Public Moral Hazard in Solutions to Private Moral Hazard, Illustrated by Macro-Financial Policy Regimes Response to Hélène Rey

Abstract

Powerful states should avoid using their power and international organisations they dominate to prescribe general measures to developing-economy states because we have not yet overcome our own obvious problems. Doing so also harms our position in the world. Good policies can speak for themselves. We can usefully try to describe our mistakes, problems, and what we think we have learned. There are important illustrations in the 2022-23 inflationary and banking problems. They are rooted in moral hazard within and across organs of the state, which are problems still largely ignored within political economy and science.