A Global 'Growth Map' for 2014
— January 21, 2014
By A. Michael Spence
The largest missing piece in the evolving US growth pattern is investment, especially public sector investment, and that is likely to continue in this political environment. The alternative -- shifting the portfolio of domestic aggregate demand for some period from consumption to investment paid for by taxes on income or large pools of wealth -- won't fly politically. That means growth will remain below potential for an extended period.
EUROPE. Thanks to the European Central Bank and its unused (but lurking in the background) Outright Monetary Transaction policy to bail out states on the verge of bankruptcy -- and the German Chancellor's backing of this important measure -- the sovereign debt markets have stabilized for now.
Read full article as published in The Huffington Post
A. Michael Spence is the William R. Berkley Professor in Economics & Business.