The International Trilemma — sometimes called the Impossible Trinity — is the proposition that a country cannot pursue simultaneously full capital mobility, full exchange rate stability, and full monetary autonomy.
The August Employment Situation
The undershoot in nonfarm payroll employment is noticeable, with a flattening in high contact services employment growth.
Business Cycle Indicators as of Early September
With the August employment situation release, we have the following picture of the macroeconomy.
“Do Central Banks Rebalance Their Currency Shares?”
Some do; some don’t. Revised paper by me, Hiro Ito, and Robert McCauley. From the abstract:
China and the Initial Response to Covid-19
A must watch documentary, even if you know the basic history: Frontline‘s “China’s Covid Secrets“.
Inflation Outlook – Looking Forward to August Data
If the Cleveland Fed nowcasts are accurate, month-on-month CPI inflation will be down, core CPI rising slightly from 4 to 4.2% (annualized).
Delta Impact
Chinn-Ito Financial Openness Index, Updated to 2019
We first constructed the index nearly 20 years ago! See the website for the data.
Measured Inflation in July
A CNN headline notes “A key inflation measure rose at fastest pace in 30 years in July”, with that key inflation measure being the year-on-year (y/y) personal consumption expenditure (PCE) inflation. In point of fact, that headline was actually incorrect as annualized m/m inflation was actually slightly higher in June. But in any case, by focusing on the y/y rate, they missed the main message In today’s release — that month-on-month (m/m) annualized PCE inflation was down sharply, from 6.6% to 5.1%. Moreover, the core counterpart was also down, from 5.8% to 4.1% (0.3% m/m hitting the Bloomberg consensus on the nose.)
Guest Contribution: “The G20 agenda in the pandemic’s year 2”
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 at Project Syndicate.