This article deals with three propositions pertaining to U.S.-Chinese dispute over the trade imbalance between them: that the Chinese currency is undervalued, that this undervaluation is the cause of the trade imbalance, and that Chinese policies are immoral and illegal according to...

The purpose of this paper is to discuss the effects of a rise in defense spending on key macroeconomic variables since September 11, 2001. For examining the effects of the rise in defense spending, empirical models were developed for GDP, employment, trade deficit, and budget deficit. In...

Despite a significant decline in the value of the dollar, the U.S. trade imbalance has almost doubled in the past three years indicating that the Marshall-Lerner condition is not applicable. Continued political pressure to devalue the dollar may result in the end of the de facto dollar standard...

A fully opened capital account, a pure floating exchange rate, and inflation-targeting monetary policy is the macroeconomic setting currently recommended in Latin America by the International Monetary Fund and the orthodoxy. In this paper, we present an alternative macroeconomic regime proposal...

This paper argues that there was a remarkable similarity in the external cycles in Latin America's economic history. The desarrollo hacia fuera, the Economic Commission for Latin America and the Caribbean earlier designation for the World Bank's "outward-oriented" model, that prevailed in the...

The debt crisis of the early 1980s prompted several analyses that emphasized the negative role of fiscal deficits on economic development. This negative view of fiscal deficits was consolidated in the "Washington Consensus" agenda. International financial crises--recurrent in a world of true...

The European debt crisis in 2010 resulted in the adoption of fiscal austerity measures in many European economies, and produced demands for the adoption of similar policies in the United States. This paper examines whether the implementation of immediate fiscal austerity during a fragile...

This paper modifies the textbook income-expenditure model to properly account for imports. This modification causes government spending to have an even larger relative impact compared to tax cuts than conventionally thought. It also shows that increased government spending can have a smaller...

This paper examines the fiscal strategy followed by the Spanish government in order to stop the fall of aggregate demand induced by the financial crisis. The Spanish economy provides the best example among the countries of the European Monetary Union of the contradictions between the...

This paper examines the implications of the experience with the financial crisis of August 2007 for fiscal policy and the use made of it. We briefly sketch the changing attitudes toward fiscal policy and the demise of arbitrary rules for the budget deficits and the reassertion of purposeful...