Bryan Caplan and David Henderson

International Macroeconomics: Exchange Rates, International Debt, etc.

A Category Archive (85 entries)

Happy Birthday, Leland Yeager

International Macroeconomics: Exchange Rates, International Debt, etc.
David Henderson
A regular reader of Econlog told me that while he likes my obituaries of famous economists, it would be nice to pay tribute to older accomplished economists while they're still alive. Here is my first. Yesterday was Leland Yeager's 90th... MORE

Ron McKinnon, RIP

Obituaries
David Henderson
Ron McKinnon, the Stanford University economist who specialized in international finance, has died. According to his colleague John Shoven, Ron "fell on an escalator at SFO about twelve days ago and was badly injured." I didn't know Ron well but... MORE

If something can't go on forever, it will

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
You may recall a famous saying by Herb Stein: If something can't go on forever, it won't. I don't quite believe that, although I must admit that Stein has me beat on logic. But I've noticed that when people say... MORE

Why Don't We Observe Time-Traveling Arbitrageurs?

International Macroeconomics: Exchange Rates, International Debt, etc.
Art Carden
Here's one reason to think time travel a la Back to the Future or one of the truly great but definitely most NSFW episodes of South Park will never work: we don't have contemporary or historical reports of time-traveling arbitrageurs.... MORE

The Keynesian information bubble

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Paul Krugman likes to brag that he doesn't read conservative bloggers, as they have nothing useful to say. And certainly the world is full of conservatives making sloppy arguments. But the downside of that strategy is that when he makes... MORE

Never reason from a price change, example #305

International Macroeconomics: Exchange Rates, International Debt, etc.
Scott Sumner
Over at TheMoneyIllusion I have a series of posts exposing the common fallacy of "reasoning from a price change." (Trademark) This occurs when people assume that consumers will buy less oil when the price is high, or there will be... MORE

The Relative Unimportance of Seigniorage

International Trade
David Henderson
I start every 50-minute segment of my class with a 5-minute discussion in which the students can ask about or talk about anything as long as it is economics. I've been doing it since January 1993 and it has been... MORE

Bet on Euro: I Won

International Macroeconomics: Exchange Rates, International Debt, etc.
David Henderson
Back in October 2011, I had a bet on the Euro with Iain Murray of the Competitive Enterprise Institute. To recall, he bet that by the end of March 2013, Spain, Italy, and Greece would have left the Euro. I... MORE

Worstall on Cyprus and Russians

Cross-country Comparisons
David Henderson
In response to my post earlier today, Tim Worstall wrote me. He quoted this from my review: We have examples of highly extractive governments even in the modern world. One shocking one, to me at least, is the case of... MORE

Evan Soltas on the Great Factor-Price Equalization

International Trade
Arnold Kling
He writes, The basic idea here is that the maintenance of Bretton Woods' fixed exchange rates required a system of financial controls which so severely limited capital flows, global investment and trade that economies were effectively closed. When Bretton Woods... MORE

The Magic Solution of Devaluation

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Scott Sumner writes, If the Spanish and Greek governments shrank enough to balance their budgets, they'd still have 24% unemployment, if not more. Their economies are hopelessly uncompetitive at the current exchange rate. And if those countries had a huge... MORE

Devaluation and the Real Exchange Rate

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
John Cochrane writes, If the Drachma goes from 1:1 Euros to 2:1 Euros and Greek prices and wages double, nothing happens. On the other hand, if prices and wages don't change, then Greek goods are cheaper and Greece will produce... MORE

Wolfgang Kasper on the Euro

International Macroeconomics: Exchange Rates, International Debt, etc.
David Henderson
When, as a Senior Fellow at the Kiel Institute of World Economics in Germany, I wrote my PhD thesis about international monetary affairs, it became clear to my colleagues and me that an imposed Europe-wide currency would be a stillborn... MORE

Today on the Eurozone Crisis

Eurozone crisis
Arnold Kling
First, two pointers from Mark Thoma. Jeff Frankel calls this the hour of the technocrat. Obvious disadvantages of some technocrats include lack of managerial experience, lack of perceived legitimacy, and lack of a domestic political powerbase. Monti and Papademos both... MORE

Comments on Eurozone Solutions

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Tyler Cowen writes, When it comes to debt, the periphery countries simply don't want to pay up. Their national wealth is many times their gdp and thus much much greater than their debts, even for Greece. It's amazing how many... MORE

A Surprise OWSer

Monetary Policy
Arnold Kling
I write, Are the Fed's actions in the interest of the 99 percent of us who do not own many shares of European banks? Overall, my comments stressed style over substance. This was for the NYT Room for Debate feature.... MORE

