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Feldstein, Martin
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3 articles of this author have been cited in the European Press Review so far.
Euro rescuers on the wrong path
Discussion of the decisions made at the Brussels crisis summit for saving the euro continues unabated. But the resolutions are headed in the wrong direction, writes the liberal-conservative daily Corriere della Sera: "Because they had not yet been sealed by an official EU treaty they can't be pushed through by the EU Commission or any other EU institution. This means there is no mechanism to ensure that the new budget rules are adhered to. ... Even if German Chancellor Merkel, French President Nicolas Sarkozy and the EU Council President Herman Van Rompuy have tried to use the debt crisis to pursue the goal of European integration their inability to do so doesn't necessarily have to prevent the reduction of interest rates on the government bonds of indebted countries. Political measures in each individual country can lower risk premiums to reduce budget deficits. ... The Merkel-Sarkozy duo should admit that it has taken the wrong approach. Europe needs reforms tailored to each individual country. A new attempt at achieving a fiscal union and political integration is not the solution."
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More from the press review on the subject » EU Policy, » Fiscal Policy, » Europe
China needs a strong currency
In the last twelve months the Chinese yuan rose six percent against the dollar. During the financial crisis of four years ago, by contrast, its value remained practically unchanged. China must be actively pursuing a currency appreciation, writes the US economist Martin Feldstein in a commentary for the liberal daily Gazeta Wyborcza: "There are two fundamental reasons why the Chinese government might choose such a policy: reducing its portfolio risk and containing domestic inflation. Consider, first, the authorities' concern about the risks implied by its portfolio of foreign securities. China's existing portfolio of some $3 trillion worth of dollar bonds and other foreign securities. ... The second reason why China's political leaders might favor a stronger renminbi is to reduce China's own domestic inflation rate. A stronger renminbi lowers the cost to Chinese consumers and Chinese firms of imported products as expressed in renminbi. A barrel of oil might still cost $90, but a 10% increase in the renminbi-dollar exchange rate reduces the renminbi price by 10%."
» full article (external link, Polish)
More from the press review on the subject » Financial Markets, » Economy, » China
Martin Feldstein doubts the merits of the euro
Martin Feldstein, professor of economics at Harvard, questions the advantages of Europe's single currency the euro in the business paper Világgazdaság: "Although the euro simplifies trade, it creates significant problems for monetary policy. Even before it was born, some economists (such as myself) asked whether a single currency would be desirable for such a heterogeneous group of countries. ... The contrast between conditions in Germany and Spain illustrates the problem. ... Germany recorded a trade surplus of $175 billion in the 12 months through August, whereas Spain has run a trade deficit of $84 billion in the past 12 months. ... If Spain and Germany still had the peseta and the D-mark as their respective currencies, the differences in trade balances would cause the mark to appreciate and the peseta to decline. The weaker peseta would stimulate demand for Spanish exports and reduce Spain's imports, which would boost domestic demand and reduce unemployment."
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More from the press review on the subject » Fiscal Policy, » Financial Markets, » Europe
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