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Cover -- Table of Contents -- Abstract -- I. Introduction and Summary -- II. Expectations and a Threatening Dark Corner -- III. Different Kinds of Forward Guidance -- III.1. Conventional Forward Guidance -- III.2. Unconventional Forward Guidance -- III.3. Country Experiences with Unconventional Forward Guidance -- III.3.1. United Kingdom -- III.3.2. United States -- III.3.3. Canada -- IV. Model Simulations of Alternative Policy Strategies -- V. Conclusions -- Appendix I. Policy Credibility: Exchange Rate and Asset Prices as Shock Absorbers or Amplifiers

"This paper argues that if policymakers seek to enhance global liquidity, then the international community must provide a higher and better coordinated level of fiscal support than it has in the past. Loans to troubled sovereigns or financial institutions imply a credit risk that ultimately must be lodged somewhere. Expanded international lending facilities, including an expanded IMF, cannot remain unconditionally solvent absent an expanded level of fiscal backup. The same point obviously applies to the European framework for managing internal sovereign debt problems, including proposals for a jointly guaranteed eurozone sovereign bond. Even attainment of a significant role for the Special Drawing Right depends upon enhanced fiscal resources and burden sharing at the international level"--National Bureau of Economic Research web site

"This paper analyzes current stresses in the two key areas that concerned the architects of the original Bretton Woods system: international liquidity and exchange rate management. Despite radical changes since World War II in the market context for liquidity and exchange rate concerns, they remain central to discussions of international macroeconomic policy coordination. To take two prominent examples of specific (and related) coordination problems, liquidity issues are paramount in strategies of national self-insurance through foreign reserve accumulation, while recent attempts by emerging market economies (EMEs) to limit real currency appreciation have relied heavily on nominal exchange rate management. A central message is that a diverse set of potential asymmetries among sovereign member states provides fertile ground for a variety of coordination failures. The paper goes on to discuss institutions and policies that might mitigate some of these inefficiencies"--National Bureau of Economic Research web site