As the world economy shows mounting signs of deceleration and recessionary fears intensify across global markets, the world community is likely to focus increasingly on how to undertake an effective anti-crisis response. Back in 2008–2009, one of the key factors in surmounting the crisis was a coordinated response of the largest economies via a fiscal stimulus that was coordinated by the IMF. In current circumstances, the conditions for effective cross-country coordination may appear to be more challenging. Nonetheless, the worsening condition of the world economy does merit a look into how the global anti-crisis response can be undertaken.
While there is ad hoc coordinated action on the part of the central banks of the largest economies in generating monetary easing in the face of the global economic slowdown, there may be a case for a more formal mechanism that envisages not only monetary easing but also coordinated fiscal stimulus. The latter has in fact already been undertaken in the context of dealing with the 2008 global crisis through IMF coordination efforts. There may be a case for a more formal mechanism of Keynesian-type fiscal stimulus that pertains not only to the global-level institutions like the IMF but also involves regional stimuli through regional integration arrangements. This would allow the global economy to make use of a broader array of instruments and the full capacity of the Global Financial Safety Net (GFSN).