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With deflation currently a more serious problem for the US economy than inflation, Joseph E. Gagnon proposes a three-part plan to fend off deflation that is both cost effective and easily reversible, should the risks of deflation suddenly decrease.

In the face of a US budget deficit that is 10 percent of GDP and rising Social Security and government healthcare costs, Simon Johnson and James Kwak argue that comprehensive tax reform, carbon pricing, a tax on the financial sector, and reducing healthcare costs can bring about long-term fiscal sustainability.

Peterson Perspectives Interviews

 If It's a Recovery, Where Are the Jobs?

with Howard F. Rosen

 Is the Economic Recovery Sputtering to a Close?

with Michael Mussa | Transcript [pdf]

 Discord at the International Monetary Fund

with Edwin M. Truman

 Pakistan's Floods: A Humanitarian and Strategic Challenge

with Mohsin S. Khan

William R. Cline demonstrates that a 10 percent real effective appreciation of the renminbi would reduce China's current account surplus by between $170 billion and $250 billion. Policy Brief 10-20. See also Policy Brief 10-15: Estimates of Fundamental Equilibrium Exchange Rates, May 2010.

Concluding the Doha Round of trade negotiations would speed up global recovery, and the swiftest path to agreement is getting the United States and China on board with a few new offers, write Gary Clyde Hufbauer and Robert Z. Lawrence. Jeffrey J. Schott argues that reviving the Doha Round and limiting new green border measures are the best ways for the G-20 countries to display their commitment to advancing multilateral trade liberalization and stifling protectionism. Policy Brief 10-11. See also new book Figuring Out the Doha Round.

Restarting talks with Taiwan on a Trade and Investment Framework Agreement (TIFA) would not only financially benefit the United States but, as Daniel H. Rosen argues, it would also send a message that the United States is serious about engagement in Asia. See also Policy Brief 10-16: Deepening China-Taiwan Relations through the Economic Cooperation Framework Agreement.

With economic growth in India on autopilot, Arvind Subramanian suggests that the United Progressive Alliance government focus on public sector balance sheet consolidation to provide the necessary resources to survive future economic crises. Severe land market distortion, aggravated by capital flows into real estate, is leading to land price increases that contribute to high inflation in India.

Russia’s economy is in need of another round of privatization to recreate the positive effects of the 1992 privatization efforts, which Anders Åslund says can be achieved through offering the majority of company shares for public purchase and open auctions of individual companies and assets. Russia’s pragmatic new foreign policy, coupled with cooperation with the WTO, will allow Russia to engage with the West.

The Dodd-Frank Financial Reform Bill gives federal regulators the ability to limit the scope of big banks, breaking them up when they become a "grave risk" to financial stability; Simon Johnson advises that regulators will also need political direction in order to make genuine progress.

In shifting to a postcrisis agenda, Gary Clyde Hufbauer, Jacob Funk Kirkegaard, and Woan Foong Wong recommend that G-20 leaders build on their global crisis management success [pdf] by living up to their commitments to promote global trade and reject protectionism.

The IMF and the international community should do more to create normative rules for the appropriate level of reserves in emerging-market and developing countries and develop with its members a code of good practice for prudential capital controls, says Olivier Jeanne. Policy Brief 10-18.

New Book: China's Strategy to Secure Natural Resources: Risks, Dangers, and Opportunities by Theodore H. Moran. In Brief [pdf].

Rising inflation, a 9.7 percent unemployment rate, and retreating home prices push the augmented misery index in the first half of 2010 to double digits, calculate Gary Clyde Hufbauer and Woan Foong Wong.

Peterson Perspectives Interviews

 What the Fed Can Still Do

with Joseph E. Gagnon | Transcript [pdf]

 Reviving the Korea-US Free Trade Agreement

with Jeffrey J. Schott | Transcript [pdf]

 Financial Regulatory Reform: B or B-plus

with Morris Goldstein | Transcript [pdf]

Peterson Perspectives: Interviews on Current Issues
Nicholas R. Lardy explains China's nuanced approach to letting the air out of its housing bubble, providing potential lessons for the United States. See also Chinomics: Yes, China Does Need that Infrastructure and The Sustainability of China's Recovery from the Global Recession.
Audio | Transcript [pdf]

New Book: Russia after the Global Economic Crisis edited by Anders Åslund, Sergei Guriev, and Andrew Kuchins. In Brief [pdf].

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Most viewed pages for the past 7 days.

Op-ed What Actions Should the Fed Be Taking?
Joseph E. Gagnon

Interview Is the Economic Recovery Sputtering to a Close?
Michael Mussa

Speech Globalization: The Concept, Causes, and Consequences
John Williamson

Op-ed India's Weak State Will Not Overhaul China
Arvind Subramanian

Event Fiscal Crises and Imperial Collapses: Historical Perspective on Current Predicaments
Niall Ferguson

Policy Brief Renminbi Undervaluation, China's Surplus, and the US Trade Deficit
William R. Cline

Op-ed Taiwan Is Next Stop in US Reengagement in Asia
Daniel H. Rosen

Op-ed New Imbalances Will Threaten Global Recovery
C. Fred Bergsten

Article The Dollar and the Deficits: How Washington Can Prevent the Next Crisis
C. Fred Bergsten

Policy Brief Estimates of Fundamental Equilibrium Exchange Rates, May 2010
William R. Cline and John Williamson

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Most recently posted material.

