Peterson Institute Press

C. Fred Bergsten to Step Down as Director of Peterson Institute for International Economics

Read the full News Release on the Peterson Institute for International Economics website.

Foreign Direct Investment and Development selected for inclusion on Choice OAT list

Choice has announced the selection of Theodore H. Moran's Foreign direct investment and development: launching a second generation of policy research: avoiding the mistakes of the first, reevaluating policies for developed and developing countries for inclusion in its annual Outstanding Academic Title (OAT) list.

This year's OAT list includes 629 books and electronic resources chosen by the Choice editorial staff from among the 7,263 titles reviewed during the past year.

You can read more about this prestigious award on Choice's website.

FT Review | Sustaining China's Economic Growth After the Global Financial Crisis

"Lardy shines a light on the cracks. His book is a useful corrective to both the triumphalism increasingly heard in Beijing and the predictions of imminent collapse heard abroad..."

Read the full review of Nicholas R. Lardy's book Sustaining China's Economic Growth After the Global Financial Crisis.

Source: Financial Times

Professor J. Bradford Jensen meets with President Obama

January 17, 2012

On Wednesday, January 11, Georgetown University's McDonough School of Business Professor J. Bradford Jensen met with President Obama and Vice President Biden during the "Insourcing American Jobs" forum at the White House. Professor Jensen, corporate executives from a range of companies, members of the Cabinet, and other Senior Administration Officials, discussed the increasing trend of insourcing and ways to encourage companies across the country to insource American jobs to help rebuild the economy.

"While it is good news that American manufacturing is adding jobs, I fear the focus on manufacturing leads policy makers to overlook the potential from trade in services" said Professor Jensen — highlighting a key theme from his book — when reached after the event.

Given the interest by economists in the policy community and within the Administration and media attention surrounding his recent book entitled Global Trade in Services: Fear, Facts, and Offshoring, Professor Jensen was invited to address the issues of global trade in services, offshoring and the U.S. economy.

Over the next few weeks, the President will introduce ways to encourage American companies to increase investments at home as well as new tax proposals that would reward companies for bringing jobs back to the United States while eliminating tax advantages for companies moving jobs overseas.

Source: Georgetown University McDonough School of Business

New Book | Sustaining China's Economic Growth After the Global Financial Crisis

The global financial crisis and ensuing economic downturn has raised many questions concerning the future of global economic growth. Prior to the financial crisis, global growth was characterized by growing imbalances, reflected primarily in large trade surpluses in China, Japan, Germany, and the oil exporting countries and rapidly growing deficits, primarily in the United States. The global crisis raises the question of whether the previous growth model of low consumption, high saving countries such as China is obsolete. Although a strong and rapid policy response beginning in the early fall of 2008 made China the first globally significant economy to come off the bottom and begin to grow more rapidly, critics charged that China's recovery was based on the old growth model, relying primarily on burgeoning investment in the short run and the expectation of a revival of expanding net exports once global recovery gained traction. Critics, however, argued that as government-financed investment inevitably tapered off, the likelihood was that global recovery would not be sufficiently strong for China's exports to resume their former role as a major contributor to China's economic expansion. The prospect, in the eyes of these critics, is that China's growth will inevitably falter. This study examines China's response to the global crisis, the prospects for altering the model of economic growth that dominated the first decade of this century, and the implications for the United States and the global economy of successful Chinese rebalancing. On the first it analyzes the strengths and weaknesses of China's stimulus program. On the second it analyzes the nature of origins of the imbalances in China's economy and the array of policy options that the government has to transition to more consumption-driven growth. On the third successful rebalancing would mean that more rapid growth of consumption would offset the drag on growth from a shrinkage of China's external surplus. Successful rebalancing would mean China would no longer be a source of financing for any ongoing US external deficit. From a global perspective China would no longer be a source of the global economic imbalances that contributed to the recent global financial crisis and great recession.

>> Sustaining China's Economic Growth After the Global Financial Crisis, by Nicholas R. Lardy, is available online for preview and purchase.

US-China Business Council Forecast 2012 | Nicholas R. Lardy speaks at today's event

Nicholas Lardy's talk, entitled "China's Economy in 2012," will occur today at the US—China Business Council as part of the Forecast 2012 program.Lardy is author of the new book Sustaining China's Economic Growth After the Global Financial Crisis.

