• “...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”

    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

    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

    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?

    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?”

    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

    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.

  • The Urbanization Fallacy

    August 16, 2013

    Urbanization accommodates but does not cause growth and the current push for urbanization will only make China richer if it increases productivity by more than it increases debt

  • The Changing Debate Over China’s Economy

    August 07, 2013

    The Chinese growth model is not radically new. It is based primarily on the growth model developed by Japan in the twentieth century, and it has been implemented in various forms by many countries.

  • Beijing’s New Leaders Are Right to Hold Back

    July 10, 2013

    Further fiscal stimulus might create growth in the short term, but would be harmful for China in the future.

  • How Much Investment Is Optimal?

    June 10, 2013

    China’s low level of social capital constrains its ability to absorb additional capital stock productively, causing the country to over-invest.

  • Excess German Savings, Not Thrift, Caused the European Crisis

    May 21, 2013

    National savings represent a lot more than the thriftiness of local households, and as such it has a lot less to do with household or cultural preferences and more so with the policies or institutions that restrain the household share of GDP.

  • Investment and Consumption

    May 10, 2013

    The speed of China’s growth in the coming decade depends on whether or not it is possible to maintain current levels of consumption growth once investment growth is sharply reduced.

  • Feedback Loops

    April 29, 2013

    It may be useful to think about Japan as a model for understanding the adjustment process in China, since the Japanese model shows how risky it is to shift to a slow-growth model.

  • The Challenges for China’s New Leadership

    April 11, 2013

    China’s leadership is saying all the right things, but the political and economic challenges they face to achieve meaningful reforms remain daunting.

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