*  *  *  Today I should like to reflect on some of the ways in which economic policy both affects and is affected by the increasing flexibility of the U.S. economy. For this country's first century and a half, government was only peripherally engaged in what we currently term the management of aggregate demand.
Today, there are many signs that political support for international financial integration has weakened in domestic constituencies, and we are witnessing an increased fragmentation of capital markets at a global and at a regional level3. This should not be accepted, because we would then lose the benefits of financial integration.