Source: US—China Business Council

News Release | Michael L. Mussa, Senior Fellow at the Peterson Institute for International Economics and Former IMF Chief Economist, Dies at 67

WASHINGTON—Michael L. Mussa, a renowned international economist who had been a senior fellow at the Peterson Institute for International Economics since 2001, and who was a former chief economist of the International Monetary Fund (IMF), died on January 15. Mussa, who was 67, died of heart failure at George Washington University Hospital in Washington, DC. He served as chief economist at the IMF (1991—2001) and was a member of the Council of Economic Advisers (1986—88) under President Ronald Reagan. Previously he had been a professor of economics at the University of Chicago Business School and at the University of Rochester.

Read full news release.

Assessing the Impact of US Debt to China | Nicholas Lardy at Asia Society tonight

Stephen Bottomley, Senior Executive Vice President and Head of Commercial Banking, HSBC North America, will present introductory and concluding remarks to the panel discussion, where Frederick H. Katayama, Anchor, Thomson Reuters will moderate a conversation with Richard J. Herring, Jacob Safra Professor of International Banking and Professor of Finance, Wharton School, University of Pennsylvania, and Nicholas R. Lardy, Anthony M. Solomon Senior Fellow, Peterson Institute for International Economics.

Program: 6:30 - 8:00 pm

Reception: 8:00 - 9:00 pm

Can't make it to this program? Tune into AsiaSociety.org/Live at 6:30 pm ET for a free live video webcast. Viewers are encouraged to submit questions to moderator@asiasociety.org.

Lardy is author of the new book Sustaining China's Economic Growth After the Global Financial Crisis.

Source: Asia Society

China and India: Right Policy, Wrong Place

by Arvind Subramanian, Peterson Institute for International Economics

Op-ed in the Financial Times

January 9, 2012

Arvind Subramanian is author of Eclipse: Living in the Shadow of China's Economic Dominance.

Is a Chinese economic slump on the horizon? | Washington Post op-ed

What lies in the future for China's economy? Nicholas R. Lardy offers three warning signs of potential economic slump in this compelling op-ed by Robert J. Samuelson in the Washington Post.

Lardy is author of the new book Sustaining China's Economic Growth After the Global Financial Crisis.

Source: The Washington Post | Post Opinions

Nicholas Lardy predicts an economic slowdown in China | Video from The Economist World in 2012 Festival

Nicholas Lardy, senior fellow at the Peterson Institute for International for Economics, delivers his predictions for China in 2012 at The Economist's World in 2012 Festival, on December 3rd 2011 in New York City. His session included Alice Lyman Miller, senior fellow at the Hoover Institution at Stanford University, James Mulvenon, director of the China Division at the Center for Intelligence Research and Analysis, and Carl Walter, co-author of "Red Capitalism: The Fragile Financial Foundation of China's Extraordinary Rise". The discussion was moderated by Tom Easton, US finance editor for The Economist.

Lardy is author of the new book Sustaining China's Economic Growth After the Global Financial Crisis.

Source: The Economist World in 2012

Noland on Bloomberg | Outlook for North Korea Following Kim Jong Il Death

Marcus Noland remarks that the risks to stability in North Korea following Kim Jong-il's death stem from his successor Kim Jong-un's relative weakness; either he may not be able to control the military or, to burnish his own credentials, he may engage in military provocations. Noland is considered a foremost expert on North Korea and is author of Korea after Kim Jong-il and coauthor of Witness to Transformation: Refugee Insights into North Korea.

Marcus Noland on Marketplace Radio | North Korea Will Go about 'Business as Usual'

Marketplace Radio interviews Marcus Noland about the implications of North Korean leader Kim Jong-il's death. Noland is author of Korea after Kim Jong-il.

Is the Kremlin Loosening Its Grip? | The New York Times Room for Debate

Anders Åslund writes a pithy piece about Putin entitled "Democracy Seems Within Reach" for this New York Times debate series.

Click the link to read all responses to the question: Is the Kremlin Loosening Its Grip?

FT op-ed | Leave China out of a trade pact at your peril

Financial Times op-ed written by Aaditya Mattoo of the World Bank and Arvind Subramanian, author of Eclipse: Living in the Shadow of China's Economic Dominance.

Click the link to read the op-ed.

Henry Kissinger praises Subramanian's Eclipse

"Subramanian makes a compelling point, which should receive wide attention" says Henry A. Kissinger of Arvind Subramanian's book Eclipse: Living in the Shadow of China's Economic Dominance. Kissinger is a 1973 Nobel Peace Prize recipient and former secretary of state and national security advisor under Richard Nixon and Gerald Ford. He has written on China and knows the country intimately throughout his work as a US diplomat.

Kindle Edition Available | Global Trade in Services

Global Trade in Services: Fear, Facts, and Offshoring by J. Bradford Jensen is now available for download and purchase in the Amazon Kindle Store.

Elliott on NPR | Will International Sanctions Help Syrians?

