Reality check for the global economy

 

 

 

 

 

 PIIE Briefing 16-3
Reality Check for the Global Economy [pdf]
Edited by Olivier Blanchard and Adam. S. Posen
Olivier Blanchard Adam. S. Posen After five years of disappointing recovery throughout the major economies, almost everyone is ready to believe the worst. The widespread large declines in global asset prices indicate a significant divergence between what financial markets fear and what most mainstream macroeconomic forecasts are showing for the world economy. Having some clarity to distinguish between the more solid underlying economic outlook and the shadows thrown by financial puppetry is critical to avoid an unnecessary recession. In this Briefing, a group of PIIE scholars came together to provide a reality check for the global economy. They set out what is known, both about macroeconomic dynamics and policy capabilities, in a context where distrust of both mainstream economic analysis and policymakers’ credibility has become excessive. Global economic fundamentals today are not so grim, though there is room for improvement in key areas including China, the United States, European banks, Brazil and Latin America, oil markets, global trade, and monetary policy options.

Copyright © 2016 by the Peterson Institute for International Economics.
The Peterson Institute for International Economics is a private nonpartisan, nonprofit institution for rigorous, intellectually open, and indepth study and discussion of international economic policy. Its purpose is to identify and analyze important issues to make globalization beneficial and sustainable for the people of the United States and the world, and then to develop and communicate practical new approaches for dealing with them. Its work is funded by a highly diverse group of philanthropic foundations,privatecorporations, and interested individuals, as well as by income on its capital fund. About 35 percent of the Institute’s resources in its latest fiscal year were provided by contributors from outside the United States. A list of all fi nancial supporters for the preceding fouryears is posted at
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CONTENTS
PREFACE
 WHY WE NEED A REALITY CHECK   ADAM S. POSEN
 THE US ECONOMIC EXPANSION REMAINS ON TRACK  DAVID J. STOCKTON
LOWER OIL PRICES ARE GOOD FOR THE UNITED STATE   OLIVIER BLANCHARD AND JULIEN ACALIN
 REALITY CHECK ON CHINA    NICHOLAS R. LARDY
GLOBAL TRADE GROWTH: SLOW BUT STEADY     CAROLINE FREUND
EUROPEAN BANKS: BUMPY TRANSITION TO A NEW POLICY REGIME   NICOLAS VERON
 HOW MUCH TROUBLE IS BRAZIL REALLY IN? MONICA DE BOLLE
FOR LATIN AMERICA, DISAPPOINTMENT BUT NOT DOOM     JOSÉ DE GREGORIO
CENTRAL BANKS HAVE LOTS OF AMMUNITION JOSEPH E. GAGNON

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