I have been stressing the international implications of a potential interest rate increase as a rationale for deferring monetary tightening. Export growth is slowing and economic activity in the tradables sector (manufacturing output, manufacturing employment) as the dollar has appreciated. [1] [2] How much more appreciation should we expect should the Fed tighten?
Category Archives: exchange rates
Manufacturing, the Dollar and Implications for Monetary Policy
One of the bits of information in the employment release was a decline in manufacturing employment. When added to declining exports and stagnant manufacturing output growth, the case for near-term monetary policy tightening seems more tenuous to me.
On China, and Preventing the Financial Runs of August
Reasoned analysis and careful decisionmaking is required.
Guest Contribution: “Recent Experience with Monetary Sovereignty”
Today we are fortunate to have a guest contribution by Helen Popper, professor of economics at Santa Clara University.
Evaluating the Chinese Devaluation
The 2% devaluation of the Chinese yuan on Monday, and subsequent 1.6% weakening on Tuesday, was variously described as surprising and stunning. I think it was to be expected, given China’s slowing growth, although there was no particular reason to believe Monday would be the day. In evaluating the effects, one has to first place the drop in context.
A Brief Note on Yuan Exchange Rate Pass-through to US Imports from China
In today’s WSJ, Justin Lahart notes “China Wind Chills U.S. Earnings”, and presents an interesting graph of import prices, which inspired me to look more closely at the issue.
“Spillovers of conventional and unconventional monetary policy: the role of real and financial linkages”
That’s the topic of a conference sponsored and hosted by the Swiss National Bank and co-sponsored with the Bank for International Settlements (BIS), the Dallas Fed, the Centre for Economic Policy Research (CEPR), and the Journal of International Money and Finance.
Possible scenarios for Greece
It’s very clear that two things have to happen from here. First, Greece needs relief from its mountain of debt, and second, the country needs to find a way to become more competitive economically.
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Some Recent Research on Exchange Rates
Here is some interesting work I’ve seen recently in Paris and Cambridge, MA.
The International Aspects of the Employment Release
The headline number for nonfarm payroll employment was decent [1], and although there are worrisome aspects, I think the key take-away is the fact that manufacturing employment is slowing much more than overall. To the extent that manufactured goods proxies for tradables, I think caution is in order with respect to monetary tightening. And yet, I read headlines reporting that the “Fed is on track to raise rates…”[Sparshott/RTE WSJ].