EconoMonitor

Peterson Institute for International Economics

Archive for February, 2012

  • An Alternative for Greece: An Incomes Policy to Achieve Internal Devaluation

    The sad fact is that no one outside officialdom (who are duty-bound to talk nonsense when sense is too embarrassing) seems to regard the recent privately held debt write-down and second Greek bailout as likely to offer an exit to Greece from its nightmare, even in the long run. The reason is simple: Greek competitiveness […]

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  • Oops, I Underestimated China’s GDP

    More than a year ago, I argued that China’s GDP in purchasing power parity (PPP) dollars had overtaken that of the United States in 2010. This calculation is used in my book, Eclipse: Living in the Shadow of China’s Economic Dominance and plays a role in my conclusion that China has overtaken or is close […]

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  • China: Capital Account Liberalization and the Corporate Bond Market

    The People’s Bank of China (PBoC) released a report (Chinese language) this week that focused on prospects for capital account liberalization. Opening up the capital account would be a major reform, perhaps the most significant in a more than a decade. It would give Chinese savers an escape hatch from financial repression and force the […]

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  • Brinkmanship in Brussels, Sturm and Drachma for Greece and Europe

    Just as it did when Congress recently extended the payroll tax cut, brinkmanship has produced a deal in Europe to extend a new lifeline to Greece and clear the way for the biggest sovereign bond restructuring in history. Both pieces of the agreement—the privately held Greek debt write-down of more than €100 billion and the […]

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  • China’s Rebalancing Will Not Be Automatic

    The imminent rebalancing of China’s economy has been forecast repeatedly over the past several years. With the shrinking of China’s external surplus during 2011, proponents of this argument have all but declared victory. The decrease of the current account surplus, from 10.1 per cent in 2007 to less than 3 per cent in 2011, is a […]

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  • The Myth of China’s Giant Fiscal Deposits

    There is a recurring notion that pops up every now and then that the Chinese government has a giant rainy day fund. When growth slows but banks are constrained in expanding lending, analysts start to call on China to tap into these reserves to finance fiscal stimulus. Macquarie: “Running down PBC [People’s Bank of China] […]

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  • Europe’s Fiscal Union Still Lacks a Blueprint

    The improvement of euro area market conditions in January can be attributed to several factors, including the progress made by Prime Minister Mario Monti in Italy, and some constructive if Delphic signals coming from Berlin. It also suggests that a lot of bad news was already priced in during December, including a “credit event” on […]

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  • Iran’s Food Supply Gets Pinched

    Washington and Brussels are trying to curb Iranian oil revenue in a bid to convince Tehran to abandon its nuclear weapons program. But it appears financial sanctions imposed by the West are having a more immediate impact on what Iran buys from abroad rather than what it sells. Reports this week suggest Iranian companies are […]

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  • The KORUS Blues

    Setting aside Syria, South Korea may be the only country in the world with politics more polarized than the United States. While in Seoul last week I was reminded of this when the leaders of the political opposition attempted to march on the US embassy to deliver letters addressed to President Obama and Vice President […]

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  • How Euro Brinkmanship Is Beginning to Succeed

    European Union leaders had the umpteenth euro crisis summit at the end of January. Indeed the EU Council meets so often that the descriptions of these gatherings should be changed from “yet another summit” to “back in session.” The slide to near-permanent policymaking has occurred as the EU Council begins to resemble a sitting parliament. […]

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