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If the United States and China step up to the plate with new offers, the momentum for a speedy conclusion of the Doha Round will be unstoppable, say Gary Clyde Hufbauer and Robert Z. Lawrence. Jeffrey J. Schott argues that reviving the Doha Round and limiting new green border measures are the best ways for the G-20 countries to display their commitment to advancing multilateral trade liberalization and stifling protectionism. Policy Brief 10-11. See also new book Figuring Out the Doha Round.

The G-20 must adapt its rebalancing strategy to prevent large eurozone surpluses that threaten global recovery and stability, writes C. Fred Bergsten. While the G-20 has helped the global economy by influencing China to introduce greater exchange rate flexibility, Arvind Subramanian predicts it will have a more difficult time convincing Germany to expand demand for the sake of the global economy.

The Dodd-Frank Financial Reform Bill gives federal regulators the ability to limit the scope of big banks, breaking them up when they become a "grave risk" to financial stability; Simon Johnson advises that regulators will also need political direction in order to make genuine progress.

In shifting to a postcrisis agenda, Gary Clyde Hufbauer, Jacob Funk Kirkegaard, and Woan Foong Wong recommend that G-20 leaders build on their global crisis management success [pdf] by living up to their commitments to promote global trade and reject protectionism.

The IMF and the international community should do more to create normative rules for the appropriate level of reserves in emerging-market and developing countries and develop with its members a code of good practice for prudential capital controls, says Olivier Jeanne. Policy Brief 10-18.

Severe land market distortion, aggravated by capital flows into real estate, is leading to land price increases that contribute to high inflation in India, argues Arvind Subramanian.

If Japan reverses the reforms of the postal system’s banking and insurance units, which were initiated by former prime minister Junichiro Koizumi, it could risk having a formal WTO dispute brought against it. Policy Brief 10-17 by Gary Clyde Hufbauer and Julia Muir. Listen to related interview with Gary Clyde Hufbauer.

The geoeconomic implications of China-Taiwan economic liberalization are significant enough to demand strategic attention from the United States and underscore the importance of securing US economic engagement of the first order in Asia, say Daniel H. Rosen and Zhi Wang. Policy Brief 10-16.

New Book: China's Strategy to Secure Natural Resources: Risks, Dangers, and Opportunities by Theodore H. Moran. In Brief [pdf].

Rising inflation, a 9.7 percent unemployment rate, and retreating home prices push the augmented misery index in the first half of 2010 to double digits, calculate Gary Clyde Hufbauer and Woan Foong Wong.

Peterson Perspectives Interviews

 What the Fed Can Still Do

with Joseph E. Gagnon

 Reviving the Korea-US Free Trade Agreement

with Jeffrey J. Schott | Transcript [pdf]

 Financial Regulatory Reform: B or B-plus

with Morris Goldstein | Transcript [pdf]

Jacob Funk Kirkegaard analyzes Europe’s political grand bargain to tackle the current European economic crisis, concluding that the eurozone remains a secure monetary union. Policy Brief 10-14.

Adam S. Posen argues that large-scale purchases of government bonds or private-sector securities by central banks represent responsible action, not a compromise of their independence from elected officials.

Mohsin S. Khan analyzes the relationship between GDP growth and monetary aggregates in sub-Saharan African economies and finds that credit growth is more closely linked than money growth to real GDP growth. Working Paper 10-11.

The big disequilibrium in the pattern of exchange rates remains the undervaluation of the renminbi and the overvaluation of the dollar, say William R. Cline and John Williamson in their May 2010 update of estimates of fundamental equilibrium exchange rates [FEERs]. Policy Brief 10-15.

Peterson Perspectives: Interviews on Current Issues
Nicholas R. Lardy explains China's nuanced approach to letting the air out of its housing bubble, providing potential lessons for the United States. See also Chinomics: Yes, China Does Need that Infrastructure and The Sustainability of China's Recovery from the Global Recession.
Audio

Anders Åslund believes Russia’s pragmatic new foreign policy, coupled with cooperation with the WTO, will allow Russia to engage with the West.

New Book: Russia after the Global Economic Crisis edited by Anders Åslund, Sergei Guriev, and Andrew Kuchins. In Brief [pdf].

Increased globalization throughout the last six decades has led to an under appreciation of the linkage between trade and finance in the global economy and policymaking [pdf], which Edwin M. Truman warns could lead to increases in barriers and fragmentation.

RealTime Economic Issues Watch:
The Global Financial Crisis

The EU Stress Tests and the Experience in Spain

Angel Ubide

The "Shamed Seven" EU Banks Open Their Books

Jacob Funk Kirkegaard

Europe's Stress Tests: Only One Step Toward Banking Repair

Nicolas Véron

The EU Bank Stress Tests—What Have We Learned?

Jacob Funk Kirkegaard

To understand the means by which goods move across borders, J. Bradford Jensen et al. examine the extent to which US exports and imports flow through wholesalers and retailers versus producing and consuming firms. Working Paper 10-10. See also The Margins of US Trade and Intra-Firm Trade and Product Contractibility.

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Most viewed pages for the past 7 days.

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Op-ed New Imbalances Will Threaten Global Recovery
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Most recently posted material.

RealTime Economic Issues Watch The EU Stress Tests and the Experience in Spain
Angel Ubide — July 29, 2010
In the days following publication by the European Union of the long-awaited stress tests of its banking sector, the market reaction—judged by the evolution of the euro, bank stocks, and peripheral spreads—has looked positive. This makes sense. The hundreds of pages of analysis ...

