Peterson Institute: RealTime Economic Issues Watch

Dr. Singh of India Comes to Town

Arvind Subramanian — Fri, 20 Nov 2009 18:48:41 +0000

Hard on the heels of his tour of China—a visit that produced mixed results and even more mixed reviews—President Obama welcomes Prime Minister Manmohan Singh to the White House in the first state visit of his presidency. For both Mr. Obama and Dr. Singh, the trip will be important symbolically, politically, [...]

Senator Schumer’s Blowhard Moment?

Jacob Funk Kirkegaard — Wed, 18 Nov 2009 19:12:24 +0000

“American taxpayer dollars should not be used to finance those Chinese jobs.“ Who could disagree with Senator Schumer’s statement, which accompanied his recent call for cancellation of $450 million in federal stimulus funds for a new $1.5 billion wind park in Texas—on the grounds that it [...]

Is the Financial System Condemned to a “Doom Loop”?

Simon Johnson — Wed, 18 Nov 2009 17:01:10 +0000

“Banking on the State” [pdf] by Andrew Haldane and Piergiorgio Alessandri is making waves in official circles. Haldane, executive director for financial stability at the Bank of England, is widely regarded as both a technical expert and as someone who can communicate his points effectively to policymakers. He is obviously [...]

Turbulence Ahead for the City of London

Nicolas Véron — Mon, 16 Nov 2009 21:33:48 +0000

The city of London has been Europe’s dominant financial center since the 18th century, and its prominence has been especially marked in the decade before the current financial crisis. The city has succeeded by combining the intermediation of global financial imbalances, channeling Asian and Middle Eastern savings toward investment products in [...]

Who’s Afraid of a Falling Dollar?

Joseph E. Gagnon — Mon, 16 Nov 2009 14:33:34 +0000

Pundits and policymakers around the world are wringing their hands over the possibility of further declines in the foreign exchange value of the dollar. Predicting exchange rates is notoriously difficult; there is almost as much chance of the dollar rising next year as of it declining. But if the [...]

The Liquidity Trap Does Not Make Monetary Policy Ineffective

Joseph E. Gagnon — Wed, 11 Nov 2009 14:30:47 +0000

With short-term, risk-free interest rates essentially at zero in the major developed economies, conventional monetary policy is in a liquidity trap. As a number of commentators have observed, printing zero-interest-rate money to buy zero-interest-rate assets has no real economic effect because the assets are near-perfect substitutes for money. But does that [...]

No Silver Bullet for “Too Big to Fail”

Edwin M. Truman — Tue, 10 Nov 2009 17:02:19 +0000

Whether to use public money to rescue financial firms because they are too big, too complex, or too interconnected to be allowed to fail is not a new issue. However, in the financial and economic crisis of the last year and a half, the number and nature of such rescues in [...]

Warren Buffett Bets on Growth in Emerging Markets (and Against the Dollar)

Simon Johnson — Mon, 09 Nov 2009 16:33:35 +0000

The G-20 finance ministers and Central Bank governors met over the weekend in St. Andrews, talking about the data they will need to look at in order to monitor each other’s economic performance and sustain growth (seriously). The underlying idea is that if you talk long enough about the US current account deficit and [...]

Obama Should Give a Qualified Endorsement to Asian Regionalism

C. Randall Henning — Fri, 06 Nov 2009 22:11:22 +0000

President Obama’s trip to East Asia over the next two weeks comes at an important time in Asian regionalism. East Asian governments have been moving on several fronts toward regional cooperation and, while some skepticism might be justified, the rest of the world would be wrong to dismiss these developments as [...]

A Merit-Based Selection Process for the World Bank and IMF? Don’t Count on It!

Jacob Funk Kirkegaard — Wed, 04 Nov 2009 22:15:16 +0000

Meeting in London last April, the G-20 leaders declared “that the heads and senior leadership of the international financial institutions [i.e., the World Bank and the International Monetary Fund] should be appointed through an open, transparent, and merit-based selection process [pdf].” When you look at the selection processes for [...]