Kimberly Ann Elliott, visiting fellow at the Peterson Institute, discusses the new economic sanctions imposed on Syria by the Arab League. Elliott is coauthor of the Peterson Institute's seminal study, Economic Sanctions Reconsidered.

News Release: Foreign Policy Lists Reinhart and Subramanian among World's Top 100 Thinkers

Washington—The Peterson Institute is pleased to announce that Senior Fellows Carmen Reinhart and Arvind Subramanian have been named among Foreign Policy magazine's Top 100 Thinkers of 2011. Reinhart is honored for "raising the alarm about America's debt burden." Subramanian is recognized for "sounding the alarm on China's economic ascendancy."

Read full news release.

Choose your poison | Buttonwood's Notebook

PIIE author Jacob Funk Kirkegaard is quoted in The Economist's Buttonwood's notebook. Kirkegaard is co-editor of a new book entitled Transatlantic Economic Challenges in an Era of Growing Multipolarity, forthcoming in 2012.

China spending big money to avoid Arab spring fever

CNN's Security Clearance quotes Nicholas R. Lardy, China expert and author of the forthcoming PIIE Press book Sustaining China's Economic Growth after the Global Financial Crisis.

PopTech 2011 Popcast | Arvind Subramanian: China's ascendance

Arvind Subramanian explains that China's ascendance is not approaching but already upon us. The country's growing dominance will be more imminent, broader in scope and greater than previously imagined. He asks us to imagine a world with, not the G20, nor even the G2, but the sole G1: the reality is that China will rule the world. What does this mean for an increasingly vulnerable United States?

Source: PopTech

Subramanian is the author of Eclipse: Living in the Shadow of China's Economic Dominance.

Will anyone rescue Europe from its economic crisis?

Robert J. Samuelson, opinion writer at The Washington Post, mentions PIIE author Arvind Subramanian's open letter to IMF Managing Director Christine Lagarde.

Webcast | J. Bradford Jensen at Georgetown University McDonough School of Business

Georgetown University McDonough School of Business Professor of International Business and Economics J. Bradford Jensen will discuss his book Global Trade in Services: Fear, Facts, and Offshoring at a breakfast hosted by the Georgetown Center for Business and Public Policy. The event also will include remarks from Christine Bliss, assistant U.S. trade representative for services and investment.

Jensen's research outlined in Global Trade in Services urges the United States to embrace trade in services and push aggressively for services trade liberalization. The book was published in September 2011 by the Peterson Institute for International Economics, where Jensen also is a senior fellow.

Source: McDonough School of Business

Architecture, Not Autos, Should Be Exports' Future

Read this Wall Street Journal Real Time Economics blog entry to learn about Global Trade in Services: Fear, Facts and Offshoring, the new book by PIIE senior fellow J. Bradford Jensen.

China's Century - Or India's?

TIME special | The Case for China: The Power of Planning

Eclipse: Living in the Shadow of China's Economic Dominance mentioned and author Arvind Subramanian is quoted on what "governance" means in the China-vs.-India context.

New Book: The Arab Economies in a Changing World, Second Edition

Compared to other regions of the world, the Middle East was once unique in its combination of authoritarianism and stultifying stability: No longer. Beginning in Tunisia, a wave of political upheaval has rolled across the region, reaching Egypt, Bahrain, Libya, and other countries caught between rising expectations and their antediluvian political systems, abetted by pan-Arab news channels and social networking media. This book examines the economics of the Middle East, with the aim of identifying changes to economic policy that could address at least the economic component of the challenges facing this part of the globe. The authors analyze the interaction of trade, productivity growth, and the political difficulties that may ensue as these countries move towards greater openness. Relevant comparisons are drawn from the experience of the transition economies and India on potentially successful policies and those likely to exacerbate existing problems. This new second edition contains a new introduction from Mohamed A. El-Erian and a new postscript.

>> The Arab Economies in a Changing World, Second Edition, by Marcus Noland and Howard Pack, is available online for preview and purchase.

Kirkegaard on Diane Rehm Show | Monday at 10:00

New Perils Facing the Eurozone

PIIE author Jacob Kirkegaard will be on the Diane Rehm show Monday in the 10:00 hour to discuss the Eurozone and Greece's impact upon it.

Bloomberg video featuring Arvind Subramanian | China's Role in European Crisis, Potential Rescue

Nov. 3 (Bloomberg) — Arvind Subramanian, a senior fellow at the Peterson Institute for International Economics, and Stephen Leeb, president of Leeb Capital Management and editor of The Complete Investor, talk about China's economy and the European financial crisis. They speak with Adam Johnson and Lisa Murphy on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Subramanian is the author of Eclipse: Living in the Shadow of China's Economic Dominance.

