TY  - JOUR
AU  - Goodhart, Charles
TI  - Global Macroeconomic and Financial Supervision:  Where Next?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 17682
PY  - 2011
Y2  - December 2011
DO  - 10.3386/w17682
UR  - http://www.nber.org/papers/w17682
L1  - http://www.nber.org/papers/w17682.pdf
N1  - Author contact info:
Charles Goodhart
London School of Economics
E-Mail: caegoodhart@aol.com
M1  - published as Charles A. E. Goodhart. "Global Macroeconomic and Financial Supervision: Where Next?," in Robert C. Feenstra and Alan M. Taylor, editors, "Globalization in an Age of Crisis: Multilateral Economic Cooperation in the Twenty-First Century" University of Chicago Press (2014)

M3  - presented at "Globalization in an Age of Crisis", September 14-16, 2011
AB  - The overriding practical problem now is the tension between the global financial and market system and the national political and power structures.  The main analytical short-coming lies in the failure to incorporate financial frictions, especially default, into our macro-economic models.  Neither a move to a global sovereign authority, nor a reversion towards narrower economic nationalism, seems likely to take place in the near future.  Meanwhile, the adjustment to economic imbalances remains asymmetric, with almost all the pressure on deficit countries.  Almost by definition surplus countries are "virtuous".  But current account surpluses have to be matched by net capital outflows.  Such capital flows to weaker deficit countries have often had unattractive returns.  A program to give earlier and greater warnings of the risks of investing in deficit countries could lead to earlier policy reaction, and reduce the risk of crisis.  
ER  -