Given this growing integration of the world economy, it might appear that there is a need for closer international coordination of economic policies. Traditionally, talk of coordination has made people think of more formal arrangements, such as the Plaza and Louvre Accords of the 1980s.
Not only did those agreements attempt to influence global exchange rates, they spelled out detailed prescriptions for individual countries in areas such as fiscal and monetary policy. I will argue today that the scope for macroeconomic policy coordination is very limited, although it is vital for policy-makers to co-operate in the sharing of information and views on monetary and fiscal policy.