Wednesday, October 12, 2005


International protection and economic stability

Central banks could certainly help to audit the public finances of a nation. However they might need protection from the national politics. But the resulting 'checks and balances' would at least assure the international monetary authority (ECB or IMF?) that the figures are in order.

Another major concern is trading imbalances around the world. Should they be levelled? On a key difficulty, Brad Setser produced helpful paper.

"I have rattled on and on about how China's current account surplus is on track to reach 6, 7 or even 8% of China's GDP. . . But that ain't nothing compared to Saudi Arabia. Its current account surplus is forecast to be close 30% of GDP in 2005 by the IMF (other forecasts put its surplus above 30% of GDP), up from 13% in 2003 (and a deficit in 1998?). The average surplus of a Middle Eastern oil exporter is around 20% of their GDP. . ."
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