Pulling Together in the Eastern Caribbean

The Eastern Caribbean Economic and Currency Union (OECS/ECCU) is one of four currency unions in the world. 

As in other parts of the world in the aftermath of the global economic and financial crisis, the region is at a crossroads, facing the major challenges of creating jobs, making growth more inclusive, reforming the banking system, and managing volatility, while grappling with high public debt and persistent low economic growth. Policymakers have the critical task of implementing strong reforms to strengthen the monetary union while also laying the foundation for accelerating growth. 

A new handbook provides a comprehensive analysis of the key issues in the OECS/ECCU, including its organization and economic and financial sector linkages, and provides policy recommendations to foster economic growth.

In an interview with IMF Survey magazine, economist Alfred Schipke, who is one of the authors, points out that, while the recent global financial crisis exposed significant weaknesses in the ECCU, it also provides a unique opportunity to move forward with needed reforms to strengthen the union.

Schipke recently co-edited The Eastern Caribbean Economic and Currency Union: Macroeconomics and Financial Systems, which was launched at IMF Headquarters in Washington, DC. IMF Deputy Managing Director Min Zhu, in his opening remarks, reflected on the challenges facing small island economies, particularly with loss of market share in the tourism industry, the mainstay of the economy in most of the island states. 

He said that the IMF and its partners can do a better job in helping the region to further push macroeconomic, as well as structural, reforms, and noted that the new book would help in providing a framework for developing solutions to the ECCU’s financial sector problems and stimulating economic growth.

Tailored Approach to Managing Public Finances

A new book by the IMF--Public Financial Management and Its Emerging Architecture--looks at reforms introduced by governments over the past two decades to improve management of public finances. These innovative ideas and reforms are changing the landscape of public finances and eventually aim to fundamentally change the way governments manage the public’s money.

The global financial and economic crisis highlighted the importance of sound public financial management in ensuring that well-designed fiscal policies are implemented effectively. Sound management of public finances means maintaining a sustainable fiscal position, allocating resources efficiently, and delivering public goods and services effectively.

The book looks at how reforms to public financial management make use of new information, processes, and rules to change the behavior of politicians and public servants to counter the ongoing challenges of managing government’s money. As identified in the book, too often the tendency for policymakers is to spend rather than save in good times; to focus on the short term; and to ignore the future costs of new policies, underlying fiscal risk, and the true state of public finances.

“The global crisis has highlighted that reforming governments’ management of public finances is no longer an option but a necessity. There is no ‘one-size-fits-all’ solution—reforms need to be tailored to countries’ individual circumstances,” said IMF Deputy Managing Director, Min Zhu, who addressed officials, journalists, and academics gathered at a special seminar to discuss the findings in the book.

IMF Survey article 

Book launch and Seminar on Public Financial Management and Its Emerging Architecture

Background and comments

Financial System Still Needs to Be Fixed

The financial system still has not been fixed and remains dangerous and fragile, says Anat Admati of Stanford University and Martin Hellwig from the University of Bonn in their book The Bankers’ New Clothes: What's Wrong with Banking and What to Do about It.  Banks remain too highly leveraged and debt is addictive. But the system can still be fixed, they argue.

Anat Admati and Martin Hellwig speak at the Peterson Institute and discuss whether banking reforms require the sacrifice of lending and economic growth. They outline an ambitious proposal to shore up financial systems and prevent future financial crisis.




Read a review in Finance & Development magazine

Admati exposes the flaws in the banking system that could trigger another financial collapse, and lays out a plan to fix it. She speaks her to Stanford Business.




Report card on global financial reform.

A Trade-off Between Credit and Welfare

The Land of Too Much: American Abundance and the Paradox of Poverty, by Monica Prasad, presents a simple but powerful hypothesis that addresses three questions: Why does the United States have more poverty than any other developed country? Why did it experience an attack on state intervention starting in the 1980s, known today as the neoliberal revolution? And why did it recently suffer the greatest economic meltdown in seventy-five years?

Monica Prasad is Associate Professor of Sociology and Faculty Fellow in the Institute for Policy Research at Northwestern University.

"Prasad’s history leapfrogs from the early New Deal to the 1970s, when economic stagnation led both Republicans and Democrats to deregulate finance to make credit even more available. At this point, we come to the familiar tale of Americans taking on too much debt, leading to speculative bubbles and the 2008 financial meltdown.
"History is where Prasad’s book runs into problems."
Read a review in Finance & Development magazine.

Prasad in the New York Times

Harvard University Press

The Damaging Effects of Global Inequality

World Bank economist Branko Milanović has a great introduction to global inequality in his The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality. He uses history, literature, and stories straight out of today’s newspapers, to discuss one of the major divisions in our social lives: between the haves and the have-nots. 

Milanovic reveals just how rich Elizabeth Bennet’s suitor Mr. Darcy really was; how much Anna Karenina gained by falling in love; how wealthy ancient Romans compare to today’s super-rich; where in Kenyan income distribution was Obama’s grandfather; how we should think about Marxism in a modern world; and how location where one is born determines his wealth. 

He goes beyond mere entertainment to explain why inequality matters, how it damages our economics prospects, and how it can threaten the foundations of the social order that we take for granted.

The book, by the lead economist with the World Bank’s research division and one of the world’s leading experts on inequality, was discussed in a three part series in Think Progress:

Part 1:  Inequality: The Global View
Part 2: Five Things You Might Not Know About Inequality
Part 3: Why Rich People Hate Talking About Inequality

See also Finance & Development magazine on inequality.
         Branko Milanovic's article: More or Less
                                 podcast interview on inequality  
          IMF research: Andy Berg and Jonathan Ostry

Inequality may be hazardous to your growth
How inequality affects savings behavior

Branko Milanović talking about inequality research:

Tribute to Chinua Achebe

Good write-up in the Guardian on Nigerian author Chinua Achebe, the father of African literature, who died in Boston, aged 82:

"African literature burst onto the world stage with Achebe's 1958 novel Things Fall Apart, which portrays an Igbo yam farmer's fatal struggle to come to terms with British colonialism in the late 19th century. It remains the best-selling novel ever written by an African author, having sold more than 10-million copies in 50 different languages. Nelson Mandela, who read his books during his 27-year incarceration, once said of him: "He was the writer in whose company the prison walls came down."

Chinua Achebe peered deep into the Nigerian psyche

"Achebe's works do not fear to challenge those post-colonial, independent regimes in Africa who abuse personal power in every possible way – from banning political opposition, to corruption. His novel A Man of the People, a biting satire on corruption in freed African regimes, uses the blade of humour to alert us to official greed and the cant which legitimises it."  from "A mind able to penetrate the mystery of being human."

New York Times ran an eloquent obituary:

In his writing and teaching Mr. Achebe sought to reclaim the continent from Western literature, which he felt had reduced it to an alien, barbaric and frightening land devoid of its own art and culture. He took particular exception to "Heart of Darkness," the novel by Joseph Conrad, whom he thought “a thoroughgoing racist.” 

Do You Still Prefer Print?

Lots of people do. Laura Miller writes in Salon:

"If print could talk, it would surely be telling the world, Mark Twain-style, that reports of its demise have been greatly exaggerated. The market for e-books grew exponentially after Amazon introduced the Kindle, and it’s still one of the most fascinating and unpredictable sectors of a once hidebound industry. But the early-adapter boom is showing signs of flagging and the growth of the e-book market appears to be leveling out. E-books are definitely here to stay, but it seems that many, many readers — a threefold majority, in fact — still prefer print."

Read the Salon article. 

Wired on the future of book publishing.

What  about reselling your ebook? Does it pass your sniff test !!