A Sentence that I Doubt

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
from Timothy Garton Ash: The passive consensus in favor of Europe is bigger than it appears in Great Britain. If I were to draw this as a cartoon, he would be the pet shop owner in the famous Monty Python... MORE

Italy's Black Friday Sale

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Selling bonds at a discount. "The pricing is awful," said Padhraic Garvey, rate strategist with Dutch bank ING in Amsterdam. "The object of the exercise this morning was to get the job done and they've done that, but that's about... MORE

European Banks

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Hyun Song Shin writes, The permissive bank risk management practices epitomized in the Basel II proposals were already widely practised within Europe as banks became more adept at circumventing the spirit of the initial 1988 Basel I Accord. Basel II... MORE

A Tax and Transfer Company with an Army

Fiscal Policy
David Henderson
That's my relabeling for accuracy of an otherwise-excellent Paul Krugman post today. Two excerpts from his post: But this seems like a good time to repeat, once again, the truth about federal spending: Your federal government is basically an insurance... MORE

Larry Summers on the European Situation

Optimum Currency Areas
Arnold Kling
He writes, At every stage of this process, from the first signs of trouble in Greece, to the spread of problems to Portugal and Ireland, to the recognition of Greece's inability to pay its debts in full, to the rise... MORE

Monetary Contraction Update

Monetary Policy
Arnold Kling
The WSJ blog writes, Since the start of September, the greenback is up 19% against the Brazilian real, 18% against the South African rand and nearly 9% against the Korean won. It's up more than 7.5% against the Indian rupee.... MORE

Toward a World Central Bank?

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
A Committee of economists proposes, the creation of an International Monetary Policy Committee composed of representatives of major central banks that will report regularly to world leaders on the aggregate consequences of individual central bank policies. In other words, more... MORE

Kipper- Und Wipperzeit Update, August 28

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Nick Rowe writes, The Tea Party makes life difficult for the Lender of Last Resort, because the Tea Party wants some sort of guarantee it will get its money back. And that guarantee can never be made cast-iron. If it... MORE

Daily Kipper- und Wipperzeit Update

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Tyler Cowen writes, Arguably it's now a question of who stares down whom. If you do not doubt German resolve, bet on the ECB and lend money to Italy fairly cheaply. If you fear that Italy suffers from its own... MORE

Boone and Johnson on the Eurozone Crisis

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Peter Boone and Simon Johnson have what written what I believe is the best analysis of the Eurozone crisis, which on this blog I refer to is as the Kipper- Und Wipperzeit. Thanks to Timothy Taylor for the pointer. I... MORE

Kipper- Und Wipperzeit Update

Finance: stocks, options, etc.
Arnold Kling
Apparently, the resolution of the debt ceiling restored the dollar's status as a safe haven in the eyes of the world's investors. That accelerated the flight from European sovereign debt and European banks. That in turn raised fears in financial... MORE

A Fragile Financial Order

Finance: stocks, options, etc.
Arnold Kling
Tyler Cowen writes Of the world's share of AAA sovereign debt, we issue 59 percent of it. (Next is Germany with ten percent and then France with nine percent of the total.) You can read this a few ways: 1.... MORE

More Wisdom from CPK

Books: Reviews and Suggested Readings
Arnold Kling
I've finished Manias, Panics, and Crashes, 5th edition. Some thoughts in addition to my previous ones (here and here). p. 55: The Kipper- und Wipperzeit [according to Wikipedia, translates to tipper and see-saw time] of 1619-1623...got its name from the... MORE

End the IMF?

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
No, this is not Ron Paul who writes, The IMF's business model sabotages properly functioning capitalism, victimizing ordinary people while benefiting the elites. Do we need international agencies to enable irresponsible--verging on immoral--borrowing and lending? Instead of dreaming up too-clever-by-half... MORE

On Greece

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
I am quoted here. Those experts who say that a default will be a solution are assuming that the default take[s] place as part of an orderly negotiation, so that either private-sector lenders or international institutions are willing to renew... MORE

End the IMF

International Macroeconomics: Exchange Rates, International Debt, etc.
David Henderson
Various bloggers are talking about who should be the new managing director of the International Monetary Fund. Here's my nominee: nobody. The IMF should be abolished. I came across an article I wrote in Canada's Financial Post in 1999. I... MORE

