The Group of 20 leaders from developed and emerging economies held their third summit in Pittsburgh, Pa., last week, about a year since the collapse of Lehman Brothers Holdings Inc. set off the current worldwide financial crisis. While there are signs of economic recovery, the leaders agreed to maintain existing stimulus policies in view of the bad employment outlook and weak consumer spending. Their agreement to avoid a premature exit from their emergency fiscal and monetary policies underscores the difficulty the world economy faces, and seems reasonable.

To try to steer the world economy away from reliance on American consumer spending, which is driven by the United States’ dependence on other countries’ purchases of its bonds, the G20 leaders adopted a “strong, sustainable and balanced growth” approach aimed at encouraging countries with large trade surpluses, such as China and Japan, to increase domestic demand and countries that spend too much to save. The leaders also agreed to periodically check each other’s economic programs to see if they are consistent with the goal of balanced growth. But how to carry out mutual checks is not clear. It will also be difficult to force change on countries whose programs are found to be inconsistent with these goals.

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