Op-ed The Kremlin's New Policy in Its Near Abroad
Anders Aslund — July 28, 2010
In August 2008, Russia's relations with its post-Soviet neighbors reached an all-time low in the aftermath of the Russia-Georgia war. Not one single country in the region recognized the independence of Abkhazia and South Ossetia because it would have endangered its own claim to territorial integrity.

RealTime Economic Issues Watch The "Shamed Seven" EU Banks Open Their Books
Jacob Funk Kirkegaard — July 28, 2010
On Monday, July 26, a memorable exercise in market power and the power of persuasion of those who favor financial market transparency took place. It came in the form of the last 7 remaining EU banks out of the total of 91 participating in the stress test reluctantly releasing their indiv ...

Op-ed India's Inflation Puzzle
Arvind Subramanian — July 28, 2010
We may not know the diagnosis but the Reserve Bank of India (RBI) has administered, and has no choice but to administer, the only cure it knows: tighten monetary policy by raising interest rates and squeezing liquidity. Even if the cure works, and especially if it does only partially, it is critical to understand the underlying disease.

RealTime Economic Issues Watch Europe's Stress Tests: Only One Step Toward Banking Repair
Nicolas Véron — July 27, 2010
The European banking stress test results announced on July 23 combined encouraging features with disappointing ones, which explains the paradoxical mix of reactions: Markets rose, even as many analysts denounced what they saw as a sham. Their publication is unlikely to single-handedly bring the ...

Speech Two Years after the Crisis: The Global Economic Agenda
Lael Brainard — July 26, 2010
I'd like to discuss the US policy response to the global financial crisis and what we have learned. Let me make three observations. First, in response to the most globally synchronized recession the world has seen, we have mounted the most globally coordinated response the world has attempted. In April 2009, with the global economy contracting at an annualized rate of 6 percent, huge numbers of people facing the catastrophic loss of jobs and savings, and trade in free fall, President Obama and other G-20 leaders together committed to undertake an unprecedented fiscal expansion amounting to $5 trillion and raising global output by 4 percent.

RealTime Economic Issues Watch The EU Bank Stress Tests—What Have We Learned?
Jacob Funk Kirkegaard — July 26, 2010
On Friday, July 23, the Committee of European Banking Supervisors (CEBS), along with national EU bank regulators and—crucially—most of the affected individual banks, finally released new data to the public regarding the stress testing of the European banking system. ...

Event Two Years after the Crisis: The Global Economic Agenda
Lael Brainard —July 26, 2010
Undersecretary of the Treasury Lael Brainard addressed the topic of "Two Years after the Crisis: The Global Economic Agenda" at an event held July 26, 2010, at the Peterson Institute. The Under Secretary discussed the prospects for maintaining the economic recovery, repairing the global financial system and rebalancing the world economy in light of the latest G-20 meetings and recent international economic developments.

Peterson Perspectives Interview Europe's Stress Tests: Not Reassuring
Morris Goldstein — July 23, 2010
Morris Goldstein finds that the stress tests announced July 23 indicate a reluctance in Europe to admit the seriousness of the banks' difficulties.

Peterson Perspectives Interview European Bank Stress Tests Succeed by Falling Short
Anders Aslund — July 23, 2010
Anders Åslund says the long-awaited stress test results, released July 23, were too easy on the banks but provide useful data that could strengthen the system.

Peterson Perspectives Interview Lessons from China's Housing Bubble
Nicholas R. Lardy — July 23, 2010
Nicholas R. Lardy explains China's nuanced approach to letting the air out of its housing bubble, providing potential lessons for the United States.

Policy Brief 10-19 Revisiting the NAFTA Agenda on Climate Change [pdf]
Jeffrey J. Schott and Meera Fickling — July 22, 2010
The three NAFTA signatories have a shared interest in harmonizing climate change policy, and while they have made steps in that direction, there is still much that can be done to promote renewable energy development and other measures to reduce greenhouse gas emissions. Authors Jeffrey J. Schott and Meera Fickling examine channels for energy and environmental cooperation among the three North American countries in light of limited progress in international climate talks and scaled back energy legislation being vetted in the US Senate. Suggestions include: harmonizing renewable energy standards and trading of renewable electricity credits, improving cross-border transmission capacity between the United States and Mexico, and using NAFTA institutions for data collection and monitoring of regional climate policies and for capacity building in Mexico.

RealTime Economic Issues Watch Time for a Monetary Boost
Joseph E. Gagnon — July 22, 2010
In his testimony [pdf] to the Congress this week, Fed Chairman Ben Bernanke left the door open to further monetary stimulus but made it clear that such action is not ...

RealTime Economic Issues Watch Playing by Berlin's Rules in an Aging Europe
Jacob Funk Kirkegaard — July 21, 2010
This week Ireland became the latest "eurozone peripheral economy" to see its sovereign credit rating downgraded by the credit rating agencies. This ...

Op-ed Detailed Disclosure Is the Key to Stress-Test Success
Nicolas Veron — July 20, 2010
European leaders' agreement to publish stress-test results for the European Union’s most prominent banks is a bold and momentous step that is both indispensable and riddled with risk. Nicolas Véron cautions that the disclosure of results must contain a high level of quantitative detail in order to require regulators to base their conclusions on facts and prevent them from manipulating the numbers. Such transparency will ensure that the stress-testing process is viewed as comprehensive and fair throughout the European Union.