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A website forum in which senior fellows of the Peterson Institute for International Economics discuss and debate their responses to global economic and financial developments as they occur each day and offer insights that others might overlook.
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 [...]
Last weekend’s announcement by China to introduce greater exchange rate flexibility is unambiguously good news. Greater currency flexibility will help China with its domestic overheating problem. But China deserves a lot of credit for its act of responsible international citizenship, for making its contribution to global rebalancing. Two implications follow.
First, [...]
When China decided last weekend to “relax” its dollar exchange rate policy, at least rhetorically, much drama-seeking media attention instead shifted to the next likeliest flashpoint at the coming G-20 Summit, namely the alleged transatlantic crisis over fiscal policies.
On this side, as expressed in his letter to the G-20 leaders, President Obama is “concerned by [...]
The recent turn toward fiscal austerity in Europe in the wake of the Greek crisis has raised serious concerns that it will threaten economic growth and revive global trade imbalances. While fiscal consolidation is unavoidable for the high-deficit, high-debt countries, the cuts made by Germany, whose government deficit is comparatively [...]
The agreement to coordinate global economic strategies was one of the most impressive achievements by the G-20 in Pittsburgh and at the IMF meeting in Istanbul. But without credible agreements on currency policies, that project could turn out to be very vulnerable, or even a Trojan horse allowing politically stronger [...]