An effective US export strategy must focus on four variables: the exchange rate of the dollar, trade agreements, our own export controls, and tax policy, writes C. Fred Bergsten. Jeffrey J. Schott and Bergsten hail USTR ambitions in negotiating a Trans-Pacific Partnership Agreement as an important move in securing US trade and security interests in Asia. See also The Future of APEC and Its Core Agenda.
While some believe that the Doha Round should be abandoned, Gary Clyde Hufbauer, Jeffrey J. Schott, and Woan Foong Wong provide recommendations for improving upon it in ways that could lead to a world GDP gain of up to $282.7 billion a year. See also Finishing Doha: The PIIE Parameters (interview) and Figuring Out the Doha Round (forthcoming book).
As central banks diversifying reserve currencies could precipitate a disorderly depreciation of the dollar, Peter B. Kenen urges reconsidering the benefits as well as the costs of creating a substitution account with the International Monetary Fund. Policy Brief 10-6. Today's international monetary system is not uniquely prone to global current account imbalances [pdf]; it should continue to evolve with the international financial system, but the case for radical reform has not been made, argues Edwin M. Truman.
Peterson Perspectives: Interviews on Current Issues
Morris Goldstein gives the new Dodd proposal a 7.5 rating out of 10, scoring well on resolution authority but less well on pricking future asset bubbles. See also A New US-European Rift on Financial Regulation, Confronting Asset Bubbles, Too Big to Fail, and Beggar-thy-Neighbor Exchange Rate Policies and Finding the Right Tool for Dealing with Asset Price Booms [pdf].
Audio
Simon Johnson testifies before the Senate Budget Committee that although the global economy will probably experience a boom based on prospects in emerging markets, the current global financial structure still carries substantial systemic risks.
While many agree that the US stimulus through tax cuts and spending moderated the Great Recession, Steven R. Weisman observes that there is no current consensus for how to handle the next phase of recovery. Healthcare reform is good fiscal stimulus because it is timely, temporary, and targeted but Adam S. Posen warns it must be paid for before the temporary deficit it creates turns permanent.
Greece and the Eurozone 
The United States should encourage an orderly resolution to problems in Greece and other troubled eurozone countries and press the Europeans to bring in the IMF in an appropriate fashion, write Simon Johnson and Peter Boone. The debate in Germany over contributing to a conditional loan to Greece is misguided; financing overstretched euro area economies is in Germany's own self interest as Germany benefits from a large euro area, says Adam S. Posen. As a country running large-scale surpluses, Germany can show both economic and political commitment by recycling demand within the euro area. See also European Carbon Tax? European Monetary Fund? It Could Be a Marriage Made in Crisis Heaven and Why Rescuing Greece Will Change Europe for Decades.
- Peterson Perspectives Interviews: Greece
- with Angel Ubide
- with Nicolas Véron | Transcript [pdf]
- with Michael Mussa | Transcript [pdf]
- with Carlo Bastasin | Transcript [pdf]
Simon Johnson testifies that China should be pressed harder on its exchange rate policy, including being labeled a “currency manipulator” by Treasury, and that the WTO should be given the authority to treat exchange rate manipulation as an unfair trade practice.
Peterson Perspectives: Interviews on Current Issues
Nicholas R. Lardy says China is concerned but is not "slamming on the brakes" or showing any signs of planning increases in interest rates or the value of its currency.
Audio
In order to see real change in China’s exchange rate policy, Arvind Subramanian advises that more countries, including the silent victims of the policy, put pressure on China to reject its beggar-thy-neighborism.
Climate Change
- After Copenhagen: Two Views
Policy Brief 10-5: Copenhagen, the Accord, and the
- Way Forward | Trevor Houser
- Gary Clyde Hufbauer and Jisun Kim
See also a guide to climate-change laws US and Canadian Climate Legislation by State and Province.
- Recent Books
- Gary Clyde Hufbauer, Steve Charnovitz, and Jisun Kim
- Trevor Houser et al.
- William R. Cline
News Release: Nicholas Lardy Appointed to New Chair in Honor of Anthony M. Solomon
America could look to India’s ability to build good institutions once old ones become dysfunctional as inspiration for the tax reform it so desperately needs to get its fiscal house in order, according to Arvind Subramanian.
Fundamental Equilibrium Exchange Rates
The overvaluation of the dollar has been sharply reduced from March to the end of 2009, and the remaining overvaluation would be completely eliminated if the five East Asian economies with seriously undervalued exchange rates—China, Hong Kong, Malaysia, Taiwan, and Singapore—were to appreciate to equilibrium levels. Policy Brief 10-2 by William R. Cline and John Williamson.
- Peterson Perspectives Interviews: China
- China's Dollar Leverage Is an Exaggerated Threat
- with Joseph E. Gagnon | Transcript [pdf]
- China vs. the Rest of the World?
