The real return on long-term government bonds has dropped steadily over the last 30 years, falling from values around 4% to something closer to zero or even negative for many countries today. What accounts for this remarkable development, and what are the prospects for this situation to continue?
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Guest Contribution: “Shadow Rates, Forward Guidance, and Unconventional Monetary Policy”
Today we are pleased to present a guest contribution by Yi Zhang, Ph.D. candidate at the University of Wisconsin-Madison. This post draws upon this paper.
The “Deindustrialization of America”, in Pictures
From Donald J. Trump, March 14, 2016:
…under decades of failed leadership, the United States has gone from being the globe’s manufacturing powerhouse — the envy of the world — through a rapid deindustrialization…
The Yuan: Nominal Bilateral vs. Basket vs. Real Trade Weighted
The yuan is sliding against the dollar. What about against other currencies?
Day One Approaches! Currency Manipulation, China and the Big Mac Index
Among the many promises made by President Elect Trump, one was to declare China a currency manipulator on his first day in office. Besides the logistical difficulties of doing so without a Treasury Secretary in place, there are the minor difficulties of what the data indicate (I know, I know, facts seem of little import these days, but what the heck). In addition to the legally defined concerns Brad Setser has raised, I think it is useful to assess China’s currency using a commonly used measure of currency misalignment.
Rising interest rates and the term premium
Last week I puzzled over the response of financial markets to the U.S. election. Since the election, the S&P500 is now up 3%, the dollar is up 4.6% against the euro, and most remarkable of all, the 10-year Treasury rate has gone up 50 basis points. Here I offer some further thoughts on the last development.
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Further Dollar Appreciation?
As noted in my last post, the collision of expansionary fiscal and counter-cyclical monetary policy will result in an appreciated dollar. How much more appreciated?
Mr. Trump and the markets
I was astounded not only by the outcome of the U.S. presidential election but also by the response of financial markets.
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Implications for the Agricultural Economy of Fiscal Policies Proposed by President Elect-Trump
In short: Rural areas will not like what they get from a combination of expansionary fiscal/counter-cyclical monetary policy.
Guest Contribution: “What Will the Trump Presidency Look Like?”
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 November 9th in Project Syndicate.