Economies Can't Just Keep On Growing
Thomas Homer-Dixon (FP) Jan/Feb 2010
Humanity has made great strides over the past 2,000 years, and we often assume that our path, notwithstanding a few bumps along the way, goes ever upward. But we are wrong: Within this century, environmental and resource constraints will likely bring global economic growth to a halt.
...And China Isn't Beating the U.S.
Daniel W. Drezner (FP) Jan/Feb 2010
China is a great power in every sense of the word. It is the most populous country in the world. The Middle Kingdom has weathered the Great Recession better than the West. It is developing a blue-water navy to rival the United States in the Pacific. In 2010, China surpassed Japan as the world's second-largest economy. For many Americans, however, this is not enough. Politicians, commentators, and the public believe China has already supplanted the United States to achieve primacy in world politics. This is not only wrong -- it is dangerously wrong.
The Global Economy Won't Recover, Now or Ever
Immanuel Wallerstein (FP) Jan/Feb 2010
Virtually everyone everywhere-economists, politicians, pundits -- agrees that the world has been in some kind of economic trouble since at least 2008. And virtually everyone seems to believe that in the next few years the world will somehow "recover" from these difficulties. After all, upturns always occur after downturns. The remedies recommended vary considerably, but the idea that the system shall continue in its essential features is a deeply rooted faith.
Think Again: American Decline
Gideon Rachman (FP) Jan/Feb 2010
"We've Heard All This About American Decline Before." This time it's different.
The Rise of the New Global Elite
Chrystia Freeland (Atlantic) Jan/Feb 2010
The economic changes of the past few years have created a new class of business megastars. Super-rich and often self-made, they tend to be ambivalent about the rest of us, and they increasingly form a nation unto themselves.
Five Myths and a Menace
Nigel Lawson (Standpoint) Jan/Feb 2011
I wonder whether enough has been made by Adam Smith scholars, which I do not claim to be, of the intellectual connection between Smith and Charles Darwin. Darwin himself records how, during his last year at Cambridge, he spent much of his time studying Smith. And I have long been struck by the parallel between Smith's explanation of how economic order and growth is secured by the free interaction of individuals seeking their own personal satisfaction, "as if by an invisible hand", and Darwin's revolutionary insight, a century later, of how the remarkable natural order could arise spontaneously as a result of natural selection, without the need for an intelligent designer or divine watchmaker.
'Groupthink' IMF slammed for mistakes before crisis
Bretton Woods Update No. 74 Jan/Feb 2011
Plus: For the love of markets: World Bank, food crisis and agriculture; The IMF's new conditionality: Crafting change, lessons from Eastern Europe; World Bank corners climate funds; IMF nostalgia: debate on capital account liberalisation all over again; Dollar debate continues; and more.
On the Move: Adapting to a New Global Economy
Knowledge @ Wharton Feb 2011
In these 16 articles, students from the Joseph H. Lauder Institute of Management & International Studies analyze some of the more far-reaching changes affecting people, industries and regions around the world. Taken together, the articles identify existing opportunities and challenges for conducting business within specific cultural, political and institutional contexts, especially in light of dramatic events that have buffeted the world economy over the past two years. The articles are part of the Lauder Global Business Insight program.
Can China's Currency Go Global?
John H. Makin (AEI) Feb 2011
China has become a global economic superpower, accounting for a third of global growth in 2010. Companies both in the United States and abroad now offer to invoice their Chinese customers in yuan, and the yuan is growing as an international medium of exchange. Concerns that the yuan could replace the dollar as an international reserve currency are premature, however. To become a global financial superpower, China would have to relinquish ¬control over capital outflows and the exchange rate between the yuan and other major currencies. Chinese officials are unlikely to undertake such liberalization anytime soon.
The Year David Slew Goliath: Will Emerging Markets Repeat in 2011?
Brigitte Posch (PIMCO) Feb 2011
On balance, we believe that strong credit profiles of several emerging market (EM) countries coupled with prudent fiscal and monetary management will support continued EM economic growth. With EM corporates deepening in size and attracting more investor interest, we expect flows to strengthen this year. Adding exposure to EM bonds can help shield dollar-based investors against increases in market interest rates in the United States, in exchange for taking high-quality EM credit risk.
Devil's Bargain
Bill Gross (PIMCO) Feb 2011
Money has become the economic and political wedge for profound changes in American society. Perhaps the most deceptive policy tool to lessen debt loads is the “negative” or exceedingly low real interest rate that central banks impose on savers and debt holders. Old-fashioned gilts and Treasury bonds may need to be “exorcised” from model portfolios and replaced with more attractive alternatives both from a risk and a reward standpoint.
Views from the Front End: Exploring New Worlds
Jerome M. Schneider (PIMCO) Feb 2011
Despite a flat yield curve, short-term investors do not have to sail off the edge of the investment universe. Duration is a dwindling source of alpha, but proper positioning on the curve can enhance return potential. Investors should remember the connectivity between U.S. liquidity and the European financial system. Remaining within the money market territory is like trying to win the America's Cup with a ten-foot dinghy.
The Domino Effect: Exposing Inflation and Default Risks Globally
Ben Emons (PIMCO) Feb 2011
Ripples from political unrest and QE2 could threaten long duration positions. A sharp rise in oil prices could ultimately provoke global central banks to tighten. Implications could even extend to our expectations about government defaults.
China’s African Front
Sanou Mbaye (Project Syndicate) Feb 1, 2011
Chinese leaders pride themselves on a keen sense of history, but that sense is absent in China's dealings with Africa. In perpetuating a partnership with the same breed of corrupt leaders that colluded with previous invaders and exploiters, the Chinese have forgotten that Africans have always gained the upper hand over their foes in the end.
Arab Revolutions of Rising Expectations
Marcus Noland & Howard Pack (PIIE) Feb 1, 2011
As poor countries go, Egypt is not in the bottom rank even among nations in the Arab world. Measured by such conventional indicators as the percentage of population living on less than $2 a day, Egypt’s poverty is not high by international standards.
Bond Buyer of Last Resort
WSJ Feb 1, 2011
Europe's politicians want to stick the European Central Bank with bad Greek debt.
How the crisis catapulted us into the future
Martin Wolf (FT) Feb 1, 2011
So far it has not proved a great turning point, but that does not mean it is of small significance. Above all, it has brought great uncertainty.
Public Debt Database Maps 120 Years of Saving, Spending
IMF Survey Feb 2, 2011
The policy choices and decisions countries face as they emerge from the worst economic crisis in 80 years have a lot to do with their past habits, and a new IMF database can help them chart a future course.
Germany, China have will to power
Martin Hutchinson (AT) Feb 2, 2011
Spiraling debt and lackluster growth can sap a nation's foreign-policy drive, a lesson Japan can teach the United States. If Washington, as is possible, takes a path of withdrawal, only two countries stand out as future world leaders (and uneasy partners) - Germany and China.
Food and failed Arab states
Spengler (AT) Feb 2, 2011
China, not the United States or Israel, presents an existential threat to the Arab world, and through no fault of its own: rising incomes have gentrified the Asian diet and priced food staples out of the Arab budget. Whether the Egyptian regime survives the current uprising or a new one replaces it, the outcome will be a disaster of biblical proportions. The jump in food prices was the wheat-stalk that broke the camel's back.
