75 Items

Blog Post - Views on the Economy and the World

You Don’t Miss International Cooperation Until It's Gone

| Dec. 02, 2020

As Joni Mitchell sang, “you don’t know what you’ve got ‘til it’s gone.”   Classroom education was often deemed boring by students and obsolete by tech visionaries.  Then the coronavirus made it difficult or impossible to meet in person.  The result:  We yearn for the irreplaceable in-class experience.
Perhaps the same is true of international economic cooperation. It was never especially popular. The theory, first formulated in a 1969 paper by Richard Cooper, said that countries could agree to coordinated bargains that achieved better outcomes, relative to the “Nash non-cooperative equilibrium.”  But economists thought of plenty of reasons to be skeptical.  The multilateral institutions of cooperation such as the World Trade Organization, the International Monetary Fund, and the United Nations agencies, were downright unpopular among the public.  Many Americans regarded them as invading US sovereignty, while other countries viewed them as an invasion of their sovereignty by the US.

Blog Post - Views on the Economy and the World

It’s Finally Time for German Fiscal Stimulus

| Oct. 21, 2019

As long as the German economy was doing well, as it was during the recovery from the 2008 global financial crisis, there existed a coherent rationale for German fiscal austerity.  The national commitment to budget discipline was enshrined in the 2009 “debt brake,” which limits the federal structural deficit to 0.35% of GDP, and by the 2011 “schwarze Null” (that is, “black zero”) policy of fully balancing the budget.  Indeed Angela Merkel’s government proudly achieved a balanced budget in 2012 and surpluses in 2014-18.

With unemployment low and growth relatively strong, fear of overheating the domestic economy was a legitimate counter-argument against the other countries that were always urging Germany to undertake fiscal stimulus.  They wanted more German spending, which would reduce its current account surplus (a huge 8-9% of GDP in recent years) and spill over into demand that would help other euro members, especially those to the south.

Blog Post - Views on the Economy and the World

The Euro's First 20 YEARS

| 02/01/2019

In Europe, twenty years ago this month, 11 long-standing national currencies disappeared and were replaced by the new single currency, the euro.  Since then, the euro has had its successes and failures.

Let us review the experience of the euro’s first two decades.  Where there were failures, to what extent were they the result of avoidable technical mistakes?  Of warnings not heeded?  Or were they the inevitable result of a determination to go ahead with monetary union in the absence of a political willingness to support fundamental changes necessary to make it work?

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Blog Post - Belfer Center for Science and International Affairs, Harvard Kennedy School

Trade and Inequality Within Countries

| Jan. 05, 2018

Inequality has been on the rise within the United States and other advanced countries since the 1980s and especially since the turn of the century.  The possibility that trade is responsible for the widening gap between the rich and the rest of the population has of course become a major political preoccupation

Blog Post - Views on the Economy and the World

Deal-maker Trump Can't Deal

| Aug. 28, 2017

Trump has threatened new trade barriers against China while simultaneously depending on Beijing’s help to rein in North Korea’s alarming nuclear weapons program. These two aspects of US policy toward China are at odds.

It feels inappropriate to write a column that treats the two issues on a par. To state the obvious, the stakes are vastly higher in a potential US-North Korean military conflict, especially when it comes to the real danger that nuclear weapons will be used, but even if they are not. But we need to consider the Chinese trade issues together with the Korean nuclear issues because the Trump White House does. (Chief strategist Steve Bannon, for example, had the priorities reversed. Just before he was fired he said that the Korea issue was a “side show” compared with the all-important “economic war with China.”)

Blog Post - Views on the Economy and the World

The Fed and Inequality

| Oct. 28, 2016
Populist politicians, among others, have claimed in recent years that monetary policy is too easy and that it is hurting ordinary workers.   But raising interest rates is not the way to address income inequality.It is a strange claim for anyone to make, but especially for populists.  Low interest rates are good for debtors, of course, and bad for creditors. Throughout most of US history, populists have supported easy monetary policy and low interest rates, to help the little guy, against bankers, who had hard hearts and believed in hard money.

Blog Post - Nuclear Security Matters

Nuclear Security in Turkey

Aug. 04, 2016

In mid-July, as an attempted coup was taking place in Turkey, many in the United States wondered whether U.S. tactical nuclear weapons stored at the Turkish airbase, Incirlik, were adequately protected against theft. Congressional Research Service Nuclear Weapons Policy Specialist, Amy Woolf, recently published a short article describing some of the security systems surrounding those weapons.