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International Coordination and Cooperation of Macroeconomic Policy -- A Case Study of “Plaza Accord”(No. 165, 2016)


By Yang Guangpu, Research Team on “Case Study of International Macroeconomic Policy Coordination”, DRC

Research Report No. 165, 2016 (Total 5048) 2016-12-7

Abstract: By taking “Plaza Accord” as an example for addressing the coordination of macroeconomic policy in the world, this paper makes a systematic study of the background under which “Plaza Accord” was signed, the policy coordination mechanism under the “Plaza Accord” framework, and the effect of policy coordination under such a framework. It gives a comparison between the respective performance of Japan and Germany before and after “Plaza Accord” was signed. Based on the above analysis, this paper puts forward four suggestions for designing international coordination mechanism relating to macroeconomic policy. 1. Domestic coordination needs to be handled well prior to addressing any international coordination. 2. The independence of the central bank needs to be improved gradually, and the transparency of the central bank’s decision-making mechanism needs to be strengthened. 3. The prerequisite for the smooth coordination of macroeconomic policy internationally is to foster a principal position relating to the coordination mechanism. 4. The coordination between the two major powers of China and the US needs to be properly dealt with in order to bring into play the role of G20 and enhance the world development.

Key words: macroeconomic policy, international coordination, plaza accord, case study