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New Year’s Resolutions for the Global Economy

STANFORD – Over the last year, global growth has been anemic – and the forecast is only slightly better for 2016. Something must be done to boost incomes and expand opportunities for people everywhere. Here are some economic resolutions that could bring good cheer in the new year and beyond.

Let us begin in Europe. Despite the European Central Bank’s monetary accommodation, a sharp depreciation of the euro, and negative short-term interest rates, the European economy remains in the doldrums.

In 2016, Europe’s leaders must stop expecting monetary policy to solve their problems, and instead pursue faster, firmer resolutions to the myriad crises they face, from the intertwined growth, banking, currency, and governance crises to the escalating refugee crisis, which is threatening free movement across internal borders. They must pursue supply-side fiscal, structural, labor-market, and regulatory reforms, with common-sense solutions for the struggling periphery economies’ fiscal crises and the stronger economies’ medium-term debt woes topping the agenda.

In Latin America, the situation is more varied. After a decade of progress (with some exceptions, notably Venezuela), the region is facing serious challenges, stemming partly from a sharp decline in global commodity prices.