The linkages between countries are influenced by their macroeconomic policies. These policies can be conducted so as to reduce risks and increase the likelihood of good outcomes.

The objective of this program is to undertake research into the design of policies in three areas. The first of these is the overall framework of macroeconomic policy, including the extent to which policy can influence exchange rates in a world of a high degree of capital mobility, and the integration of fiscal and monetary policy in the management of the economy. The second is the extent to which the financial system can be regulated so as to minimise the risk of currency and financial crises, and to lessen the costs of such crises as occur. The third is the way in which the liberalisation of international trade can be managed so as to avoid the growth of preferential discrimination between countries, and the growth of discriminatory trading blocs.

Research in this program will also be conducted into the connection between these areas: the extent to which trade liberalisation strategies demand a change to exchange rate strategies, and the extent to which the need to minimise the risks of financial crises has implications for exchange rate strategies.