Eclipse now available as NOOK download

China Warily Eyes E.U. Bailout

November 3, 2011

As the G-20 convenes in Cannes Thursday, the European Union's roller-coaster debt crisis tops the agenda. Last week, European leaders asked cash-rich China to back the E.U.'s bailout fund. Some economists saw the request as marking a shift in the global economic order.

Click on the link to hear the short segment, and listen to Arvind Subramanian as he weighs in, building on the thesis of his new book Eclipse: Living in the Shadow of China's Economic Dominance.

Arvind Subramanian | NPR Morning Edition November 3

Arvind Subramanian will appear on NPR's Morning Edition program tomorrow, November 3, 2011. Subramanian is the author of Eclipse: Living in the Shadow of China's Economic Dominance.

Arvind Subramanian on NPR's On Point | November 1st from 10:00 to 11:00 AM EST

Arvind Subramanian will be a guest on NPR's On Point on November 1, 2011 from 10:00 AM — 11:00 AM EST. Subramanian, author of Eclipse: Living in the Shadow of China's Economic Dominance, will discuss the EU looking to China to help bail out its banks. Just click on the link tomorrow at 10:00 AM to listen live!

Why China Should Bail Out Europe

New York Times op-ed by Arvind Subramanian, author of Eclipse: Living in the Shadow of China's Economic Dominance.

Cannes and Cannot: The Need for a Lean G-20 Agenda

This Realtime Economic Issues Watch was written by Arvind Subramanian, author of Eclipse: Living in the Shadow of China's Economic Dominance.

As the G-20 traveling road-show heads to Cannes, the coinage of international summitry risks becoming utterly debased. Restoring relevance to these events requires an agenda that must meet three criteria. The issues must be important, they must be truly international, and there must be some realistic scope for getting agreement on them. At Cannes, only [...]

From American Hegemony to Pax Sinica

Eclipse: Living in the Shadow of China's Economic Dominance

By Arvind Subramanian

Peterson Institute for International Economics, 2011, 236 pages, US $21.95

Review of Eclipse written by Mark L. Clifford, executive director of the Asia Business Council.

Services Can Pace New Export Boom

News Release

Services Can Pace New Export Boom

October 18, 2011

Contact: Katharine Keenan (202) 454-1334

Washington—Policymakers have largely overlooked the export potential of the economy's fast-growing services sector, which could become an abundant source of well-paying jobs for Americans. A new book published by the Peterson Institute for International Economics, Global Trade in Services: Fear, Facts and Offshoring by senior fellow J. Bradford Jensen, lists several misconceptions about the kinds of jobs in that sector. A common belief is that business services such as software, finance, architecture and engineering are niche sectors. However, these jobs account for 25 percent of US workers–more than double those in manufacturing. In the past decade, employment in services has grown by over 20 percent while manufacturing declined by 20 percent.

Another misconception is that services are "bad jobs with low wages." However, in 2007 the average annual income in manufacturing was $46,000; business services was $56,000. Educational differences account for this wage gap. The ratio of workers with a bachelor's and advanced degree in tradable services versus manufacturing is two to one.

Additionally, some experts argue that services are not tradable. Jensen finds that there are more jobs in the tradable business service sector than in the entire manufacturing sector. In addition, some have expressed fears that jobs in tradable services will be lost to overseas competitors. On the contrary, the US consistently runs a trade surplus in services because the United States enjoys many comparative advantages in this sector.

Over the next 25 years, tradable services will be in high demand. The world faces an enormous infrastructure boom that presents a huge opportunity for US firms to increase exports in services. An estimated $40 trillion will be up for grabs, primarily in developing countries as they work to build roads, airports, water systems and residential and commercial buildings. Some of these projects are already underway with skills and expertise provided by US firms. Successes include a $10 billion Lavasa city development project in India, designed by HOK of St. Louis, Missouri and DDG of Baltimore, Maryland; and the $35 billion Songdo International Business District in South Korea, under the direction of Gale International and Kohn Pederson Fox, both New York-based firms.

Despite recent successes, significant hurdles to expansion of services trade persist. Chief among them are policies that restrict incorporation, foreign partnership and ownership, and investment. Other requirements regarding nationality, residency and local presence, and licensing and accreditation for foreigners inhibit expansion. Developing countries are likely to give preferential treatment to locally-based firms because of political pressures. This undercuts their obtaining the highest quality services at the best price and puts foreign firms at a disadvantage. To level the playing field, the United States should, in collaboration with other developed countries, push for further liberalization of trade in services through the General Agreement on Trade in Services and the World Trade Organization's government procurement agreement.

