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2009-07-30

Wrong diagnose, focus, and prescriptions

Comments on Eswar S. Prasad “REBALANCING GROWTH IN ASIA”, July 2009, http://www.nber.org/papers/w15169, quoted in fancunhui的日志, 美国经济研究局论文:亚洲再平衡式增长, http://www.pinggu.name/space-11768-do-blog-id-17325.html

It seems to be a useless study from an equally incompetent economist, disguised as something to help high savings countries.

They should be focusing on how to rebalance the high consumption countries, especially the US economy. It has been a real problem of theirs, but they blame for high saving countries.

If they don't import, how could other countries export to them? If they don’t consume much, how can other countries force them to do so?

If they can sort out their own behaviour, the issue of international imbalance will be solved.

What is the main difference between high and low income countries from economic point of view? It is the difference in their productive capacity, and in turn their physical capital stocks on a per capita level.

How to reduce that difference rapidly? By investment and capital accumulation. Investment requires savings and that is why developing nations need to have higher saving rates.

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