Euro Bet Resolved

Economic Methods
Bryan Caplan
Almost four years ago, I made the following bet with Jeremy Rabkin: If France, Germany, and Italy remain on the Euro as of December 31, 2010, Rabkin owes me $20. Otherwise, I owe him $20.I win.... MORE

Options for Europe

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
I have a hard time getting a grip on the European situation. The economics are complicated enough. But the political issues turn it into a three-dimensional chess game that is too deep for me. Anyway, perhaps this Bruno Leoni Institute... MORE

The State of the European Crisis

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Tyler Cowen writes, In a nutshell, we're watching the most pitched, highest-stakes, most determined battle between politics and finance which has been staged. I am expecting finance to win. The question is whether the Eurocrats can beat back the speculators.... MORE

Two Links

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
1. File this story under "collapsing center watch." (Yesterday, I linked to my response to a NYT question about the state of the economy. In that response, I changed the subject in order to mention my view that the political... MORE

The Euro and Armageddon

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Michael Pettis writes, In my opinion the current set of crises, beginning with the sub-prime crisis in the US and spreading throughout the world, is not a short-term liquidity crisis like LTCM, the Asian Crisis, or the Mexican crisis of... MORE

The State of the European Crisis

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Richard Baldwin and Daniel Gros introduce a set of essays on the crisis in the eurozone. The authors unanimously believe that the crisis is not over, and that the Eurozone rescue is not finished. More needs to be done. I... MORE

Rajan and Reinhart

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Raghu Rajan spoke at Cato about his new book, Fault Lines. One of the discussants was Carmen Reinhart, of Reinhart and Rogoff fame. I found it interesting, and it might be worth checking out when Cato puts up a recording,... MORE

Returned From Europe

Political Economy
Arnold Kling
I just returned from Europe, where I participated in two conferences sponsored by market-oriented think tanks. Some impressions below. (Note: Tyler Cowen has some interesting things to say, blogging from Germany--Tyler and I failed to meet in Berlin, primarily because... MORE

Some Bailout Commentary

Finance: stocks, options, etc.
Arnold Kling
James DeLong wonders what the business model is for Wall Street. Or, "We borrow from the government at low rates and lend back to the government at a premium, and for that we get paid a lot." (From the investment... MORE

Rodrik Update

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
In an email, Dani Rodrik writes to correct my misinterpretation. I don't think the world needs a strong government. I think the world needs to ease up on economic globalization, precisely because it cannot have (and should not have, for... MORE

The Deeper Meaning of the Greek Crisis

Political Economy
Arnold Kling
We are going to argue about this one. Dani Rodrik writes, The choice that the EU faces is the same in other parts of the world: either integrate politically, or ease up on economic unification. I read his essay as... MORE

Europe's TARP

Finance: stocks, options, etc.
Arnold Kling
Tyler Cowen writes, 6. Basically the ECB is monetizing bad government debt claims. His other 11 short points also are interesting. Peter Boone and Simon Johnson write, This is a whole new level of global moral hazard - the result... MORE

Should the IMF Have Intervened Sooner in Greece?

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
I'll say right away that I don't know squat about the theory or the practice of the IMF. But the IMF seems to have the power to negotiate deals of the sort that say, "We'll lend you the money, but... MORE

European Monetary and Fiscal Crises

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Sebastian Mallaby and Paul Krugman explain that the PIIGS have monetary as well as fiscal problems. That is, their wages are too high, and there is not enough labor mobility to produce the needed adjustment (hence, as many economists argued,... MORE

Time for Cryptonomicon

Money
Arnold Kling
Martin Feldstein writes, In the end, Greece, the eurozone's other members, and Greece's creditors will have to accept that the country is insolvent and cannot service its existing debt. At that point, Greece will default. Feldstein points out that there... MORE

Japan and the World Interest Rate

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
In Rudi Dornbusch's international macro course, there was something called the world interest rate. If the interest rate in dollars is 5 percent, and the interest rate in yen is 2 percent, then to have a world interest rate the... MORE

LDC Debt

International Macroeconomics: Exchange Rates, International Debt, etc.
David Henderson
In going through memos I wrote at the Council of Economic Advisers, I came across the following memo that I wrote to Jeff Frankel, who replaced Paul Krugman as the International Finance economist at the CEA. It was about Chapter... MORE

Martin Feldstein on the Greek Tragedy

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
He writes, The European economic and monetary union is doubly flawed. First, it forces diverse countries to live with a single interest rate and exchange rate that cannot be appropriate for all members. Second, combining a single currency with independent... MORE

Wish You Lived in Europe?

