9 Items

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

Addressing Commodity Price Volatility in Algeria & Morocco

| June 11, 2016
I recently visited Algeria and Morocco.  Like so many other developing countries, they are dealing with the sharp decline in global commodity prices that has taken place over the last few years.  In meetings in Algiers and Casablanca, I offered four concrete ideas for policies to help commodity-exporting countries deal with global price volatility.  The four proposals, very briefly, are: (1) hedging with options (as Mexico does), (2) commodity bonds, (3) countercyclical fiscal institutions (like Chile’s), and (4) central bank targeting of a currency-plus-commodity basket.

Blog Post - Views on the Economy and the World

Fiscal Education for the G-7

| May 26, 2016
As the G-7 Leaders gather in Ise-Shima, Japan, on May 26-27, the still fragile global economy is on their minds.  They would like a road map to address stagnant growth. Their approach should be to talk less about currency wars and more about fiscal policy.Fiscal policy vs. monetary policyUnder the conditions that have prevailed in most major countries over the last ten years, we have reason to think that fiscal policy is a more powerful tool for affecting the level of economic activity, as compared to monetary policy.

Blog Post - Views on the Economy and the World

Escaping The Oil Curse

| Dec. 15, 2011
Libyans have a new lease on life, a feeling that, at long last, they are the masters of their own fate. Perhaps Iraqis, after a decade of warfare, feel the same way. Both countries are oil producers, and there is widespread expectation among their citizens that that wealth will be a big advantage in rebuilding their societies.Meanwhile, in Africa, Ghana has begun pumping oil for the first time, and Uganda is about to do so as well. Indeed, from West Africa to Mongolia, countries are experiencing windfalls from new sources of oil and mineral wealth.

Blog Post - Views on the Economy and the World

Escaping the Oil Curse

| Dec. 15, 2011
Libyans have a new lease on life, a feeling that, at long last, they are the masters of their own fate. Perhaps Iraqis, after a decade of warfare, feel the same way. Both countries are oil producers, and there is widespread expectation among their citizens that that wealth will be a big advantage in rebuilding their societies.Meanwhile, in Africa, Ghana has begun pumping oil for the first time, and Uganda is about to do so as well. Indeed, from West Africa to Mongolia, countries are experiencing windfalls from new sources of oil and mineral wealth.

Blog Post - Views on the Economy and the World

Barrels, Bushels & Bonds: How Commodity-Exporters Can Hedge Volatility

| Oct. 20, 2011
The prices of minerals, hydrocarbons, and agricultural commodities have been on a veritable roller coaster. Although commodity prices are always more variable than those for manufactured goods and services, commodity markets over the last five years have seen extraordinary volatility.Countries that specialize in the export of oil, copper, iron ore, wheat, coffee, or other commodities have boomed. But they are highly vulnerable. Dollar commodity prices could plunge at any time, as a result of a new global recession, a hard landing in China, an increase in real interest rates in the United States, fluctuations in climate, or random sector-specific factors.

Blog Post - Views on the Economy and the World

Barrels, Bushels & Bonds: How Commodity-Exporters Can Hedge Volatility

| Oct. 20, 2011
The prices of minerals, hydrocarbons, and agricultural commodities have been on a veritable roller coaster. Although commodity prices are always more variable than those for manufactured goods and services, commodity markets over the last five years have seen extraordinary volatility.Countries that specialize in the export of oil, copper, iron ore, wheat, coffee, or other commodities have boomed.  But they are highly vulnerable. Dollar commodity prices could plunge at any time, as a result of a new global recession, a hard landing in China, an increase in real interest rates in the United States, fluctuations in climate, or random sector-specific factors.

Blog Post - Views on the Economy and the World

UAE and Other Gulf Countries Urged to Switch Currency Peg from the Dollar to a Basket That Includes Oil

| July 08, 2008
The possibility that some Gulf states, particularly the United Arab Emirates, might abandon their long-time pegs to the dollar has been getting increasing attention recently (for example, from Feldstein and, especially, Setser). It makes sense. The combination of high oil prices, rapid growth, a tightly fixed exchange rate, and the big depreciation of the dollar against other currencies (especially the euro, important for Gulf imports) was always going to be a recipe for strong money inflows and inflation in these countries.