Goodbye to “Globalization”
Harold James & Matteo Albanese (Project Syndicate) Feb 2, 2011
The term “globalization” first swept the world in the 1990’s and reached its highpoint of popularity in 2000 and 2001, but has since faded rapidly. A brief history of the concept, and a comparison with another term – "totalitarianism" – that also became discredited by overuse, helps to explain what happened.
Taking the Fat Out of Global Warming
Ian Roberts (Project Syndicate) Feb 2, 2011
Mitigating climate change presents unrivaled opportunities for improving human health and well being. Indeed, policies to reduce greenhouse-gas emissions promise to bring about substantial reductions in heart disease, respiratory illness, cancer, obesity, diabetes, depression, and road deaths and injuries.
Eurozone needs more clarity
Kunal Kumar Kundu (AT) Feb 2, 2011
The stability facility created by the European Union in response to the Greek debt crisis and its proposed successor stability mechanism each carry their own baggage of unresolved questions. Critically, the problem of politics taking precedence over prudent single zone policy has not been resolved.
No Way to Run a Trade Policy
NYT Feb 2, 2011
Most Republicans claim they are pro-trade, but their position is no match for parochialism and politics.
Educate or import the new entrepreneurs
John Gapper (FT) Feb 2, 2011
US innovation challenge in relation to Asia is human. China enrols 15 per cent of the world’s university students in science and engineering.
Risks abound with inflation-linked bonds
Jeremy Siegel (FT) Feb 2, 2011
Dividend-paying stocks offer better long-term protection against rising prices compared with government debt, whose interest rates are too low.
Davos: Ministers Target Doha Accord by End-2011; Experts Call for ‘Absolute Deadline’
Bridges Weekly Trade News Digest, Volume 15, Number 3 Feb 2, 2011
Trade ministers from two dozen influential WTO member countries on Saturday agreed to push for a breakthrough agreement in the Doha Round negotiations by July, so that the long-struggling trade talks can be wrapped up by the end of the year.
Commodity Price Hikes Could Spark Unrest, Warn Heads of WTO, UNCTAD
Bridges Weekly Trade News Digest, Volume 15, Number 3 Feb 2, 2011
High and volatile prices for key commodities, including food products, could spark unrest in poor countries, warned the heads of the WTO and the UN Conference on Trade and Development (UNCTAD) on Monday.
A Global Growth Bargain
Gordon Brown (Project Syndicate) Feb 3, 2011
Asia's growth confronts the West with unprecedented challenges and opportunities. In order to meet the former and seize the latter, the West needs a global agreement that would raise public investment in Europe and the US while committing China to a significant increase in consumption.
Europe’s Futile Search for Cheaper Money
Daniel Gros (Project Syndicate) Feb 3, 2011
Various forms of common “European bonds” have been proposed recently as a way out of the current euro crisis, with proponents stressing the promise of lower borrowing costs. But this seems to be wishful thinking, because all the proposals would give official debt seniority over private claims, thereby driving up the cost of private financing.
Spain Is Not Greece and Need Not Be Ireland
Mohamed A. El-Erian (PIMCO) Feb 3, 2011
Spain’s success is of acute relevance to the rest of the eurozone. Unlike Greece, Spain does not have a direct public finance crisis. Spain is where Ireland was a couple of years ago, but is clearly keen to avoid Ireland’s experience. To avoid a bad outcome in Spain (and the rest of the eurozone), additional, significant and highly visible progress needs to be made within the next few weeks.
Who’s afraid of the big bad dragon? How Chinese trade boosts European innovation
Nicholas Bloom, Mirko Draca & John Van Reenen (VoxEU) Feb 3, 2011
Chinese exports are often blamed for job losses and firm closures in developed economies. This column tracks the performance of more than half a million manufacturing firms in 12 European countries over the past decade. It finds that competition with Chinese exports is directly responsible for around 15% of technical change and an annual benefit of almost €10 billion in these countries – the wider productivity effects may well be larger.
Future cities need to hand over the keys
Sebastian Mallaby (FT) Feb 3, 2011
Rather than push for reform within a political system, Paul Romer suggests starting afresh from the outside in order to defeat global poverty.
China has much to gain from supporting the euro
Henny Sender (FT) Feb 3, 2011
The country is at the same time diversifying its reserves and winning the gratitude of its beleaguered trading partners.
Germany's economy: Vorsprung durch exports
Economist Feb 3, 2011
Which G7 economy was the best performer of the past decade? And can it keep it up?
Inequality, leverage and crises
Michael Kumhof & Romain Rancière (VoxEU) Feb 4, 2011
Of the many effects of the global crisis, one that has received comparatively little attention is the effect on inequality. This column provides a theoretical framework for understanding the connection between inequality, leverage and financial crises. It shows how rising inequality in a climate of rising consumption can lead the poorer households to increase their leverage, making them especially vulnerable during crises.
How to become better macroeconomists: Leijonhufvud’s new Policy Insight
Richard Baldwin (VoxEU) Feb 4, 2011
The financial crisis and the ensuing recession have prompted reappraisals of macroeconomic theory. This column introduces Policy Insight No 53 arguing that we have landed ourselves in a worse mess than ever. It is time to stop thinking of the macroeconomy as an electrical circuit; we must think of an economy as an “open system” and adapt our methods to the nature of the economy.
The Inequality Wildcard
Kenneth Rogoff (Project Syndicate) Feb 4, 2011
As the dramatic events in North Africa continue to unfold, many outside observers smugly tell themselves that it is all about corruption and political repression. But high unemployment, glaring inequality, and soaring prices for basic commodities are also a huge factor – and look set to roil the developed world as well.
Egypt and the Global Oil Market: Geopolitics Is Back
Matthew Hulbert (Globalist) Feb 4, 2011
The political turmoil in Egypt has helped push oil prices near $100 per barrel. Markets are extraordinarily bad at getting political risk right — and the Egypt crisis is no exception.
Unilateral restructuring, buybacks, and euro swaps: An example
Paolo Manasse (VoxEU) Feb 5, 2011
Recent press reports suggest that Greece and Ireland may be allowed to buy back some of their debt. This column provides an example to show that if the purpose of the restructuring is to reduce the burden of payments for the debtor and to have creditors share the losses, a unilateral partial default or a debt swap would be preferable to a buyback.
Understanding and quantifying contagion
Harald Hau, Sandy Lai & Choong Tze Chua (VoxEU) Feb 5, 2011
Fear of contagion across asset classes is again stalking European sovereign bond markets. This column discusses how shocks to bank stocks spread to non-financial stocks in 2007 and 2008. It finds that equity fire sales by mutual funds had a surprisingly large and devastating effect on the price of non-financial stocks. Could the sale of bonds trigger a similar reaction?
Is the euro rescue succeeding?
Uri Dadush & Bennett Stancil (VoxEU) Feb 6, 2011
The recent fiscal problems in Greece, Ireland, Italy, Portugal, and Spain have left the single currency in need of rescue. But this column argues that this is only part of the problem. Until leaders deal with the core issues – the periphery’s lost competitiveness and misaligned economic structures – Europe’s rescue will ultimately fail.
Made in the USA
Jeff Jacoby (Boston Globe) Feb 6, 2011
US manufacturing still tops China’s by nearly 46 percent.
Europe planning to solve the wrong crisis
Wolfgang Münchau (FT) Feb 6, 2011
Why do we dream about policy co-ordination in a post-crisis world, instead of tackling the problems we already have?
