The latest World Economic Outlook, released this month by the International Monetary Fund, warns that even though global “flow imbalances” are lower than a few years ago, they are still substantial and so US liabilities to foreigners continue to rise each year. “Stock imbalances” remain a problem.
I visited Korea earlier this summer and gave a talk on effects of U.S. Tapering on Emerging Markets. (This was also the subject of comments at an Istanbul conference sponsored by the NBER and the Central Bank of Turkey in June.)
An interview on the effects of policy at the Fed and other advanced-country central banks on East Asian EMs now appears in KRX magazine (in Korean), August. Here is the English version:
Special Interview with Jeffrey A. Frankel <KRX MAGAZINE> August
Q: On 10 June 2014, Federal Reserve Bank of Boston President Eric Rosengren said in a speech that the Fed’s “new” monetary policy tools, including forward guidance and large-scale asset purchases, were “essential” in ensuring the economic recovery in the United States. What do you think about the ‘ongoing’ U.S’s ‘Tapering’ policy? And what is your idea about appropriate “new” monetary policy?
Widespread recent reports have trumpeted: “China to overtake US as top economic power this year.” The claim is basically wrong. The US remains the world’s largest economic power by a substantial margin.
The story was based on the April 29 release of a report from the ICP project of the World Bank: “2011 International Comparison Program Summary Results Release Compares the Real Size of the World Economies.” The work of the International Comparison Program is extremely valuable. I await eagerly their latest estimates every six years or so and I use them, including to look at China. (Before 2005, the data collection exercise used to appear in the Penn World Tables.)