Busy Bee
06-17-2008, 10:29 AM
Mohamed El-Erian, former head of Harvard Management, now co-president of bond giant Pimco:
Whatever happened to the debate on global payments imbalances?...At its roots, the policy solution called for simultaneous implementation of three sets of measures. First, a reduction in US domestic aggregate demand to contain imports and encourage a shift to exports. Second, an increase in consumption in Asia and the Middle East, including having China adopt a higher and flexible exchange rate. Third, structural reforms in western Europe to enhance the growth potential of the global economy.
Most observers agreed on the elegance and theoretical potency of this policy combination, which reduces imbalances in the context of high global growth, contained inflation and relatively stable financial markets. Indeed, the question was never about design. It was about implementation...
http://tinyurl.com/5vdnzq
Whatever happened to the debate on global payments imbalances?...At its roots, the policy solution called for simultaneous implementation of three sets of measures. First, a reduction in US domestic aggregate demand to contain imports and encourage a shift to exports. Second, an increase in consumption in Asia and the Middle East, including having China adopt a higher and flexible exchange rate. Third, structural reforms in western Europe to enhance the growth potential of the global economy.
Most observers agreed on the elegance and theoretical potency of this policy combination, which reduces imbalances in the context of high global growth, contained inflation and relatively stable financial markets. Indeed, the question was never about design. It was about implementation...
http://tinyurl.com/5vdnzq