Beijing’s motives are often just pragmatic
Yang Yao (FT) Feb 6, 2011
Strong special interest groups are shaping the way the state acts. The resources drive abroad is a case in point.
Reminder from Egypt: The age of oil isn't going away
Robert Samuelson (WP) Feb 6, 2011
Just what Egypt's crisis will do to the markets is unclear.
Droughts, Floods and Food
Paul Krugman (NYT) Feb 6, 2011
World prices of food are surging, and one major factor is the disruption caused by extreme weather.
Will China Eat Our Technological Lunch?
George Magnus (Globalist) Feb 7, 2011
How China needs to change its educational institutions and patent policies to help foster innovation.
Why Did Economists Not Foresee the Crisis?
Raghuram Rajan (Project SYndicate) Feb 7, 2011
Since failing to predict the global economic crisis, economists have been accused of everything from ideological blindness to outright corruption. These charges deserve to be taken seriously, the true reason could be far more mundane – and thus far more worrisome.
Down with “Emerging Markets”
Jim O'Neill (Project Syndicate) Feb 7, 2011
Many of the countries referred to nowadays as "emerging markets" have already emerged. Each of the BRIC countries – Brazil, Russia, India, and China – along with South Korea, Indonesia, Mexico, and Turkey, accounts for at least 1% of the global economy, and several more "growth economies" are set to emerge in the next 20 years.
The End of the Beginning for the Euro Crisis
Jacob Funk Kirkegaard (PIIE) Feb 7, 2011
The European Union Council, meeting in the first week of February, did not produce the “comprehensive long-term solution” to the eurozone’s debt crisis that some had hoped. Yet, EU leaders did agree on a deadline to produce their version of such a solution at the next Council in late March 2011, and they offered the general policy direction of the content of this long-term package. The EU and eurozone in particular are finally approaching the end of the beginning of the euro crisis, which is gradually being reflected in the calming eurozone financial markets.
Sterling is vulnerable to reversal of fortune
Mansoor Mohi-uddin (FT) Feb 7, 2011
Betting on UK rate increases is dangerous. Rising inflation and low growth should be a hugely unattractive mix for foreign exchange investors.
No One Size Fits All in the Euro Zone
NYT Feb 7, 2011
Chancellor Angela Merkel of Germany is finally playing a role in the euro crisis. But her proposals ask too much and do not offer enough in return.
A Breakthrough on the Reminbi?
C. Fred Bergsten (PIIE) Feb 8, 2011
There are encouraging signs that a breakthrough may have been achieved in the long-running debate over the exchange rate of China’s currency, the renminbi. Its real rate against the dollar is now rising at an annual rate of 10 to 12 percent, which if continued would complete the needed correction of 20 to 30 percent over two to three years, and official US reactions suggest that assurances that the adjustment will continue may have been received. This movement appears to derive from effective US pressure, increasing expressions of concern about the issue from other countries (especially a number of major emerging markets) and, most importantly, changes in economic conditions in China itself.
Deleveraging efforts have stalled too soon
John Plender (FT) Feb 8, 2011
Given that the big creditors, China, Japan and Germany are now tightening policy after loosening in the recession, the imbalance story is back with a vengeance.
Why Egypt Should Worry China
Barry Eichengreen (Project Syndicate) Feb 8, 2011
The revolts in Tunisia and Egypt, and protests elsewhere in the Arab world, largely reflect the fact that the benefits of growth have failed to trickle down to disaffected youth. China, with its armies of unemployed university graduates and poorly treated migrant workers, should take note.
The Health Challenge in Emerging-Market Cities
Shaukat Aziz (Project Syndicate) Feb 8, 2011
Emerging-market countries account for a rapidly growing share of the world’s population and economy. But their governments now face one of the major challenges of the twenty-first century: creating public-health solutions that match the speed and scale of urbanization.
The Politics of Revolutionary Surprise
Timur Kuran (Project Syndicate) Feb 8, 2011
The mechanisms underlying the political unpredictability of mass protest are not unique to the Arab world. Unforeseen uprisings are possible wherever repression keeps people from expressing their political preferences openly.
The Poverty of Dictatorship
Dani Rodrik (Project Syndicate) Feb 9, 2011
If Tunisia’s Zine El Abidine Ben Ali or Egypt's Hosni Mubarak were hoping for political popularity as a reward for economic gains, they must have been sorely disappointed. Their people have just sent a sobering message to China and other authoritarian regimes around the world: don’t count on economic progress to keep you in power forever.
Mexican Proposal for Breaking Doha Deadlock Rejected by US
Bridges Weekly Trade News Digest Volume 15, Number 4 Feb 9, 2011
A Mexican proposal spelling out how WTO members might break the deadlock in the Doha Round of global trade talks through new market-opening and subsidy concessions has been rejected by the US as insufficient.
Trade Preference Schemes, FTAs Become Political Footballs in US Congress
Bridges Weekly Trade News Digest Volume 15, Number 4 Feb 9, 2011
Trade was an issue on which the Obama administration and Congressional Republicans were supposed to be able to cooperate. Instead, little over a month into the new Congress, a number of separate trade-related policies have become hostage to partisan gamesmanship and localised concerns.
The rise of trade in intermediates: Policy implications
Shimelse Ali & Uri Dadush (VoxEU) Feb 9, 2011
Intermediate inputs – the parts and materials imported to make products for consumption domestically and abroad – are a growing force in world trade. This column argues that without better measurement of intermediate imports we run the risk of overestimating the growth effects of exports and severely underestimating the cost of protection and the crucial role that inputs play in enhancing efficiency.
CoCo bonds as a way of preventing risk
Mark Flannery & Enrico Perotti (VoxEU) Feb 9, 2011
Contingent Convertible (CoCo) bonds have been suggested as a way to ensure that banks keep aside enough capital to help them through financial crises. This column proposes a market-triggered CoCo buffer to maintain risk incentives during periods of high leverage. It argues that this will also activate risk information discovery through the market prices of bank securities and increase activism by outside shareholders.
Europe and the Arab World in the 21st Century
J.P. Lehmann (Globalist) Feb 9, 2011
How Europe and the Arab world, by combining their strengths and compensating for each others' weaknesses, can retain an influential role in the 21st century global geography.
Free Trade Foul-Ups
WSJ Feb 9, 2011
Obama and the GOP are muffing a chance for bipartisan deals.
A spluttering Europe has its mojo back
Gerard Errera (FT) Feb 9, 2011
EU governments might be tempted to go it alone. It could have been feasible in the first phase globalisation but not now.
China can navigate rate rises and property risks
Gerard Lyons (FT) Feb 9, 2011
China is not a 'bubble economy', but it is an economy prone to bubbles. There is a big difference.
Foreclosures, house prices, and the real economy
Atif Mian, Amir Sufi & Francesco Trebbi (VoxEU) Feb 10, 2011
Several academics, policymakers, and regulators emphasise the role of foreclosures in the Great Recession and subsequent global crisis. This column provides one of the first attempts to show this empirically. Using micro-level data from all US states, it shows that foreclosures had a significant negative effect on house prices, residential investment, durable consumption – and consequently the real economy.
Chinese puzzle
Antal E Fekete (AT) Feb 10, 2011
Japan, when the largest holder of United States debt, fell in line with US demands that it let its currency appreciate. China, having already erred by following its Asian neighbor as a record debt holder, need not follow it in listening to the siren-song of the American exchange-rate manipulators.
