In a post regarding the transmission of financial turmoil from Europe to the US last week, I noted my research with Kristin Forbes on the determinants of the strength of financial market linkages. A more recent and extensive survey of the macroeconomic — as opposed to financial — linkages is provided by a recent released working paper coauthored by Ashoka Mody and Alina Carare at the IMF.
Category Archives: international
Recent estimates of Chinese Yuan misalignment
Yin-Wong Cheung, Eiji Fujii and I have just written a chapter for a VoxEU book The US-Sino Currency Dispute edited by Simon Evenett (link to blog post). After discussing the various approaches to measuring misalignment, we summarize the most recent estimates of CNY undervaluation.
The Post-Crisis Global Economy: Prospects for Recovery and Reform
Join a distinguished panel of speakers, including Jeffry Frieden, Stanfield Professor of International Peace, Department of Government, Harvard University, Menzie Chinn, Professor of Economics and Public Affairs, and Michael Knetter, Albert O. Nicholas Dean, Wisconsin School of Business, for a discussion of pressing questions facing the global and U.S. economies in the aftermath of the crisis. Moderated by Mark Copelovitch, Assistant Professor of Political Science & Public Affairs.
A Misalignment Primer
As the release of the next Treasury Report to Congress on International Economic and Exchange Rate Policies looms, it might be useful to recount the various ways in which different observers define currency “misalignment”.
Durable Goods and the Collapse of Global Trade
From a Dallas Fed Letter by Jian Wang:
Durable goods represent a moderate share of the economy in most industrial countries — in the U.S., for example, they accounted for 23.6 percent of real GDP in 2008. However, durable goods make up a large share of international trade. In the U.S., they accounted for more than 60 percent of trade in goods (excluding energy products) in 2008. The figure is 70 percent on average for the OECD countries, according to several studies.
Doubling Exports
The Administration has committed itself to doubling exports in five years, via the National Export Initiative. Much of the journalistic coverage has focused on the regulatory, trade-credit financing, and export promotion measures being considered [0]. I wanted to take a macro oriented approach to the viewing the plausibility of this goal. Let me address this issue from a variety of perspectives.
Reserves Are Revised Upward, the Dollar Share Declines
Perhaps the most startling thing about the new COFER data on reserves released by the IMF is not the declining dollar share in total reserves, but rather the fact that reserves have risen relative to where we thought they were [0]. The change is entirely due to the upward revision in unallocated reserves by emerging market and LDC central banks. This point is shown in Figure 1.
Some International Finance at ASSA
I’m not at the ASSA meetings in Atlanta this year, but my coauthor Hiro Ito is presenting our papers (with Joshua Aizenman) in two very interesting sessions on international finance.
The Prospects for Global Imbalances: A View from the IMF
Following up on recent posts ([1], [2], [3], [4], [5] [6]) Here’s another take on the prospects for resolving global imbalances, from Olivier Blanchard and Gian Maria Milesi Ferretti, “Global Imbalances: In Midstream?” Staff Position Note 09/29 (Dec. 22, 2009):
IV.B. Lower Global Imbalances in the Future
What will happen in the future depends on how long the factors we just listed will be in play [oil price decline, asset price busts, increase in home bias, the hit to durable consumption and investment goods demand].
Below is reproduced the IMF World Economic Outlook‘s October 2009 forecast for current account balances.
How High Do Income Elasticities Have to Be to Explain the Recent Import Drop-off?
There’s been a debate over the cause of the trade flow drop-off, with varying explanations being offered. Broadly speaking, the explanations are (1) trade credit and credit crunch more broadly, (2) enhanced vertical specialization implying higher income elasticities, and (3) compositional effects (the trade dependent sectors were those most highly affected in the latest recession). Without necessarily offering definitive evidence one way or the other, I wanted to quantify the extent to which income elasticities had to be higher in order to rationalize the movements observed in US data.