Economic Policy Regime after Global Inflation
For nearly 30 years since the 1980s, neoliberalism was the dominant economic policy regime among major industrial countries. It lost its persuasiveness during the course of 2010s, however, following the global financial crisis of 2007–08, widening of income inequality, and increased focus on climate change. We have since seen a search for new policy regimes. Just prior to the pandemic, a gradual consensus seemed to emerge on (1) placing more emphasis on the use of fiscal policy rather than monetary policy for macroeconomic stabilization, (2) advancing global cooperation for decarbonization, and (3) achieving international harmonization of corporate tax rates, including digital taxation.
The pandemic caused inflation rates to surge almost everywhere, however, including even in Japan, which had been beset by deflation for many decades. Under the circumstances, there is little wonder that major countries are now fighting inflation with monetary policy. A few years from now, though, when global inflation has eased, the world will likely resume its search for a new economic policy regime. This program will analyze how such a search may unfold.