Those were some of the topics of a recent Asia-Europe Economic Forum conference that took place at the French Ministry of Economy, Finance and Industry, entitled “G20: Completing the Agenda”, organized by Agnès Bénassy-Quéré and co-sponsored by CEPII, DG-ECFIN, and the Ministry of Economy, Finance and Industry.
Author Archives: Menzie Chinn
UK: No Expansionary Fiscal Contraction Yet
The UK can be seen as a kind of test case for the proposition that contractionary fiscal policy can induce an economic expansion, a proposition forwarded by most recently Alesina and Ardana (2010) [wp version] (following up earlier work by Alesina and Perroti). So far, admittedly early in the process, the evidence is not consistent with the view of expansionary contraction. Here’s Gavyn Davies’ view:
…The statistics were expected to show a significant slowdown in output growth, but nothing like the drop of 0.5% in real GDP (-2 per cent quarter-on-quarter annualised) which was actually announced this morning. …
Chinese Exchange Rate Pass-Through
Jian Wang had an interesting article on the Chinese rebalancing issue, and how renminbi revaluation would fit in. One point he raised pertained to exchange rate pass through. That inspired me to check the literature on this subject.
Three Years after the Great Recession’s Start
I thought it useful to take a look at a few retrospective macro indicators pertaining the December 2010, three years after the beginning of what some term “the Great Recession”. In particular, recall that some observers were, even ten months into the recession, and a month after Lehman’s collapse, denying the possibility of a truly deep loss in employment, and the idea of a lack of credit availability.
The Yuan, the Chinese Trade Balance and the US, Again
…through the Lens of Multiple Regression
Cumulative Output Loss
…lest we forget how much the mindless deregulation and irresponsible fiscal policy induced-crisis [1] [2] [3] and great recession has cost us in terms of lost output, and how difficult the road to recovery remains. (Very important as certain forces seek to gut financial regulation by way of “defunding”. [4])
The Financial Crisis, Interpreted
And some unanswered questions. From Jeffry Frieden, “A Classic Foreign Debt Crisis,” The Political Economist 12 (2) (Fall 2010) [newsletter of the Political Economy section of APSA, not online]:
Much of the popular, and scholarly, analysis of the crisis has focused
on its financial aspects: the breakdown of financial markets, the malfunction
of financial innovations, the failure of financial regulation. …
Exchange Rate Modelling at AEA
Or, at least one session’s worth of recent thinking on the topic.
Presiding: Philippe Bacchetta (University of Lausanne)
On the Unstable Relationship between Exchange Rates and Macroeconomic Fundamentals, by Philippe Bacchetta (University of Lausanne), and Eric van Wincoop (University of Virginia). Discussed by Ken Kasa (Simon Fraser University).- Order Flow and the Monetary Model of Exchange Rates: Evidence from a Novel Data Set , by Menzie Chinn (University of Wisconsin), and Michael Moore (Queen’s University Belfast). Discussed by Pierre-Olivier Gourinchas (University of California-Berkeley)
- Phoenix Taylor Rule Exchange Rate Forecasting During the Financial Crisis, by David Papell (University of Houston), and Tanya Molodtsova (Emory University) . Discussed by Jan Groen (Federal Reserve Bank of New York).
- The Scapegoat Model of Exchange Rates: An Empirical Test, by Marcel Fratzscher (European Central Bank), Lucio Sarno (Cass Business School), and Gabriele Zinna (Bank of England). Discussed by Nelson Mark (University of Notre Dame).
Explaining Recent Trends in Household Saving
From Reuven Glick and Kevin Lansing, Consumers and the Economy: Household Credit and Personal Saving:
In the years since the bursting of the housing bubble, the personal saving rate has trended up from around 1% to around 6%, while the ratio of household debt to disposable income has dropped from 130% to 118%. Changes over time in the availability of credit to households can explain 90% of the variance of the saving rate since the mid-1960s, including the recent uptrend, according to a simple empirical model.
The BIS on Global Forex Trends
The results from the triennial BIS forex survey are out. Unsurprisingly, trading volume continues to rise, the dollar retains its dominance in forex transactions, and the dollar/euro currency pair is the most heavily traded. But, notably, algorithmic trading is on the rise.