Their deficit is projected to be 10% of GDP and they’ll soon introduce a budget that will raise taxes. Is that really the appropriate response in the teeth of a deep recession? Mr. Trichet: I am not speaking of one country in particular. In each case you have to see what your own room for maneuvering is.
Professor Kenneth Rogoff’s well-researched messages on effects of financial globalisation on developing countries are appropriate as governing thoughts for this session. There is evidence of a threshold effect in the relationship between financial globalisation and economic growth, and the heightened risks of volatility in capital flows to developing countries gets reduced only after a particular level of integration.