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Op-ed
Chinomics: Yes, China Does Need that Infrastructure
Nicholas R. Lardy
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Critics have exaggerated fears that stimulus spending will lead to a banking crisis in China following the government's increase in infrastructure investment last year in response to the global recession. Such fears are unnecessary; Nicholas R. Lardy argues that the government can increase its revenue and repay government-guaranteed loans by raising the prices of water and subway services and introducing a property tax.
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Op-ed
One Fiscal Size Does Not Fit All
Adam S. Posen
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There is still time for the euro area to avoid repeating in Spain today the IMF's mistake of imposing excessive austerity on South Korea in 1998. Adam S. Posen argues that the euro area recognize the differences between Spain and Greece or Portugal, and the risks from a one-size-fits all policy, instead of adhering to a blind consistency. While South Korea in 1998 was able to recover via currency devaluation and trade expansion, Spain does not have that option—especially if its euro area trading partners contract their own demand and compress their own wages. Repeating this mistake would not only make the coming contraction worse than it needs to be; it could create lasting political reaction against the euro area leadership within the European Union, much as East Asia continued to self-insure against the IMF years after its crisis.
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Op-ed
Going from State Capitalism to Pragmatism
Anders Åslund
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The financial crisis delivered a shock to the Russian establishment that had a positive impact on its economic thinking. Pragmatism has replaced state capitalist ideas. A consensus has arisen on the need for new structural reforms, but the new reform agenda is eclectic and incremental. Accession into the WTO is key to Russia's modernization efforts as well as its relationship with the United States, though Anders Åslund warns that the current reforms must not be exaggerated. Ambitious, controversial reforms such as pension and healthcare overhauls are unlikely in the next two years.
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Peterson Perspectives Interviews
Germany's Fiscal Contraction: Less Than Meets the Eye?
Jacob Funk Kirkegaard argues that reports of a drastic fiscal consolidation by Germany are exaggerated—and the cries of alarm in the United States may be overstated.
Reviving the Korea-US Free Trade Agreement
Jeffrey J. Schott assesses the prospects for approving the stalled trade accord after Presidents Obama and Lee pledged in Toronto to remove the impediments this year.
Are Global Banking Reforms in Danger of Being Watered Down?
Morris Goldstein cautions that after G-20 leaders pledged to push for reforms in Toronto, there is a risk that countries will water down the measures needed to strengthen banks.
Financial Regulatory Reform: B or B-plus
Morris Goldstein says that in the end, the sweeping financial reform measure heading toward Congressional approval will go far to stabilize the financial system.
How Stressful Is the European Bank Stress Test?
Nicolas Véron says that stress-testing Europe's 100 biggest institutions could strengthen the system, spur the economy, and lead to G-20 agreement on bank reforms.
Is the G-20 Heading Too Quickly for the Exit?
Michael Mussa assesses the pledge by G-20 countries in Toronto to move toward fiscal consolidation, despite pressure from the United States not to withdraw stimulus too quickly.
PIIE Noted in the News and on the Web
WTO Forum
What's on the Table for Developing Countries in the Doha Round?
Jeffrey J. Schott and David Laborde, International Food Policy Research Institute, discuss the Doha Round with Keith Rockwell, WTO spokesperson.
Preview of Our Next Issue
Op-ed
The G-20 and "Chermany"
Arvind Subramanian
Paper
G-20 Protection in the Wake of the Great Recession [pdf]
Gary Clyde Hufbauer, Jacob Funk Kirkegaard, and Woan Foong Wong
Policy Brief
Dealing with Volatile Capital Flows
Olivier Jeanne
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