Peterson Institute Update

Obama Should Give a Qualified Endorsement to Asian Regionalism

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 inconsequential. The United States, Europe, and other regions have an interest in an East Asia that is open to the rest of the world and composed of states at peace with one another. Yet, US policy toward Asia as a region, as distinct from individual states or issues, has been unclear.

RealTime Economic Issues Watch post by C. Randall Henning.

Interview: Can Obama Help Revive Asia-Pacific Economic Cooperation?

Jeffrey J. Schott says the Asia-Pacific Economic Cooperation (APEC) forum, which President Obama will attend in Singapore, offers an opportunity for him to try to clarify his intentions to a group that accounts for most world trade.

Speech: A Blueprint for Global Leadership in the 21st Century

The current international economic system was created at the end of World War II with the intention of avoiding a repetition of the Great Depression of the 1930s. Though the system has evolved markedly during recent decades, its basic structure is the same as it was 60 years ago. The systemic shortcomings we have experienced in the recent global economic crisis can be traced to a common cause: the erosion of the political legitimacy of a regime that was created long ago on the basis of a vastly different distribution of economic weight among nations. We cannot expect that a dated global economic order can thrive in the face of a dramatically altered power configuration, which is why C. Fred Bergsten argues in this speech that we must provide a foundation for a viable "blueprint for global leadership in the 21st century."

Speech by C. Fred Bergsten.

Interview: Obama in China: Limited Expectations

Nicholas R. Lardy credits the President with moves to stabilize the relationship with China but expects few breakthroughs when he travels there later in the month.

The Impact of the Financial Crisis on Emerging Asia [pdf]

This paper analyzes how the global financial crisis has impacted emerging Asia and identifies key characteristics that have made these economies more or less vulnerable to a transmission of crises from the advanced economies. After reviewing how economic outcomes in emerging Asia have evolved since the crisis began in the summer of 2007, Morris Goldstein and Daniel Xie review several studies of the effect of financial stress and/or growth slowdown in advanced economies on emerging Asia. They then discuss how emerging Asia is "different" in ways that matter for the contagion of crises, with the emphasis on currency and maturity mismatches, the nature of the region's foreign trade links (product composition, the geographic pattern of trade, and the degree of net export-led growth), financial market integration with the advanced economies, and the scope for implementing countercyclical monetary and fiscal stimulus.

Working Paper by Morris Goldstein and Daniel Xie.

America, Europe, and the New Trade Order [pdf]

Over the last 60 years, the multilateral management of trade through the GATT and subsequently through the WTO has been led by the United States and Europe. Since the turn of the new millennium, however, developing countries have increasingly used their leverage to insist that talks on agriculture receive priority attention, deny the inclusion of investment and competition policy on the negotiating agenda, and block agreement on negotiating modalities for agriculture and nonagricultural market access (NAMA). Cooperation between the United States and the European Union is still essential, but no longer sufficient, for successful multilateral negotiations. Specifically, the "BRICKs" (Brazil, Russia, India, China, and Korea) are likely to be pivotal in directing the course and contributing to the success or failure of the WTO.

Article by Jeffrey J. Schott.

Testimony: The Impact of the Recovery Act on Economic Growth

In his testimony before the Joint Economic Committee of Congress hearing, Simon Johnson lays out the impact of the Recovery Act on economic growth. While the situation in the United States is different from that of Japan in the 1990s, the Japanese experience does suggest that fiscal stimulus is not a useful substitute for confronting financial sector problems head on. Johnson concludes that the United States needs to address the main threats to the recovery that are coming from the financial system and look ahead to fiscal consolidation to stabilize its debt-GDP levels.

Interview: Obama Will Face a Skeptical Asia

Marcus Noland says President Obama's Asia trip, starting November 11, will highlight questions among many in Asia over the administration's leadership on trade and economic and security issues.

New Fiscal Stimulus Is Not Warranted Now

Yesterday morning I testified to a Joint Economic Committee of Congress hearing (update: that link may be fragile; here's the JEC general page). The session discussed the latest GDP numbers, the impact of the fiscal stimulus earlier this year, and whether we need further fiscal expansion of any kind.

RealTime Economic Issues Watch post by Simon Johnson.

Event: The New World Order: The Influence of Asia and Emerging Countries

Gerard Lyons, Standard Chartered Bank, speaks about Asia's role in the new world order.

Event materials available online

The Leader of the CIS Is Lonely and Weak

Russia's relations with its neighbors are worse than ever, and this is particularly true among the former Soviet republics. On October 9, the Commonwealth of Independent States (CIS) held its annual summit in Chisinau. The Nezavisimaya Gazeta headline said it all: "Summit in 30 Minutes. CIS Leaders Had Nothing to Tell One Another."

Op-ed by Anders Åslund.

India: New Letter and Spirit

Never mind that it was a confidential communication. Never mind too that the establishment came down on him and crushed any possibility of his private views translating into public policy. Never mind, in short, that it is back to the status quo with a vengeance. The impact of the leaked letter from Jairam Ramesh, minister of state for the environment, to the prime minister on the terms of India's international engagement was nevertheless seismic with the aftershocks sure to reverberate for some time. The terms of the debate, especially on the tone and possibly also on the substance of India's external entanglements—and not just in the climate change negotiations—have been altered, possibly for good and definitely for the better. Consider in turn the motives, content, and implications.

Op-ed by Arvind Subrmanian.

Is King Euro Naked?

Europeans may find several historical and theoretical reasons why a political government for the euro area would be desirable. But after the global crisis there are technical reasons why it is more than desirable. That conclusion is a necessity in light of three increasingly important aspects of current monetary developments in Europe: (1) the lack of an exchange rate policy; (2) the absence of a European fiscal authority guaranteeing the stability of sovereign bonds; and (3) the collusive relationship developing between the European Central Bank (ECB), the banks, and the national governments hiding the costs to the taxpayers.

RealTime Economic Issues Watch post by Carlo Bastain.