• New
• Featured

Most recently posted material.

North Korea: Witness to Transformation North Korea by Night 2: Cities
Stephan Haggard and Travis Pope — April 24, 2014
In an earlier post, we reported on an initial effort to use luminosity to measure spatial patterns of economic activity in North Korea. As it turns out, we are not alone; see the interesting paper by Yong Suk Lee at Williams on the ...

Op-ed Russia Is in No Economic Shape to Fight a War
Anders Aslund — April 23, 2014
If the Russian National Security Council had invited one of the country's many good economists, it would probably have heard that Russia is in no shape to carry out an aggressive war in Ukraine.

China Economic Watch Will China finally tackle overcapacity?
Ryan Rutkowski — April 22, 2014
Chinese economic growth for the past decade has been categorized by controls on resource and capital price increases, excessive levels of investment, and overcapacity in certain industrial sectors. Policymakers have been concerned with overcapacity since 2005 yet even after a decade of regulatory in ...

RealTime Economic Issues Watch A New ECB Outlook: Part II
Jacob Funk Kirkegaard — April 22, 2014
As argued in Part I of this posting, the European Central Bank (ECB) has tiptoed toward a policy of monetary easing but is unlikely to act quickly. Here I discuss what the ECB might do in the second half of 2014, if the inflationary environment ...

RealTime Economic Issues Watch Can China Achieve Its 7.5 Percent Growth Target?
Li-Gang Liu — April 22, 2014
China announced its first quarter GDP growth in April. The economy slowed to 7.4 percent on a year-over-year basis in the first quarter of 2014, down from 7.7 percent on the same basis in the fourth quarter of 2013, slightly higher than the market expectation of 7.3 percent. Comparing the first q ...

RealTime Economic Issues Watch A New ECB Outlook? Part I
Jacob Funk Kirkegaard — April 21, 2014
The European Central Bank (ECB) seems to be tiptoeing toward further easing of monetary policy in the euro area. Inflation has dropped to just 0.5 percent in March and the pressure for action is increasing. During the biannual financial meetings in Washington, the International Monetary Fund ( ...

Peterson Perspectives Interview Ukraine Stalemate: Is the Geneva Accord a Dead Letter?
Anders Aslund — April 18, 2014
Anders Åslund says the deal reached by US Secretary of State John Kerry is unenforceable and that Vice President Biden should be prepared to announce new sanctions against Russia in Kiev next week.

China Economic Watch China’s Reserves: Parsing the Recent Data and Rhetoric
Kent Troutman — April 17, 2014
As China’s policy regarding continued intervention in its currency market increasingly appears to be reaching an inflection point, we have been closely following the data over the past months in order to ascertain whether there has been a change in this policy. The initial conclusions from the first ...

RealTime Economic Issues Watch Putin Needs Victory
Anders Aslund — April 14, 2014
"All we need is victory regardless of the cost." So runs the refrain in a popular old Soviet film, "The Belarusian Railway Station," about World War II veterans. This line probably explains President Vladimir Putin's policy on Ukraine. The latest developments, including the seizure by Russian ...

Working Paper 14-1 Regime Change, Democracy, and Growth [pdf]
Caroline Freund and Mélise Jaud — April 11, 2014
Economic improvements generally accrue to countries that go through regime change, but not always when the change leads to democratization, according to a new study on the relationship between democracy and growth.

Peterson Perspectives Interview Storming the Opera House in Ukraine
Anders Aslund — April 11, 2014
Anders Åslund says Russia's ham-fisted tactics to destabilize Ukraine have backfired, and Moscow may now turn to tougher steps, including an invasion, to halt the country's progress.

RealTime Economic Issues Watch Time for the United States to Risk Its IMF Veto
Edwin M. Truman — April 11, 2014
Support in the United States for the International Monetary Fund (IMF) is at a new low. The reasons are many and varied, and the IMF is unpopular in many countries, not just among the women and men on the streets, most of whom have never heard of the IMF unless their countries are in crisis, b ...

Op-ed The IMF Should Move Ahead without the United States
C. Fred Bergsten and Edwin M. Truman — April 10, 2014
The International Monetary Fund (IMF), which has its annual spring meetings in Washington this week, is confronting a potentially existential crisis: withdrawal by the United States from active participation in, and leadership of, the world's most important economic institution.

