{"id":417478,"date":"2010-03-11T14:19:32","date_gmt":"2010-03-11T19:19:32","guid":{"rendered":"http:\/\/www.businessinsider.com\/heres-the-real-reason-china-wont-raise-rates-2010-3"},"modified":"2010-03-11T14:19:32","modified_gmt":"2010-03-11T19:19:32","slug":"heres-the-real-reason-china-wont-raise-rates","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/417478","title":{"rendered":"Here’s The Real Reason China Won’t Raise Rates"},"content":{"rendered":"

\"paulkrugman<\/p>\n

From NYT<\/a>:<\/em><\/p>\n

Today’s markets are being somewhat roiled by news of accelerating inflation in China, leading to worries that China will have to tighten monetary policy<\/a>. But, you know, that’s not what China is supposed to do in this situation.<\/p>\n

There’s an oldie but goodie in international macro known as the Swan Diagram — not instructions for making an origami swan<\/a>, but the insightful analysis developed by the Australian economist Trevor Swan. He suggested that we think of countries as having two objectives — keeping unemployment as low as is consistent with stable inflation, but not lower — and keeping the trade balance at an acceptable level. He also suggested that we think of two kinds of policies: things like monetary and fiscal policy that affect the overall level of domestic spending, and exchange rate policy that affects the competitive position of exporters and import-competing industries.<\/p>\n

Read the full post at The New York Times<\/em> –><\/a><\/strong><\/p>\n

Join the conversation about this story »<\/a><\/p>\n

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