The growth effect of current-account reversals

Giuliano Amato, Richard Baldwin, Daniel Gros, Stefano Micossi, Pier Carlo Padoan, 7 December 2010The unfolding crisis in Europe has focused policymakers’ attention on reducing debt-to-GDP ratios.

Steven Pearlstein argues that The case for austerity isn’t dead yet, and that:

Fed chairman Ben Bernanke is at odds with Brazil, China, and even the IMF over his policies. Please consider the BBC report Bernanke defends Federal Reserve stimulus measures Brazil has said US monetary easing to keep interest rates low and weaken the dollar has hurt emerging economies. And International Monetary Fund chief Christine Lagarde warned on Sunday of consequent asset bubbles developing in emerging nations.

The Economist recently published a Special Report focusing on developing country growth (see The World Economy – A Game of Catch-up for the entire special report). The report focuses on the shift in economic power from developed to emerging economies.

EARLIER this week, the San Francisco Fed published a new look at factors that may be shaping structural unemployment in the economy.