The World Bank’s new World Development Indicators were released a bit over a month ago. The impact on the estimates of RMB misalignment are substantial. (This is an elaboration on a RGEMonitor post by Yin-Wong Cheung from a week and half ago, and is based on preliminary results from a presentation made yesterday at a Deutsche Bundesbank and Center for Financial Studies/Goethe University Frankfurt Workshop on Panel Methods and Open Economies”.)
Category Archives: exchange rates
Current Account Balances, Again
Two years ago, as part of a multi-year project, Charles Engel and I organized a conference on current account sustainability in major advanced economies.
Lask week, we convened a follow-up conference aimed at updating our knowledge on this subject. Below is the latest read on the U.S. current account to GDP.
The Monetary Model of Exchange Rates, Money Demand Shocks and Order Flow
Yes, exchange rate prediction once again. Last Thursday, Michael Moore (of Queen’s University Belfast) and I presented a new paper at the IMF’s conference on International Macro-Finance (co-sponsored with the ESRC funded World Economy and Finance Program). Here’s the paper [pdf].
Let’s Think Long and Hard about Extending Those Bush Tax Cuts
There was a time one could plausibly argue that importing lots of goods and services, and borrowing a lot from abroad (financing the budget deficits that we’ve incurred since 2001) was a great idea. But at the time, about two and a half years ago, I made the following warning in a Council of Foreign Relations report [pdf]:
The United States faces a wide variety of possible outcomes, with the most dire having a significant likelihood. One real possibility entails the satiation of global investors’ appetite for U.S. Treasury securities, combined with an endless vista of government budget deficits. After several years of large losses on dollar assets due to depreciation, they then demand a substantial premium for holding dollar-denominated assets; either the dollar must weaken so as to make Treasury securities cheap, or yields must rise relative to those on other assets.
Why new oil price highs?
West Texas Intermediate closed today above $115/barrel. Does that reflect changes in the fundamentals of world supply and demand? My answer is no.
The G-7 Communique and the Dollar
Was this the new (reverse) “Plaza Accord”? From Bloomberg:
The Yuan on the Move: An Update
And a bit on the IMF’s revised forecast for the US.
From Reuters, “U.S.’s Paulson praises China on currency progress”:
Recoupling, Monetary Policy Divergence, and the Dollar
At the risk of losing my audience by skipping over the the record housing price decline, and an outsized drop in the consumer confidence index, I’m going to focus on what seems like old news (but is being reflected in current news on the dollar), namely the OECD reduction in growth forecasts for the G-7 economies. The euro area economy is slated to do better than the US economy in 2008H1, but that’s not saying much.
Limits to Expenditure Switching? Monetary Policy, Intervention, and Tradability
Currently, net exports are one of the few bright spots in the US economy. As Krugman points out, this is the one area where monetary policy is proving effective: by driving down the value of the dollar, expenditure switching is being induced.
“Bush Would Like a Stronger Dollar”
That’s the title of a post in today’s WSJ RealTime Economics:
President George W. Bush said in an interview today with Nightly Business Report that the dollar’s fall to record lows against the euro is not a good thing and he “absolutely” wants a stronger dollar. Excerpts: