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Disclaimer: The views expressed herein are those of the authors and should not be attributed to the IMF, its Executive Board, or its management.The great moderation lulled macroeconomists and policymakers alike in the belief that we knew how to conduct macroeconomic policy. The crisis clearly forces us to question that assessment. In this paper, we review the main elements of the pre-crisis consensus, we identify where we were wrong and what tenets of the pre-crisis framework still hold, and take a tentative first pass at the contours of a new macroeconomic policy framework. JEL Classification Numbers: E44, E52, E58, G38, H50

This is a Working Paper and the author(s) would welcome any comments on the present text. Citations should refer to a Working Paper of the International Monetary Fund, mentioning the authoi(s), and the date of issuance. The views expressed are those of the author(s) and do not necessarily represent those of the Fund.

The great moderation lulled macroeconomists and policymakers alike in the belief that we knew how to conduct macroeconomic policy. The crisis clearly forces us to question that assessment. In this paper, we review the main elements of the precrisis consensus, identify where we were wrong and what tenets of the precrisis framework still hold, and take a tentative first pass at the contours of a new macroeconomic policy framework. Copyright (c) 2010 The Ohio State University. The International Monetary Fund retains copyright and all other rights in the manuscript of this article as submitted for publication.