Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A shorter version appeared on March 22nd in Project Syndicate.
Category Archives: exchange rates
Nowcasting with OMB Director Mick Mulvaney
What If China Gave Mr. Trump What He Says He Wants: A Stronger Chinese Currency
Well, given the trilemma, and limits to capital control efficacy, it’ll mean more PBoC decumulation of US Treasurys, and holding all else constant, higher long term interest rates.
Would a Gold Standard Result in Fast Adjustment to Parity?
Judy Shelton argues that “Free trade needs sound money”:
…[T]he time has come to develop a comprehensive approach to international monetary reform compatible with genuine free trade under free-market conditions. If markets are to function properly, money needs to convey accurate price signals; that won’t happen as long as governments can manipulate exchange rates.
This Makes No Sense
Judy Shelton on currency manipulation.
A New Approach to Tackling Chinese Currency Manipulation That I Do Not Understand
From Bloomberg:
President Donald Trump’s administration is considering a new tactic to discourage China from undervaluing its currency that falls short of a direct confrontation…
Exchange Rate Prediction Redux
That’s the title of a new European Central Bank working paper (coauthored with Yin-Wong Cheung (City U HK), Antonio Garcia Pascual (Barclay’s), and Yi Zhang (U. Wisc.)) just released.
The President Asks a Good Macroeconomics Question
But he asks it at 3AM, and asks General Flynn.
MacParity Defined Undervaluations: 3.7%, 8.5%, 50.2%
Those are estimated amounts of currency undervaluation, using the Big Mac index and the Penn Effect as of July 2016. Guess which currency is 3.7%, and which currency is 50.2%.
What Explains the Trump Dollar?
Elevated real interest rates and policy uncertainty explain a dollar about 4% higher than election day.