The underlying slowdown in productivity slow GDP growth and how monetary policy became the only game in town

This past weekend in Shanghai, the G-20 finance ministers and central bank governors held its annual meeting to discuss the prospects for global growth and the possibility of a coordinated policy response, which was received with mixed emotions and a great uncertainty. With estimates of annual growth revised 2015 US real GDP reaching nearly 2% and the increasing uncertainty of the side effects of slowing growth in emerging markets such as China, economic analysts OECD predict growth continuous tepid 2-3% growth for the US and many of the other nations of developed markets.

The phenomenon of slow growth of GDP secular ranging from 2-2.5% (below the long term trend of 3%) following the great recession is a continuous pattern one that has attracted the attention of scholars Many. Two new academic books, one by former CEO of PIMCO, Mohammed El-Erian and another from Northwestern macroeconomist Bob Gordon, try to identify the underlying factors behind "the new normal" of slow growth. Both books that explain the recent unrest have won awards and have reached the New York Times Bestseller list in recent weeks.

Mohammed El-Erian warns us on how monetary policy has become "the only game in town", promoting a pivot towards fiscal policy and structural reforms

The only game in town, Mohammed El-Erian, is an adept description of the history of central banking from its origins to the new instruments of unconventional monetary policy used by major central banks around the world, and how economies world need to start pivoting away from over-reliance on monetary policy to a more balanced set of economic policies, which also includes fiscal policy and structural reforms.

On the basis when markets crash, which won the FT Best Business Book of the Year in 2008, the former CEO of PIMCO reminds us of his skill to diagnose trends in financial markets and global economies. In fact, it was El-Erian coined the now ubiquitous phrase, "The New Normal" to describe the recovery of prolonged slow growth.

Related eXtra/News business news News Today