The author concludes that the United States and other developed countries should act quickly or risk missing the opportunities for job creation presented by the coming infrastructure boom. The United States must press developing countries for greater openness in procurement practices, respect for intellectual property rights, simplified licensing procedures, and reduction of other barriers to trade. Meanwhile, developing countries need to recognize their gains from access to the highest quality, most cost effective services available to meet their infrastructure needs.

Global Trade in Services

J. Bradford Jensen

ISBN paper 978-0-88132-601-7

September 2011 | 246 pp. | $25.95

Event: Global Trade in Services: Fear, Facts, and Offshoring

The Peterson Institute for International Economics released its latest study, Global Trade in Services: Fear, Facts, and Offshoring, by J. Bradford Jensen, on October 18, 2011. The book breaks new ground in analyzing the extent to which US services are tradable and fills many of the previous empirical gaps on the size, scope, and potential impact of services trade. It makes a series of bold policy recommendations for the United States to promote access to foreign markets for its services exports, especially since the coming global boom in infrastructure spending will be of historic proportions. The book also addresses fears concerning offshoring of US services activities and finds that they are greatly overstated.

Live video webcast of Eclipse's New York Release | 6:30 PM ET tonight

Arvind Subramanian, author of Eclipse: Living in the Shadow of China's Economic Dominance will be speaking at the Asia Society in New York this evening. Eclipse has been selected by Citi Foundation to be sponsored under their Asian Business Leaders series.

If you are unable to make the program, tune into http://asiasociety.org/live at 6:30pm ET for a free live video webcast. Online viewers are encouraged to send questions to moderator@asiasociety.org.

Martin Wolf reviews Eclipse in the Financial Times

Eclipse Review by Martin Wolf, chief economics commentator, Financial Times

Arvind Subramanian is the author of Eclipse: Living in the Shadow of China's Economic Dominance.

Joseph E. Gagnon op-ed in US News and World Report

For a Serious Impact, Tax Chinese Assets in the United States

Any exchange rate involves two currencies by definition. Congress, and the U.S. government more broadly, undeniably have an interest in any foreign attempt to manipulate the value of the dollar in terms of another currency. So, what action should the US government take in response to China's currency policy?

Read this op-ed by Joseph E. Gagnon, author of Flexible Exchange Rates for a Stable World Economy and The Global Outlook for Government Debt over the Next 25 Years: Implications for the Economy and Public Policy

New Book: Flexible Exchange Rates for a Stable World Economy

Volatile exchange rates and how to manage them are a contentious topic whenever economic policymakers gather in international meetings. This book examines the broad parameters of exchange rate policy in light of both high-powered theory and real-world experience. What are the costs and benefits of flexible versus fixed exchange rates? How much of a role should the exchange rate play in monetary policy? Why don't volatile exchange rates destabilize inflation and output?

The principal finding of this book is that using monetary policy to fight exchange rate volatility, including through the adoption of a fixed exchange rate regime, leads to greater volatility of employment, output, and inflation. In other words, the "cure" for exchange rate volatility is worse than the disease. This finding is demonstrated in economic models, in historical case studies, and in statistical analysis of the data. The book devotes considerable attention to understanding the reasons why volatile exchange rates do not destabilize inflation and output.

The book concludes that many countries would benefit from allowing greater flexibility of their exchange rates in order to target monetary policy at stabilization of their domestic economies. Few, if any, countries would benefit from a move in the opposite direction.

>> Flexible Exchange Rates for a Stable World Economy, by Joseph E. Gagnon with Marc Hinterschweiger, is available online for preview and purchase.

New Book: Eclipse: Living in the Shadow of China's Economic Dominance

In his new book, Arvind Subramanian presents the following possibilities: What if, contrary to common belief, China's economic dominance is a present-day reality rather than a faraway possibility? What if the renminbi's takeover of the dollar as the world's reserve currency is not decades, but mere years, away? And what if the United States's economic pre-eminence is not, as many economists and policymakers would like to believe, in its own hands, but China's to determine?

Subramanian's analysis is based on a new index of economic dominance grounded in a historical perspective. His examination makes use of real-world examples, comparing China's rise with the past hegemonies of Great Britain and the United States. His attempt to quantify and project economic and currency dominance leads him to the conclusion that China's dominance is not only more imminent, but also broader in scope, and much larger in magnitude, than is currently imagined. He explores the profound effect this might have on the United States, as well as on the global financial and trade system. Subramanian concludes with a series of policy proposals for other nations to reconcile China's rise with continued openness in the global economic order, and to insure against China becoming a malign hegemon.

