Peterson Institute: RealTime Economic Issues Watch

Assessing the Tragedy of the Pakistan Floods

Mohsin S. Khan — Thu, 26 Aug 2010 20:06:37 +0000

The floods in Pakistan have affected one-fifth of the country (an area roughly the size of England) and engulfed large parts of all four provinces—Punjab, Balochistan, Sindh, and Khyber Pakhtunkhwa (formerly the North West Frontier Province). The vast scope of the damage makes this a truly national disaster bearing long-term economic [...]

India’s Growth Paradox

Arvind Subramanian — Tue, 17 Aug 2010 20:42:15 +0000

On August 15, India celebrated 63 years of independence. Many hail it as an economic powerhouse but also point to the lopsidedness of its growth. Despite being home to some of the world’s leading technology companies, poverty is still widespread, physical and social infrastructure still woefully inadequate, employment opportunities still [...]

The Sun Is Rising in the East

Anders Aslund — Wed, 11 Aug 2010 21:00:20 +0000

What hand wringing there has been recently on both sides of the Atlantic as the major European economies pursue austerity in their budgets and social programs! But is it not overdone? Europeans and Americans need only look east—to the European Union’s new eastern members—to see that austerity can deliver growth and [...]

The EU Stress Tests and the Experience in Spain

Angel Ubide — Thu, 29 Jul 2010 13:00:50 +0000

In the days following publication by the European Union of the long-awaited stress tests of its banking sector, the market reaction—judged by the evolution of the euro, bank stocks, and peripheral spreads—has looked positive. This makes sense. The hundreds of pages of analysis of the impact of the stress tests [...]

The “Shamed Seven” EU Banks Open Their Books

Jacob Funk Kirkegaard — Wed, 28 Jul 2010 17:53:27 +0000

On Monday, July 26, a memorable exercise in market power and the power of persuasion of those who favor financial market transparency took place. It came in the form of the last 7 remaining EU banks out of the total of 91 participating in the stress test reluctantly releasing [...]

Europe’s Stress Tests: Only One Step Toward Banking Repair

Nicolas Véron — Tue, 27 Jul 2010 20:17:18 +0000

The European banking stress test results announced on July 23 combined encouraging features with disappointing ones, which explains the paradoxical mix of reactions: Markets rose, even as many analysts denounced what they saw as a sham. Their publication is unlikely to single-handedly bring the interbank market back to soundness. But [...]

The EU Bank Stress Tests—What Have We Learned?

Jacob Funk Kirkegaard — Mon, 26 Jul 2010 21:51:06 +0000

On Friday, July 23, the Committee of European Banking Supervisors (CEBS), along with national EU bank regulators and—crucially—most of the affected individual banks, finally released new data to the public regarding the stress testing of the European banking system. What have we learned? Appearances [...]

Time for a Monetary Boost

Joseph E. Gagnon — Thu, 22 Jul 2010 13:42:43 +0000

In his testimony [pdf] to the Congress this week, Fed Chairman Ben Bernanke left the door open to further monetary stimulus but made it clear that such action is not imminent. This reluctance to act may seem puzzling given the widespread view that the economic recovery is too weak. In [...]

Playing by Berlin’s Rules in an Aging Europe

Jacob Funk Kirkegaard — Wed, 21 Jul 2010 15:52:04 +0000

This week Ireland became the latest “eurozone peripheral economy” to see its sovereign credit rating downgraded by the credit rating agencies. This follows similar earlier downgrades of Portugal, Spain, and of course Greece. But this downgrading trend is actually good news for the European economy as a whole and truly [...]

Does Capping Carbon Really Help US Energy Security?

Trevor Houser — Mon, 19 Jul 2010 20:41:21 +0000

In the wake of the Gulf oil spill, Senate Democrats are gearing up to bring an energy bill to the floor next week in the hopes of improving the safety of offshore oil production and beginning to wean the country off fossil fuels. The biggest outstanding question surrounding the draft legislation [...]