On June 28, the Bank for International Settlements released its annual report. The dominant theme is that fiscal expansion has run its course and fiscal consolidation must become the order of the day.
On June 25, economists Vladimir Gligorov and Michael Landesmann examined the problem of debt in Europe. They argue that the high level of private debt is a greater problem than high government and foreign debt.
Also on June 25, the Department of Commerce announced that foreign investment in the U.S. exceeded U.S. investment in foreign countries by $2.7 trillion at the end of 2009, down from $3.5 trillion at the end of 2008.
On June 16, the Center for Economic Policy Research in London published an online book about the eurozone economic crisis. It contains papers by noted experts such as Barry Eichengreen of the University of California, Berkeley; Thomas Mayer of Deutsche Bank; Alberto Alesina of Harvard and others.
On June 7, the International Monetary Fund released a report on economic policy in the eurozone. It emphasized the need to get fiscal policy on a sustainable basis. While recognizing that weak growth will require continued fiscal stimulus for some time, the IMF is concerned that failure to begin putting in place plans for fiscal consolidation could have a negative effect on financial market expectations, which could be detrimental to growth.
On May 31, Bank of Japan Governor Masaaki Shirakawa gave a speech in which he expressed optimism about Japan’s recovery from the recession, but pessimism about its long-term growth potential, which he attributes largely to a drop in the labor force resulting from an aging society and a decline in the growth of output per worker. Shirakawa says that Japan must become more innovative in order to raise productivity.
On May 27, the OECD released a new report on measuring innovation. It contains a wealth of data on the sources of economic growth emphasizing technological and scientific advances.
On May 26, the OECD posted a new interactive feature on GDP growth in its member nations. It shows, for example, that net exports (exports minus imports) were the largest contributor to GDP growth in 2009, with government consumption also raising growth. Gross investment was the biggest negative factor.
Also on May 25, credit-rating agency Fitch warned about the deteriorating quality of sovereign debt in the eurozone. However, the quality of corporate debt is improving as economic conditions improve.
One explanation for the housing bubble is that there was a “savings glut” that held interest rates artificially low. This glut resulted from an unusual flow of saving from developing countries to developed countries. A May 20 paper from the OECD supports the savings glut theory, concluding that saving flowed from developing countries to developed countries because of the latter’s more efficient institutions and superior financial markets.
In April, the Bureau of Labor Statistics released a chartbook on international labor comparisons. It includes data on GDP per capita and per employed person, composition of the labor market in various countries, productivity and other statistics.
Note: I posted links on global imbalances on June 24.
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. Read his most recent column here. 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, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday, 2006).
Previous posts:
June 29: Focus on the Fed and Inflation
June 28: Focus on China
June 25: Weekly Roundup
June 24: Focus on Global Imbalances
