International Coordination Of Macroeconomic Policies From The Perspective Of Non-synchronous Economic Cycle

In the second decade of the 21^st century,international economy gradually recover from the 2008 financial crisis,the business cycles of different countries?both developed and emerging economies?are becoming asynchronous because of their specific industrial structures and the international financial capital flows.Although the necessity of international coordination of macroeconomic policies is well recognized,governments intend to put their own economic and politic interests first due to their short-sighted tendency and“Beggar-thy-neighbor”thought during the implementation.Traditional coordination of macroeconomic policies mainly focus on monetary policy and trade policy.Scholars did quantitative analysis based on game theory,NOEM model and study of spillover effect.They neither study the channel and mechanism of the coordination from the macro perspective,nor did qualitative analysis on the benefit of the coordination from the micro perspective.It does not help to understand the current imbalance state of the world's economy,and it cannot encourage countries to participate in the coordination of macroeconomic policies.This paper attempts to deepen the understanding of the above issues through careful study of the international coordination of macroeconomic policies.The international coordination of macroeconomic policies refers to the mutual cooperation of countries through fiscal,financial,monetary,and trade policies.It seeks to maximize the welfare in the context of global economic integration.The theoretical analysis framework is an important basis for the study.This paper studies the relationship between macroeconomic policy coordination and international mechanisms,and discusses the formal?hard coordination?and informal?soft coordination?international mechanism.The experience of Eurozone and G7 group set a good observation sample for international coordination of macroeconomic policies.European countries has gained experience from European debt crisis.We can conclude from the loss and gains from coordination of macroeconomic policies of the two groups that coordination through fiscal,financial and trade should be chosen and“soft coordination”mode is more effective.Furthermore,the paper analyzes the correlation between macroeconomic policies and the economic cycle and the obstacles to macroeconomic policy coordination.Follow the qualitative analysis,based on Lucas's judgement,by introducing a three-state discrete Markov process,this paper establishes a welfare cost model and makes quantitative analysis to clarify the macroeconomic policy coordination welfare benefits respectively between China and America,between the developing and developed countries of G20 group and between the long-term and short-term cycles.The benefit estimated by the cost model is much higher than that of Lucas model.Welfare benefits that countries get is about 7 to 12 times the estimated results of the Lucas model.To some extent it indicates that welfare cost model of macroeconomic policy coordination is universal,and the spillover effects of macroeconomic policy coordination is significant.Developed countries can get more benefit than developing countries,which indicates developed countries should anticipate in the coordination more actively rather than“Beggar-thy-neighbor”.Long-term coordination is more beneficial than short-term coordination,which indicates countries should chase for long-term benefit rather than short-term.G20 group,as temporary coordination mechanism since 2008 financial crisis,has become important platform for current macroeconomic policies coordination.This paper focuses on the coordination results achieved by the G20 summit since 2009,and introduces the concept of China's participation in the construction of the G20.It points out that the G20 should overcome short-term fluctuations of the economic cycle,strengthen the self-monitoring and mutual supervision of members and guide the institutionalization of the platform to ensure that the G20 will play a more prominent role in macroeconomic policy coordination in the future.From the perspective of China,the article puts forward the measures China can take in the system construction and agenda setting of macroeconomic policy coordination,and provides feasible suggestions for China's participation in macroeconomic policy coordination.This paper combines the international politics and international economics together.Based on the assumption of limited rationality,maximizing profit,minimizing transaction costs,policy choices of different countries are analyzed.Different from traditional view of political game,this paper uses the perspective of non-synchronous economic cycle.Macroeconomic policies coordination is affected by international capital channel,international industrial structure channel and international trade channel.Moreover,current researches focus on developed countries,while this paper extends analyzing dimensions to both internal and external coordination between developed and developing countries.And it also aim to achieve the completeness and universality of the theoretical framework,model construction and empirical conclusions.