• On Chinese CPI and PPI Data for December

    January 09, 2015

    China’s consumer price index (CPI) and producer price index (PPI) data suggest that China is facing deflationary pressures. Beijing must tackle the country’s debt and create alternative sources of demand to address them.

  • My Reading of the FT on China’s “Turning Away from the Dollar”

    5
    December 14, 2014

    Economists tend to undervalue institutional flexibility, especially in the first few years after a major financial crisis, perhaps because in the beginning countries that adjust very quickly tend to underperform countries that adjust more slowly.

  • How Might a China Slowdown Affect the World?

    1
    December 02, 2014

    A slowing Chinese economy might be good or bad for the world, depending on domestic savings and domestic investment.

  • China, Europe, and Optimal Currency Zones

    November 05, 2014

    While China is a more integrated optimal currency zone than the EU, there are still frictional costs across provinces that will require Beijing to make some adjustments, which have their own costs.

  • Should Beijing Raise Subway Fares?

    October 29, 2014

    Considering what would be the best subway fare in Beijing is a useful way to think about infrastructure investment more generally.

  • How to Link Australian Iron With Marine Le Pen

    October 19, 2014

    China’s disproportionate demand for iron is the result of its investment-driven growth model. In considering how Chinese adjustment will affect Australia, one must consider global savings imbalances.

  • Are We Starting to See Why It’s Really the Exorbitant “Burden”

    2
    October 05, 2014

    The role of the U.S. dollar as the world’s global reserve currency has been regarded as a great advantage to the United States but actually it is a destabilizing burden rather than an “exorbitant privilege.”

  • How Much Longer Can the Global Trading System Last?

    September 28, 2014

    The next few years could see a break-up of the current monetary and trading regime and a U.S. turn inward toward isolation.

  • “...Not With a Bang but a Whimper”

    September 14, 2014

    Policies that affect the savings rate of a small country can have more-or-less predictable domestic impacts because the global economy is so large that domestic policies are not affected by external constraints. But with a large economy, the analysis changes.

  • What Does a “Good” Chinese Adjustment Look Like?

    September 01, 2014

    Instead of a hard landing or a soft landing, the Chinese economy faces two very different options, and these will be largely determined by the policies Beijing chooses over the next two years.

  • Can Pedro Sanchez Save the PSOE?

    August 18, 2014

    If Pedro Sánchez Castejón hopes to lead Spain and his party out of its current economic crisis, he must recognize that the crisis is fundamentally a conflict between the interests of Europe’s bankers and of Europe’s workers.

  • Bad Debt Cannot Simply Be “Socialized”

    1
    July 14, 2014

    While debt plays a key role in understanding the recent evolution of the Chinese economy and the timing and process of any further adjustment, there seems to be a remarkable amount of confusion as to why debt matters.

  • The Four Stages of Chinese Growth

    1
    June 18, 2014

    The past two decades of Chinese growth have disproportionately benefited a small elite that has become increasingly entrenched; the next stage must focus on liberal reforms to build social capital more broadly.

  • Some Things to Consider if Spain Leaves the Euro

    May 25, 2014

    The European Central Bank has managed to head off the liquidity crisis that Spain and other peripheral countries faced, but little has been done to address concerns about solvency or global imbalances.

  • Economic Consequences of Income Inequality

    2
    March 23, 2014

    Rising inequality is inextricably tied to economic imbalances and, in a context of limited productive investment opportunities, the only sustainable outcome is sharply higher unemployment.

  • What Do Bank Share Prices Tell Us About Growth?

    1
    February 16, 2014

    The plummeting valuation of China’s banks suggests that investors are losing confidence in China’s growth prospects.

  • When Are Markets “Rational?”

    2
    November 24, 2013

    An “efficient” market is one that has an efficient mix of investment strategies. Without this efficient mix, the market itself fails in its ability to allocate capital productively at reasonable costs.

  • Will Debt Derail Abenomics?

    November 08, 2013

    Unless Japan moves quickly to pay down debt, perhaps by privatizing government assets, Abenomics will be derailed by its own success.

  • Hidden Debt Must Still Be Repaid

    1
    October 22, 2013

    The fact that Beijing can recapitalize China’s banks during a debt crisis should not be reassuring: the debts must still be paid, and doing so will decrease demand and slow future growth.

  • Rebalancing and Long-term Growth

    September 03, 2013

    As China's economy rebalances over the coming decade, average growth of 3-4 percent is likely to be the upper limit on what Beijing can achieve.

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