One of the most robust findings in international finance is that interest differentials do not point in the right direction for subsequent exchange rate changes. This means that dollar returns on say one year certificates of deposit in the US and in the UK are not on average equalized. In Chinn and Meredith (2004), we show that this anomaly — if it is one — disappears as one goes to longer horizons. This finding was discussed previously here.
Author Archives: Menzie Chinn
A Debate in Foreign Affairs: Stimulus or Reform
From an exchange in the September/October issue of Foreign Affairs, with Raghuram Rajan, Karl Smith and myself. I write in my comment:
Guest Contribution: “Sticky Prices, Store-Switching, and Effective Price Flexibility”
Today, we are fortunate to have a guest contribution written by Olivier Coibion (UT Austin), Yuriy Gorodnichenko (UC Berkeley), and Gee Hee Hong (Bank of Canada); it is based on The Cyclicality of Sales, Regular and Effective Prices: Business Cycle and Policy Implications.
Romney Campaign on the Tax Policy Center study: “Objective, Third-Party Analysis”
Or, he was for the Tax Policy Center before he was against the Tax Policy Center, and how to assess think tank research.
Central Bank Balance Sheets and Inflation
Given several prominent policymakers have worried about central bank actions leading to high inflation, (e.g. Representative Ryan) it seems reasonable to see how expansions in central bank balance sheets correlate with inflation.
Representative Paul Ryan’s Economic Weltanschauung
Recapping my analyses of his budgetary and macroeconomic views, including supply side, interest and inflation rates, and command of economic history.
Guest Contribution: Innocent Bystanders? Monetary Policy in the U.S. and Inequality
Today, we are fortunate to have a guest contribution written by Olivier Coibion (UT Austin) [interviewed here by Prakash Loungani], Yuriy Gorodnichenko (UC Berkeley), Lorenz Kueng (Northwestern) and John Silvia (Wells Fargo); it is based on IMF Working Paper No. 199
Non-Government GDP and Employment: Revisiting Lazear’s Comparative Analyses
Reader Peter Schaeffer writes in comments to my rebuttal to Ed Lazear that demonstrates that ex-defense GDP growth is higher under the Obama administration than during the comparable period of the G.W. Bush administration:
Guest Contribution: “The Making of America’s Imbalances”
Today we are fortunate to have a Paul Wachtel (NYU) and Moritz Schularick (Free University of Berlin) as guest contributors. This article is based upon their paper of the same title.
Governor Romney Recalibrates Employment Forecasts
Last May, Governor Romney stated that in a typical recovery, monthly employment increases should be about 500,000 per month [1]. The sheer implausibility of that statement (assessed in this post) has induced him to reduce his estimate (without explanation of the change) to 250,000 per month. [2]. In Figure 1, I provide a plot of the implied path, as well as that from his May statement (which made me laugh for days!). In other words, his forecast has moved from clearly “Heritage Foundation space” to something that seems a bit less implausible, even if not clearly motivated by a specific model