The CBO has released its budget and economic outlook update.
Author Archives: Menzie Chinn
How does China retain monetary autonomy?
As I discussed in earlier posts, China retains some policy autonomy by virtue of the presence of capital controls. A recent working paper by Ma and McCauley attempts to quantify how binding the controls are.
Worse than 1998?
From IDEAGlobal, FX Alert, August 21:
Saving Glut Reversed? A Historical Analogy and Conjecture about US Adjustment
One interpretation of recent global capital flows is that the collapse in investment in East Asia post-crisis, combined with stable saving rates in ex-China developing Asia, led to an excess of saving in that region (so really the term of “investment drought” is better). Note that there was no excess saving until the collapse of unsustainable lending associated with bubbles, or crony capitalism, or — in other models — behavior of investors implicitly “insured” against losses. While this is a voluminous literature, it’s interesting to me that few analysts have observed that a similar occurence can not be ruled out in the current unfolding drama in the ever expanding but always containable subprime mortgage crisis.
Europe Slows
Part of the optimism regarding the economic outlook is based upon the robust growth — to date — in the rest of the world (see this post on the subject). The Euro zone looks like it’s in for some slower growth, though.
Myths about, and Empirics on, Chinese Trade and FDI
There is a lot of hyperbole surrounding China’s entry into the world trading system. There is fear in countries that compete with China, there is fear that China is somehow orchestrating the transfer of technological prowess from foreign to domestic firms, and a host of other anxieties.
China, Reserve Accumulation, and (Further) Threats to Financial Stability
The Administration Reassures the Markets
In light of the events of today, it makes sense for the President and his Administration to appeal for calm.
Variation in Global Economic Growth
In discussing the U.S. economy, I keep on seeing this refrain from Treasury Secretary Paulson (this one happens to be from the NYT)
Almost Everything You Wanted to Know about G-7 Current Account Imbalances
A new book is out examining whether — and if so how — ongoing current account imbalances will be unwound.