Publication

This report argues that policymakers must go beyond short-term stimulus packages to tackle one of the root causes of the economic crisis: imbalances between savings and investment in major countries. The report analyzes the nature of these imbalances and identifies three features of the international financial system that have allowed the imbalances to persist. Beyond stimulus packages around the world, it urges measures to raise savings (principally government savings) in the US, reform labor and product markets in Europe and Japan to increase competition and flexibility, and boost domestic consumption in China.