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Europe is not the United States

By Martin Feldstein CAMBRIDGE: Europe is now struggling with the inevitable adverse consequences of imposing a single currency on a very heterogeneous collection of countries. But the budget crisis in Greece and the risk of insolvency in Italy and Spain are just part of the problem caused by the single currency. The fragility of the major …


The French don’t get it

By Martin Feldstein CAMBRIDGE: The French government just doesn’t seem to understand the real implications of the euro, the single currency that France shares with 16 other European Union countries. French officials have now reacted to the prospect of a credit rating downgrade by lashing out at Britain. The head of the central bank, Christian Noyer, …


America’s economic stalemate

By Martin Feldstein CAMBRIDGE: The United States appears trapped in a dangerous economic stalemate. The refusal by both Republicans and Democrats to give ground on the budget is preventing the government from dealing with its massive fiscal deficit and rapidly rising national debt. Indeed, the Congressional Budget Office projects that the national debt could increase to …


Europe’s high-risk gamble

By Martin Feldstein CAMBRIDGE: The Greek government needs to escape from an otherwise impossible situation. It has an unmanageable level of government debt (150 percent of GDP, rising this year by 10 percentage points), a collapsing economy (with GDP down by more than 7 percent this year, pushing the unemployment rate up to 16 percent), a …


Why is America’s budget deficit so large?

By Martin Feldstein CAMBRIDGE: America’s enormous budget deficit is now exceeded as a share of national income only by Greece and Egypt among all of the world’s major countries. To be sure, the current deficit of 9.1 percent of GDP is due in part to the automatic effects of the recession. But, according to the official …


What’s happening to the US economy?

By Martin Feldstein CAMBRIDGE: The American economy has recently slowed dramatically, and the probability of another economic downturn increases with each new round of data. This is a sharp change from the economic situation at the end of last year — and represents a return to the very weak pace of expansion since the recovery began …


The G-20’s empty gestures

By Martin Feldstein CAMBRIDGE: The world’s 20 most important finance ministers and 20 most important central bankers traveled to Washington this month from every part of the globe to accomplish, predictably, exactly nothing. The subject of the G-20’s recent meeting was “global imbalances.” According to the communiqué issued by the group, the meeting focused on developing …


China’s five-year plan and global interest rates

By Martin Feldstein CAMBRIDGE: China’s new five-year plan will have important implications for the global economy. Its key feature is to shift official policy from maximizing GDP growth toward raising consumption and average workers’ standard of living. Although this change is driven by Chinese domestic considerations, it could have a significant impact on global capital flows …


Quantitative easing and the Renminbi

By Martin Feldstein CAMBRIDGE: The United States Federal Reserve’s policy of “quantitative easing” is reducing the value of the dollar relative to other currencies that have floating exchange rates. But what does the new Fed policy mean for one of the most important exchange rates of all — that of the renminbi relative to the dollar …


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