A few months ago the Federal Reserve seemed to be inexorably moving toward adopting an inflation targeting policy regime. Fed Chairman Ben Bernanke is known to support such a framework having co-authored several articles and books on the subject. Moreover, his institutional hand had been strengthened by Frederic Mishkin’s appointment as Vice-Chairman of the Fed, Mishkin being one of Bernanke’s co-authors. (more…)
The International Monetary Fund (IMF) has been the focus of extended debate and criticism, yet reform has been hard to come by. Now, owing to changes in the global economy, the issue of reform has forced itself onto the official agenda. The Fund’s management has responded with its own reform proposals, but they are too narrow. Instead, the IMF should be pressured to adopt bolder reform that incorporates missing social concerns into its mission. (more…)
Over the past several years, much attention has focused on the role of China’s trade surplus in creating today’s global financial imbalances. With so much attention devoted to China, little attention has been paid to the role of Japan’s policy of near-zero interest rates that has also contributed to these imbalances. With global financial uncertainty rising, it is time for Japan to decisively abandon this policy. (more…)