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The Doha round of international trade negotiations was christened, 'Development Round'. Coming in the wake of the September 11, 2001, it was meant to demonstrate good faith on the part of the developed world in addressing the route cause of frustration in the developing world. Two years later, such hopes remain unfulfilled. This paper argues that it is still not too late for the developed world to rescue the Doha round, if they were sincere then and are sincere now.
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In the 1970s and 1980s, the problem that central bankers faced was how to tame inflation. Inflation is a tax on purchasing power and invariably, it hurts the poor as they do not find it easy to augment their incomes as the well-off are able to. Poverty is a trap.
However, in the 21st century, the problem central bankers face is one of deflation. Fighting inflation is easier than fighting deflation. Interest rates can be raised without limit. However, deflation is trickier. Interest rates can only be lowered to zero per cent. Beyond that, central bankers have to start printing money. Since it has not been done before, no one knows what the consequences will be. No solution in economics is without costs. The question is whether the costs would be manageable or would benefits outweigh them.
We may be able to find out soon as the US Federal Reserve could be forced to consider such a possibility some time this year.
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