The Covid crisis has caused the greatest collapse in economic activity since 1720. Some advanced countries have mounted a massive fiscal response, both to pay for disease-fighting action and to preserve the incomes of firms and workers until the economic recovery is underway.
But there are many emerging market economies which have been be prevented from doing what is needed by their high existing levels of public debt and - especially - by the external financial constraints which they face.
Professor David Vines, Professor of Economics at INET Oxford, discusses that there is a need for international cooperation to allow such countries to undertake the kind of massive fiscal response that all countries now need, and that many advanced countries have been able to carry out. So far such cooperation has been notably lacking; the contrast with what happened in the wake of the global financial crisis in 2008 is very striking.
The necessary cooperation needs to be led by the Group of Twenty, or G20, just as happened in 2008-9 since the G20 brings together the leaders of the world’s most important economies. This cooperation must also involve a promise of international financial support from the International Monetary Fund since otherwise international financial markets might take fright at the large budget deficits and current account deficits which will emerge, creating fiscal crises and currency crises and so causing such expansionary policies which need to be brought to an end.
This talk is in partnership with The Smith School of Enterprise and the Environment at the University of Oxford and the Oxford Review of Economic Policy.
The talk will also be streamed via YouTube here, but please note you will not be able to take part in the interactive Q&A session unless you join the talk on CrowdCast.
Professor David Vines
Professor of Economics
David Vines is Professor of Economics, and a Fellow of Balliol College, at the University of Oxford. He is also a Research Fellow of the Centre for Economic Policy Research.
From 2008 to 2012 he was the Research Director of the European Union’s Framework Seven PEGGED Research Program, which analysed Global Economic Governance within Europe. Professor Vines received a BA from Melbourne University in 1971, and subsequently an MA and PhD from Cambridge University. From 1985 to 1992 he was Adam Smith Professor of Political Economy at the University of Glasgow.
His research interests are in macroeconomics, including financial frictions, fiscal and monetary interactions, and financial crisis. His recent books include: The Leaderless Economy: Why the World Economic System Fell Apart and How to Fix It (Princeton University Press, 2013, written jointly with Peter Temin); The IMF and its Critics: Reform of Global Financial Architecture (Cambridge University Press, 2004, edited jointly with Christopher Gilbert) and The Asian Financial Crisis: Causes, Contagion and Consequences (Cambridge University Press, 1999, edited jointly with Pierre-Richard Agénor, Marcus Miller, and Axel Weber).
Professor Cameron Hepburn
Director, Smith School of Enterprise and the Environment
Cameron Hepburn is Professor of Environmental Economics at the University of Oxford; Director of the Smith School of Enterprise and the Environment; and Managing Editor of the Oxford Review of Economic Policy. He also serves as the Director of the Economics of Sustainability Programme, based at the Institute for New Economic Thinking at the Oxford Martin School and Lead Researcher on the Oxford Martin School Post-Carbon Transition Project & Oxford Martin Programme on the Future of Plastics.
Cameron has published widely on energy, resources and environmental challenges across disciplines including engineering, biology, philosophy, economics, public policy and law, drawing on degrees in law and engineering (Melbourne University) and masters and doctorate in economics (Oxford as a Rhodes Scholar). He has co-founded three successful businesses and has provided advice on energy and environmental policy to government ministers (e.g. China, India, UK and Australia) and international institutions (e.g. OECD, UN).