chapter  IV
National Economic Policymaking in an Era of Global Finance
ByRobert B. Packer
Pages 31

This chapter analyzes the efforts made by the governments of the advanced countries to respond to shifting economic conditions in the years since the Second World War. It focuses on the capacities of the different governments to intervene selectively to shape industrial outcomes. The chapter discusses that an examination of national financial structures can illuminate the economic strategies of these governments and the political conflicts that accompany industrial adjustment. New Zealand offers an example of institutional reform to resolve credibility problems, through the formation of a central bank independent from the government. The chapter outlines briefly the differences that competing international financial regimes can make in the pursuit of macroeconomic policy. The Rational Expectations argument is important in discussing the influence of financial market operators on macroeconomic policymaking. The changes in the international financial regimes, such as the shift from fixed to flexible exchange rates, and the reemergence of international capital mobility, changed the relationship between states and financial asset-holders.