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Attaching Blame for the Financial Crisis

Wednesday, September 29, 2010

Howard Davies spoke at the LSE this week on responsibility for the financial crisis - teaching colleagues may want to download and dip into the presentation that has kindly been made available here by the LSE.

IMF signs off on UK’s fiscal plans

Monday, September 27, 2010

The IMF signed off on George Osborne’s fiscal deficit plans today.

The Fund praised the government’s bold strategy to eliminate the deficit within five years. The deficit reduction plan “greatly reduces the risk of a costly loss of confidence in fiscal sustainability and will help rebalance the economy,” the concluding statement of the mission said.

It welcomed the early action on the deficit and the weight given to spending cuts rather than tax increases.

More here.

Irish economy sinks deeper into recession

Sunday, September 26, 2010

The latest growth figures for the ailing Irish economy make for sorry reading. National output continues to shrink and this is reducing the size of the tax base from which the government draws revenue to pay off the huge level of debt. This BBC news video provides a background on the debt-recession spiral.

 

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A2 Macro - Economic Growth Charts

Tuesday, September 21, 2010

We started our teaching this year by looking at issues related to measuring living standards and now we are moving onto aspects of the causes and consequences of economic growth.

I like to put growth into some kind of context by drawing on recent UK cyclical data and growth information for a range of other countries. I have attached a brief powerpoint of such charts with this blog which may be of some use for colleagues.

One of the interesting trends for many OECD countries is that estimated trend growth (the % change in potentail) GDP has fallen sharply in recent years. Indeed for Spain and Ireland, trend growth estimates have dropped into negative territory. Mo’s recent blog on hysteresis links in part to why this is happening.

Download the A2 Macro Growth Charts
Economic_Growth_Charts.pptx

Hysteresis in the US Economy

The idea of hysteresis from the current recession is well illustrated in this article.

Millions of Americans risk falling out of the job market forever, the Organisation for Economic Co-operation and Development said today, as it cautioned a full recovery will take years. This recession has left the US with a long-term unemployment rate - a measure of those without work for more than six months - of 4.5pc, almost double that seen in the downturns of the 1980s and 1990s… Read more here.

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Currencies in the News - Two Videos

Thursday, September 16, 2010

Movements in the external value of currencies have direct and indirect effects on plenty of macroeconomic variables such as inflation, exports, output, profits and - ultimately - jobs. This week we have seen the Japanese central bank intervening in the foreign exchange market in an attempt to drive the value of the Yen lower. Japan is struggling to sustain a recovery after the global financial crisis and a weaker currency is seen as a vital part of the attempt to prevent another draining bout of price deflation.

And the long-running dispute between the United States and China about the alleged under-valuation of the Yuan against the US dollar continues to rumble. This BBC news video takes a swing through New Jersey to find trade unions lobbying government for more action on the exchange rate issue.

New Research on Fiscal Multipliers

Sunday, September 05, 2010

The size of the fiscal multiplier may be larger in recessions than in expansions according to new research published here. A useful article to use when teaching macro policy responses at A2 level. Hat tip to Kevin Hinde for first flagging this up.

Autumn leaves are falling for the global economy

Thursday, September 02, 2010

The arrival of the Fall is often a time to take stock of where the global economy is heading and there have been several perceptive and fascinating blogs on this in recent days.

 

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Fears rise for a double dip over the pond

Wednesday, August 25, 2010

There are some very worrying signs for the United States today with the news that new home sales (for completed properties and those under construction) have dropped to to their lowest level for nearly 50 years. Dr Doom, Noruiel Roubini has tweeted that the risk of a double dip recession in advanced economies (comprising the USA, Japan, the Eurozone and the UK) has now risen to 40%.

The fall in new home sales is taken as a litmus test of weakening confidence and signs that the fiscal and monetary policy stimulus policies have started to run out of steam. Unemployment claims in the USA are up to 500K per month and a fresh descent into recession in the labouy-intensive US construction industry will give deeper deflationary pressure on the world’s largest economy. Since the start of the global financial crisis, US construction businesses have shed more than two million jobs.

In a related feature, Nouriel Roubini takes tea with the Economist and discusses some of the main systemic risks for the global economy.

Inequality and the risk of financial crisis

Are there causal links between the scale of income and wealth inequality and the risks of financial crisis and distress? This article from the New York Times reports on research from David A Moss at the Harvard Business School who continues to mine cross country data on inequalities to see if there are close correlations with banking crises in particular countries.

