Il Houng Lee is currently a Senior Associate at the Centre for Security Diplomacy and Strategy, Vrije University Brussels. He served formerly as a member of the Monetary Policy Board of Bank of Korea, the President of the Korea Institute for International Economic Policy, and as the Ambassador for International Cooperation and G20 Sherpa for the Republic of Korea. He also spent 24 years at the International Monetary Fund, including as the head of the IMF Resident Representative office in China. He taught at the Seoul National University, the National Economics University in Hanoi, and at the Jilin University, China as a visiting professor. His research interests include macroeconomics, international monetary system, international finance and trade, and income inequality. He earned his BSc. in economics at the London School of Economics and his Ph.D. at Warwick University, UK.

Abstract

Despite good efforts, the track record of macroeconomic policy coordination of the last few decades is at best mixed. This is in large part due to drastic structural changes that accompanied globalization. This lecture will limit its scope to monetary and fiscal policy issues. It will explain how expansionary monetary policy, underpinned by passive fiscal responses, has facilitated overvaluation of asset prices, and how this in turn has contributed to wealth inequality and suboptimal allocation of global savings. The world is entering a rapid aging process. Social and economic sustainability will critically depend not only on whether there are adequate savings, but also how they are distributed across countries and households. In this regard, our current status quo does not bode well. This lecture will suggest a solution that will require a notable adjustment in monetary and fiscal policy formulation, both at the national and the international level.