>> Eclipse: Living in the Shadow of China's Economic Dominance , by Arvind Subramanian, is available online for preview and purchase.

New Book: Global Trade in Services: Fear, Facts, and Offshoring

The service sector is large and growing. Additionally, international trade in services is growing rapidly. Yet there is a dearth of empirical research on the size, scope and potential impact of services trade. The underlying source of this gap is well-known—official statistics on the service sector in general, and trade in services in particular, lack the level of detail available for the manufacturing sector in many dimensions.

Because services are such a large and important component of the US economy, understanding the implications of increased trade in services is crucial to the trade liberalization agenda going forward. In this path-breaking book, J. Bradford Jensen conducts primary research using a range of data sources to produce the most detailed and robust portrait available on the size, scope, and potential impact of trade in services on the US economy. Jensen presents new evidence on the prevalence of service firm participation in international trade. He finds that, in spite of US comparative advantage in service activities, service firms' export participation lags manufacturing firms. Jensen evaluates the impediments to services trade and finds evidence that there is considerable room for liberalization—especially among the large, fast-growing developing economies.

The policy recommendations coming out of this path-breaking study are quite clear. The United States should not fear trade in services. It should be pushing aggressively for services trade liberalization. Because other advanced economies have similar comparative advantage in service, the United States should make common cause with the European Union and other advanced economies to encourage the large, fast-growing developing economies to liberalize their service sectors through multilateral negotiations in the General Agreement on Trade in Services and the Government Procurement Agreement. Jensen notes that the coming global infrastructure building boom is of historic proportions and provides an enormous opportunity for US service firms if the proper policies are in place. Increased trade in services might help rebalance the global economy, and both developed and developing economies would benefit from the productivity-enhancing reallocation brought by increased trade in services.

>> Global Trade in Services: Fear, Facts, and Offshoring, by J. Bradford Jensen, is available online for preview and purchase.

Three big thinkers at Davos on the Potomac

Three big thinkers at Davos on the Potomac | Commentary: Provocative ideas about the new economic order

By Barry D. Wood

WASHINGTON (MarketWatch) – A year ago (on this site) I argued that the International Monetary Fund and World Bank had created a Davos on the Potomac by compressing their annual meetings to a single day while instead hosting several days of concurrent seminars on major economic issues. Capitalizing on the presence in Washington of public and private shapers of economic policy from around the world, think tanks have added to the buzz, scheduling some of their weightiest gatherings to coincide with the IMF meeting.

To this reporter, three individuals this September stood out for adding fresh and compelling ideas to the debate on the global economy and financial crisis.The first is Arvind Subramanian, an Indian academic and former staff member of the IMF who for four years has been a fellow at the Peterson Institute for International Economics. Unveiling his provocative book (Eclipse: Living in the Shadow of China's Economic Dominance)at a Peterson gathering on Sept. 23, Subramanian made the case that China is likely to call the shots in the global economy within 10 years. He posits that the Chinese currency will supplant the dollar in trade and as a reserve currency within the decade.

Among the questions he poses is whether the open trading system, which he says China requires, can survive the rise of China without fragmenting and being undermined by protectionist measures.

Subramanian's thesis is that the United States – weighed down by slow growth, a huge debt, an overstretched military and a shrinking middle class - is a declining power like Britain after the Second World War. Or, as Subramanian's friend and colleague Simon Johnson of MIT puts it, "his argument is that China has already surpassed the US in terms of economic dominance – but we have not yet woken up to this new reality."

Martin Wolf, the astute economics commentator at the Financial Times, countered Subramanian, saying it is premature to count the Americans out. "They possess formidable strengths," he said, "including a great capacity to make alliances, a political system that works, and a retained lead in technological innovation." Wolf said it is absurd to think the renminbi will soon be the world's dominant currency...

...Read more to learn about the other "big thinkers": Mohamed El-Erian and Bill Rhodes.

Arvind Subramanian | WSJ Guest Contribution: How to Value a Currency

With the Senate about to take up legislation to penalize China for "manipulating" its currency and keeping it artificially undervalued, we asked Peterson Institute of International Economics economist Arvind Subramanian to explain how calculations of under- and overvaluation are made. Mr. Subramanian is the author of a new book on China's economic future, Eclipse: Living in the Shadow of China's Economic Dominance. In recent Congressional testimony, he said China's currency was about 15% undervalued, citing work by two colleagues at PIIE.

Carmen M. Reinhart Book Release Meeting for A Decade of Debt

The Peterson Institute hosted a meeting on September 27, 2011, to release A Decade of Debt by Carmen M. Reinhart and Kenneth S. Rogoff. Multimedia of this book release meeting is now available.

