Global Economic Leadership and the Group of Seven

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Institute for International Economics, Jan 1, 1996 - Political Science - 167 pages
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Sluggish global growth, frequent currency crises, and huge trade imbalances all reveal the failure of the Group of Seven (G-7) industrial nations to provide effective leadership of the world economy. The G-7 has played this role in the past and must do so again to ensure global prosperity.

Part of the G-7's decline is due to continuing policy differences among the United States, Germany, and Japan. The bigger problem, however, is a new "consensus for inaction" based on fears of trying to counter the huge flows of international private capital, the existence of large budget deficits, and the resistance of central banks to coordination by anyone.

The study offers a comprehensive analysis of all these changes in the world economy and reaches an optimistic reading of the prospects for effective G-7 leadership. It proposes an action program that includes reforming the exchange rate regime, instituting an early warning system to prevent new monetary crises, augmenting the resources of the IMF to deal with private capital flows, and institutional reform of the G-7 itself.

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About the author (1996)

C. Fred Bergsten has been director of the Peterson Institute for International Economics since its creation in 1981. Dr. Bergsten has been the most widely quoted think-tank economist in the world over the eight-year period 19972005. He was ranked in the top 50 "Who Really Moves the Markets?" by Fidelity Investment's Worth, and as "one of the ten people who can change your life" in USA Today. Dr. Bergsten was assistant secretary for international affairs of the US Treasury (197781). He also functioned as undersecretary for monetary affairs (198081), representing the United States on the G-5 Deputies and in preparing G-7 summits. Bergsten coordinated US foreign economic policy in the White House as assistant for international economic affairs (196971) to Dr. Henry Kissinger at the National Security Council. Dr. Bergsten has authored, coauthored, or edited 40 books on international economic issues.

C. Randall Henning, visiting fellow, has been associated with the Institute since 1986. He serves on the faculty of the School of International Service, American University. Henning specializes in the politics and institutions of international economic relations, international and comparative political economy, and regional integration. His research work focuses specifically on international monetary policy, European monetary integration, macroeconomic policy coordination, finance G-7 and G-8 summit cooperation, and regional cooperation in East Asia.

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