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Terrific NYU Symposium on the Greek tragedy. Paul Wachtel California is not Greece. I do not know what will happen if California defaults but I do remember what happened when NYC defaulted on its general obligation bonds in 1975 (I... MORE

The PIIGS Crisis

Finance: stocks, options, etc.
Arnold Kling
Peter Boone, Simon Johnson,, and James Kwak discuss the current financial situation, focusing on the PIIGS crisis. Their bottom line translates into: have a nice day. The PIIGS crisis seems a bit like the subprime crisis. That is the PIIGS... MORE

Bernanke Breaks His Arm at Ski Resort

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
His speech today at the famous Jackson Hole conference. This strong and unprecedented international policy response proved broadly effective. Critically, it averted the imminent collapse of the global financial system, an outcome that seemed all too possible to the finance... MORE

Financial Crises, Debt Finance, and Emerging Economies

Finance: stocks, options, etc.
Arnold Kling
Ravi Balakrishnan and others write, Evidence from past systemic banking crises in advanced economies (the US in the 1980s and Japan in the 1990s) shows that the decline in capital flows to emerging economies tends to be sizeable. Since then,... MORE

Banana Republic Economics, Continued

Finance: stocks, options, etc.
Arnold Kling
Carmen Reinhart and Ken Rogoff write, We find that banking crises almost invariably lead to sharp declines in tax revenues as well significant increases in government spending (a share of which is presumably dissipative). On average, government debt rises by... MORE

IMF to Investigate the U.S. Financial System?

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
A reader forwarded me this story. Officials with the International Monetary Fund (IMF) have informed Bernanke about a plan that would have been unheard-of in the past: a general examination of the US financial system. The IMF's board of directors... MORE

Blaming the Fed

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Bryan writes, the effect of the exchange rate on the price of gas turns out to be enormous. Our present search for scapegoats is deeply misguided, but a few people really are personally responsible for the high price of gas.... MORE

A Reason to Teach Macro

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
David T. King writes, In Europe, the price of oil has risen by 50 euros in the past five-and-a-half years. It now stands at about 75 euros per barrel, three times what it was then. But in the U.S., the... MORE

If You'd Listened to Me, You'd Be Happy About the Falling Dollar

International Macroeconomics: Exchange Rates, International Debt, etc.
Bryan Caplan
Two years ago I denounced home country bias, people's propensity to invest solely in their own country's assets. International diversification is a free lunch in terms of mean-variance efficiency, but most of us pass on it. As Karen Lewis explains:Indeed,... MORE

Open Economy Macro

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Tyler Cowen writes, I know full well that in most sensible intertemporal models the U.S. dollar is overvalued and must fall further to set right the trade balance. But these same intertemporal models don't explain business cycles or unemployment very... MORE

Leave a Comment, Larry

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
In an interview, Larry Summers says, The classic concern with respect to imbalances is that a situation develops where people are both trying to take money out of a country’s banks and trying to sell its currency. And the central... MORE

The CEA on Exchange Rates

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
From the 2007 Economic Report: the Chinese intervention does not systematically change the relative real prices between the United States and China. Had the Chinese government not intervened, Chinese domestic prices would have remained the same in terms of yuan... MORE

Euro Bet

Macroeconomics
Bryan Caplan
I made a wager this weekend while I was at a Liberty Fund conference in Chicago. Fellow participant Jeremy Rabkin of Cornell made quite a few predictions about the non-future of the EU that struck me as overconfident. When he... MORE

Global Competitiveness?

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
The World Economic Forum writes (in its executive summary), Switzerland takes the leading position as the world’s most competitive economy in 2006–2007, overtaking Finland and Sweden, and replacing the United States, which dropped to sixth position. Switzerland’s top ranking reflects... MORE

Why the IMF and World Bank?

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Mary Anastasia O'Grady writes, In a world of floating exchange rates and open capital markets, the IMF's raison d'être no longer exists. Its "clients" are rapidly repaying their outstanding loans. Macroeconomic accountability has improved world-wide, not because the fund mandates... MORE

Economic Nationalism, once more

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Don Boudreaux writes, Now consider a slightly different example in which I live, not in Virginia, but in Maine on the U.S. side of the Canada-U.S. border. My neighbor is a Canadian living in Canada. He mows my lawn; I... MORE

The Trade Deficit

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Don Boudreaux writes A trade deficit isn't debt. My young son, for example, received for Christmas several Chinese-made toys. These were bought with cash. If the Chinese toymakers invest their newly earned dollars in, say, that factory in Utah, the... MORE

Phelps on the Dollar

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Edmund Phelps, who I once said might have won the Noble Prize had he been Scandinavian, ventures a perspective on the dollar and the trade deficit. This model revolves around the epochal event hanging over the present situation: the explosion... MORE

Dollars and Deficits

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
About the falling dollar, I literally say "So what?" Taking as given government policy for spending, taxes, and money creation, there is nothing specific that political leaders can contribute to the operation of the foreign exchange markets...Our government has no... MORE

Whose Debt is it, Anyway?