C-SPAN Video of Arvind Subramanian's Congressional Testimony

September 21, 2011

Video of Joint Economic Committee: US Trade Policy and Offshore Jobs

Witnesses testified about global trade strategy and job creation. Among the topics they addressed were the state of international trade competition, pending free trade agreements with Colombia, South Korea and Panama, as well as Chinese trade practices and policies.

Congressional testimony is given by Arvind Subramanian, author of Eclipse: Living in the Shadow of China's Economic Dominance.

A Muscular Multilateralism to Engage China on Trade

September 21, 2011

Today, Arvind Subramanian gave a testimony before the Joint Economic Committee of the United States Congress. This testimony draws upon his forthcoming book, Eclipse: Living in the Shadow of China's Economic Dominance, his article in Foreign Affairs with Aaditya Mattoo, "From Doha to the Next Bretton Woods" and his forthcoming paper with Mattoo, "A China Round of Trade Negotiations."

The Economist Debates: The Yuan

The ongoing, live debate posed by The Economist is thus: "This house believes that the yuan will be the world's main reserve currency within ten years."

Arvind Subramanian, senior fellow, Peterson Institute for International Economics and Center for Global Development, is defending the motion while Stephen Jen, Managing Partner, SLJ Partners, is against it.

Arvind Subramanian is author of Eclipse: Living in the Shadow of China's Economic Dominance, now available for purchase from PIIE Press.

News Release: PIIE Press Author Carmen M. Reinhart Wins Council on Foreign Relations' Arthur Ross Book Award

WASHINGTON—The Peterson Institute for International Economics is pleased to announce that Senior Fellow Carmen M. Reinhart, along with her coauthor Kenneth S. Rogoff, have won the Council on Foreign Relations' tenth annual Arthur Ross Book Award for their trailblazing study, This Time is Different: Eight Centuries of Financial Folly. Their provocative study is widely quoted and has increasingly informed the policy discussion surrounding the current financial and economic crisis.

"We at the Institute are enormously proud of Carmen's contribution to the understanding of one of the most critical issues facing the world today and its potential to help guide us out of the crisis," said C. Fred Bergsten, director of the Peterson Institute. Reinhart has been Dennis Weatherstone Senior Fellow since joining the Peterson Institute from the University of Maryland in November 2010.

This Time is Different provides a comprehensive analysis of financial crises of the last 800 years. In each instance, contemporary observers asserted that their particular circumstances were unique, bearing little resemblance to past experiences and therefore suggesting that the old rules no longer applied. Reinhart and Rogoff, who is a professor of economics at Harvard, present evidence to the contrary and powerfully demonstrate remarkable similarities in sovereign defaults, bank failures and other financial disruptions over many centuries. They find the frequency, duration and severity of financial crises to be strikingly consistent. However, they say, a sort of amnesia occurs among policy makers that contributes to their complacency and to the recurrence of crises.

The Arthur Ross Book Award is a prestigious prize for a book on international affairs. It was endowed by Arthur Ross in 2001 to honor nonfiction works, in English or translation, that merit special attention for bringing forth new information that changes the world's understanding of events or problems and leads to new insights that help resolve foreign and economic policy problems. The winner receives $15,000. An award ceremony took place on September 8 in New York.

Carmen M. Reinhart and Kenneth S. Rogoff draw upon their award-winning study This Time is Different in their new book from the Peterson Institute for International Economics Press A Decade of Debt.

The Renminbi's Rise as a Reserve Currency

All the discussion about including the renminbi in the Special Drawings Rights (SDR) basket established by the International Monetary Fund (IMF) is a side-show or distraction with the real action being the conditional imminence of the renminbi's rise. That is not a judgment, just a description of reality.

RealTime post by Arvind Subramanian, author of Eclipse: Living in the Shadow of China's Economic Dominance, available this month.

Coming Soon: When the Renminbi Rules the World

Economic turmoil in the United States and Europe is helping to accelerate a deeper, long term development. After three centuries of economic dominance, the west is about to be eclipsed by a rising Asian power: China. Not only may the Chinese economy soon be larger than America's—if measured in purchasing power—but the renminbi could displace the dollar as the premier reserve currency within the next decade or soon thereafter.

Op-ed by Arvind Subramanian, author of Eclipse: Living in the Shadow of China's Economic Dominance, available this month.

Working Paper 11-14: Renminbi Rules: The Conditional Imminence of the Reserve Currency Transition [pdf]

Against the backdrop of the recent financial crisis and the ongoing rapid changes in the world economy, the fate of the dollar as the premier international reserve currency is under scrutiny. This paper attempts to answer whether the Chinese renminbi will eclipse the dollar, what will be the timing of, and the prerequisites for this transition, and which of the two countries controls the outcome. The key finding, based on analyzing the last 110 years, is that the size of an economy—measured not just in terms of GDP but also trade and the strength of the external financial position—is the fundamental correlate of reserve currency status.

