Brad Setser thinks that China is again holding the RMB down to maintain export volume in the face of softening global demand. From the comments (my emphasis): China prefers subsidizing US consumption of Chinese goods to subsidizing Chinese consumption of Chinese goods… if China’s foreign asset accumulation continues at $800b a year, it will add $3.2 […]
Read more...This item came from reader Chris, who passed along a tidbit from Wolfgang Munchau’s Eurointelligence daily newsletter. I can’t provide a link to the story itself; checking around the Eurointelligence site, it seems to be an e-mail only product, and the piece in question is based on a German news story. The proposal is odd. […]
Read more...The headline of this International Herald Tribune article (hat tip reader Saboor) is a real sign of the times. The short answer is our policies assume the answer is yes, but if we don’t course correct, that assumption is likely to be tested. Specifically, the argument goes, our trading partners will continue to be willing […]
Read more...Even though Greg Mankiw claims in the New York Times today that ” Economists are nearly unanimous in their support of an unfettered system of world trade,” another Harvard economics professor begs to differ. Dani Rodrik, writing for Project Syndicate, finds that some prominent former staunch advocates of liberalized trade regimes are having serious doubts […]
Read more...Blomberg columnist William Pesek plays out a line of thought that may have occurred to some readers: what if the resolution of the credit crisis and global imbalances isn’t a nasty recession or punishing inflation but Japan-like protracted low growth, with stagnant to deteriorating living standards? This idea may not be as much of a […]
Read more...The headline above, which comes from an article in the Telegraph by Ambrose Evans-Pritchard, might benefit from a better image. “Blowing up” doesn’t seem the right image to describe an economy at risk of a sudden drop in growth. But something more fitting, like engines going into stall, might have taken too much space. Aside […]
Read more...Bloomberg, getting a jump on next week’s news, tells us that expectations for the Commerce Department’s report on the US trade deficit, due on July 11, is that it got worse. In general, increasing current account deficits (of which trade is the biggest component) put downward pressure on currencies. But our nasty conundrum is that […]
Read more...Full disclosure: I’m normally a fan of Mohamed El-Erian, former head of Harvard Management, now co-president of bond giant Pimco. But his current comment in the Financial Times, “How best to manage global imbalances,” struck me as more than a tad disingenuous. Let’s go through the article: Whatever happened to the debate on global payments […]
Read more...A good paper at VoxEU reaches a conclusion that seems expected, yet has been contested in academic research, namely, that imports have lowered US inflation. As we have discussed in other posts, this has far more important policy implications than obvious at first blush. The Fed has been looking at inflation as strictly a domestic […]
Read more...Dani Rodrik often thinks more like a political economist (which was the initial focus of the dismal science) than the development economist he professes to be, which I consider to be a plus. That perspective enables him to frame issues in ways that sometimes escape other observers. Many discussions about economics often boil down to […]
Read more...Policymakers in Europe have been worried about the appreciation of the euro, which makes local goods less competitive in international markets. Another cost of the currency’s strength is that foreign direct investment has plummeted, as producers shift funds to nations that now have a cost advantage. From the Telegraph: Long-term private investors are pulling their […]
Read more...A good comment by Philip Stephens in the Financial Times, “Uncomfortable truths for a new world of them and us,” is a polite and understated wake-up call to the fading former imperialist of the West. He notes that the countries currently dominant in major international organizations assume that life will continue more or less as […]
Read more...I’m intrigued when a commentator gives high praise to a work by someone who comes from a political vantage different from his own. I get even more interested when another take on the same piece seems straight out of Rashomon, a radically different account with only a few facts in common. The opus in question […]
Read more...It’s hard to read the tea leaves of the European Union at such a remove, but a public show of disagreement, even if done politely, is not an everyday spectacle. Frances’ finance minister Christine Lagarde urged central bankers to alleviate currency misalignment. This is mainly code for “do something about the pricey euro” but is […]
Read more...Why is it that some ideas capture the popular imagination and others die on the vine? A lot has to do with timing, getting noticed by opinion leaders, having a pithy turn of phrase. Yet I’ve seen articles and books that (at least to me) make fundamentally important observations and go nowhere, and others which […]
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