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New global forum to tackle macroeconomic recovery

20 May 2020

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Distinguished Professor Renée Fry-McKibbin is an economist in the Centre for Applied Macroeconomic Analysis (CAMA) at The Australian National University. She is the Co-Director of the Finance and Macroeconomy Research Program, the Commodities and the Macroeconomy Research Program and the COVID-19 and the Macroeconomy Research Program within CAMA. She is a Research Associate of the Research Project in Forecasting at George Washington University, the Norwegian Centre for Macroeconomic and Petroleum Analysis (CAMP), and formerly at the Cambridge Finance and Policy (CFAP) at the University of Cambridge (2008-2012).

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A new body of global economists has been formed at Crawford School to find pathways to economic recovery from the COVID-19 pandemic.

Forty eminent economic scholars from 20 countries have joined as founding members of the new forum, which will examine the global macroeconomic consequences of the pandemic and explore potential mechanisms of recovery.

Co-Director of the COVID-19 and the Macroeconomy Research Program, Professor Renee Fry-McKibbin from Crawford’s Centre for Applied Macroeconomic Analysis, said economists worldwide have been struggling with the enormity of the economic impact arising from the need to arrest a global public health crisis.

“Everything has changed, and the economy is not going back to the way it was, so our program provides a dialogue with colleagues in other countries who are all thinking about the same issues, but from different perspectives,” she said.

“Keeping people safe has come at a large cost, and now we need to work out how to balance the nation’s health with a healthy economy that supports our new era of living with the virus.

“Our global trade and financial networks have fundamentally changed. Our major trading partners may not be able to supply us with the goods and services we need, and our export markets have also been affected by a global reduction in demand.

“We will not have a tourism industry as we did before, education and international education have changed, and financial markets are incredibly volatile. Policymakers need to respond to all of these shocks that are occurring simultaneously.

“This forum will help us navigate through COVID-19 and its long-term ramifications. There is no easy solution, and there will not be one policy that fixes all of these problems, so everything is on the table for discussion through this forum.” Professor Fry-McKibbin said for the first time Australia has adopted unconventional monetary policy, with the central bank intervening in bond markets to affect the money supply and liquidity in the economy.

“Other countries adopted quantitative easing in response to the global financial crisis of 2008, but this is new territory for Australia,” Professor Fry-McKibbin said. “We are a small economy with smaller financial markets compared to those in the US and Europe, so it will be interesting to see how this plays out for counties like us.” New data presented to the opening session of the forum showed the worst historical periods of unemployment in the United States.

“Before COVID-19 the peak was during the energy crisis in 1979 where unemployment topped 10.8 per cent, and during the global financial crisis it peaked at 9.9 per cent. With COVID-19 unemployment in the US has already hit 14.7 per cent and that happened dramatically,” Professor Fry-McKibbin said.

“This is a shock unlike any that we have seen before, and which is likely to exacerbate inter-generational inequality and have long-term impacts on the labour markets.” The program aims to inform policymakers in both developed and emerging economies on issues that they are grappling with as they find their way through the crisis. “In addition, the program will be pooling the best of our global knowledge and will enhance the quality of research into this unexpected turn of global events,” said Professor Fry-McKibbin.

Economists from Australia, Belgium, Brazil, Canada, Denmark, England, France, Germany, Ireland, Italy, Japan, Lithuania, Macao, Malaysia, Nepal, the Netherlands, New Zealand, Norway, Switzerland, Turkey, Sri Lanka and the US, have joined the program.
More information can be found here.

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