Subscribe I have ended up taking a lot longer to write up my biggest picture thoughts on the dollar than I initially expected. Partially this is because things seem to have stabilized- for now- and thus I didn’t feel the pressure to rush a piece out. Just yesterday China| Notes on the Crises
Rapid GDP growth, due in part to high rates of investment and capital accumulation, has raised China out of poverty and into middle-income status. But progress in raising living standards has lagged, as a side-effect of policies favoring investment over consumption. At present, consumption per capita stands some 40 percent below what might be expected given China's income level. We quantify China's consumption prospects via the lens of the neoclassical growth model. We find that shifting the ...| Liberty Street Economics
Global risk conditions, along with monetary policy in major advanced economies, have historically been major drivers of cross-border capital flows and the global financial cycle. So what happens to these flows when risk sentiment changes? In this post, we examine how the sensitivity to risk of global financial flows changed following the global financial crisis (GFC). We find that while the risk sensitivity of cross-border bank loans (CBL) was lower following the GFC, that of international de...| Liberty Street Economics
Roger Vicquéry and Kevin Hjortshøj O’Rourke While the collapse of the Bretton Woods system in 1973 has traditionally been seen as heralding a major shift towards floating exchange rates, the extent…| Bank Underground
Persistent shortfalls in domestic savings, requiring funds from abroad to finance domestic investment spending, could be why the U.S. runs a trade deficit.| Liberty Street Economics
Simon Whitaker Digital currencies and the tokenisation of financial assets could speed up the movement of money and assets between institutions and across borders. Historically, the liberalisation of capital flows led to debates about the impact on macroeconomic and financial stability. Bouts of instability – for example the 2008 global financial crisis – provoked calls … Continue reading Could digitalisation of finance lead to more disruptive international capital flows?→| Bank Underground
Amid increasing pressure on the Chinese economy from China’s trade conflict with the U.S., assessing the strength of the Chinese economy will be an important watch point. In this post, we provide an update on China’s recent economic performance and policy changes. While China is likely to counter growth headwinds from the escalating trade tensions with additional policy stimulus, the country’s complex fiscal dynamics and the varying interpretations of the strength of its economic growth...| Liberty Street Economics
This talk, entitled “Monetary Sovereigns, Monetary Subjects and Monetary Vassals: A Spectrum Approach to Monetary Sovereignty and Our Dollar World”, lays out the basic building blocks of how I think about the international monetary order.| Notes on the Crises
A look at how global demand for oil could flatten with the growing use of low-carbon technologies and how this decline could affect global oil markets.| Liberty Street Economics
In the literature on monetary policy spillovers considered in the two previous posts, countries that would otherwise operate independently are connected to one another through bilateral trade relationships, and it is assumed that there are no frictions in currency, financial, and asset markets. But what if we introduce a number of real-world complexities, such as a dominant global currency and tight linkages across international capital markets? Given these additional factors, is it still pos...| Liberty Street Economics
As covered in the first post in this series, the international transmission of monetary policy shocks features positive output spillovers when the so-called expenditure-switching effect is sufficiently large. Departing from textbook analysis, this post zooms in on the implications of differences across market participants with respect to their consumption preferences and ability to insure against income risk. The key message is that these features can, at least theoretically, change the impac...| Liberty Street Economics
An overview of how countries’ policy actions can cause international monetary policy spillovers in the domestic economies of other countries.| Liberty Street Economics
A look at global inflation trends since the onset of the pandemic and how they may result from correlated or global shocks.| Liberty Street Economics
An analysis of the correlation of pre- and post-pandemic U.S. and global inflation dynamics using the Multivariate Core Inflation Trend (MCT) model.| Liberty Street Economics
The authors find a swath of firms suffering valuation losses on tariff-announcement days and a link between those losses and the firms' future performance.| Liberty Street Economics
A look at the effect of tariff announcements on U.S. stock returns in assessing the overall impact of the US-China trade war.| Liberty Street Economics
From collaborator to commentator, economist Leopoldo Fergusson offers a unique perspective on his work with recent Nobel laureates in economics. Fergusson reflects on their groundbreaking research on institutions, political incentives, and social norms, while providing personal insights into the brilliance and generosity of James Robinson and Daron Acemoglu.| ProMarket
Artificial Intelligence (AI) is poised to permeate across different industry sectors, offering unprecedented opportunities alongside significant risks. Effective governance necessitates coordinated cross-border efforts to build institutional expertise, dispel misconceptions, foster innovation, and align global safety priorities. Advocating structured dialogue and a bottom-up approach, Oscar Borgogno and Alessandra Perrazzelli present a proposal which aims to avoid institutional redundancy and...| ProMarket
The authors consider the potential impact to the U.S. economy if China’s ongoing property sector slump were to take another leg down.| Liberty Street Economics
China's leader Xi Jinping recently laid out the goal of reaching the per capita income of "a mid-level developed country by 2035." Is this goal likely to be achieved? Not in our view. Continued rapid growth faces mounting headwinds from population aging and from diminishing returns to China's investment-centered growth model. Additional impediments to growth appear to be building, including a turn toward increased state management of the economy, the crystallization of legacy credit i...| Liberty Street Economics