'Let them eat cake'
Hossein Askari and Noureddine Krichene (AT) Feb 10, 2011
Federal Reserve chairman Ben Bernanke believes other nations facing rising food costs "can use their own monetary policy and adjust exchange rates to deal with their inflation problems" - or "rising demand" as he also phrased it. Such contempt ignores the facts of his own behavior and policy.
The False Promise of Green Jobs
Bjørn Lomborg (Project Syndicate) Feb 10, 2011
Investment in alternative energy technologies like solar and wind, we are increasingly being told, promises huge economic payoffs – above all, a freshet of so-called "green jobs." Unfortunately, that promise does not measure up to economic reality.
Toward a More Stable International Monetary System
Dominique Strauss-Kahn (IMF) Feb 10, 2011
The international monetary system is a topic that encompasses a wide range of issues—reserve currencies, exchange rates, capital flows, and the global financial safety net, to name a few. Some are of the view that the current system works well enough. I take a less sanguine view.
Is Egypt Hopeless?
Daniel Henninger (WSJ) Feb 10, 2011
With a third of the population employed by the state, Egypt may be past the tipping point that allows a modern economy to grow.
Now Comes the Global Revolution in Services
Joseph Sternberg (WSJ) Feb 10, 2011
Imagine a Malaysian architect sketching a new office tower for London and a Chinese engineer assessing the soundness of the designs.
Africa's wealth: spread the wealth
Economist Feb 10, 2011
The impressive growth figures of resource-rich African countries are not all good news.
Economics focus: Chilling consequences
Economist Feb 10, 2011
The economic impact of bouts of severe weather is easily exaggerated.
In China, Tentative Steps Toward Global Currency
NYT Feb 10, 2011
Beijing has begun to loosen currency controls, which could strengthen China's influence in financial markets.
Our G-Zero World
Nouriel Roubini (Project Syndicate) Feb 10, 2011
For the first time since the end of World War II, no country or strong alliance of countries has the political will and economic leverage to secure its goals on the global stage. Ours is, in essence a G-Zero world, which may encourage, as in previous historical periods, the ambitious and the aggressive to seek their own advantage.
All aboard for a new two-speed Europe
Philip Stephens (FT) Feb 10, 2011
There is a snag – the German chancellor and French president want to couple only 17 of the Union’s 27 carriages to their refurbished locomotive.
What Somali pirates reveal about the global economy
Matthew Lynn (FT) Feb 10, 2011
These buccaneers can also be viewed as businessmen, who have figured out the way trade is flowing, and how to get their share.
Exchanges jostle to escape the middle
Philip Augar (FT) Feb 10, 2011
Pressure will come from an emerging group of exchange behemoths of which LSE-TMX would be a fringe member at best.
Exchanges race to become one-stop shop
Jeremy Grant (FT) Feb 10, 2011
Regulation and competition are propelling globalisation of exchanges and consolidation is inevitable, but the test is whether nationalist impulses can be set aside.
How biofuels contribute to the food crisis
Tim Searchinger (WP) Feb 11, 2011
Food prices should come down, if we can just limit biofuel growth.
The IMF’s psychodrama: The Independent Evaluation Office report
Biagio Bossone (VoxEU) Feb 11, 2011
In the years leading up to the global crisis, the IMF routinely failed to detect the vulnerabilities that brought the global economy to its knees – even once the turmoil had begun. How could the organisation mandated to oversee international finance stability have been so blind? Here one of the contributors to the Independent Evaluation Office report speaks in his own capacity about the failings of the IMF.
Debt reduction without default?
Daniel Gros & Thomas Mayer (VoxEU) Feb 11, 2011
It is almost a year since commentators began suggesting the idea of a European Monetary Fund. This column, by two of the main proponents, argues that since then the Eurozone has created an emergency funding mechanism, but not a Fund. Europe’s leaders urgently need to take steps towards creating a credible mechanism that can deal with overly indebted countries.
Information technology and economic change: The impact of the printing press
Jeremiah Dittmar (VoxEU) Feb 11, 2011
Despite the revolutionary technological advance of the printing press in the 15th century, there is precious little economic evidence of its benefits. Using data on 200 European cities between 1450 and 1600, this column finds that economic growth was higher by as much as 60 percentage points in cities that adopted the technology.
Pressures on Surplus Countries
John Williamson (PIIE) Feb 11, 2011
The dominant short-term economic problem today is the contrast between the prosperity of most emerging markets/developing countries and the excess capacity in most of the advanced economies (the principal exceptions being Australia and Sweden). No one begrudges the success of the poorer countries in starting to catch up, but they gain nothing (and lose a little, e.g. in aid foregone) by the difficult situation of the developed countries.
Global Monetary Reforms Needed to Tackle Imbalances
IMF Survey Feb 11, 2011
Wide-ranging reform of the international monetary system is still needed to secure a well-balanced and sustainable recovery and help prevent future crises, experts say at a panel discussion at the IMF, adding that global recovery should not be an excuse to put reform on the backburner.
Global: Ending the Inflation Merry-Go-Round
Spyros Andreopoulos (MS GEF) Feb 11, 2011
We believe that coordination to normalise policy in tandem would end the global inflation merry-go-round.
Emerging Markets as Partners, not Rivals
N. Gregory Mankiw (NYT) Feb 12, 2011
Achieving economic prosperity is not like winning a game, and guiding an economy is not like managing a sports team.
How America is doing compared to the rest of the world
William Antholis and Martin Indyk (WP) Feb 13, 2011
In the past month, President Obama has pressed the autocratic president of our most important Arab ally to heed the demands of his people and step down, established a workmanlike relationship with China's president, and delivered a State of the Union address that sought to "win the future." Taken together, these critical events highlight the complexity of America's global leadership dilemma: whether to cooperate or to compete; whether to partner with some autocrats while pressuring others. Over the past three decades, American presidents have found their ability to deal with these dilemmas affected by the shifting balances of relative power in the international system. In the seventh "How We're Doing" Index , experts at the Brookings Institution explored some of the key data behind our leading partners and competitors.
Running for the exit: International banks and crisis transmission
Ralph De Haas & Neeltje van Horen (VoxEU) Feb 13, 2011
Cross-border bank lending fell dramatically during the global crisis, but lending to some countries declined far more severely than to others. Recreating the monthly lending flows of the 118 largest international banks, this column finds that banks with head offices farther away from their customers are less reliable funding sources during a crisis, suggesting that the nationality of foreign banks matters.
Trade liberalisation and lagging regions in South Asia
Pravin Krishna, Devashish Mitra & Asha Sundaram (VoxEU) Feb 13, 2011
Trade liberalisation is often controversial in developing countries. This column argues that uneven exposure to trade across the various regions of South Asia has stifled the poverty-alleviating impact of trade liberalisation. It claims this research underscores the importance of developing ports, transport, and communications infrastructure to help ensure wider access and exposure to international markets and the benefits they can bring.
Arab rulers confront a new world
David Gardner (FT) Feb 13, 2011
Hosni Mubarak’s grey era of a three decades-long state of emergency exposed the limits of economic reform, in a national security state with kleptocratic elites.
Draghi can lead the eurozone out of danger
Wolfgang Münchau (FT) Feb 13, 2011
If the ECB succession turns into a long and bitter fight, it could trigger another damaging loss of confidence
Wall Street's Dead End
Felix Salmon (NYT) Feb 13, 2011
Why the decline of public markets threatens American capitalism.
