1. 회의주제: Macroeconomic Management under Debt Workouts in the Pacific Region

2. 일 시: 2004년 3월 20 - 21일

3. 장 소: 일본, 오사카

4. 참석자
o 허찬국 선임연구위원 (한국경제연구원)

5. PEO 구조 활동의 목적과 2004-2005 활동 주제

Our task is to tackle those policy-oriented medium- or longer-term issues which are closely associated with contemporary macroeconomic management in the Pacific region. In the past, we dealt with: 1) Privatization, 2) Foreign Direct Investment, 3) Trade in Goods and Services, 4) Capital Flows, 5) Exchange Rate Fluctuations and Macroeconomic Management, 6) Domestic Savings, 7) Productivity Growth and Industrial Structure, 8) Fiscal Policy Issues, and 9) Infrastructure Development.

Among several candidate topics, we would like to propose that

Macroeconomic Management under Debt Workouts in the Pacific Region

be a topic for the next research cycle of the PEO/Structure Task Force. The general background and orientation of the research would be as follows:

Under the financial globalization, we have witnessed more frequent financial crises all over the world than before. The large-scale bankruptcies of S&L institutions in the United States in the late 1980s, the system-wide downward spiral due to die-hard NPLs (Non Performing Loans) in Japan since 1990 up to now, the cascading defaults of nonfinancial corporations, commercial banks and nonbank financial institutions after the 1997 economic crisis in East Asia, the defaults of sovereign debts in some emerging markets, to name a few. Debt workouts, thus, have become serious policy issues throughout the region.

Furthermore, debt workouts not only become policy issues themselves, but constrain macroeconomic management in various ways. Deterioration in balance sheets can be found in a variety of levels, i.e. countries, governments, banks, and nonfinancial corporations. The deterioration in one level can spill over to others and eventually snowball to an economywide degree. It can constrain monetary policy and/or exchange rate adjustment. Or it can narrow a room for countercyclical fiscal policy.

These are actually what happened in the region in the past decades. What can we learn from these painful experiences? And how can we get better prepared for the possible future troubles? We would like to focus on how these efforts to improve balance sheets of financial as well as nonfinancial sectors constrain macroeconomic management such as monetary and fiscal policies, and how we can overcome these constraints and achieve macroeconomic stability.

We may want to discuss experiences in advanced economies such as how we have coped with bubble bursts or asset market crash through a carefully coordinated macroeconomic policy mix. Even low inflation becomes a headache under debt deflation in advanced as well as some emerging markets. Inflation targeting could be interpreted as a search for a new nominal anchor replacing pegged exchange rates in East Asia after the Crisis. The recovery process in East Asia looks similar across the economies, crisis-hit or not, as characterized by active fiscal management and cautious but relatively loose monetary policy. Meanwhile, in Latin
America, government itself may have to ameliorate balance-sheet vulnerability, which surely binds fiscal initiatives, leaving too much adjustment burden on monetary policy.

6. 중점 논의 과제

Because this is the first meeting on the very new, hot policy issue and we as usual have relatively little time for paper preparation, I suggest we start in the following manner:

1) to briefly review balance sheet problems (e.g. maturity, currency and other mismatches) across sectors encountered in the recent past, possibly with sectoral flow of funds data,

2) to describe how they possibly affected macroeconomic policy management, touching on prudential/supervisory and other institutional aspects,

3) to discuss how the policy authorities react to those balance sheet vulnerabilities and try to overcome their constraints imposed by them, and

4) to remind us of relevant aspects omitted, if any. In doing so, provide as much relevant data as possible and show us important references.

7. 첨부문서
o 프로그램
o 발표자료 1부