Might it be the case that persistent relative poverty among lower income groups was a factor driving the expansion of sub-prime lending and excessive borrowing on very expensive credit cards?

Or was the sub-prime debacle largely the result of inappropriate financial deregulation and policy interest rates being held close to zero for too long rather than a trend rise in inequality?

What of the incentives of people at the top of the income scale? Has the rising economic power and influence of the super rich played some role in creating the conditions for financial and macroeconomic instability.

Correlation does not necessarily imply causation as the article makes clear in an interview with Glenn Hubbard from the Columbia Business School.

The Stimulus Debate - Krugman versus Ferguson

Tuesday, August 24, 2010

If you are looking for an introduction to some of the key themes in the debate about how best macro policy should respond to the global financial crisis and the recession then this set of videos from Global Public Square could be pitch perfect. There are interviews with the Keynesian-leaning Paul Krugman and Niall Ferguson who buils the case for running small fiscal deficits.

Links to the videos are below

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Credit squeeze - businesses rely more on factoring

Monday, August 23, 2010

A new report has found that the cost of borrowing money for small and medium size enterprises continues to rise as the economy struggles to sustain and meaningful recovery. Risk-averse banks have lifted borrowing interest rates and tightened the conditions on which loans are offered - a major bone of contention for businesses under threat of going under or perhaps looking for fresh funding to cover the cost of expansion.

Many are turning to factoring as an alternative to traditional loans and overdrafts. Under factoring a business chooses to pass on an existing invoice to a factoring company who pays a percentage of that invoice straightaway. The balance is received when an invoice is settled with the factoring company taking their own % cut and charging an administration / commission fee for handling a businesses’s credit management.

It is not cheap - but turning an invoice into cash immediately can be a lifeline. This BBC news report looks at the case of James Winnister who runs a security and fire installation business, and has to use factor invoicing to manage his cashflow.

Germany speeds ahead

Friday, August 13, 2010

After a terrible 2009 in which real GDP dropped by 4.9%, the German economy has posted the biggest increase in her quarterly GDP since West was unified with the East. German gross domestic product expanded by 2.2 per cent rate in the second quarter compared with the previous three months. German industry is riding on the back of a rebound in demand in the global economy (her manufacturing businesses are closely tied to swings in the world economic cycle) allied to the competitive boost of the recent depreciation of the euro against the US dollar.

Steve Evans reports on the surging German economy

 

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King on the economy

Thursday, August 12, 2010

The Guardian offers a good summary of the main issues arising from Mervyn King’s recent Inflation Report. There is a great little animation in the middle of this article to show how each month the Bank’s projected growth figures have always proven to be a little too optimistic and how they have deteriorated over the past couple of years.

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Typical 2689% APR…Eh??

When a friend’s Facebook status mentioned a website offering loans for a TV at 2689% APR, I was intrigued. It sounds astronomically high, doesn’t it? – The answer, as always in Economics, is that “...well it depends…”

Firstly, APR stands for annual percentage rate and is the interest payable on the amount borrowed and other charges expressed as an annual rate of charge.

Secondly, the website in question is called Wonga.com - “Wonga provides small and super-flexible loans around the clock. We’re here to help solve urgent and short term cash flow problems.

Wonga’s business model is based on lending money (maximum £400) for short durations (maximum 30 days).

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Consumer sentiment weakens as double dip looms

Monday, August 02, 2010

Swings in consumer confidence have often provided reliable evidence of short term turning points in economic activity. And there are growing fears of a double-dip recession for the UK with a raft of household surveys suggesting a weakening of sentiment about prospects for the economy.

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Paul Krugman at the LSE

Wednesday, June 02, 2010

This is a reprise of a blog posted last summer following Krugman’s talk at the LSE. So much of what he talked about remains relevant today especially the challenges facing macro-economic policy-makers when deflationary and debt dangers continue to lurk.

”“The central problem of depression-prevention has been solved, for all practical purposes.” Robert Lucas, 2003

In a world of depression economics many of the standard rules of economics no longer apply. The global economy remains in the grip of a sustained downturn, the duration of which might make Japan’s “lost decade” look favourable in comparison. And macro policy-makers are grappling with an infection that has proved highly resistant to the usual doses of anti-biotic. Despite a remarkable attempt at stimulating demand – through the acceptance of large fiscal deficits and the dual attack of conventional and unconventional monetary policy – things seems to getting worse albeit more slowly.

