Posted January 29, 2010
Financial Crisis | American Economy | Economic Development & Trade | Labor & Employment
Thinking about the Crisis
Challenge, November/December 2009, v52, #6
- Alternative Explanations of the Operation of a Capitalist Economy
Challenge, November/December 2009, v52, #6, pp5-28
"As the United States and the world rush to re-regulate the financial community - too little attention has been paid to the underlying theoretical errors that underpinned deregulation and crisis. Paul Davidson returns to John Maynard Keynes for an explanation of the failure of financial markets - and indeed the failure of accepted economic theory today - to warn the nation, no less to prevent its occurring."
Paul Davidson is an American macroeconomist who has been one of the leading spokesmen of the American branch of the Post Keynesian school in economics. Order article B1/01-10
- Free Trade, Fair Prices, and Sustainable Deficits
Challenge, November/December 2009, v52, #6, pp29-59
"The recently approved economic stimulus package will put many people back to work in government-financed job and will bolster the sagging finances of state and local governments, concedes the author. But he argues that a successful sustainable economic recovery will require making U.S. products more competitive internationally and reducing our trade deficit. Doing this could restore a major share of the 8 millions jobs that have been lost largely to an overvalued dollar. In this essay John Hansen examines the reasons that traditional protectionist approaches to restoring trade balances are not desirable, and he proposes a foreign currency transaction tax instead."
John Hansen worked for thirty years with the World Bank as an economist specializing in trade, public finance, industrial development, and the transition process for economies of the former Soviet Union. Order article B2/01-10
- How Would Adam Smith Fix the Financial Crisis?
Challenge, November/December 2009, v52, #6, pp60-78
"The works of Adam Smith are habitually over simplified. But in this essay, the author takes a deeper journey into the meaning of Smith to draw interesting lessons about the current economic crisis and future reforms.
David Bholat is currently a visiting Fulbright scholar at the London School of Economics. Order article B3/01-10
The Secret of Stability
Newsweek, December 21, 2009, v154, #25, pp54-60
"This article discusses the author's view that despite the global financial crisis of 2008-2009 the predictions about the economic and political collapse across the world has not materialized. According to the author reasons for continued global economic stability include peace among superpowers, low inflation and technological connectivity which has helped expand knowledge and trade among nations."
Fareed Zakaria is the editor of Newsweek International. Fulltext B4/01-10
Climate Policy in Hard Times
Jones, Benjamin; Keen Michael
Finance & Development, December 2009, v46, #4, pp6-9
"Restoring economic growth after the global financial crisis need not thwart the fight against climate change. Carbon pricing can strengthen fiscal positions, and improved climate resilience can promote macroeconomic stability."
Benjamin Jones is an Economist and Michael Keen is Assistant Director in the International Monetary Fund’s Fiscal Affairs Department. Fulltext B5/01-10
Should Central Banks Target Asset Prices?
The International Economy, Fall 2009, v23, #4, pp8-19
"Should, or can, central bankers target asset prices in their conduct of monetary policy? Over the past year, central bankers have engaged in a financial fire brigade in the aftermath of the bursting of the U.S. subprime mortgage bubble. But how difficult is it to identify bubbles and to avoid moral hazard without, from time to time, engaging in a fool’s errand? [...] Twenty experts offer their views." Fulltext B6/01-10
Rebuilding U.S. Wealth
Tanner, Evan; Abdih, Yasser
Finance & Development, December 2009, online edition, 3p
"Although the world is focusing on finding a replacement for the newly frugal U.S. consumer as an engine of demand, there is a related worry. Will those consumers save enough to restore their net worth to pre crisis levels and support sustained capital investment?"
Evan Tanner is a senior economist in the Internal Monetary Fund (IMF) Institute, and Yasser Abdih is an economist in the IMF’s Middle East and Central Asia Department. Fulltext B7/01-10
Rescuing American Capitalism
Greenberg, Maurice R.
National Interest, January/February 2010, #105, online edition
"The current crisis in the financial system was well over a decade in the making. A combination of new incentives to increase home ownership, long-term low interest rates, the taking on of increased leverage by banks, and the creation of financial products that were not properly overseen or managed led to a catastrophic economic meltdown. The question now is can we learn from this and also prevent what ended up being a disastrous handling of the crisis itself from happening again." The former head of AIG takes on the people who destroyed his company, the bankers who accepted too many bonuses and the bureaucrats trying to fix the financial system.
Maurice R. Greenberg is chairman and CEO of C. V. Starr and Company. Fulltext B8/01-10
Death Cometh for the Greenback
Stiglitz, Joseph E.
