Until 2007, large parts of the world had enjoyed a long and sustained period of relatively strong economic growth and stability, the so-called “Great Moderation”. While there were signs of weaknesses and risks, most observers tended to underestimate these threats. The OECD was not alone in failing to connect or missing the warning signs. Other institutions involved in international surveillance, many finance ministries, credit rating agencies, national and supra-national financial regulators and financial institutions themselves had been lulled into a sense of complacency during the Great Moderation. Given the analytical models used to examine the financial sector, the extent of the crisis and the subsequent global recession were consistently underestimated, which contributed to significant policy failures. Five years since the crisis began many advanced economies remain fragile, with significant downside risks and high unemployment. In short, OECD countries were generally not prepared for the crisis and were poorly positioned to withstand it.
In light of work already undertaken by the OECD, as well as the extensive scholarly literature on the causes and lessons from the crisis, the proposals for further work under this category are necessarily selective and targeted towards addressing key gaps and priorities. This work includes:
|A1||The crisis: Drawing lessons from history and past policy experiences|
|A2||Forecasting in time of crisis: post-mortem of OECD projections|
|A3|| The role of the financial system in the crisis and reforms required to promote sustainable growth
|A4||Fostering long-term investment and responding to the challenges of ageing and longevity|
|A5||New approaches to SME and entrepreneurship financing: broadening the range of instruments|
|A6|| How much scope to achieve growth- and equity-friendly fiscal consolidation?
|A7||Applying new tools and approaches for better policy making|