China's Trade-off
Razeen Sally (WSJ) Feb 13, 2011
It could keep its industrial policies and its slow pace of trade reforms. Or it could become a real global leader.
The Evolving Structure of Global Growth
Michael Spence & Sandile Hlatshwayo (VoxEU) Feb 14, 2011
We are now slightly more than halfway through the century-long process of modernization that started for many of today's developing countries with their emerged from colonialism in the years following World War II. But where is that process taking us, and how can we influence its course?
Poverty Enlightenment: Awareness of poverty over three centuries
Martin Ravallion (VoxEU) Feb 14, 2011
For how long have we cared about poverty? Tracing the number of references to the word “poverty” in books published since 1700, this column shows that there was marked increase between 1740 and 1790, culminating in a “Poverty Enlightenment”. Attention then faded through the 19th and 20th centuries, leaving room for the second Poverty Enlightenment in 1960 – and interest in poverty still rising.
Honduras's Experiment With Free-Market Cities
Mary Anastasia O'Grady (WSJ) Feb 14, 2011
A poor country considers a new way to stimulate private investment.
The Misleading Metaphor of Decline
Joseph Nye (WSJ) Feb 14, 2011
Rome remained dominant for more than three centuries after the apogee of Roman power.
Villages Without Doctors
Tina Rosenburg (NYT) Feb 14, 2011
In poor countries, people with no or little formal medical training are improving the health of entire villages.
Europe’s downpayment on democracy
Catherine Ashton (FT) Feb 14, 2011
The victory of people power is just the start. The European Union now stands ready to help both Egypt and Tunisia.
Britain would have fared better in the euro
Philip Stephens (FT) Feb 14, 2011
The thread linking the multiple mistakes in British economic policymaking in recent decades has been the righteous certainty of those making the wrong decisions.
No free lunches in debt-fuelled bear rally
David Rosenberg (FT) Feb 14, 2011
Investors need courage to avoid jumping on the bandwagon as the bear-market rally winds down.
A Chinese currency win for Obama?
Andrew Leonard (Salon) Feb 14, 2011
If the yuan keeps hitting record highs against the dollar, good things will happen for the U.S. economy
EM capital flows – portfolio equity flows up, bank lending down
Markus Jaeger (DB Research) Feb 14, 2011
Capital flows to EM-30 are forecast to remain at record levels, the recent Middle East related jitters notwithstanding. The stock of potentially fickle non-resident claims has increased tangibly in a number of EM since 2009. While this may increase the magnitude of a potential capital account shock, manageable foreign-currency mismatches will ensure that any sudden reflow of capital will eventually prove largely self-correcting...
The Eurozone According to Merkel
Jean Pisani-Ferry (Project Syndicate) Feb 15, 2011
German Chancellor Angela Merkel did not announce her ideas for eurozone reform in a formal speech or in a statement before her peers, but instead allowed a quickly cobbled-together and telegraphic draft of a non-paper to leak. Despite consternation in Brussels and other EU capitals, the German proposals deserve serious attention.
The Arab World’s Triple Crisis
Nafeez Mosaddeq Ahmed (Project Syndicate) Feb 15, 2011
A mere change of governments will not make Arab countries’ economic problems go away. Indeed, the converging effects of population growth, climate change, and energy depletion are setting the stage for a looming triple crisis in the region.
Europe’s Competitiveness Shell Game
Ann Mettler (Project Syndicate) Feb 15, 2011
Little more than a decade ago, EU leaders unveiled the “Lisbon Agenda,” a policy blueprint to make Europe “the most competitive, knowledge-based economy in the world.” Now, in a desperate effort to save the euro, France and Germany have proposed a “Competitiveness Pact,” which reprises the Lisbon Agenda's fatal flaws.
International macro-finance
Anna Pavlova & Roberto Rigobon (VoxEU) Feb 15, 2011
International macro-finance is a new area of open economy macroeconomics that brings portfolio choice and asset pricing considerations into models of international macroeconomics. This column argues that the recent global crisis illustrates just how important these considerations are. It surveys recent developments in international macro-finance and suggests several promising directions for future research.
Why world needs three global currencies
Fred Bergsten (PIIE) Feb 15, 2011
America must anticipate and begin to build an era in which the euro and the renminbi rival the dollar.
Not the time to meddle with money market funds
Mark Fetting (FT) Feb 15, 2011
Securities and Exchange Commission's plans for reform could create turbulence at a time when market stability is ever more important.
From Tunis to Cairo to Riyadh?
Karen Elliott House (WSJ) Feb 15, 2011
The Saudi royal family is corrupt, infirm, increasingly criticized in social media—and about to face a delicate, perhaps divisive succession process.
Is the World Producing Enough Food?
NYT Feb 15, 2011
Food prices are zooming again for reasons besides bad weather, climate change and global growth.
Asset bubbles: Origins and implications
Alberto Martin & Jaume Ventura (VoxEU) Feb 16, 2011
Modern economies often experience large movements in asset prices that have significant macroeconomic effects. Yet many of these movements in asset prices seem unrelated to economic fundamentals and are often termed “bubbles”. This column explains how recent advances in the theory of rational bubbles can help us to understand these movements in asset prices and their macroeconomic implications.
The fog of currency war
Avinash Persaud (VoxEU) Feb 16, 2011
Criticism of China’s exchange-rate policy continues throughout the US. This column argues that the US is in fact the exchange rate manipulator, due to its ongoing quantitative easing. What the US needs to do for a sustainable turnaround is to learn from other successful economies like China and Germany – not de-rail them.
Structural change in China: Economic development still reliant on industry for now
Philipp Ehmer (DB Research) Feb 16, 2011
The global recession has revealed weaknesses in China’s growth model, which relies on exports and investment as its drivers. By ramping up domestic economic activity it is planned to make the country’s expansion less reliant on global trends. This should benefit precisely the services sectors. The twelfth Five Year Plan is expected to shift the focus of economic policy in this direction. Revaluation of the yuan, higher minimum wages and state investment in the healthcare system could help strengthen the tertiary sector. However, any changes in economic policy are likely to be moderate. Especially in the Special Economic Zones, industry will remain a vital employer. Consumer services should continue to catch up on business-related services. The rising number of people participating in the country’s prosperity, e.g. through higher minimum wages, will fuel consumer demand.
The J-curve hits the Middle East
Ian Bremmer (FT) Feb 16, 2011
The graphical relationship between a country’s stability and its social and political openness, and how Arab countries are moving between the two
There is more to an exchange than a name
John Gapper (FT) Feb 16, 2011
The attraction of a merger for the NYSE is that the merged body would be more a derivatives than a stock exchange, combining Euronext’s Liffe with DB’s Eurex.
WTO: Brazil Proposes Greater Market Opening for Key Farm Products
Bridges Weekly Trade News Digest Volume 15, Number 5 Feb 16, 2011
In a surprise move, Brazil has proposed that market-opening for key farm products such as beef, pork and poultry should go beyond levels currently proposed at the WTO, in return for the greater market access for manufactures sought by the US. However, developed countries appear to have responded coolly to the initiative.
G-11 Talks: Ag-NAMA ‘Exchange Rate’ Still the Problem for WTO’s Doha Round
Bridges Weekly Trade News Digest Volume 15, Number 5 Feb 16, 2011
The “exchange rate” between the depth of concessions on farm subsidies and tariffs and the extent of future market access for manufactures remains the principal sticking point in the long-struggling Doha Round trade talks, officials said following talks among eleven influential WTO members in Geneva.
