BUFFALO, N.Y. -- An independent monetary policy and aggressive
fiscal policy during the recent financial crisis are among the
factors contributing to an economic recovery in the U.S. that is
outpacing the other G7 nations, according to a University at
Buffalo economics professor.
Winston Chang, an expert on international economics, agrees with
the new report by the Organization for Economic Cooperation and
Development, a Paris-based think tank, which expects the U.S. and
Canada to lead the G7 nations in economic recovery. Chang said part
of the reason is that Europe is facing a different problem than
"The Eurozone does not allow member countries to have their own
monetary policy and, thus, their own exchange rate," said Chang.
"The U.S., on the other hand, with its independent monetary policy,
can also influence the value of the dollar."
Chang said a common currency, like the euro, is bound to have
problems in the long run when member countries experience different
degrees of productivity growth. U.S. economic, political and
military power puts the country in a position to accumulate
external debt that simply was not available to other countries,
"The fact that productivity growth in southern nations like
Greece, Portugal and Spain can't keep pace with Germany and France
in the north, coupled with the south's fiscal crisis, is the
culprit and a drag to the Eurozone," said Chang.
The OECD report anticipates the U.S. economy will grow 2.9
percent in the first quarter, while the Canadian economy will grow
at 2.5 percent. The robust North American growth compares to weaker
European activity, where the outlook, according to the report,
Gains in unemployment have not been strong anywhere within the
G7, a fact that Chang says points to "structural unemployment."
"Today's labor-saving technological change is unprecedented,"
said Chang. "Workers without appropriate skills would be hard
pressed to find suitable jobs, as they are now competing in world
labor markets with significant growth of off shoring."
Chang also addressed Japan's surprising bounce back of 3 percent
following last year's earthquake and tsunami.
"I think Japan's recent disaster affected mainly those export
industries located in the affected area," said Chang. "Overall, I
believe the disaster's effect is temporary and wouldn't be felt
Nevertheless, Japanese's economy lacks sufficient flexibility
compared to the U.S. in economic adjustment, said Chang.