Peterson Institute for International Economics

Archive for May, 2009

  • The Economic Crisis and the Crisis in Economics

    The Economic Crisis The global financial crisis of fall 2008 was unexpected. A few people had been predicting that serious problems were looming, and even fewer had placed bets accordingly, but even they were astounded by what happened in mid-September. What did happen? There are many layers to unpeel, but let me begin with the […]

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  • Ending the Crisis without Starting Another: A “Green” Global Recovery?

    At the G-20 meeting last November, the world’s leading economies agreed to combat global recession with coordinated fiscal stimulus. Given the scale of the challenge—and the amount of money that will be used to address it—economic recovery efforts are monopolizing national legislative agendas and promising to strain state coffers. Policymakers are hoping to direct government […]

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  • Coupled Economies, Decoupled Debates

    In the industrial countries, and the United States in particular, the current financial crisis has raised fundamental questions about capitalism and the so-called Anglo-Saxon version of it that had elevated the status and role of finance. The London-based Financial Times ran a series on the future of capitalism over several months, and many of the […]

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  • World Recession and Recovery: A V or an L?

    Michael Mussa, senior fellow, Peterson Institute for International Economics Paper presented at the fifteenth semiannual meeting on Global Economic Prospects, April 7, 2009. © Peterson Institute for International Economics. All rights reserved. The world economy collapsed into steep recession in the final quarter of 2008 with global real GDP dropping at a 6 percent annual […]

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  • North Korea: Take Away Their Mercedes

    Last September, satellite photos of North Korea revealed construction of a large new missile-launch facility near the Chinese border. Now speculation is growing that Pyongyang may be about to test a multistage rocket, one potentially capable of reaching the US West Coast. South Korean intelligence officials estimate that the launch site is 80 percent complete, and their US counterparts claim the North is moving forward with preparations, including engine tests.

    Should Pyongyang fire its new weapon, it would be just the latest in a recent string of bellicose moves, including abrogation of all military accords with Seoul (which led the South to raise the alert level of its forces). Some pundits see this aggressiveness as an attempt to punish the conservative South Korean government for jettisoning the “sunshine policy” of its predecessors and making further economic aid conditional on North Korean reform. Others see it as a test of the new Obama administration. Still others say it reflects a power struggle in the North—or that it’s a test drive for potential arms buyers like Iran, Syria, and Libya.

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  • A Crisis Calls for a “Crisis Round”

    Protectionism is steadily mounting, but not only through the usual tariffs and quotas and the like. Instead, countries are skirting World Trade Organization rules and erecting new kinds of trade barriers. It’s time to find new solutions to this new problem. Today’s protectionism is wide in scope. It ranges from tariff increases (Korea and Turkey) […]

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  • To Save the Banks We Must Stand Up to the Bankers

    If you hid the name of the country and just showed them the numbers, there is no doubt what old International Monetary Fund hands would say when confronted by the current situation of the United States: Nationalize the banking system. The government has already essentially guaranteed the system’s liabilities, bank assets at market value must […]

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  • A Green Recovery? Assessing US Economic Stimulus and the Prospects for International Coordination

    As the new Congress and President Obama take office, enacting a fiscal stimulus program is at the top of the legislative agenda. Because the size of this program may limit the scope for other legislative priorities and because US consumers’ new-found propensity to save makes government spending a more attractive approach for economic recovery, policymakers […]

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  • Rules for a Bank Bailout

    The United States is failing to handle the horrendous banking crisis. The Treasury and the Federal Reserve have sunk hundreds of billions of dollars into the banking system with no real solution in sight. This cannot continue. The world has endured many large-scale banking crises, and the rules for survival are simple. Chief among them: […]

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  • Temporary Nationalization Is Needed to Save the US Banking System

    Many important US banks are currently in a dangerous halfway house between public and private, fragile and failed. This is unprecedented in scale, but not in situation. The United States faced a very similar problem with our Savings and Loan crisis of the mid-1980s, Japan and Sweden had systemic banking crises during the 1990s, and […]

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