This seemed to me to be gist of the core message from the first of the Lionel Robbins lectures delivered by the 2008 Nobel Prize Winner for Economics, Professor Paul Krugman of Princeton speaking at the LSE this evening.

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Are we on the cusp of a second banking crisis?

Tuesday, June 01, 2010

Paul Mason reports here on fears of a second banking crisis - closely tied to the sovereign debt crisis. “Across the European banking system there is too much unfinished business” - there is much to be done to cleanse the system of bad assets and recapitalize the banks? Given the scale of public sector debt and the lack of room for further bail outs - are some banks too big to save? Will banks have to agree a hair-cut on their existing loans? Is a bank tax needed to create a new bail out fund?

This radio 4 Today programme discussion between George Magnus and Robert Peston is also worth a listen: Eurozone crisis ‘has ensnared’ governments

Finding new opportunities among the economic wreckage

I am reprising this blog entry from a year ago partly because Robert Frank is one of my teaching heroes. But also because his idea of a steeply progressive consumption tax continues to have such resonance today as we seek to find ways of re-balancing our economic systems away from excessive and often wasteful consumption towards saving and productive investment. Read on and you will find out about positional goods, status races and the case for taxing consumption more and saving less.

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AS Macro Revision: Consumer Borrowing

Sunday, May 30, 2010

Most of us at some time need to borrow money to finance spending. From taking out a mortgage or using a student loan and making frequent use of bank credit cards, borrowing is a normal feature of life and not necessarily something to be worried about. What matters is whether building up debt is sustainable – in other words, can those who rely on debt pay it back? Huge levels of borrowing and an inevitable surge in household debt were features of the long period of growth that came to an end in 2008. Now the British economy is being held back by a historically high level of consumer debt - and you thought that it was the British government stuck in the deepest debt trap?

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Warnings of hysteresis for the EU economy

Saturday, May 29, 2010

This is an updated blog post on the topic of hysteresis in the EU economy. The recession and financial crisis may lead to a permanent loss in potential economic output and a slower trend rate of growth in the future according to a study by the European Commission. The fall in potential GDP will be an example of hysteresis effects across the European economy and the cyclical downturn in output and jobs creates long term damage.

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EU Economics: Eurozone crisis in graphics

Wednesday, May 26, 2010

An excellent graphic resource on the BBC web site - available here

Greek’s shadow economy and institutions

Tuesday, May 25, 2010

Economic institutions matter! From the credibility of central banks to the roles played by legal systems in upholding property rights and the need for a functioning system of government in collecting tax revenues and making sure that each dollar or euro or pound of state spending is money fairly well spent. I enjoyed reading Tyler Cowen’s piece in the New York Times today - among many others he senses that an eventual default and departure from the Euro is probably the best approach that greek can take.

The budget crisis facing Greece boils down to excessively high levels of government spending and a failure to collect sufficient tax income. This comes as no surprise when we discover the size of Greece’s shadow economy.

“Greece has a malfunctioning fiscal system in which the shadow economy is estimated to be roughly 20 to 30 percent of the reported economy and tax evasion may run at $30 billion a year. Simply collecting taxes that are legally due would help bring Greece’s books into balance, yet even this simple remedy does not appear imminent.”

More here

Blanchflower scathing on cuts

Blanchflower here criticises Osborne’s contractionary fiscal policy at a time when growth is still anaemic, emphasising the collapse of multiplier effects from government spending, but also the negative impact on employment, both in the public and private sector, at a time when the private sector is still recovering slowly from the recession. Whilst cutting in a recession is clearly against the Keynesian ethos, Blanchflower accuses the Conservatives of also only following ideology rather than common sense, at a time when the government is one of the few entities to still be able to spend right now. He says this, and while there are reasons why the fiscal outlook for the UK is different to Greece’s, it is the financial markets that will dictate whether the government is allowed to spend right now…

Ireland’s GNP and the Debt Crisis

Friday, May 21, 2010

Despite well publicised attempts to tackle an alarmingly high fiscal deficit, Ireland still has a budget shortfall in excess of ten per cent of national income and a high accumulated national debt measured as a percentage of GDP. But the true situation may be much worse. Low corporate taxes encouraged sizeable inflows of FDI especially from North America, the result being that Ireland’s GDP is much larger than her GNP - a better measure of the national income generated by Irish-owned economic assets. Government borrowing measured against GNP is very large indeed. And Ireland along with countries such as Greece, Portugal and Spain is mired in the classic debt-growth trap - how can it achieve fiscal austerity when national output and real incomes are falling.