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Don Boudreaux is puzzled as to why I should care about my country's net savings position, as opposed to just my personal net savings position. Suppose that government starts collecting trade data on blonde-haired people. The government could then calculate... MORE

Debating Outsourcing

International Trade
Arnold Kling
The link may only work for a day, but Tyler Cowen and John Irons go at it on the online WSJ over outcourcing. I think that Tyler supplies all of the highlights: Outsourcing resembles technical progress in its economics; in... MORE

Dollar Bubble

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Brad DeLong continues to predict a crash for the dollar. Japan, China, and other export-oriented East Asian economies are indeed eager to keep the value of the dollar relatively high, and their central banks have piled up close to $2... MORE

The Balance of Saving

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Should we worry about what I call the Balance of Saving (our trade deficit)? Don Boudreaux says no. Why should I care if new enterprises are financed out of the savings of a stranger from South Dakota rather than out... MORE

What Determines Exchange Rates?

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Tyler Cowen meditates on the topic of exchange rates. I am headed back from Poland to France, for one more day in Europe. I cannot help but wince at the especially high prices in France, compared to the United States.... MORE

Uncovered Interest Parity

Finance: stocks, options, etc.
Arnold Kling
Brad DeLong wonders, U.S. interest rates are low relative to those of other major countries (save Japan). Where is my uncovered interest parity? Here is what Brad is thinking. If I own dollars today and want to invest in bonds... MORE

Economists, Bridge, and National Savings

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Brad DeLong and I were sitting East-West, with Warren Mosler and Thomas E. Nugent sitting North-South. Somehow, we got to two ad hominems, doubled and redoubled. Let's review the bidding. Mosler and Nugent opened with Understanding that government deficits add... MORE

Trade Deficit, Saving, and Tax Policy

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
I argue that our trade deficit is really a savings deficit. Increasing exports relative to imports is not a matter of beating up on China to live up to its commitments in the World Trade Organization. It is not a... MORE

U.S. as Debtor

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Ken Rogoff, former chief economist of the International Monetary Fund, finds it odd that the United States is a borrower rather than a lender in international capital markets. Isn't it even stranger that this borrowing includes sizable chunks from countries... MORE

Economics of Outsourcing

International Trade
Arnold Kling
Brad DeLong makes another attempt to explain the economics of outsourcing. Remember: few would be worried about "outsourcing" if the U.S. unemployment rate were still close to four percent, rather than at the above six percent level that it is.... MORE

Trade Deficit a Concern?

International Trade
Arnold Kling
To what extent is the large trade deficit reported for the U.S. a cause for concern? In my Bubbleheads essay a couple months back, I discussed some of the fears about the deficit and the apparently-overvalued dollar. Brad DeLong wonders... MORE

Common Sense Macroeconomics

Macroeconomics
Arnold Kling
Robert Solow favors common sense over exotic theory. On the concerns about deflation in the U.S., he writes, If you look at the hundreds of prices that are tracked by the Bureau of Labour Statistics as elements of the consumer... MORE

Germany

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
The German economy is in bad shape. Brad DeLong points to a paper by Adam S. Posen that assesses Germany's potential to go into a long slump like Japan. For an advanced economy to perpetually stagnate, its political economy must... MORE

China, India and Deflation

International Macroeconomics: Exchange Rates, International Debt, etc.
Arnold Kling
Prashant Kothari forwarded an email from one of his readers that said, I think global deflation is [in] the cards as long as we have free trade in goods and services. China is rapidly becoming a sophisticated manufacturer and there... MORE

Deflation-fighting and Depreciation

Macroeconomics
Arnold Kling
Continuing the discussion that began with the thread Liquidity Trapped?, we can add opinions from Richard Berner of Morgan Stanley and Victor Canto of the Cato Institute. Canto writes, The data make a compelling case that we are on the... MORE

Optimum Currency Areas

Optimum Currency Areas
Arnold Kling
Martin Feldstein explains why Europe is not an optimum currency area, even though the United States is one. First, American employees move within the country when demand is relatively weak in a particular region, facilitated by a common language and... MORE

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