- with Arvind Subramanian | Transcript [pdf]
- FEERs Update: China's Persistently Undervalued Currency
- with John Williamson | Transcript [pdf]
- A Growing US-China Rift
- with Nicholas R. Lardy | Transcript [pdf]
- See also: China's Rise: Challenges and Opportunities and The Future of China's Exchange Rate Policy
RealTime Economic Issues Watch:
The Global Financial Crisis
Views updated daily on the current crisis in global financial markets, its impact on the real economy, and the public policy choices confronting the United States and other countries.
The global financial crisis has had a profound effect on Gazprom that Anders Åslund says is the best opportunity ever for Russian and European energy reform that will lead Russia to a more normal and open society.
The augmented misery index for the second half of 2009 fell to less than half the stratospheric level recorded in the first half, calculate Gary Clyde Hufbauer and Woan Foong Wong.
Peterson Perspectives: Interviews on Current Issues
Simon Johnson argues that President Obama's proposed bank tax is a step forward but that the financial system is still distorted by flawed incentives.
Audio | Transcript [pdf]
An International Commission of Independent Experts, co-chaired by PIIE Senior Fellow Anders Åslund, proposes a comprehensive reform program for the first year of a new presidency in Ukraine [pdf]. See also Will the New Regime in Ukraine Embrace Reform? (interview) and How Ukraine Became a Market Economy and Democracy (book).
New Book: Reengaging Egypt: Options for US-Egypt Economic Relations by Barbara Kotschwar and Jeffrey J. Schott
North Korea's confiscatory currency reform and ban on the use of foreign currencies are economically misguided policies and will result in the reduction of North Korean citizens' welfare. Policy Brief 10-1 by Stephan Haggard and Marcus Noland. See also North Korea Moves (Further) to the Left (interview) and North Korea's Failed Currency Reform (op-ed).
Jeffrey A. Frankel and Daniel Xie test a synthesis technique to estimate countries' de facto exchange rate regimes and find that real world data require a flexible technique that allows parameters and regimes to shift frequently. Working Paper 10-1
The Putin model of crony state capitalism is dead and President Dmitry Medvedev is chairing the movement that Anders Åslund says is opening Russia’s government up to restructuring.
The budget that Indian Finance Minister Pranab Mukherjee presents to the Indian parliament should address the vulnerabilities of India's public finances and avoid the temptation to engage in fiscal populism, says Arvind Subramanian. Subramanian also suggests Indian policymakers become more activist in relation to capital account policymaking. India should implement a goods and services tax in order to strengthen state capacity and bridge the gap between the economies of India and China.
Most viewed pages for the past 7 days.
Speech
Globalization: The Concept, Causes, and Consequences
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Testimony Crisis and Aftermath: The Economic Outlook and Risks for the US Federal Budget and Debt
Simon Johnson
Article
The Dollar and the Deficits: How Washington Can Prevent the Next Crisis
C. Fred Bergsten
Speech
Drugs, Crime, Money, and Development
Edwin M. Truman
Testimony
China's Lending Activities and the US Debt
Simon Johnson
Policy Brief 10-3
Confronting Asset Bubbles, Too Big to Fail, and Beggar-thy-Neighbor Exchange Rate Policies
Morris Goldstein
Speech
The Global Financial Crisis: Lessons Learned and Challenges for Developing Countries
Edwin M. Truman
RealTime Economic Issues Watch
Another Greek Lesson: As Always Hard But Inspiring
Carlo Bastasin
Op-ed
How Best to Boost US Exports
C. Fred Bergsten
Op-ed
Figuring Out the Doha Round
Gary Clyde Hufbauer, Jeffrey J. Schott, and Woan Foong Wong
Most recently posted material.
Peterson Perspectives Interview
Senator Dodd's Regulatory Reform: A Step Forward
Morris Goldstein — March 15, 2010
Morris Goldstein gives the new Dodd proposal a 7.5 rating out of 10, scoring well on resolution authority but less well on pricking future asset bubbles.
Peterson Perspectives Interview
Germany's Virtuous Economy: How Much Is It to Blame?
Angel Ubide — March 15, 2010
Angel Ubide argues that Germany should rebalance its growth, allow wages to grow, and encourage domestic demand to help countries like Greece, Spain, Portugal, and Italy.
Peterson Perspectives Interview
A New US-European Rift on Financial Regulation
Nicolas Véron — March 15, 2010
Nicolas Véron says that Europe's determination to regulate private equity and hedge funds, which has drawn criticism in Washington, is part of a growing trend toward a "Fortress Europe" mentality in finance.
Peterson Perspectives Interview
Finishing Doha: The PIIE Parameters
Jeffrey J. Schott — March 12, 2010
Jeffrey J. Schott outlines how negotiators could jump-start the global trade talks, raise their ambitions, and produce a package beneficial to all parties.
Peterson Perspectives Interview
Will the New Regime in Ukraine Embrace Reform?
Anders Aslund — March 12, 2010
Anders Åslund, co-chairman of Independent International Experts Commission on Ukraine, says the new government may adopt some of the commission's proposals.