Simon Johnson is strong on this issue today - the dangers of sovereign debt

“Debt overhangs hurt growth for many reasons: business is nervous that taxes will go up in the near future, the cost of credit is high throughout society, and social turmoil looms because continued austere policies are needed to reduce the debt.”

More here

Roubini at the LSE - governments run out of policy bullets

Thursday, May 20, 2010

The LSE was packed tonight for a talk and discussion with Nouriel Roubini. It was an occasion to help launch his latest book “Crisis Economics” and Roubini started by arguing that financial crises are now more common than is supposed. Economics textbooks pay lip-service to crises and the conventional wisdom is that systemic crises in the markets are irregular and few and far between. Dr Doom takes a completely different stance believing that the sorts of crises that have dominated the headlines in recent years are best described as White Swans rather than the Black Swans beloved of Nicholas Taleb.

The Roubini lecture is now available on video using this link

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The Financial Crisis and Beyond

Thursday, May 06, 2010

Modern economies run on credit and so the collapse in confidence and lending within the international financial system in 2007-09 was bound to bring about a series of after-shocks to global demand, trade and jobs. In this sense, the economic and political crisis in Greece represents a stark example of the ripple effects of the credit crunch as we edge our way forward in an age of instability.

This to me was the key theme running through David Smith’s talk at the Keynes Society on Thursday night. Followers of David’s columns in the Sunday Times will appreciate his unerring ability to capture the essence of what really matters in the economics and business domain. In his presentation David’s narrative provided a tremendously clear overview of the background to the crisis, the shape of the inevitable recession that followed. And, more pertinently, prospects for the UK economy in 2011 and beyond.

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Guardian interactive - PIIGS and Domino Effects

Tuesday, May 04, 2010

Here is a neat interactive graphic from the Guardian European debt crisis: the possible domino effect

 

A2 Economics Revision - Changing Pattern of Global Trade & Investment

Sunday, May 02, 2010

This new streamed revision presentation guides students through some key evaluation points on the changing patterns in global trade & investment. Ideal for A2 revision.

Revision Presentation on the Changing Pattern of Global Trade & Investment

A2 Economics Revision - From Budget surplus to deficit

Saturday, May 01, 2010

Here is a suggested answer to this question: “Explain why a government budget might move from surplus to deficit” (15 marks)

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From Junk to Triple A

Wednesday, April 28, 2010

Here is a useful ranking of sovereign debt ratings for many countries - updated as ratings change!

Top rated:
Australia AAA - STABLE
Austria AAA - STABLE
Canada AAA - STABLE
Denmark AAA - STABLE
Finland AAA - STABLE

all the way down to

Pakistan B- (STABLE)
Ukraine B- (POSITIVE)
Ecuador CCC+ (STABLE)

 

 

Greek junk status timeline

This informative interactive graphic from the FT shows the rapid rise in Greek government yields over the past year, resulting in yesterday’s downgrade to junk status.
When S&P warns holders of Greek debt that they only had an “average chance” of between 30% and 50% of getting their money back in the event of a debt restructuring or default, its going to have consequences…
One result of going junk (or sub-investment grade…) is that many financial institutions (including pension funds) are not allowed to hold such investment instruments, which will lead to a big sell-off of these, causing the yields to rise further.
As the fears of contagion spread, Portugal was also downgraded and the Vix index, a measure of “fear” in the US stock market, rose by more than 30 per cent, its biggest one-day jump since the height of the financial crisis in October 2008.
The moves highlighted the potential that the Greek crisis – the result of too large a debt load and expectations that it may default or have to restructure that debt – could spread and have knock-on effects on the global economy.
In this month’s edition of Economax, there is an in-depth article on Greece’s fiscal crisis.

Greece dropped to junk - serious wobble time for the Euro

Tuesday, April 27, 2010

Tuesday afternoon and breaking news of a serious downgrade for the Greek economy.The ratings agency Standard & Poor’s has cut Greek’s credit rating three levels to BB+, or junk. Two year bond interest rates are 16% and rising. I am sure this will be huge news in the financial papers in the morning. This BBC news video looks at some of the opposition to the spending cuts the Greek government will be required to make as part of the international financial rescue package.

