Tabellini 「世界金融危機の教訓；その2」

Guido Tabellini, “Lessons for the future: Ideas and rules for the world in the aftermath of the storm, Part II”（July 17, 2009）

今般の世界金融危機が将来の世界経済に対して示唆するところのインプリケーションに関していかなる結論を下すべきであろうか？　本論説では―本論説は2部構成のうちの第2のパートを成すものである―、財政・金融政策においてあらかじめ想定されておくべき出口戦略の輪郭を大まかに描くことを試みる。また、本論説においては、危機＝パラダイムシフトを迫るような出来事（a paradigm-shifting event）、と見なすよりはむしろ、危機＝一時的な混乱の時期（a temporary period of turmoil）、と見なすべきであることが主張される。

In light of the failings outlined in my previous column, we need an exit strategy. Even if recent events cannot be interpreted as a systemic crisis and only stem from a number of important technical problems in financial markets, they could become a major turning point if the recovery continues to be managed in the haphazard, improvised way it has been thus far.

In order to sustain intermediaries with financial problems, central banks have injected massive amounts of liquidity into markets. Within a few months of Lehman Brothers’ bankruptcy, the Federal Reserve’s balance sheet had almost tripled, and the Fed projects that it could triple again in the near future, reaching almost one-third of US national income. This huge amount of liquidity was immediately absorbed without generating inflation, because today everyone is markedly risk averse and wants to hold liquid, low-risk assets. In the near future, the risk is actually the opposite – the demand for liquidity still exceeds money creation, and this may produce deflation.

As we begin to exit the crisis, however, demand for liquidity will go back to normal levels, and fear of deflation will be replaced by the risk of inflation (or asset price inflation). To avoid it, policymakers will have to withdraw liquidity in a timely fashion. That is easier said than done. Too abrupt a change in monetary policy could induce losses on circulating assets, and the economy could plunge back into the crisis. But a belated intervention would not be sufficient to prevent the start of an inflation spiral. These difficulties are exacerbated by the weakness of currency markets, where the supremacy of the dollar as a reserve currency for Asian countries could be suddenly put into question. Successful monetary policy will most importantly require successful guidance of expectations, reassuring economic agents that price stability is a key objective.

Fiscal policy will face comparable, if not greater, difficulties. The IMF estimates that, on average, public debt in G20 economies will reach 110% of national income before 2014. And this is the best-case scenario – in the worst case, average public debt may reach 140% of income. Again, the US is among the most exposed countries, and according to the projections of Congress, the US deficit will continue to stay around 6% of national income until 2019, even under the assumption of a quick return to sustained growth (above 3.6% on average between 2011 and 2015). In order to avoid financial instability, tax rates will have to be raised significantly, and a credible and rigorous program of public debt reduction has to be announced soon.

But there is a further uncertainty here. Whereas monetary policy is managed by an independent bureaucracy according to technical criteria, fiscal policy stems from political processes whose outcomes are less predictable. It cannot be excluded that the expansion of the role of the state, started in order to temporarily counteract the crisis, will last longer and bring significant changes in the division of tasks between state and market, even in those countries in which the public sector has traditionally had more limited a role than in continental Europe.

Concluding remarks

How will this crisis be remembered in economic history books? As a systemic crisis and a turning point, or as a temporary, soon reabsorbed accident due to too rapid growth of financial innovation?

If we look at the causes of the crisis and the lessons to be drawn from it, the answer must clearly be the latter. In a nutshell, the crisis has burst due to a number of specific technical problems in the functioning and regulation of financial markets, and it has been exacerbated by a number of mistakes made during the management of the crisis. Although these are complex problems, they can be tackled and solved with appropriate, although deep, reforms of financial regulation. If we will be able to learn from these mistakes and manage the recovery from the crisis well, the economy will be back to how it used to be, and even better, with less excesses and more stability. Talking about a crisis of capitalism, the end of globalisation, the crisis of a whole system and of way of thinking would be a huge exaggeration.

This, however, does not mean that this outcome is obvious. The crisis is not over yet, and above all we still do not know how policymakers will address the difficulties linked to recovery from the crisis. Any technical or political mistake in this second phase may have long-lasting consequences for economic recovery, the allocation of economic power among the various parts of the world, and the division of tasks between state and market.