Thursday, November 18, 2010
OECD Sees Global Recovery Slowing as U.S. Lags
The global economic recovery is losing steam in the face of a slowing U.S. rebound and tensions over currencies, and a debt crisis in Europe could trigger more weakness next year. The OECD twice-yearly report said governments needed to tighten public finances and coordinate better on economic policy to usher in a durable recovery. The organization’s chief economist said short-term stimulus measures were becoming increasingly ineffective. While the recovery is still in progress, it is more hesitant than in the early part of the year according to the OECD secretary.
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It's interesting that the OECD is saying that there needs to be money tightening in light of the fact that The Fed just began their bond purchases which will theoretically increase the money supply and cause inflation to ensue.
ReplyDeleteso this might be a case where the government tries to influence the IS curve by shifting it to the left while the Fed is trying to impact the LM curve by shifting it to the right.
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