A crisis is a terrible thing to waste, and nowhere is this truer than in the arena of international economic policy cooperation. With the world facing the largest and most synchronized plunge in output of the postwar era, policy makers banded together to find solutions. This paper looks at the lessons from what did and did not occur in the area of policy cooperation since the crisis. Outcomes seem to be weaker over time in areas such as macroeconomic policies, where institutional procedures were less well defined and there were disagreements over spillovers. By contrast, cooperation seems to have been most effective where there was a consensus that such policies could avoid the risk of highly detrimental outcomes and institutional arrangements were more concrete. Principle amongst these was trade, but bank capital buffers, IMF resources, and derivatives exchanges also fall into this category. Lessons for those interested in promoting cooperation seems to be: it may be more fruitful to: focus on the potential for major costs from a lack of cooperation, rather than the minor gains from fuller coordination; strive for more consensus estimated spillovers; convince policy-makers costs of loss of cooperation are large; and focus on building better and more enduring institutional arrangements.

A crisis is a terrible thing to waste” is a quip that could be used about many economics papers over the last 5 years, and this one continues in that fine tradition. The particular issue I focus on is what the policy responses since the 2007/08 crisis tell us about policy cooperation in the real world. After all, the Lehman bankruptcy led to the deepest and most synchronized global downturn of the postwar era. With the close linkages and dependencies of one country on another so dramatically exposed, and the risk of a new great depression on the horizon, the impulse for collective action was inevitably heightened. What was done and possibly equally importantly what was not done over the subsequent half decade provides a natural experiment to examine the impulses towards policy coordination and its practical limitations. Accordingly, this paper looks at policy cooperation in the period since the Lehman collapse using an historical approach. More specifically, it discusses what has happened and provides some assessment as to why, supported by references to more detailed analysis. This “revealed preference” and historical approach using observed behavior is used to infer preferences contrasts strongly with the typical approach in the policy coordination literature of developing a model and then assessing appropriate behavior based on welfare maximization. The outcome is some relatively unconventional ideas on how to promote policy cooperation.