Focus on International Economics

Focus on International Economics

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On January 28, the International Monetary Fund posted a working paper which founds the roots of the recent European debt crisis in the inability of heavily indebted countries to sell long-term securities on the international market well in advance of crisis conditions.

In a January 28 commentary, Harvard economist Martin Feldstein said that China’s current account surplus has probably peaked due to rising wages, increased dividend payments by Chinese corporations, and increased government spending on health, education and housing, all of which will reduce the national savings rate and, therefore, the current account surplus.

On January 27, Morgan Stanley posted a report on the political problems Japan faces in getting its economic and financial house in order.

Also on January 27, the Federal Reserve Bank of Dallas posted a study of the U.S.-China trade deficit. A key factor is China’s high saving rate, which is fueled by high corporate profits. It suggests that increased competition will reduce profit margins, lower national saving, and thus help redress the trade imbalance.

In a January 26 commentary, Yale economist Stephen Roach warned that many Asian nations are developing an inflation problem.

Also on January 26, economic historian Jan Luiten van Zanden posted a commentary on why the Industrial Revolution developed in Europe and not in China. A key reason is that China had no need for labor saving machinery because of its large population.

And on January 26, the IMF published a working paper on sovereign wealth funds, their investment objectives and performance.

On January 25, the International Labour Organization issued a report on global employment trends. It notes that 55 percent of the rise in unemployment since 2007 occurred in the OECD countries, which only account for 15 percent of the world’s labor force.

Also on January 25, the IMF released updated projections for the global economy. In general, growth is projected to be slightly higher in 2011 than previously estimated, with no change for 2012. In a related report, the IMF warned that the world financial system is still fragile, with little progress on deleveraging. It further warned that there are signs of a bubble emerging among developing countries, which are attracting strong capital inflows.

On January 20, Inc. magazine published an article on the dynamism of entrepreneurship in Norway despite its high taxes.

Also on January 20, the European Central Bank published a study projecting a decline in potential growth in the euro area in coming years mainly due to the aging of the population.

In a January 13 blog post, Peterson Institute economist Arvind Subramanian estimated that China’s GDP is larger than America’s based on purchasing power parity exchange rates.

I last posted items on this topic on January 19.

Bruce Bartlett is an American historian and columnist who focuses on the intersection between politics and economics. He blogs daily and writes a weekly column at The Fiscal Times. Bartlett has written for Forbes Magazine and Creators Syndicate, and his work is informed by many years in government, including as a senior policy analyst in the Reagan White House. He is the author of seven books including the New York Times best-seller, Imposter: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday, 2006).

Bruce Bartlett’s columns focus on the intersection of politics and economics. The author of seven books, he worked in government for many years and was senior policy analyst in the Reagan White House.