International Conference Gathers Leading Economists in Advance of G8 and G20

Chicago Council Report Considers Challenges Confronting the Global Economy

June 15, 2012 CHICAGO - The Chicago Council on Global Affairs today released a report, “Searching for Strategies to Restore Global Economic Stability and Growth,”  in advance of the G20 Summit in Los Cabos, Mexico. The report aims to enhance the current understanding of the world economy and to help identify possible short- and medium-term solutions to its growth. It summarizes a two-and-a-half day international economic conference hosted by The Chicago Council, in partnership with nine local and global institutions, on May 2-4, 2012.

Leading economists— Austan Goolsbee, former chairman of the U.S. Council of Economic Advisers; Yang Yao, Director of Peking University‘s Center for Economic Research; Charles L. Evans, president and CEO of the Federal Reserve Bank of Chicago; Susan Schwab, former U.S. Trade Representative; and Jeff Joerres, chairman and CEO, ManpowerGroup, and chair of the B20 Task Force on Employment, to name a few—participated in the conference and addressed key challenges confronting the global political economy, including sustained financial turmoil, renewed recessionary fears, persistent macro-imbalances, continued popular protest over damaged social compacts, and rising political populism.

Keynote presentations from Jean-Pierre Landau, former deputy governor of the Banque de France; Henry Paulson, former secretary of the U.S. Department of the Treasury; Dr. Y.V. Reddy, former head of the Reserve Bank of India; and Jesus Silva-Herzog, former minister of finance for Mexico and Mexican Ambassador to the United States informed general discussion by offering first-hand practitioner perspectives as to the goals, pressures, and limitations affecting the institutions most needed to expedite long-term economic growth.

But it was the topics covered in panel and breakout sessions, summarized in the full conference report, that reveal the scope of the crisis and the interconnectedness among global economies. Commissioned papers, distributed in advance of the conference, examined four sets of issues:

• The Current Crisis: Leaders of developed economies, themselves struggling with their own high levels of sovereign debt presently seem unlikely to generate new approaches to current problems without outside support. And while major emerging economies like China and Brazil may hold the key to long-term future stability and growth, they themselves are vulnerable and appear hesitant to overextend themselves.
• The Medium-Term Outlook: While the immediate challenges facing the global economy may seem daunting, the medium-term offers some cause for cautious optimism.  Coordinated global responses implemented at the height of the crisis through global institutions such as the IMF and G20 as well as the “stress tests” of the United States government towards its crucial financial sector, were largely seen as having been successful in mitigating the worst potential impacts of the crisis such as a complete freeze on global liquidity or the collapse of systemically important banks.
• Threatened Social Compacts and Political Responses: Rising inequality globally coupled with the loss of valued guarantees regarding the availability of employment and housing, the safety of once reliable public sector jobs as governments cut spending, and substantial reductions in access to credit have raised fundamental questions as to the legitimacy of the relationship between governments and populations.
• New Economic and Political Models: As fiscal stimulus winds down, leaders have fewer tools available to bolster local economies and shield populations from the pain of a sluggish economy. It remains unclear if private demand can take over from government spending and whether new political and economic frameworks are required to manage political paralysis and economic stagnation. 

The Chicago Council on Global Affairs hosted the May 2012 conference, “Strategies to Restore Global Economic Stability and Growth,” in partnership with local and international partner organizations, including the Brazilian Institute of Economics (IBRE) of the Fundação Getulio Vargas, the Europe-based Bruegel Institute, the Center for International Macroeconomics at Northwestern University, the Federal Reserve Bank of Chicago, the Indian Council for Research on International Economic Relations (ICRIER), the Initiative on Global Markets at the University of Chicago's Booth School of Business, the Japan Economic Foundation, the Kellogg School of Management at Northwestern University, and the Chinese National School of Development at Peking University (CCER).

The Council received generous support from the John D. and Catherine T. MacArthur Foundation, the Cooper Family Foundation, lead corporate sponsors JPMorgan Chase & Co. and Hyatt Hotels Corporation, and supporting corporate sponsors ManpowerGroup and Northern Trust Corporation.

About The Chicago Council on Global Affairs
Founded in 1922, The Chicago Council on Global Affairs is one of the oldest and most prominent international affairs organizations in the United States. Independent and nonpartisan, The Chicago Council is committed to influencing the discourse on global issues through contributions to opinion and policy formation, leadership dialogue, and public learning. Long known for its studies of American public opinion on foreign policy, The Chicago Council has expanded its contributions to national and international discussions on issues such as the global economy, migration, agricultural development and food security, and energy and climate change. Through studies, task force reports, and special initiatives, The Chicago Council contributes fresh insights and authentic perspectives from Chicago and the Midwest to the formation of opinion and policy in the United States and abroad.