Yves here. This post is important because even though the Fed is focused on the impact of QE (and hence the taper) on the domestic economy, it’s been getting enough of a hard time from central bankers of leading emerging markets economies that it least has to feign concern credibly.
The Eichengreen/Gupta paper summarized in this post concludes that, quelle surprise, the countries most vulnerable to changes in Fed policy (which really means hot money in and outflows) are those with the biggest financial markets relative to GDP. Curiously, Eichengreen and Gupta fail to note that this means the orthodox advice to developing economies, that financial “deepening” is a Good Thing and therefore should be supported by government policy, in fact reduces financial stability and makes them even more vulnerable to the moods of fickle foreign investors.
Yves here. In some ways, I hate to be having such a run of Paul Krugman posts, but his stand on the TransPacific Partnership and his continued defense of dubious economic ideas that were long ago disproven, like loanable funds, in combination with his prominence, means the attention is well warranted.
Municipal bond investors, a conservative bunch who want to avoid rollercoaster rides and cliffhangers, are getting frazzled. And they’re bailing out of muni bond funds at record rate, while they still can without losing their shirts.
Yves here. While itmay seem far afield of normal NC fare, I thought this post on the Junior Reserve Officers Training Corp was worth highlighting for several reasons. One is, as you’ll see, the way that the well-funded armed services are managing to suck funds out of already-struggling inner city school budgets. Second is that […]
As in so many Western countries these days, the social, political and economic landscapes in Spain are shifting at a startling rate. In the last two weeks alone the Rajoy government has announced one draft law and passed another that threaten to radically redraw the country’s system of law and order.
I’ve been fascinated lately with the meaning of the terms “liberal” and “progressive.” It’s clear that what we now call “liberalism” is really a variant, a side branch of the real thing, and should be more properly named “FDR liberalism” or “social liberalism.”
Yves here. This post looks at the strictures of the Eurozone (debt to GDP and deficit limits) and not surprisingly concludes that the supposedly independent ECB is making matters worse that a more “political,” as in growth oriented one, would. But depicting central bank independence as detrimental is a novel and important argument.
Yves here. Even though Yanis Varoufakis has savaged the Trokia’s austerity policies that are driving Greece and other periphery countries into economic and social distress as well as fueling the rise of extreme right wing parties, some readers of this blog have criticized him for advocating reforms to pull the Eurozone out of its nosedive […]
Lambert here, a proposition: Unwillingness to own the externalities of one’s own consumer fetish correlates highly with intensity.
By Laurent Bouton, Assistant Professor of Economics, Georgetown University, Paola Conconi, Associate Professor at ECARES and CEPR Research Affiliate, Francisco J Pino, Postdoctoral Researcher in Economics at ECARES, Université Libre de Bruxelles, and Maurizio Zanardi, Reader in Economics, Lancaster University Management School. Originally published at VoxEU.
Despite support from around 90% of US citizens, expanded background checks for gun purchases failed in the US Senate. This ‘gun-control paradox’ can be explained by the fact that the intensity of voters’ preferences differs across policy issues, and voters only have one vote with which to hold politicians accountable on a bundle of issues. A model incorporating these features predicts Senate voting behaviour very well. Senators closer to re-election are more likely to vote pro-gun, and only Democrats ‘flip-flop’ on guns.
Lambert here: Nice to see an organization sponsored by the Institute of Chartered Accountants in England and Wales calling for financial criminals to be prosecuted. And here’s who Victoria Chick is. I wish she’d come over here and smack the weasels at Justice around.