Peterson Perspectives Interview The IMF's Existential Crisis
Edwin M. Truman — April 9, 2014
Edwin M. Truman, elaborating on his proposal jointly offered with C. Fred Bergsten, says the International Monetary Fund should walk away from the United States if Congress fails to support its governance and finance reforms.

News Release Peterson Institute Economists Forecast Modest Growth in Major Economies; Identify Ongoing Risks to Financial Stability Limiting Stimulus and Recovery
April 9, 2014
WASHINGTON—Economists at the Peterson Institute for International Economics are forecasting a generally favorable outlook for the economic prospects of the United States, Western Europe, Japan, China and some but not all other emerging ma ...

• New
• Featured

Economic improvements generally accrue to countries that go through regime change, but not always when the change leads to democratization, according to a new study on the relationship between democracy and growth. Working Paper 14-1 by Caroline Freund and Mélise Jaud.

The failure in mid-January by the US Congress to approve IMF reform legislation halted progress on Fund governance and damaged the US reputation around the world. The administration and the Congress must make every effort to pass this legislation before the early-April meeting of the International Monetary and Financial Committee (IMFC). Policy Brief 14-9 by Edwin M. Truman.

Peterson Perspectives Interviews

The IMF's Existential Crisis

with Edwin M. Truman

Related Event: The IMF: What Is It Good For?

China's Moderate Growth Slowdown

with Nicholas R. Lardy

French Cabinet Shakeup: Old Wine in New Bottles?

with Nicolas Véron

Cathleen Cimino, Gary Clyde Hufbauer, and Jeffrey J. Schott analyze the impact of the widely used local content requirements (LCRs) and recommend a new World Trade Organization code to constrain their use, enhance transparency, expedite dispute resolution, and impose penalties for noncompliance. Policy Brief 14-6.

Caroline Freund finds that the emphasis on small and medium enterprises in the National Export Initiative, while attractive, was misguided and recommends a specific set of policies that the administration should concentrate on to boost exports. Policy Brief 14-7

With the economic recovery incomplete and inflation falling well short of target, the US Federal Reserve needs to be prepared to stop tapering as announced in December 2013 or even reverse course should the forecasted acceleration in real activity show signs of faltering, warns David J. Stockton. See also Five Challenges for Janet Yellen at the Federal Reserve by David J. Stockton.

The crucial international role the Fed played during US Federal Reserve Chairman Ben Bernanke's tenure—a time when domestic economic weakness translated into relatively ineffective American global leadership—should not be overlooked, writes Arvind Subramanian.

Joseph E. Gagnon and Brian Sack propose a new operating framework that will allow the Federal Reserve to conduct monetary policy while maintaining a substantially elevated balance sheet and abundant liquidity in the financial system. Policy Brief 14-4.

Dani Rodrik and Arvind Subramanian argue that emerging markets are not hapless victims of the US Federal Reserve (and other central banks) but merely reaping what they have chosen to sow. Subramanian testifies that the US Federal Reserve's monetary easing policies [pdf], including the bond purchasing program known as quantitative easing, have generally had a positive impact on emerging markets and the global economy.

Simon Johnson testifies that Volcker Rule will likely have a positive impact on job creators and on job creation, and that there are no signs of the dire consequences that large bank holding companies fear. Johnson also testifies that the GAO study on government support for bank holding companies [pdf] has several prominent limitations; perhaps most worrying, the GAO seems to weight all "expert" opinion equally, irrespective of whether the work in question was undertaken by people who work for big banks.

C. Fred Bergsten recommends addressing currency manipulation through trade agreements, starting with adding a currency chapter in the Trans-Pacific Partnership. Policy Brief 14-2.

Jacob Funk Kirkegaard predicts that Europe's relative tranquility in the past year will continue into 2014, but says the risks of complacency have not disappeared.

Arvind Subramanian and Devesh Kapur explain India's obsession with spending and subsidies, to the neglect of taxation and the potential detrimental consequences for democracy and accountability.

India's trade is paradoxically closed in terms of policy but open in terms of outcomes, writes Arvind Subramanian.

The latest estimates of fundamental equilibrium exchange rates (FEERs) shows that exchange rate misalignments have tended to narrow in the past six months despite earlier concerns that prospective tapering in US quantitative easing would wreak havoc in international capital and currency markets. Policy Brief 13-29 by William R. Cline.

New Book: Responding to Financial Crisis: Lessons from Asia Then, the United States and Europe Now
Changyong Rhee and Adam S. Posen, editors
See also: Release Event | News Release