38 Items

Blog Post - Views on the Economy and the World

Energy Policies Can Be Both Geopolitical and Green

| Apr. 29, 2022

Russia’s invasion of Ukraine has amplified the importance of national security objectives when Western nations formulate energy policy.  At the same time, they should not take their eye off the ball of reducing environmental damage and, in particular, slowing down greenhouse gas emissions.  Both goals, geopolitical and environmental, are urgent.  The national security and environmental objective should be evaluated together, rather than via separate “stove pipes.”

Blog Post - Views on the Economy and the World

History Advises Biden to Match Signals with Actions in Ukraine

Dec. 24, 2021

As Russian troops mass along the border with Ukraine, the White House has been calibrating its response. President Joe Biden has warned that in the event of an invasion, the US and allies would make Russian President Vladimir Putin pay a heavy price. Likely measures would particularly include economic sanctions such as a cut-off from the SWIFT payments system and turning off the new Nord Stream 2 pipeline.  Good. It is possible that such threats will deter Putin.

Blog Post - Views on the Economy and the World

How China Compares Internationally in New GDP Figures

| May 31, 2020

The World Bank on May 19, as it does every six years, released the results of the most recent International Comparison Program (ICP), which measures price levels and GDPs across 176 countries.  The new results are striking.  It is surprising that they have received almost no attention so far, perhaps overshadowed by all things coronavirus.

For the first time, the ICP shows China’s total real income as slightly larger than the US.  It reports that China’s GDP was $19,617 billion in 2017, in Purchasing Power Parity (PPP) terms, while the United States’ GDP stood at $19,519 billion.

Blog Post - Views on the Economy and the World

Let’s Go Back to Good Old Tariff-Cutting

| Dec. 02, 2019

The “bicycle theory” used to be a metaphor for international trade policy.  Just as standing still on a bicycle is not an option — one has to keep moving forward or else the bike will fall over – so it was said that international trade negotiators must continue to engage in successive rounds of liberalization, or else the open global trading system would be pulled down by protectionist interests.  I don’t know if the theory was ever right.  (And, to be honest, I don’t entirely understand why forward movement keeps a bicycle from falling over.)  But if we had stood still on trade policy over the last three years we would be a lot better off than where we are now.

Blog Post - Views on the Economy and the World

RMB Reaches 7.0; US Names China a Manipulator

| Aug. 12, 2019

The US-China trade war heated up in the first week of August.  On August 1, Donald Trump abruptly announced plans to impose a 10 % tariff on the remaining $300 billion of imports from China that he had not already hit with earlier tariffs.   The Chinese authorities then allowed their currency, the renminbi (RMB), to fall in value below the highly visible line of 7.0 RMB/$.  The US Administration promptly reacted on August 5 by naming China a “currency manipulator” — the first time any country had been given that designation in 25 years.   Pundits declared a currency war, while investors responded by immediately sending stock markets down.

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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

The Sugar Swamp

| June 26, 2017

As the United States, Mexico, and Canada prepare to renegotiate the North American Free Trade Agreement, as US President Donald Trump’s administration has demanded, much attention is being devoted to one item in particular: sugar. The negotiations will probably produce a sweet deal for the US sugar industry, highlighting the emptiness of Trump’s promises to “drain the swamp” of special-interest influence over policymaking.
Sugar producers’ political clout is nothing new, in the US or other industrialized countries. They have often received trade protection, in the form of import tariffs and quotas, to ensure that domestic sugar prices far exceed those in supplier countries like Australia, Brazil, the Dominican Republic, the Philippines, and Mexico.

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 - 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.