The National Interest, November/December 2009, #104, pp50-60
"America's debt-to-GDP ratio is slated to increase from 40.8 percent in 2008 to 70 percent or more by 2019, and if interest rates return to more normal levels of say 5 to 6 percent from their current range of 0.0 to 0.25 percent, it will mean the cost of paying interest on the debt will eat up a substantial fraction of tax revenue (20 percent or more) - unless taxes are raised. The demand for a currency is based on the return to holding the asset relative to other assets, e.g., the interest rate received from a dollar asset, like a Treasury bill, plus the expected capital gain or loss. There are only two questions: will the movement away be orderly or disorderly, and will America play a part in shaping the new system that will emerge? I believe that the transition to the new system will be smoother and that both the United States and the world will benefit if we stop putting our heads in the sand and help create the worldwide reserve system that the globalization of financial markets requires."
Joseph E. Stiglitz is University Professor at Columbia University. He served as chief economist of the World Bank from 1997 to 2000. Fulltext B9/110
A Path to Balance: A Strategy for Realigning the Federal Budget
Etltinger, Michael et al.
Center for American Progress, December 2009, 24p (PDF)
"It’s time to show the world that the U.S. government has a path to reducing its budget deficits. Current projections show that annual deficits will be running at above 4 percent of gross domestic product and be on the rise even once the nation is well clear of the Great Recession. That’s too high. The mere prospect of large sustained deficits poses risks to financial markets, endangers the rest of the economy, and undermines U.S. standing in the world. The reality of those deficits would mean pirating public expenditures away from needed public services and investments into the sinkhole of debt service. No one seriously denies that we face a real fiscal challenge. We need lower deficits."
Michael Ettlinger is the vice president for Economic Policy at American
Progress. Fulltext B10/01-10
The Dollar and the Deficits: How Washington Can Prevent the Next Crisis
Foreign Affairs, November/December 2009, v88, #6, pp20-29
"Even as efforts to recover from the current crisis go forward, the United States should launch new policies to avoid large external deficits, balance the budget, and adapt to a global currency system less centered on the dollar. Although it will take a number of years to fully implement these measures, they should be initiated promptly both to bolster confidence in the recovery and to build the foundation for a sustainable US economy over the long haul. This is not just an economic imperative but a foreign policy and national security one as well."
C. Fred Bergsten is Director of the Peter G. Peterson Institute for International Economics. Fulltext B11/01-10
Taming the Deficit: Saving our Children from Themselves
Rosnick, David; Baker, Dean
Center for Economic and Policy Research, December 2009, online edition, 7p
"Many proponents of conservative fiscal policies talk of the budget deficit as being a matter of intergenerational equality. However, the paper shows the younger generations will contribute more to the deficit than older generations. The analysis uses data from the CBO Long-Term Budget Outlook and the authors' calculations to show that the driving force behind the deficit is our broken health care system and that this should be the focus of the debate."
David Rosnick is an Economist and Dean Baker is a Co-Director of the Center for Economic and Policy Research in Washington, D.C. Fulltext B12/01-10
Reconciling Climate Change and Trade Policy
Mattoo, Aaditya et al.
Peterson Institute for international economics, December 2009, 48p, (PDF)
"There is growing clamor in industrial countries for additional border taxes on imports from countries with lower carbon prices. While this paper confirms the findings of other research that unilateral emissions cuts by industrial countries will have minimal carbon leakage effects, output and exports of energy-intensive manufactures are projected to decline, potentially creating pressure for trade action. A key factor affecting the impact of any border taxes is whether they are based on the carbon content of imports or the carbon content of domestic production. The paper's quantitative estimates suggest that the former action when applied to all merchandise imports would address competitiveness and environmental concerns in high income countries but with serious consequences for trading partners. Border tax adjustment based on the carbon content in domestic production would broadly address the competitiveness concerns of producers in high income countries and less seriously damage developing country trade."
Aaditya Mattoo is the lead economist with the International Trade group of the Development Research Group at the World Bank. Fulltext B14/01-10
China in the Global Financial Crisis: Rising Influence, Rising Challenges
, William H. Overholt is senior research fellow at the Kennedy School of Government at Harvard University. Order article B15/01-10
Finance & Development, December 2009, online edition, 3p
"As Asia tentatively makes its way out of the global economic crisis, the region—and the world—watches and learns from its resilient, though far from invulnerable, journey. Five leading Asian voices share their views on the region’s fragile rebound."
Ajith Cabraal is the Governor of the Central Bank of Sri Lanka; Shuli Hu is a leading Chinese
journalist; Yung Chul Park is Research Professor and Director of the Center of International Commerce and Finance at the Graduate School of International Studies, Seoul National University; Raghuram Rajan is Eric J. Gleacher Distinguished Service Professor of Finance at
the University of Chicago and an Economic Advisor to the Prime Minister of India; and Tharman Shanmugaratnam is Singapore’s Minister of Finance. Archana Kumar is Chief of Internal Communications in the IMF’s External Relations Department. Fulltext B16/01-10
Rebalancing Growth in Asia
Finance & Development, December 2009, online edition, 4p
"With the increasing importance of Asian emerging markets in the world economy, rebalancing growth in developing Asia toward more reliance on domestic demand and less on exports is an important component of the global effort to stabilize the world economy."
