Thought Leaders: The Financial Crisis
Author: Professor Gikas Hardouvelis
Periodical: Business Partners Magazine, November – December 2008 Issue, p. 30
A globalized economy requires a new architecture of global rules and coordinated supervision. Gordon Brown’s current lead at coordinating the European governments on tackling the unraveling crisis foreshadows the urgent need for preventive supervisory coordination well after the crisis is over. Regulatory broadening and deepening on a global scale will become the new reality in the years to come. I also foresee a higher tolerance for a more activist short-run discretionary fiscal policy, but in a way that does not sacrifice long-run macroeconomic stability. A new era of active government intervention in the private sector is unlikely to occur. The Stability and Growth Pact in Europe, for example, would probably become more flexible but in a way that does not negate its long-run disciplining role on politicians.