Benn Steil argues that the world has no attractive alternatives to the current dollar-based international monetary system, but that the dollar's days of coasting on the accomplishments of the Volcker Fed are over. The Fed must demonstrate to the world anew that the dollar is a reliable long-term store of value.

In this excerpt from The Closing of the American Border, Edward Alden writes that George Bush came to office as the most pro-immigrant president in modern U.S. history. Yet he presided over a war on terrorism that has been waged through anti-immigrant measures.

Brad W. Setser writes about the United States' dependency on China as its largest creditor. He argues that the U.S. government should look to transition to a world in which more U.S. investment is financed by the United States' own savings.

The National Bureau of Economic Research (NBER) is in some ways an anti-Wikipedia. In this Seattle Post-Intelligencer article, Amity Shlaes writes that when it comes to ideas, and the election, NBER remains a significant source of value creation in the hunt for a philosophy of content.

In this YaleGlobal piece, Amity Shlaes and Gaurav Tiwari examine entrepreneurship and oil wealth in various countries and how these factors relate to a country’s policy towards the U.S.  They find that there is indeed a significant positive relationship between the pro-US votes and the level of enterprise in a country, and that countries with oil tend to be less entrepreneurial as well as less friendly to the US. It seems clear that the US would benefit not only from helping countries strengthen education, the rule of law and free trade, but also from supporting the entrepreneurial culture of any country where the US has an interest.

The China Investment Corporation’s $5 billion investment in Morgan Stanley, its $3 billion investment in Blackstone and the China Development Bank’s likely $2b investment in Citigroup have attracted an enormous amount of attention.  In this paper for RGE Monitor, Brad Setser examines the unprecedented growth in China ’s foreign assets, the key institutions managing these assets, and the composition of China's aggregate external portfolio.

With oil at $100, what do we know about how the big oil exporters are managing their petrodollars? In this paper for RGE Monitor, Brad Setser and Rachel Ziemba examine the different GCC funds and estimate that total Gulf investment abroad exceeded $2 trillion in 2007.  One surprising conclusion that emerges from their analysis is that the Gulf as a whole has not diversified away from the dollar.

Brad Setser makes the case for oil-exporting Gulf states to stop pegging to the dollar in this Peterson Institute policy brief.

In this piece for The National Interest, David Victor looks at imagined wars that could erupt as China and India scramble for oil, as well as the various hypotheses surrounding the possibility that climate change could trigger conflicts over water and other scarce resources. He argues that "resource wars" are rising in the public imagination yet are unlikely to occur in reality.

Newspaper and magazine stories refer to a "loss of nerve", even a "loss of faith" in free trade by economists. When presidential candidates are challenged by free trade proponents, they typically say: "Ah, but economists no longer have a consensus on free trade." But the truth of the matter is that free trade is alive. The analytical arguments in favor of trade have hardly been dented by its critics, such as Alan Blinder, arrayed against it.

The odds are high that humans will warm Earth’s climate to worrisome levels during the coming century. Policy makers in the United States, which historically has produced more CO₂ emissions than any other nation while doing relatively little to tame the flow, can in particular learn much about creating viable carbon-cutting markets by studying Europe’s recent experience. In this Scientific American article, David Victor and Danny Cullenward offer several concrete suggestions on how the U.S. should go about constructing an effective national climate policy.

Politicians are supposed to be the masters of persuasion, flattery and spin; technocrats just the opposite. In a review of The Age of Turbulence, Alan Greenspan’s new book, Sebastian Mallaby claims that Greenspan succeeded as much through charm as through his skills as an economist.

In the Spring/Summer 2007 issue of The Cato Journal, Benn Steil writes on "Federal Reserve Policy in the Face of Crisis." He argues that the global monetary order of national fiat currencies represents the greatest threat to globalization.

Monetary Policy as Globalization's Achilles' Heel

The WTO talks between the G-4 nations—Brazil, India, the United States and the European Union—have collapsed yet again, and the U.S.'s inability to respond to long-standing, world-wide demands for the reduction of its (and the EU's) agricultural subsidies are mostly to blame, argue Jagdish Bhagwati and Arvind Panagariya.

In the Spring/Summer 2007 issue of The Cato Journal, Peter Kenen claims that the United States has become the largest single beneficiary of financial globalization, and we may have to pay a high price for that privilege.

The Benefits and Risks of Financial Globalization