Eswar Prasad holds the New Century Chair in International Economics. He is the Tolani Senior Professor of Trade Policy at Cornell University and a Research Associate at the National Bureau of Economic Research. Fulltext B17/01-10
Employment Outlook: 2008–18
Monthly Labor Review, November 2009, v132, #11
"The November issue of the Monthly Labor Review marks the release of the 2008–18 employment projections of the Bureau of Labor Statistics (BLS). Four sets of projections are presented in separate articles on the labor force, the U.S. macroeconomy, industry output and employment, and occupational employment. These articles outline the assumptions and rationales underlying expected changes in the economy and present detailed results for each set of projections. For just the second time in the last 30 years, the base-year employment and output of the projections reflect an economy in a deep recession."
- The Employment Projections for 2008–18
Bartsch, Kristina J.
Monthly Labor Review, November 2009, v132, #11, pp3-11
"The employment structure of the U.S. economy in 2018 is expected to remain similar to that of 2008, although changes in shares of employment will result from continuing increases or declines among some occupations; in general, goods-producing sectors, excluding agriculture, will lose employment while service-providing sectors will expand."
Kristina J. Bartsch is chief, Occupational Outlook Division, Office of Occupational Statistics and Employment Projections, Bureau of Labor Statistics.
- The U.S. Economy to 2018: From Recession to Recovery
Wyatt, Ian D.; Byun, Kathryn J.
Monthly Labor Review, November 2009,
v132, #11, pp11-29
"In the summer of 2009, U.S. payroll employment continued to fall as a result of the recession that began more than a year and a half earlier in December 2007. The recession has been one of the most severe since World War II, with the unemployment rate jumping from 4.7 percent in November 2007 to 10.2 percent in October 2009. However, as with other business cycles, the Bureau of Labor Statistics (BLS) projects that the economy will return to a path of long-run growth over the next decade."
Ian D. Wyatt and Kathryn J. Byun are economists in the Division of Industry Employment Projections, Office of Occupational Statistics and Employment Projections, Bureau of Labor Statistics.
- Labor Force Projections to 2018: Older Workers Staying more Active
Monthly Labor Review, November 2009, v132, #11, pp30-51
"As the baby-boom generation ages, the share of workers in the 55-years-and-older age group will increase dramatically; the participation rates of older workers in the labor force are expected to increase, but will remain significantly lower than those for the prime age group, and, as a result, the participation rate and overall labor force growth rate will decline."
Mitra Toossi is an economist in the Office of Occupational Statistics and Employment Projections, Bureau of Labor Statistics.
- Industry Output and Employment Projections to 2018
Woods, Rose A.
Monthly Labor Review, November 2009, v132, #11, pp52-81
"Professional and business services and the health care and social assistance sectors account for more than half of the projected job growth from 2008 to 2018; construction also is expected to add jobs, while agriculture and manufacturing employment is expected to decline over the period."
Rose A. Woods is an economist formerly in the Division of Industry Employment Projections, Office of Occupational Statistics and Employment Projections, Bureau of Labor Statistics.
- Occupational Employment Projections to 2018
Lacey, T. Alan; Wright, Benjamin
Monthly Labor Review, November 2009, v132, #11, pp82-123
"Professional and related occupations and service occupations are expected to create more new jobs than all other occupational groups from 2008 to 2018; in addition, growth will be faster among occupations for which postsecondary education is the most significant form of education or training, and, across all occupations, replacement needs will create many more job openings than will job growth."
T. Alan Lacey and Benjamin Wright are economists in the Division of Occupational Outlook, Office of Occupational Statistics and Employment Projections, Bureau of Labor Statistics. Fulltext articles B18/01-10
Women in the Labor Force: A Databook (2009 Edition)
Bureau of Labor Statistics, U.S. Department of Labor, September 2009, online edition
"The past several decades have been marked by notable changes in women’s labor force activities. Women’s labor force participation is significantly higher today than it was in the 1970s, particularly among women with children, and a larger share of women work full time and year round than in past decades. In addition, women have increasingly attained higher levels of education: among women aged 25 to 64 who are in the labor force, the pro- portion with a college degree roughly tripled from 1970 to 2008. Women’s earnings as a proportion of men’s earnings also have grown over time. In 1979, women working full time earned 62 percent of what men did; in 2008, women’s earnings were 80 percent of men’s." Fulltext B19/01-10
Surviving the Third Wave
Finance & Development, December 2009, online edition, 4p
"After the financial and economic crises, a “third wave” is engulfing the labor market, leaving millions without work and changing the course of their lives." F&D looks at the people likely to be hardest hit, and investigates how governments are responding.
Hyun-Sung Khang is a senior editor on the staff of Finance & Development.