description perhaps seems to suggest that the keynesian ideal of the economist as a dentist might become reality. to quote keynes : “ if economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid. ” i am afraid, however, that this notion of the economist ’ s role will remain a pious hope. most economists are indeed humble or competent people – and sometimes they are both. but in the past few years, insights gained in the field of economics have probably experienced more ardent debate than the latest findings on dentistry. for given the complexity of reality, the dynamics of an increasingly interlinked global economy and the uncertainty that upheavals like the financial and economic crisis in particular generate, there are often no simple answers to economic policy questions. what is more, these answers may change with time. on the one hand, the specific set - up of an efficient competitive order is subject to constant change. as the framework conditions shift, so the regulatory principles i have just mentioned may have to be re - operationalised. at the same time, it is important to weigh other social policy objectives anew against the requirements of a competitive order, if necessary. on the other hand, not even a rule - bound, regulatory policy - driven economic set - up can do without discretionary decisions. generally speaking, therefore, rules are needed to give validity to regulatory principles such as the principles of competition and liability. they have to narrow the scope for action of participants in the economic process in such a way that market forces produce better economic results – results which are also more sustainable and more socially just than those of unbridled competition or of a centrally planned economy. to this end, the appropriateness of a given regulatory framework must be constantly reviewed, and adjustments made where necessary. one such example is agenda 2010. at that time, the rules laid down in employment and social welfare laws had shown themselves to be major obstacles to labour market entry, bis central bankers ’ speeches even in times of an economic upswing. in consequence, unemployment continued to rise across the business cycles until it reached a level that was no longer sustainable. the measures that were then taken boosted flexibility, lowering the barriers to entering the labour market. for example, the liberalisation of temporary employment makes it easier for employers to hire job - seekers. moreover, the amalgamation of unemployment assistance and social assistance and the shortening of the period of entitlement to unemployment benefits increased the incentive

andreas dombret : introductory statement - iif international capital markets and emerging markets roundtable introductory statement by dr andreas dombret, member of the executive board of the deutsche bundesbank, at the iif international capital markets and emerging markets roundtable, washington dc, 20 april 2018. * * * ladies and gentlemen ever since the ground - breaking work of solow in the fifties most policy makers and members of academia – especially in the advanced economies – have inclined to favour free capital flows. many crises later, the view has somewhat shifted, in particular, regarding emerging markets and developing countries, which is the group of countries that i will focus my remarks on. not only can capital flow reversals and in the extreme form sudden stops create significant costs in terms of output losses, financial instability and even political instability. but from all we know today it is surprisingly difficult to find empirical evidence of capital account liberalization being beneficial in terms of output gains, investment, productivity gains, or risk sharing for countries that have not progressed sufficiently far in their institutional development. much of the work on this has been carried out by the imf and indeed by maurice obstfeld himself, so maurice should correct me if i am wrong, but essentially liberalized capital flows should go hand in hand with functioning judicial systems including well enforced property rights, developed and well regulated financial systems as well as stability - oriented macroeconomic policies. there are even longer lists, but these seem to be the minimum requirements. so, given that these conditions are not always met fully, should countries resort to capital flow measures if faced with volatile flows? by the way, i am using the imf terminology of capital flow measures. these are basically capital controls plus those macroprudential measures that aim to limit financial stability risks arising from cross - border capital flows. i think we all agree that sound domestic policies should always be the first line of defence and that capital flow measures should not substitute for warranted macroeconomic or exchange rate adjustments. but it is also useful to state an obvious but often overlooked fact : unlike restrictions on the current account, the imposition of capital flow measures is not under the jurisdiction of the imf, thus, any country can basically adopt such controls as it deems necessary to regulate capital movements. however, capital flow policies are part of the funds surveillance and as such open to an assessment of their impact on the international monetary system. objectives of capital flow measures usually are to maintain monetary independence, to mitigate exchange