Why the jobs problem is not going away
Richard Dobbs, Anu Madgavkar 19 September 2012
Unemployment in the US and UK is over 8% and in many Eurozone countries is far higher. This column argues that we can’t just blame the recession – this is also symptomatic of long-term trends that, without a concerted effort by policymakers, will continue to stunt growth, deepen income inequality, weigh on public budgets, and cause living standards in many countries to stagnate.
Three years after the official end of the 'Great Recession', millions of workers across advanced economies remain unemployed. The US and UK unemployment rates remain above 8%; among Eurozone countries, unemployment exceeds 10% (US Bureau of Labor Statistics).
Global economy Labour markets
US, Labour Markets, UK, global economy
Quota formula reform is about IMF credibility
Arvind Virmani 22 June 2012
Looking at the economic and business media over the past few months you can be forgiven for thinking there are no other problems with the world economy. This column argues that we need to remind ourselves of the need to reform the IMF, lest the ‘International’ part will lose all credibility.
The Eurozone crisis has overwhelmed all other debates about the reform and development of global governance institutions dealing with the world economy . It is therefore necessary to remind ourselves why we need a reform of the IMF quota formula. The quota formula determines the both the quota contribution and the vote share of the members of the IMF (except for the basic vote which is assigned equally to all members and therefore favors the smaller members).
Global economy Global governance
IMF, global economy
The first global recession in decades
Jean Imbs 10 November 2010
What makes the global crisis global? This column argues that the interdependence of the global economy, brought about by financial linkages between developed countries as well as goods trade ties with developing countries, has made the global crisis the first global recession in decades.
The current turmoil is often argued to have had unprecedented global consequences (see Sugawara et al. 2010 for example). It is perhaps the severity of the universal consequences of a US-based shock, rather than the recession itself, that has drawn comparisons with the Great Depression (see also on this site Eichengreen and O’Rourke 2010).
This raises two questions:
Global crisis Global economy International finance International trade
international trade, global crisis, global economy, international finance
Lessons in regionalism: What can the WTO teach the IMF?
Kati Suominen 03 November 2010
Will financial regionalism damagingly fragment the global financial architecture precisely at the time when sturdy system-wide management is needed? This column points to the world trading system’s engagement with regional trade agreements as a source of lessons for how to harmonise regional and global approaches to international finance.
The epicentre of financial regionalism is Asia. Emerging East Asian economies, scarred by the IMF’s policy conditionalities during the 1997-98 regional financial crisis, are busily building national reserves and regional financial arrangements so as to wean themselves off the Fund’s influence. During the global crisis of 2008 and 2009, East Asians expanded the regional Chiang Mai swap initiative to $120 billion and multilateralised it into a regional pool.
Global economy International finance
WTO, IMF, regionalism, global economy, international finance
A currency war the US cannot win
Yiping Huang 19 October 2010
The ongoing global imbalances has strengthened calls for the US to declare trade war with China. This column argues that the US did not emerge victorious from the last currency war with Japan, and against China the chances are even slimmer. Instead the upcoming G20 meeting should focus on a broad range of structural adjustments from both sides.
A new currency war is looming. The US Congress has already passed a bill for imposing currency import tariffs, although becoming an actual policy is still a long shot. Tim Geithner is urging the IMF and the international community to play more active roles in promoting more flexible exchange-rate regimes.
Global economy International trade
US, global imbalances, China, international trade, global economy
Debating the global roots of the current crisis
Brad Setser 28 January 2009
While national policy considerations dominate debates on macroeconomic policies, this column argues that these debates need to take into account the global consequences of their policy choices. The sum of individual macroeconomic policy choices will determine whether large imbalances remain a defining feature of the global economy – and thus the risk of future trouble.
There is a broad consensus that regulatory weaknesses, distorted incentives and excessive leverage in the US (and European) financial sector contributed to the current, severe global financial crisis. The investment banks themselves presumably no longer think that doubling their leverage from 2004 to 2007 was a good idea. The Western financial sector made two big bets. The first bet was that US home prices wouldn’t fall on a nationwide basis, and the second one was that macroeconomic volatility would remain low even as macroeconomic imbalances built.
exchange rates, monetary policy, global economy
A $2 trillion question
Gian Maria Milesi-Ferretti 28 January 2009
The crisis has produced a number of highly unusual macroeconomic effects. Preliminary estimates suggest that the US net international investment position deteriorated by over $2 trillion over 2008 − some 15% of GDP. This column explores the reasons for this unprecedented worsening.
With the raging financial crisis and the possible measures to combat it taking centre stage in the policy debate, the focus on the US current account deficit and its implications for the US net external asset position has waned to some extent.
US, global economy