Perspectives On Policy Response

Question 1

Keynesian approach on policy response

Answer 1

-provide strong monetary and fiscal stimulus

Question 2

Austrian approach

Answer 2

Avoid bailouts (lead to moral hazard)

Question 3

Strategies for avoiding future financial crises

Answer 3

• floating XR
• build up foreign currency reserves (avoid liquidity runs on banks)
• regulation
• improved public and private sector debt
• structural reforms