Sunday’s NYT had a great interactive graphics by Amanda Cox detailing the dynamics of recessions and recoveries. One interesting graph pertained to the OECD Leading Indicators:
Author Archives: Menzie Chinn
Waxman-Markey and the Great Depression II?
“With the passage of Cap and Trade there is a good chance that unemployment will be worse than 1933 by the end of 2010.”
So writes an Econbrowser reader. Well, anything can happen, but that is not the outcome I predict. Nor the CBO, EPA, and other informed analysts.
Back to the Stimulus Debate: W, Timing, the States, and Baselines
A “W” Recession?
Martin Feldstein has recently raised the possibility that we might experience a relapse into recession (a beautiful symmetrical W), with the next dip in 2010. In my view, this means (1) we should have opted for a bigger and better composed stimulus package, and (2) the timing of expenditures in the stimulus package might not be as problematic as many commentators have indicated. From Bloomberg:
The Newest Data on Foreign Exchange Reserves
The IMF has released its estimates for 2009Q1 reserves (COFER data). Below I update and extend my recent post on the dollar as a reserve currency.
New Papers on International Finance: Crises, Puzzles, and Exchange Rates
Summertime is conference season, especially for those of us who don’t live close to a major airport hub. The first conference I attended was the NBER’s International Seminar on Macroeconomics, co-organized by Lucrezia Reichlin and Ken West. The conference was broken up into several sections: Financial Crises, International Economic Puzzles, Exchange Rates and Financial Development. Lot’s of interesting papers, and plenty of stimulating discussion. I can’t do justice to the proceedings, but I can provide the summaries of the papers.
So Much for “Exorbitant Privilege” and “Dark Matter” As Well: Anticipating the 2008 NIIP Release
In my last post, I cited Jeff Frankel’s keynote speech from a recent Bank of Canada-ECB workshop. He also pointed to the end of “Exorbitant Privilege” and “Dark Matter”, and other arguments of American exceptionalism. I think we’ll see resounding evidence of this in Friday’s release of the US end-2008 Net International Investment Position (NIIP).
Update on US Exports and Imports: The Collapse Continues
Here’s an update of US imports and export behavior. The trade collapse remarked upon a couple of months ago is still in play.
The Global Saving Glut: Rest in Peace? Mirage? Bete noir?
I’ve just come back from two weeks on the road, during which time I attended a couple of conferences. The first conference (NBER International Seminar on Macroeconomics) dealt with issues of exchange rates, reserve accumulation and financial crises (more on that later). The second one, a joint Bank of Canada-ECB workshop (not online), focused on exchange rates in the global economy. At the latter, Jeff Frankel delivered the keynote speech, entitled “On Global Currency Issues”, in which he outlined what’s “out” and what’s “in” in international finance (Powerpoint presentation here). One of the phenomena he concluded was no longer relevant was “the global saving glut”.
Guest Blog: The Impact of the Trilemma Configurations on Macroeconomic Performance
By Hiro Ito
Today, we’re fortunate to have Hiro Ito, Associate Professor of Economics at Portland State University as a guest blogger.
In my last posting, I introduced a recent paper coauthored with Menzie Chinn and Joshua Aizenman (UC, Santa Cruz) on the “trilemma,” or “impossible trinity” — a country simultaneously may choose any two, but not all, of the three goals, monetary independence, exchange rate stability and financial integration.
The Dollar as a Reserve Currency: Apres le Deluge
Time to review trends in reserves, against the backdrop of financial crisis, recession, and dollar gyrations. (I’ll try to be original, but Brad Setser has been more diligent than I in covering these issues over the past few months. [0] [1] [2])
A few observations:
- Known dollar reserves as a share of world reserves appear to be falling.
- Total dollar reserves have likely not declined as precipitously.
- Even with the decline in the dollar share, it is probably not as low as it was during the early 1990’s.
- The dollar share is (mechanically) linked to the dollar’s value.
- Known dollar reserves at end-2008 are less than predicted by a historical correlation.
- But this differential is infinitesimal compared to the “unallocated” share of total reserves.