Roubini Topic Archive: Monetary Policy and Inflation
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.
Edited transcript, recorded March 15, 2010.
by Simon Johnson, Peterson Institute for International Economics and Peter Boone, Effective Intervention
Op-ed in the Wall Street Journal
February 13, 2010
Plutus, the Greek god of wealth, did not have an easy life. As the myth goes, Plutus wanted to grant riches only to the “the just, the wise, the men of ordered life.” Zeus blinded him out of jealousy of mankind (and envy of the good), leaving Plutus to indiscriminately distribute his favors.
Modern-day Greece may be just and wise, but it certainly has not had an ordered life. As a result, the great opportunity and wealth bestowed by European integration has been largely squandered. And lower interest rates over the past decade—brought down to German levels through Greece being allowed, rather generously, into the eurozone—led to little more than further deficits and a dangerous buildup of government debt.
In his speech at the American Economic Association on Sunday, Ben Bernanke, chairman of the Fed, said that monetary policy played at most a small role in the US housing bubble and that financial regulatory policy is the appropriate tool for preventing harmful asset price bubbles in the future. I agree with these conclusions, but I suspect that many do not, even within the world of central banking.
Main Points The world economy is experiencing a modest recovery after near financial collapse this spring. The strength of the recovery varies sharply around the world: In Asia, real GDP growth is returning quickly to precrisis levels and while there may be some permanent GDP loss, the real economy appears to be clearly back on […]
Op-ed in the Moscow Times: It cannot be denied: Exchange rate policy around the world is confused and lacks theoretical ground. Although the degree of confusion varies, Russia is close to taking the prize. Before World War I, it was easy. Just about everybody used the gold standard, and if any country faced too high […]