Policy Brief 10-6
The Substitution Account as a First Step Toward Reform of the International Monetary System [pdf]
Peter B. Kenen — March 11, 2010
The creation of a substitution account might be costly to the United States, but the cost could be greatly reduced by adopting a cost-sharing regime or assessing an annual fee on depositors. The United States also must consider the effect of reserve currency diversification by central banks that now hold larger dollar reserves than they need to cope with balance-of-payment problems. Large-scale diversification could cause extremely disorderly depreciation of the dollar. To avoid this, Kenen recommends revisiting the potential costs and benefits of a substitution account lodged in the International Monetary Fund (IMF), which could act as a barrier against further development of a multi-currency reserve system.
RealTime Economic Issues Watch
The Speech for Which We Have Been Waiting
Simon Johnson — March 11, 2010
For nearly two years now we have waited for a speech. We need a simple speech and a direct speech—most of all a political speech—about what exactly happened to our financial system, and therefore to our economy, and what we must do to make sure it can never happen again.
President George W. Bu ...
RealTime Economic Issues Watch
European Carbon Tax? European Monetary Fund? It Could Be a Marriage Made in Crisis Heaven
Jacob Funk Kirkegaard — March 11, 2010
Lacking the policy instruments to deal with Greece and other economic crises, some in Europe have floated the idea of ...
RealTime Economic Issues Watch
Governor Gjedrem's Critique of the G-20: A Response
Edwin M. Truman — March 10, 2010
On February 25, Bank of Norway Governor Svein Gjedrem delivered an interesting and important speech at the Peterson Institute for International Economi ...
Op-ed
Too Much Stimulus or Not Enough?
Steven R. Weisman — March 9, 2010
It was never easy to love the fiscal stimulus. The consensus of many private economists, however, is that its tax cuts and spending have moderated the Great Recession—though perhaps not as much as the Obama administration maintains. With the president now urging Congress to approve a second phase, the argument over the program's worth won't die down soon—certainly not with the midterm elections on the way.
RealTime Economic Issues Watch
Greece, Act III—Athens's Leverage versus Eurozone Solidarity?
Jacob Funk Kirkegaard — March 5, 2010
In the latest phase of its financial melodrama, Greece successfully placed a €5 billion 10-year government bond in the financial markets on Thursday (March 4). The bond issue was heavily ...
RealTime Economic Issues Watch
Treasury's Disappointing Performance on Capitol Hill
Simon Johnson — March 4, 2010
The campaign to convince people that Treasury is serious about banking reform—led sometimes by President Obama—suffered a major blow Thursday on Capitol Hill. In testimony to the Congressional Oversight Panel, Assistant Secretary for Financial Stability and "Counselor to the S ...
Policy Brief 10-5
Copenhagen, the Accord, and the Way Forward [pdf]
Trevor Houser — March 4, 2010
Policymakers and the public had high expectations for the UN climate change summit in Copenhagen last December. Since the international community embarked on a new round of negotiations in Bali in 2007, elections in the United States, Australia, and Japan raised developed countries' climate change ambitions and a number of emerging economies—including China, India, and Brazil—announced their first ever nationwide climate change targets. Yet while political will to tackle climate change appeared to be building, international climate change negotiations were failing to deliver. The UN process launched in Bali struggled for two years to reach agreement on even the most basic issues between the Parties to the UN Framework Convention on Climate Change (UNFCCC). These two trends collided in Copenhagen, when ministers and heads of state arrived to find a negotiation process in disarray and no consensus text on the table. An eleventh-hour diplomatic flurry by leaders of a diverse and representative set of countries produced a political accord addressing the core issues of the negotiations. While attracting broad support among the 192 Parties to the UNFCCC, the accord did not receive unanimous approval. Instead, the UN "took note" of the agreement.
Policy Brief 10-4
After the Flop in Copenhagen [pdf]
Gary Clyde Hufbauer and Jisun Kim — March 4, 2010
Despite high drama, the United Nations Framework Convention on Climate Change (UNFCCC) conference in Copenhagen ended as a flop. During chaotic negotiations and fundamental disagreements surrounding the formation of a post-Kyoto deal, five heads of state got together on the last day of negotiations in an attempt to salvage the conference with a document that would later be called the Copenhagen Accord. The United States, Brazil, South Africa, India, and China led a group of 20 supporting countries to craft the Copenhagen Accord, which was criticized because it was crafted behind closed doors and it did not commit major emitting countries to much in terms of emission reductions, finance, or technology transfer. The members of the UNFCCC agreed to "take note of" the Accord: Some leaders characterized this as a meaningful first step toward a future climate treaty, but many observers characterized the Accord as a failure because it is nonbinding and vague.
RealTime Economic Issues Watch
Why Rescuing Greece Will Change Europe for Decades
Carlo Bastasin — March 3, 2010
In the next few days, Greece's Prime Minister, George Papandreou, will meet Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France in what will likely become the defining moment for a crisis that is shaking Europe. What they decide is also likely to shape the future of th ...
