Contents
1 The old world 3
2 What has changed 4
2.1 Globalisation .................................. 4
2.2 Government control of finance has partially eased .............. 5
2.3 The business cycle ............................... 6
2.3.1 Monsoon shocks matter less ...................... 7
2.3.2 A more conventional business cycle .................. 7
2.4 Exchange rate inflexibility ........................... 10
2.5 The fiscal crisis has partially abated ...................... 10
3 Looking forward 13
3.1 Fiscal stability .................................. 14
3.2 Stabilisation ................................... 18
3.2.1 Monetary policy ............................. 19
3.2.2 Fiscal policy ............................... 21
4 Conclusion 24