This BBC news report has a neat six page graphic helping to explain what went wrong with Greece in the eight years since the Euro was introduced into the Greek economy.

Issues and Prospects for the UK Economy in 2010

Sunday, April 25, 2010

Here are some notes from a presentation on some current issues affecting the UK economy - suitable I hope for AS and A2 macroeconomics courses and students preparing for their June 2010 papers.

We will make the full presentation available late and this blog post links to many of our other recent blogs on UK and global macroeconomic issues.

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Bonds

Saturday, April 24, 2010

Both companies and governments can issue bonds when they need to borrow money. The issue of new government debt is done by the central bank and involves selling debt to capital markets. The bond market is also the place where companies may seek to raise funds by issuing new tranches of debt.

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Living in a multi-polar world economy

Friday, April 23, 2010

Although many millions of people in the lowest income countries have suffered greatly from the world recession, for many emerging countries growth has continued apace and the world economy is more resilient than the consensus view believes. This was one of the arguments explored by Jim O’Neill, Head of Global Economics, Commodities and Strategy Research for Goldman Sachs, in his talk to the 40th Anniversary meeting of the Eton College Keynes Society last night. The creator of the BRIC acronym was also quite bullish about prospects for the UK economy, with Britain able to take advantage of a competitive exchange rate and a strong rebound in global economic activity driven forward by fast growth in emerging market countries.

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CEP analysis of the UK economy

On the day that weak economic growth data was released by the Statistics Commission, a hat tip to Romesh Vaitilingam for sending through details of the new CEP election analysis briefing. The latest CEP Election Analysis describes where we are now in terms of macroeconomic performance and the impact on the public finances – and the policy options, focusing on debt reduction and economic recovery, and comparing the parties’ positions. It can be downloaded here.

New CEP report on the financial crisis

Wednesday, April 21, 2010

The financial meltdown of 2008 led to the worst recession experienced by the UK and other advanced economies since the Great Depression. The latest Election Analysis from the Centre for Economic Performance (CEP) - by Professors Luis Garicano and John Van Reenen - examines what went wrong with the regulatory system for finance and how can it be fixed. Here is the link to their new report.

Lessons for the UK from the Irish Recession

Saturday, April 10, 2010

Stephanie Flanders offers this timely and well-judged piece from the Irish Republic about how the former celtic-tiger ecoonmy has adjusted to the painful medicine of fiscal austerity after their deep economic recession. She asks what lessons there might be for the political parties fighting the UK election.

The (sovereign) default option is costly

Wednesday, April 07, 2010

No rich advanced nation has defaulted on sovereign debts since the end of the second world war but should the default option seem attractive governments should beware the longer term costs and consequences. The Economist this week has a feature on some recent research into the impact of sovereign debt default focusing in particular on the experience of Argentina. Three major effects are identified:

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The best article on Economics I have read for ages

Barry Eichengreen, Professor of Economics and Political Science, University of California, Berkeley is on superb form in this special piece on lessons from the crisis for the Economics profession. A stunning piece of writing that captures some of the scholarly work in Economics that does have something tangible and important to say about the lessons from the financial and economic crisis. Here is the article.

Lessons for economists from the crisis

Monday, April 05, 2010

Larry Elliot has a superb piece in today’s Guardian on the challenges facing the economics profession in the fallout from the global economic crisis. He flags up a new book by David Smith “The Age of Instability: The Global Financial Crisis and What Comes Next ” which is now available through Amazon and will be a great read for ambitious AS and A2 students. And he flags up the first major meeting of the George Soros funded Institute for New Economic Thinking which is meeting appropriately enough in Cambridge. Reading through the agenda for the conference it looks like a gold mine of top quality speakers and sessions - sadly by private invitation only!

The director of the Soros-funded Institute is quoted as saying

“Too much of modern economic theory relied on sophisticated mathematical models to predict market behaviour. A broader, interdisciplinary approach to economics, taking in history, psychology, natural science — to deal with issues such as climate change — and even literature was now needed”

Larry Elliot argues in his piece that

“There is no need to reinvent the wheel. It’s more important to strip away the layers of complexity that gave big-picture economics a spurious and dangerous exactitude in advance of the crisis. The big lesson in economics from Keynes is that we know less than we think we do, and that there is a vast difference between the output of economic models and the actual behaviour of individuals.”

