Wednesday, July 30, 2014

Boskin and Sinn

Will the euro displace the dollar as the world’s principal reserve currency? How should financial markets be re-regulated without stifling innovation? Should the European Central Bank focus on growth, as America’s Fed does? Is Germany’s export-led growth strategy a threat to its trading partners?

The coming decade may well be remembered for mounting transatlantic struggles. Systemic friction – in financial regulation, antitrust, currencies, and trade – is increasing in the wake of the financial crisis as well as the euro’s rise against the dollar. Many in Europe view America’s commitment to free markets not only as the root cause of the crisis, but as quasi-imperialistic and untempered by concern for the community and the environment. Americans, in turn, often regard European social policy as a mix of protectionism and self-indulgence.

Yet, over the coming decade, the same forces – the struggle to regulate financial markets, technological innovation, and dissolution of boundaries between national markets – will drive the European and American economies. Europe and America also face similar challenges – from terrorism to immigration, from outsourcing to energy security – that call for a truly Transatlantic Perspective.

Whether the issue is currencies, taxation, or European integration, harmonization of fiscal policies, securities regulation, or the international financial system, intimate knowledge of the “political economy” of decision-making on both sides of the Atlantic will be the key to understanding what lies in store for both Europe and America, and how their decisions will affect the world.

This is why two of the world’s most distinguished political economists, Michael Boskin, a former Chairman of the US Council of Economic Advisors and currently Professor of Economics at Stanford University, and Hans-Werner Sinn of Germany’s Ifo Institute and Munich University, have teamed up to provide Project Syndicate with exclusive monthly commentaries on Europe, America, and the world. Deeply informed and bracingly prescient, Boskin and Sinn are essential reading for anyone who wants to comprehend the complex relationship between political decisions and economic performance.

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