From the Bretton Woods system to the global non-system: The trials and tribulations of slow learning

In this paper we analyse why an understanding of the global ‘non-system', in which we now live, took so long to arrive after the Bretton Woods system collapsed in 1971. We first describe how knowledge of how an inflation-targeting regime would operate—what we call ‘Taylor-rule macroeconomics'—was only gradually created during the 1970s, 1980s, and 1990s. We then describe how, subsequent to this, an awareness emerged, also gradually, of how the international non-system might work, depending, as it does, on Taylor-rule macroeconomics being already in place. We then discuss the Great Moderation, making clear that a well-functioning global non-system would require not just inflation targeting and floating exchange rates in each country, but also adequate fiscal discipline, and a satisfactory form of financial regulation. We describe how a well-functioning version of this global non-system would actually fit together. We then discuss how this non-system has responded to two enormous challenges of the last 15 years, namely the Global Financial Crisis and the Covid pandemic. This discussion of what has happened in the recent past provides the background to a discussion, in the companion paper by Subacchi and Vines in this issue of the Oxford Review of Economic Policy, of the challenges that the global non-system will face in the future. © The Author(s) 2023. Published by Oxford University Press.

Research on China's Monetary Policy Orientation and Regulation in COVID-19.

The outbreak of COVID-19 in 2019 has caused a huge impact on the global economy. In this context, it is of great significance to study the orientation and regulation of China's monetary policy, which aims to mitigate the external impact brought by COVID-19. Therefore, this paper uses the SV-TVP-FAVAR model to analyze the dynamic relationships among interest rate, inflation gap and output gap. The main conclusions are as follows. First, the output gap has a significant impact on the adjustment of the interest rate and inflation gap. In the COVID-19 era, the former response is positive and the latter response is negative. Second, the impact of the inflation gap on the interest rate fluctuates frequently, but the impact has gradually weakened in recent years. In addition, the inflation gap shows a significant positive response to the impact of the output gap. Third, interest rate is characterized by targeting the output gap and the inflation gap in the short term. However, in the period of COVID-19, the regulation effect of China's monetary policy on the inflation gap and the output gap has weakened. Meanwhile, compared with targeting the output gap, monetary policy has a more obvious orientation to control inflation.