Read: Rescuing economics from its own crisis

The Times reports that George Soros is to create a new economics institute at Oxford University.

Small businesses and financial economies of scale

Friday, April 02, 2010

The latest Bank of England survey on financial and credit conditions finds that smaller businesses are finding it tough to get the credit they need to finance an upturn in sales and production. Interest rate spreads on new loans are rising and it is larger firms that seem to be benefitting from lower borrowing costs. A Times article explains that “larger groups are enjoying a reduction in the cost of borrowing and improved access to credit as banks favour lower-risk custom.” - the main commercial banks continue to adopt a risk averse approach to new lending and this may hamper prospects of recovery.

Unsecured loans for consumers have also become harder to get and more expensive despite the ultra-low interest rate policy of the Bank of England. In 2006, the top 10 average rate for a £3,000 personal loan was 6.49%, but today it is 14.92%, analysis by price comparison website moneysupermarket.com has shown.

End of the Road for the Car Scrappage Scheme

Wednesday, March 31, 2010

Today marks the end of the UK government’s car scrappage scheme. The scheme offered drivers of cars at least 10 years old £2,000 off the price of a new vehicle with half of the money is paid by the government and half by the carmaker in question. Over the course of the scheme is estimated that the scrappage initiative has been responsible for about a fifth of all new UK car registrations.  And there seems little doubt that the consumer subsidy has provided a shot in the arm for a car industry affected badly by the global financial crisis and subsequent recession. Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders is quoted as saying that it had provided a “much-needed stimulus for the UK motor industry”.

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Is 70% of the world economy in a liquidity trap?

Thursday, March 18, 2010

Paul Krugman expands on the nature of the liquidity trap and why more of the world economy might be in this situation than is commonly supposed. His opening paragraph raises an interesting question for A2 economists - does a liquidity trap encourage protectionist policies and heighten the risks of a period of prolonged de-globalisation?

“Being in a liquidity trap reverses many of the usual rules of economic policy. Virtue becomes vice: attempts to save more actually make us poorer, in both the short and the long run. Prudence becomes folly: a stern determination to balance budgets and avoid any risk of inflation is the road to disaster. Mercantilism works: countries that subsidize exports and restrict imports actually do gain at their trading partners’ expense.”

More here

Now and the 1930s - Great Blog

Tuesday, March 09, 2010

A hat tip to Diane Coyle for flagging up this superb blog update from Barry Eichengreen and Kevin O’Rourke comparing today’s global crisis to the Great Depression - fantastic for students of economic history.

Sovereign debt hot spots

Monday, March 08, 2010

An interesting summary of the sovereign debt worries of a cluster of countries courtesy of the Wall Street Journal

Recession hits vulnerable low income families

Recessions have macroeconomic effects - a topical discussion at the moment is the impact of the slump on the UK economy’s productive capacity and underlying growth rate - but the effects on individuals, families and local groups can often be over-looked by the broader macroeconomic debates. This news article refers to new research highlighting the damage caused by the recession on younger people whose pay and jobs are vulnerable.

These groups

1/ Are at higher risk of having to accept cuts in their money and real wages
2/ Are more exposed to a reduction in working hours and therefore lower weekly gross incomes
3/ Many have a personal inflation rate higher than the published data for CPI and RPI
4/ Have higher levels of unsecured household debt on which interest rates have risen in recent years and not fallen

It also focuses on just how little people on below-average incomes can afford to save.

“More than half of people on low incomes have less than one month’s salary saved and 40pc are not saving into a pension, while 53pc have unsecured debts, averaging £5,200.”

More here: Younger workers hit hardest by the recesssion, says think tank

Intergenerational injustice?

Saturday, March 06, 2010

Is the younger generation picking up the economic tab for the foolishness and extravagence of the baby-boom generation born in the 1940s and 1950s (and early 1960s!)? Justin Rowlatt from Newsnight has this fascinating report, one that raises important questions about inter-generational equity / fairness.

Trade as a stimulus for recovery

Friday, March 05, 2010

Pascal Lamy from the WTO has given a strong defence of the impact that trade can has as a stimulus for broader global economic recovery. World trade in goods and services has declined by 12% since the onset of the financial crisis but according to the WTO although there has been renewed claims of a return to protectionism, fears of a tsunami of import controls have - by and large - proved to be wide of the mark.

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