Fisheries Negotiations Move Ahead as Easter Deadline Looms
Bridges Weekly Trade News Digest Volume 15, Number 5 Feb 16, 2011
Delegates in the WTO’s Negotiating Group on Rules last week actively pushed for compromise on fisheries subsidies disciplines in order to produce a revised draft negotiating text before the Easter deadline. The technically-heavy discussions, which took place from 7-14 February, were widely described as positive and fruitful.
China’s dilemma: Higher inflation or deflation of exportables
Domingo Cavallo & Fernando Díaz (VoxEU) Feb 17, 2011
With growing inflation in China, policymakers are facing tough decisions. This column argues that if the government is to curb inflation without allowing for the deflation of the tradables, it should do so though sector focused policies. Monetary policy is already committed to the objective of preventing deflation of the tradables and to dampen the credit cycle that is behind asset bubbles.
Independently Incompetent
WSJ Feb 17, 2011
Regulators may drive derivatives markets out of the U.S.
Unsettling America
Robert Skidelsky (Project Syndicate) Feb 17, 2011
The idea that the US is a status-quo power is a delusion of international-relations experts. In the short run, of course, the US behaves like an ordinary power – protecting its interests even if this requires supporting unsavory regimes – but America’s long-term goal is to remake the world in its image.
The Green Shoots of the Green Economy
Achim Steiner (Project Syndicate) Feb 17, 2011
Many people may wonder whether the Green Economy is just pleasing jargon or a genuinely new pathway to a low-carbon, resource-efficient, and sustainable twenty-first century. The answer can be found in some of the extraordinary transitions taking place in the electricity and energy sectors around the world.
QE2 Fuels a Global Fury
Mark Thornton (Mises Daily) Feb 17, 2011
The Federal Reserve has been busy the last three months pumping up the money supply by $300 billion dollars, with much more promised in the months ahead. Some of the results have been painfully predictable, others less so.
Asia Faces Risk of Overheating, Needs Quality Growth
IMF Survey Feb 17, 2011
Asia continues to lead the global recovery following the financial crisis, but a top IMF economist has warned that the risks of overheating are emerging within the region.
The buys from Brazil
Central banks: A more complicated game
To end the food crisis, the G20 must keep a promise
A monetary regime for a multipolar world
A pact for Euro-Mediterranean stability
China's passion for property lacks the bubble factor
Global Imbalances: Links to Economic and Financial Stability
Risk and crises: How the models failed and are failing
Deposit insurance without commitment: Wall Street vs. Main Street
Chinese inflation, monetary policy and the dollar peg
Global: The Great Rebalancing
The Looming Food Crisis
Trade preferences: A win-win-win policy
Why the Eurozone rescue fund is large enough
India’s expectations from the G20
More Action Needed for "Right Kind of Recovery"
What does the Arab world do when its water runs out?
A misguided German narrative of the crisis
The birds and the bees, and the big banks
What the renminbi means for US inflation
The End of the Renminbi Regime
Is China the New World Bank?
The Economic Future of Egypt’s Revolution
More Trade, Less Hunger
Sarkozy’s Moment
Is the Food Crisis Real?
Arab spring will not see an economic boom
Europe’s reforms may come at a high price
Brazil may be heading for a subprime crisis
How the financial sector sees technology as its saviour
Geithner’s Gamble
International Monetary System Reform: Will the G-20 Make Significant Progress?
Madman Is Wanted to Fill Euro's Job From Hell
Prepare for a shock from the Middle East
Prepare now for a Saudi oil price shock
Ireland needs help with its debt
BRICs Losing for Second Time in Decade as U.S. Takes Over as Growth Driver
The Federal Reserve Is Causing Turmoil Abroad
Four Fallacies of the Crisis
A Balanced Look at Sino-American Imbalances
What's Behind the Currency War?
Bye-bye, American shipping lines
Stop looking in the rear-view mirror at Japan
G-20 Ministers Compromise on Imbalances, But Real Work Lies Ahead
WTO General Council: Lamy Calls for “Major Acceleration” in Doha Talks
China balks at speeding fine
The $100 Oil Panic
China’s Turning Point
The plenum of German economists on the European debt crisis
The Great Recession: An historical perspective
The 9 billion-people question
Is It Global Weimar?
Swiss central bank discord provides a warning bell
The Food Crisis
Arab Autocracies and US Inflation
Why Europe Needs Automatic Haircuts
The Last Resource Frontier
The eternal capital-inflow dilemma
Bill Clinton's Corn Sense
US will take easy option
The international monetary system: If it ain’t broke, don’t fix it
M&A battalions are not yet out in force
The 10 most systemically risky financial firms in the US
Asia’s Chains that Bind
War, Debt, and Democracy
A three-part plan to tackle the Eurozone debt crisis
Forecasts performing badly: New insights on dynamic stochastic general equilibrium models
Need Versus Greed
Ireland Votes for Stability
Don’t expect autocratic oil to flow smoothly
Don’t wait for the bubble to burst
US will win from Middle East domino effect
Why China Is Nervous About the Arab Uprisings
Economist Feb 17, 2011
Economist Feb 17, 2011
The next president of the world's second-most-important central bank should be Mario Draghi.
Economist Feb 17, 2011
The West's financial crisis has shaken public confidence in its leading central banks. Yet it has also led to an expansion of their duties and powers
Jeffrey Sachs (FT) Feb 17, 2011
Rising prices for commodities are once again haunting the world economy with soaring food and energy prices posing severe economic, political and social risks in developing countries.
Robert Zoellick (FT) Feb 17, 2011
Shifts in monetary regimes have signalled the rise of new political orders. When change is about co-ordination, countries need incentives to avoid a slow degradation of the old order.
Franco Frattini (FT) Feb 17, 2011
Europe can help shape a new order in the Mediterranean region through an ambitious development and stability pact based on substantial economic assistance, political partnership and social inclusion.
Henny Sender (FT) Feb 17, 2011
While Beijing announces the latest edicts in a loud voice, local governments undermine that policy in whispers.
Ben S. Bernanke (FRB) Feb 18, 2011
By facilitating the allocation of the world's savings to the most productive uses, the free flow of capital across national borders confers substantial economic benefits, including the promotion of economic growth. That said, we have seen a number of episodes in which international capital flows have brought with them challenges for macroeconomic adjustment, financial stability, or both.
Jon Danielsson (VoxEU) Feb 18, 2011
Financial models are widely blamed for underestimating and thus mispricing risk prior to the crisis. This column analyses how the models failed and questions their prominent use in the post-crisis reform process. It argues that over-relying on market data and statistical forecasting models has the potential to further destabilise the financial system and increase systemic risk.
Russell Cooper & Hubert Kempf (VoxEU) Feb 18, 2011
Before the surprising 2007 collapse of Northern Rock, it was taken for granted that bank runs were things of the past. But their return and the modifications of deposit insurance schemes lead many to question the credibility of the government’s commitment. What makes a run on a bank? And when should the government intervene? This column provides some answers.
J James Reade & Ulrich Volz (VoxEU) Feb 18, 2011
China is grappling with rising inflation. This column argues that the Chinese government, instead of focusing on micro-managing the economy, should grant its central bank room for further reform of its monetary policy. To make more efficient use of the interest-rate instrument, China's policymakers will need to further loosen the dollar peg.
