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International Macroeconomics: Exchange Rates, International Debt, etc.
A Category Archive (78 entries)
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April 23, 2013
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
April 4, 2013
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
July 30, 2012
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
July 25, 2012
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
January 8, 2012
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
December 5, 2011
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
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
December 3, 2011
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
November 30, 2011
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
November 27, 2011
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
November 25, 2011
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
November 21, 2011
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
October 22, 2011
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
September 23, 2011
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 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
September 16, 2011
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
August 28, 2011
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
August 7, 2011
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
August 5, 2011
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
August 4, 2011
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
July 26, 2011
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
July 24, 2011
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
July 11, 2011
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
June 29, 2011
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
May 23, 2011
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
December 31, 2010
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
December 2, 2010
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
November 26, 2010
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
September 21, 2010
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
June 28, 2010
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
June 17, 2010
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
June 16, 2010
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
June 15, 2010
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
May 12, 2010
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
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
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
May 10, 2010
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
May 5, 2010
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
April 30, 2010
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
April 29, 2010
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
April 25, 2010
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
February 26, 2010
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
February 17, 2010
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
February 12, 2010
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
February 9, 2010
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
August 21, 2009
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
April 27, 2009
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
December 23, 2008
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
July 1, 2008
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
June 18, 2008
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
May 23, 2008
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
November 20, 2007
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
November 18, 2007
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
November 1, 2007
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
February 12, 2007
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
January 22, 2007
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
September 28, 2006
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
September 15, 2006
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
February 24, 2006
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
February 10, 2006
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
December 28, 2004
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
December 20, 2004
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
December 3, 2004
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
November 9, 2004
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
October 18, 2004
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
June 21, 2004
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
June 7, 2004
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
April 30, 2004
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
March 11, 2004
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
November 18, 2003
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
October 20, 2003
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
August 20, 2003
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
August 17, 2003
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
June 17, 2003
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
June 11, 2003
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
May 29, 2003
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
May 9, 2003
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
April 22, 2003
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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