Responding to the Global Financial Crisis with 'credibility': an assessment of the macroeconomic policy frameworks of the inter-governmental organisations

Following the severe impact of the Global Financial Crisis on output and unemployment in most developed economies since 2008, policymakers have been subjected to a greater than usual flow of macroeconomic and labour market policy advice from the major Inter-Governmental Organisations, including the OECD, IMF, World Bank and the European Union. The objective of this paper is to critically assess the evolution of this policy advice from the broad consensus about the need for modest fiscal stimulus measures in selected countries to general agreement that virtually all OECD countries must now adopt strategies of fiscal consolidation in the medium term in the pursuit of long term fiscal sustainability. It is concluded that the policy advice is severely compromised by the failure of these organisations to differentiate between those countries that can conduct independent fiscal and monetary policy, and those subject to voluntary policy constraints, notably the Eurozone countries.