In a July 15 commentary, economist Hans-Werner Sinn responded to American economists—Paul Krugman in particular—who have been critical of Germany’s tight fiscal policy. Sinn suggests that the US follow Germany’s lead and reduce government borrowing.
On July 14, the European Central Bank released a study of the international role of the euro. It contains a wealth of interesting data. For example, it reports that at the end of 2009, 45.6 percent of the world’s debt securities were denominated in dollars, 31.5 percent in euros, 6 percent in yen, and the rest in other currencies.
In a July 9 commentary, economist Kati Suominen examined reports of the death of the dollar as the world’s reserve currency and finds them to be premature.
On July 8, the Treasury Department released its semi-annual report on international economic and exchange rate policies. It concluded that the Chinese currency remains undervalued.
On July 7, the World Bank released a report on foreign direct investment policies. It presents data on laws and regulations affecting FDI in 87 countries and finds that many are overly restrictive.
In a July 5 commentary, Stanford economist Ronald McKinnon complains that too much attention is being paid to the exchange rate between the U.S. and China and its impact on trade flows. He thinks that appreciation of the yuan would not have much impact on the trade balance as long as China’s saving rate remains high.
In a July 2 post, Harvard economist Jeff Frankel examined various indicators on whether they provided an early warning to a nation’s financial problems. Contrary to earlier studies, Frankel found that two indicators: overvaluation of the exchange rate and the level of international reserves have strong predictive value. See also his June working paper that goes into this in more detail.
A July 1 study by Johns Hopkins economist Olivier Jeanne expresses sympathy for capital controls as a means of controlling the volatility of international capital flows and preventing economic instability.
In a July working paper, International Monetary Fund economists Vivek Arora and Athanasios Vamvakidis examined China’s impact on the world economy. On net they find that it is positive, especially for its neighboring countries in Asia through spillover effects. The impact on the US and Europe is negative, but to a very small degree.
A June report from the Asian Development Bank examined the role of the dollar as the international reserve currency, problems and alternatives. Contributors include economists Jeffrey Sachs, Barry Eichengreen and Joseph Stiglitz.
Also in June, the United Nations issued a report on the international economy.
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)