In The News

Globalization: How the New Shift of Power Is Affecting Inflation

Hamish McRae May 31, 2006
Because of globalization, manufacturers must pay increasing prices paid for raw goods like oil or minerals, and consumers discover dropping prices for products on store shelves. This analysis of the International Monetary Fund’s “World Economic Outlook” suggests that ten years ago, developed countries provided the impetus for trade, but the emerging economies of India, China and Eastern Europe...

IMF Expands Role in Seeking to Reduce Trade Imbalances

Paul Blustein April 25, 2006
The International Monetary Fund has focused attention a new concern – massive global imbalances. Of particular concern are the burgeoning US budget deficit; China’s currency, which some claim is undervalued; and increasing investment in the energy-related infrastructure of oil-producing countries. The IMF was created 60 years ago to deflect international crisis. But some economists suggest that...

US, China Eager to Gloss Over Any Disagreements

Daniel Sneider April 25, 2006
The inevitability of China’s rise has led its Asian neighbors to perform “fine balancing” acts, with the question of how to respond to China’s growth remaining high on every agenda. Even countries that have been historically at odds with China – such as Japan and Vietnam – worry about the threat, but must cooperate with the second largest economy in the world in terms of purchasing power. Like...

Currency Manipulator?

Ronald I. McKinnon April 24, 2006
As China’s bilateral trade surplus with the US continues rising in record-breaking fashion, there has been growing speculation that Beijing manipulates currency-exchange rates in its favor. However, Stanford economist Ronald McKinnon argues that China’s motivation for pegging the renminbi is to secure monetary stability rather than achieve an undue mercantile advantage in world export markets....

China’s Investors Are to Get Freer Hand Abroad

James T. Areddy April 20, 2006
On the eve of Chinese President Hu’s visit to the US, China made a gesture toward a more open, market-based currency that pleases the US, but falls short of revaluing of the yuan. China will allow companies and individuals to make financial investments overseas, which could influence the country’s currency exchange-rate system as well as the value of yuan. China has kept the yuan’s value...

The US and China: Friends or Foes? – Part II

Daniel H. Rosen April 20, 2006
The US and China are the world’s two largest economies – but the citizens of the two nations differ in terms of financial habits. For example in 2005, savings accounted for at least 30 percent of Chinese household income while the US registered no savings at all. In the second of this two-part series, economist Daniel H. Rosen analyzes the implications of China’s increasing interdependence with...

Managing Globalization: In Asia, How to Manage the Boom?

Daniel Altman April 10, 2006
Southeast Asian nations have grown fat with international trade – but are they growing too fat? As the region approaches another period of rapid expansion, fears abound that the region’s economy could grow out of control. Demand for Southeast Asian products runs high, and an overheating economy could bring inflation and currency problems, overpowering government attempts at fiscal and monetary...