Further, the conventional view that sterling persisted well beyond the strength of the UK economy is overstated. Although the United States overtook the United Kingdom in terms of GDP in the 1870s, it became dominant in a broader sense encompassing trade and finance only at the end of World War I. And since the dollar overtook sterling in the mid-1920s, the lag between currency dominance and economic dominance was about 10 years rather than the 60-plus years traditionally believed. Applying these findings to the current context suggests that the renminbi could become the premier reserve currency by the end of this decade, or early next decade. But China needs to fulfill a number of conditions—making the reniminbi convertible and opening up its financial system to create deep and liquid markets—to realize renminbi preeminence. China seems to be moving steadily in that direction, and renminbi convertibility will proceed apace not least because it offers China's policymakers a political exit out of its mercantilist growth strategy. The United States cannot in any serious way prevent China from moving in that direction.

Working Paper 11-14 by Arvind Subramanian, author of Eclipse: Living in the Shadow of China's Economic Dominance, available this month.

New Book: NAFTA and Climate Change

NAFTA remains a centerpiece of US trade-policy debate, but its provisions have sacrificed environmental concerns for the sake of trade liberalization. This timely volume analyzes the national policies of the United States, Canada, and Mexico; the authors explain how the competing priorities of province, state, or government agendas can slow coordination measures to curtail emissions throughout North America. But, North American cooperation could serve as a model for how developed and developing countries can mutually benefit from an international climate change agreement.

Emission reduction is now inextricably linked with trade and finance measures in this post-Kyoto era. The authors argue that the three NAFTA partners can work together to reduce greenhouse gas emissions while mitigating concerns about trade competitiveness. NAFTA and Climate Change provides a critical assessment of how NAFTA initiatives will contribute to the achievement of important climate-change goals at both regional and global levels. This thorough investigation advances potential solutions, and ideas to develop practical channels for transferring technical and financial assistance from developed to developing countries to reduce greenhouse gas emissions and further economic development.

NAFTA and Climate Change, by Meera Fickling and Jeffrey J. Schott, is now available for preview and purchase online.

Red Dawn | Why the United States should embrace, not fear, China's economic rise

Read Charles Kenny's Foreign Policy article on China's economic ascent which focuses on Arvind Subramanian's new book Eclipse: Living in the Shadow of China's Economic Dominance.

New Book: A Decade of Debt

This book presents evidence that public debts in the advanced economies have surged in recent years to levels not recorded since the end of World War II, surpassing the heights reached during the First World War and the Great Depression. At the same time, private debt levels, particularly those of financial institutions and households, are in uncharted territory and are (in varying degrees) a contingent liability of the public sector in many countries. Historically, high leverage episodes have been associated with slower economic growth and a higher incidence of default or, more generally, restructuring of public and private debts. A more subtle form of debt restructuring in the guise of "financial repression" (which had its heyday during the tightly regulated Bretton Woods system) also importantly facilitated sharper and more rapid debt reduction than would have otherwise been the case from the late 1940s to the 1970s. It is conjectured here that the pressing needs of governments to reduce debt rollover risks and curb rising interest expenditures in light of the substantial debt overhang (combined with the widespread "official aversion" to explicit restructuring) are leading to a revival of financial repression—including more directed lending to government by captive domestic audiences (such as pension funds), explicit or implicit caps on interest rates, and tighter regulation on cross-border capital movements.

>> A Decade of Debt, by Carmen M. Reinhart and Kenneth S. Rogoff, is available for preview and purchase online.

Financial Times Blog Post on Eclipse

"The United States is losing the economic race against China. Within 20 years, the Asian power will be dominant.

What's more, there's nothing much that the US can do about it. It is China, not the US, that will determine the outcome of the race.

So argues Arvind Subramanian...in a new and (it goes without saying) provocative book."

Read The Financial Times piece to learn more about Arvind Subramanian's new book Eclipse: Living in the Shadow of China's Economic Dominance.

Reuters Article on Eclipse | Analysis - China yuan could challenge dollar role in a decade

Alan Wheatley, Global Economics Correspondent for Reuters London, concentrates on Arvind Subramanian's analysis in Subramanian's new book Eclipse: Living in the Shadow of China's Economic Dominance. "Here's a bold prediction to feed Western worries that power is shifting inexorably to the East: China's yuan could overtake the U.S. dollar as the world's principal reserve currency as soon as next decade."