Peterson Perspectives Interview If It's a Recovery, Where Are the Jobs?
September 1, 2010
Howard F. Rosen explains how the recession has exposed and exacerbated long-term structural trends hampering employment growth in the United States.

Peterson Perspectives Interview Discord at the International Monetary Fund
Edwin M. Truman — August 31, 2010
Edwin M. Truman explains why the Obama administration decided this summer to provoke a fight over IMF governance and how it might be resolved.

Op-ed Four Steps to US Fiscal Health
Simon Johnson and James Kwak — August 30, 2010
The United States has a significant budget deficit, likely to be $1.3 trillion (10 percent of GDP) this year, and the long-term forecasts are worrying. According to the Congressional Budget Office (CBO, the leading nonpartisan experts), Social Security—together with Medicare, Medicaid, and other healthcare programs—will grow to consume almost all tax revenues by 2035.

Peterson Perspectives Interview Pakistan's Floods: A Humanitarian and Strategic Challenge
Mohsin S. Khan — August 30, 2010
Mohsin S. Khan assesses the damage in Pakistan, the prospects for recovery, and the threat to Western interests and to Pakistan's democracy.

Policy Brief 10-21 The Road to a Climate Change Agreement Runs Through Montreal [pdf]
Richard J. Smith — August 26, 2010
The 1987 Montreal Protocol to address ozone layer depletion was a pivotal agreement in the history of global environmental negotiations. It established a process that remains an important precedent for dealing with global environmental problems, including global warming. What made the negotiation of that agreement such an iconic event, and what useful lessons does it hold for climate change negotiators? Richard Smith cites a number offactors that were critical to the success of the Montreal Protocol. For example: (1) the United States played a leadership role from the beginning, including banning the use of chlorofluorocarbons (CFCs) in most aerosols and appointing a chief negotiator with responsibility for developing the U.S. position well before the negotiations began; (2) from the outset all countries that were parties to the agreement, both developed and developing countries, made specific commitments to reduce the production and use of ozone-depleting substances; and (3) the protocol set up a procedure for regularly reviewing and revising its provisions at follow-up meetings, thus accommodating new information rapidly and efficiently. A central lesson that climate change negotiators should learn from the Montreal Protocol is that it set a process in motion, which ultimately led to all parties to the agreement making the necessary commitments to arrest and eventually reverse the deterioration of the stratospheric ozone layer.

RealTime Economic Issues Watch Assessing the Tragedy of the Pakistan Floods
Mohsin S. Khan — August 26, 2010
The floods in Pakistan have affected one-fifth of the country (an area roughly the size of England) and engulfed large parts of all four provinces—Punjab, Balochistan, Sindh, and Khyber Pakhtunkhwa (formerly the North West Frontier Province). The vast scope of the damage makes this a truly natio ...

Op-ed Let's Make a Deal: How to Bring the Doha Trade Talks to a Close
Gary Clyde Hufbauer and Robert Z. Lawrence — August 25, 2010
Originally scheduled to conclude in 2005, the Doha Round trade negotiations have dragged into their ninth year with no end in sight. The Doha Round was launched in November 2001 with the ambitious goal of liberalizing world trade and lifting living standards around the globe, especially in the least developed nations of the world. An agreement on the round would offer universal economic benefits by reducing farm subsidies, opening up new markets, and spurring investment. Yet without a final consensus on Doha, the WTO continues to lose its preeminence in the global trading system, as its members increasingly pursue trade interests, if at all, through bilateral agreements.

Op-ed Assessing India's United Progressive Alliance Government
Arvind Subramanian — August 25, 2010
Growth in India is on autopilot and is unlikely to be disrupted by a lapse in government control or to be boosted by policy reforms. With governance reforms out of the question for the United Progressive Alliance (UPA) government, it should focus on strengthening the public sector balance sheet and allow other reforms to be driven by growth. Strengthening the public sector balance sheet during an economic boom is a crucial lesson from the recent global economic crisis, and high growth and low interest rates in India make balance sheet consolidation necessary and attainable. While modest, the provision of the necessary resources to survive economic crises is an important item for the UPA to address.

Op-ed What Actions Should the Fed Be Taking?
Joseph E. Gagnon — August 20, 2010
It is now apparent that deflation is a more serious risk for the US economy than inflation. Both headline and core inflation are well below the 2 percent level that central banks view as optimal for economic growth and that the Fed has adopted as its goal. Recent bad news on economic growth and employment further increase the risk of plunging into outright deflation.

Peterson Perspectives Interview Is the Economic Recovery Sputtering to a Close?
Michael Mussa — August 20, 2010
Michael Mussa says the latest disappointing economic numbers indicate a slower pace of growth and a possible rise in unemployment, and that a return to recession cannot be ruled out.