Alan Taylor & Manoj Pradhan (MS GEF) Feb 18, 2011
The crisis accelerated the ongoing global rebalancing, and we expect it to continue and expect four key trends to assert themselves.
David Dapice (YaleGlobal) Feb 18, 2011
Extreme weather, economic forces of rising demand and speculation threaten global food security.
Ivan Cherkashin, Svetlana Demidova, Hiau Looi Kee & Kala Krishna (VoxEU) Feb 19, 2011
Trade preferences, such as those removing restrictions on Madagascar’s exports to the US, have long been a controversial policy. Some argue that it removes incentives for firms to become more competitive as they simply divert their trade to the preferred market. This column argues using counterfactual simulations that trade preferences can increase trade for the provider country, the receiver country, and other trading partners as well.
Hans-Werner Sinn (VoxEU) Feb 19, 2011
According to their government accounts, Ireland, Portugal, and Spain only need €310 billion. This column argues that analysts calling for a larger fund must have something else in mind, for example, using EU capital to reduce national debt via debt buybacks. While debt buybacks are reasonable, granting EU loans for this purpose is not.
Francis Xavier Rathinam & Parthasarathi Shome (VoxEU) Feb 20, 2011
The world anticipates many things from India over the coming years, but what does India expect from the rest of the world? This column explores India’s immediate and long-term concerns for the G20. It argues that India is focused on achieving a global framework for more inclusive economic growth that encompasses developed and developing countries, as well as emerging markets.
IMF Survey Feb 19, 2011
Speaking at the G-20 meeting in Paris, IMF Managing Director Dominique Strauss-Kahn says stronger policy action is needed to ensure that world sees “the right kind of recovery” that addresses unemployment and inequality. Some emerging markets face the risk of overheating.
John Vidal (Observer) Feb 20, 2011
Water usage in north Africa and the Middle East is unsustainable and shortages are likely to lead to further instability – unless governments take action to solve the impending crisis
Wolfgang Münchau (FT) Feb 20, 2011
While the rest of us are debating how to solve Europe’s crisis, Angela Merkel is solving a crisis in a parallel universe.
Andrew Haldane and Robert May (FT) Feb 20, 2011
Size and complexity increase the chances of cross-contamination of the whole barrel, even if there is only one bad apple.
Raphael Auer (VoxEU) Feb 21, 2011
The low inflation in the US over the past 15 years has a lot to thank cheap Chinese imports for. This column argues that if the US trade deficit is reduced – via either Chinese inflation or a nominal appreciation of the renminbi – the US will miss out on this disinflationary effect. It says that the resulting inflationary impulse could be severe.
George Magnus (Globalist) Feb 21, 2011
What China should do to maintain its rapid economic growth in this decade.
Teresita Cruz-del Rosario & Phillie Wang Runfei (Project Syndicate) Feb 21, 2011
In a world weary of the limited effectiveness of most development programs in curtailing endemic poverty, China’s growing role in countries around the world provides ample opportunity to reconstruct the landscape of economic aid and financing. But reaching that goal requires a plan, and China must play its part in formulating it.
Mark Roe (Project Syndicate) Feb 21, 2011
The question of the day regarding Egypt is whether the country will build a democratic political system or relapse into some form of autocratic regime. But an equally important question – above all for Egyptians, but also for other developing countries (and development experts) – is the economic impact of the outcome.
Pascal Lamy (Project Syndicate) Feb 21, 2011
The recent sharp spike in food prices and growing concerns about food security have sparked anxiety worldwide. But there is a policy prescription available to leaders today that could help alleviate growing supply-side pressure: more trade.
Howard Davies (Project Syndicate) Feb 21, 2011
The international system of financial regulation remains a spider’s web of committees, councils, and agencies with overlapping responsibilities, unrepresentative memberships, and inadequate enforcement powers. President Nicolas Sarkozy of France, which chairs the G-20 this year, should push for a modicum of global coordination and consistency.
John Berthelsen (Asia Sentinel) Feb 21, 2011
Or is it another bout of government panic and market manipulation?
Arvind Subramanian (FT) Feb 21, 2011
Even if the Arab regimes fall, the seemingly unstoppable forces of protest will quickly run up against an immovable object.
Axel Weber (FT) Feb 21, 2011
In terms of future crisis prevention, it will be essential to set the correct incentives for stability-oriented policies in member countries.
Paul Marshall (FT) Feb 21, 2011
Credit is being pushed to consumers who ultimately won't be able to service it.
Francesco Guerrera (FT) Feb 21, 2011
If financial groups can automate functions carried out by humans, their cost base will shrink, bolstering profits and pleasing investors.
Simon Johnson (Project Syndicate) Feb 22, 2011
Timothy Geithner, the US Treasury secretary, recently laid out his view of the nature of world economic growth and the role of the US financial sector. It is a deeply disturbing vision, one that amounts to a huge, uninformed gamble with the future of the American economy.
Edwin M. Truman (PIIE) Feb 22, 2011
President Sarkozy of France, current head of the G-20, has slipped comfortably into France's traditional role of calling for fundamental reform of the international monetary system (IMS). On February 19, the G-20 finance ministers and central bank governors met in Paris and dutifully laid out a work program "aimed at strengthening the functioning of the IMS." Will France and the G-20 be able to deliver more IMS reform than in previous efforts over the past four decades? The probable answer is no. At best, one can hope for a dialogue in sufficient depth that it will produce modest evolution, but fundamental IMS reform is likely to remain out of reach.
Matthew Lynn (Bloomberg) Feb 22, 2011
It comes with a nice office and a grand title. You would probably have a pretty generous expense account. And there may well be a lucrative consulting gig with Goldman Sachs Group Inc. when it is all over.
Mohamed El-Erian (FT) Feb 22, 2011
In the short term at least, turmoil in Libya and sectarian tensions in Bahrain are bad news for the global economy.
Michael Levi (FT) Feb 22, 2011
Oil demand is shifting to Asia, so responsibility for responding to shocks must now move with it,although no one really knows how the China will to respond to current dramas in the Middle East.
Martin Wolf (FT) Feb 22, 2011
Immediate changes must be made to the behaviour of private investors and lenders if the country is to find a way out of this calamity.
Lynn Thomasson and Inyoung Hwang (Bloomberg) Feb 22, 2011
Stocks in developed countries are rising the most since 1998 while emerging markets slump, a sign the U.S. is returning to its role as the engine of world growth aided by a recovery in Europe.
George Melloan (WSJ) Feb 23, 2011
Few protesters in the Middle East connect rising food prices to U.S. monetary policy. But central bankers do.
Jagdish Bhagwati (Project Syndicate) Feb 23, 2011
The current twin crises in finance and the real economy, what Americans call Wall Street and Main Street, and the interminable discussions about financial reform and the prospects for economic recovery, have spawned several fallacies. They need to be addressed and dismissed, lest we absorb the wrong lessons.
Yu Yongding (Project Syndicate) Feb 23, 2011
In the long run, America’s growth pattern must undergo a structural shift from reliance on debt and consumption to an economy driven by America’s ability to innovate and create. But in the short run, the US current-account deficit will remain, regardless of which country runs bilateral surpluses.
Antony P. Mueller (Mises Daily) Feb 23, 2011
In September 2010, a short time before the international financial summit of the Group of Twenty (G20) took place in South Korea, Brazilian finance minister Guido Mantega declared that the world is experiencing a "currency war" where "devaluing currencies artificially is a global strategy."
John Gapper (FT) Feb 23, 2011
There are few such clear examples of an entire industry being blighted by trade protectionism as the US merchant marine fleet.
Peter Tasker (FT) Feb 23, 2011
The de-bubbling process means Tokyo-listed stocks are no longer expensive.
Bridges Weekly Trade News Digest, Volume 15, Number 6 Feb 23, 2011
Finance ministers and central bankers from the Group of 20 leading economies agreed over the weekend on a set of indicators to use for identifying dangerous global financial imbalances, in what is intended to be a step towards the G-20’s goal of putting the world economy on sounder footing.
Bridges Weekly Trade News Digest, Volume 15, Number 6 Feb 23, 2011
“A major acceleration” in the Doha Round negotiations is necessary if WTO members are to meet their goal of striking a multilateral trade deal by the end of the year, Director-General Pascal Lamy told delegates on Tuesday.
Francesco Sisci (AT) Feb 24, 2011
After the Group of 20 summit in Paris last week seemed intent on imposing a speeding fine on China for breakneck economic growth and its resistance last year to demands to help address global imbalances, political solitude is perhaps Beijing's greatest risk. American proposals for a new bomber able to penetrate China's air defenses add to the price of hubris.
WSJ Feb 24, 2011
A Libya premium on top of the Bernanke premium.
Stephen S. Roach (Project Syndicate) Feb 24, 2011
China’s new five-year plan, the 12th since the revolution, plans to shift the economy from exports to domestic consumption. It is likely to prove the most monumental plan since Deng Xiaoping opened the economy 30 years ago, not only for China, but for Asia and the world as well.
Andreas Haufler, Bernd Lucke, Monika Merz & Wolfram F Richter (VoxEU) Feb 24, 2011
The European rescue fund is steeped in controversy. This column argues that both the fund and the case to keep it permanently are unjustified. It says that they create the wrong incentives and that they will only further intensify the debt crisis in Europe, at the risk of undermining the foundations of the EU itself. It calls on the German government to act.
Nicholas Crafts (VoxEU) Feb 24, 2011
What started as a subprime crisis in the US soon spread to a global crisis resulting in what some have called the Great Recession. This column argues that economists spectacularly failed to take the prevention of financial crises seriously. But since then, economists have heeded the lessons from past crises and have helped avoid the worst.
John Parker (Economist) Feb 24, 2011
The world’s population will grow from almost 7 billion now to over 9 billion in 2050. Will there be enough food to go round?
Christopher Whalen (Globalist) Feb 24, 2011
Rather than deficit spending, why must debt restructuring and reduction occur for the West's economies to truly recover?
Gillian Tett (FT) Feb 24, 2011
In normal times, investors spend little time contemplating the political status of the Swiss National Bank. Now, however, they should
NYT Feb 24, 2011
As food prices soar, threatening developing countries with mass hunger, G-20 nations are breaking their promises to help.
Michael Pento (Forbes) Feb 24, 2011
Civil revolt is currently spreading across the Arab world.
Hans-Werner Sinn (Project Syndicate) Feb 25, 2011
Having agreed to double the European Financial Stability Facility's capacity to lend to distressed eurozone members, EU countries are now mulling how the EFSF’s funds will be made available. The crucial issue is the extent to which creditors will have to participate in rescue measures by accepting “haircuts” – that is, partial losses on their claims.
Paul Collier (Project Syndicate) Feb 25, 2011
Too often in Africa’s history, money that should have financed productive investment has been looted or squandered. The challenge now is to prevent the continent’s sad history of exploitation from repeating itself during the coming era of massive resource extraction.
Carmen M Reinhart & Vincent Reinhart (VoxEU) Feb 25, 2011
Sudden stops and reversals in capital flows are the stuff of policymakers’ nightmares. This column builds on the last 20 years of research and argues that the capital-inflow dilemma is not an external problem – it is an eternal one.
WSJ Feb 25, 2011
The former President connects ethanol to rising food prices.
Hossein Askari and Noureddine Krichene (AT) Feb 25, 2011
Political compromise to resolve the crises facing the United States is unlikely, leaving inflationary financing of deficits the only way out. The future is looking more ominous by the day, with international recrimination ahead.
Uri Dadush & Vera Eidelman (VoxEU) Feb 26, 2011
Reform of the international monetary system tops France’s agenda as G20 chair. But what is it about the international monetary system that needs to change? This column says that the exchange-rate system is in relatively good shape.
Tony Jackson (FT) Feb 27, 2011
There are specific problems to which M&A might seem a solution and most of them are now present, as some industries shrink and other expand rapidly
Viral Acharya, Thomas F. Cooley, Robert Engle & Matthew Richardson (VoxEU) Feb 27, 2011
As part of the US policy response to the global crisis, the Dodd-Frank Financial Reform Act calls for regulators to identify systemically risky financial firms – the sort that took the US financial crisis global. But how to identify these firms remains unclear. Some claim the task is impossible. This column begs to differ and names the 10 most systemically risky financial firms in the US.
Yuriko Koike (Project Syndicate) Feb 28, 2011
Asia’s vast production networks are at the heart of Asia’s booming growth. Three changes in China may auger significant changes in how these networks invest and function in the years ahead. To manage Asia’s growing economic integration, its nations need greater coordination of monetary and fiscal policies, with leaders focusing as much on the regional good as well as individual national interests.
John Ferejohn & Frances Rosenbluth (Project Syndicate) Feb 28, 2011
Modern democracy, with its mix of universal suffrage and property rights, reflects a compromise born of centuries of military competition among states, according to which the public supplies the manpower to fight and moneyed interests supply the capital to train and equip the troops. But the US government is no longer bound by that deal.
Zsolt Darvas, Jean Pisani-Ferry & André Sapir (VoxEU) Feb 28, 2011
It is well over a year since concerns over debt sustainability in Greece began spilling out to the rest of the Eurozone. The crisis continues. This column presents a three-part plan aiming to clean up the banks, reduce Greece’s public debt, and foster growth in the peripheral economies.
Rochelle M Edge & Refet S. Gürkaynak (VoxEU) Feb 28, 2011
Studies have shown that the forecasts from dynamic stochastic general equilibrium models perform better than central banks' judgemental forecasts as well as forecasts based on statistical analysis but without a theoretical foundation. This column shows that performing better is hardly good performance given how badly all three forecasts compare with reality.
Jeffrey D. Sachs (Project Syndicate) Feb 28, 2011
India’s great moral leader Mohandas Gandhi famously said that there is enough on Earth for everybody’s need, but not enough for everybody’s greed. Today, Gandhi’s insight is being put to the test as never before.
Oliver O'Connor (WSJ) Feb 28, 2011
The new coalition won't default on its sovereign debt or raise its corporate tax rate.
Nick Butler (FT) Feb 28, 2011
Facing rising demand, the world is increasingly reliant on oil supplies from countries that are authoritarian or worse.
Peter Peterson (FT) Feb 28, 2011
The longer government debts grow unchecked, the less flexibility policymakers will have in dealing with unexpected challenges.
Scott Minerd (FT) Feb 28, 2011
As the democracy movement spreads across the Middle East, there is a prospect that perceived pressures may push prices to $125 or higher.
Various (NYT) Feb 28, 2011
Is a growing economy enough to keep broader discontent at bay?
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