Economics & Global Affairs

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Blog Post - views-on-the-economy-and-the-world

Why Might Americans Vote the Extremist Party?

| Oct. 30, 2022

 Americans will go to the polls November 8.  It appears probable that they will give the Republican party majority control of the House of Representatives, and possibly the Senate as well.  The same for Secretaries of State and other statewide offices.  The consequences could be enormous. Especially worrying is the future of US electoral democracy, if the result is further distortions of voter eligibility rules, congressional redistricting, the electoral college, and other structural features.  How could such an outcome of the mid-term elections be explained, seeing as how the Republican party is now dominated by its extremist MAGA faction?

Blog Post - Views on the Economy and the World

The Dollar Dazzles Once More

| Sep. 24, 2022

The dollar is sky-high.  Since May 2021, it has risen 19% against Europe’s euro, even reaching 1-to-1 parity in recent weeks. The dollar has appreciated 20% against Britain’s pound.  And it is up 28% against Japan’s yen, provoking the Bank of Japan to sell dollars on September 22, essentially the first foreign exchange intervention by a G-7 country since 2011 and the first in the direction of supporting a currency’s value against the dollar since the euro in 2000.

Blog Post - Views on the Economy and the World

Global Recession is Not Inevitable

| Aug. 28, 2022

Project Syndicate asked, “Is a Global Recession Inevitable?”   Steven Roach says, “yes”;  Anne Krueger says, “Depends…Certainly not inevitable”; & Jim O’Neill says, “Quite possible.”

My answer to the question, Is a global recession inevitable:

No. A global recession is entirely “evitable.”

True, the odds of a downturn are high in Europe, hard-hit by the need to manage winter without Russian natural gas; China, where Covid shutdowns already turned growth negative last quarter; and Emerging Market and Developing Economies, many of which have debt troubles.

Blog Post - Views on the Economy and the World

Why Commodity Prices May Have Peaked

| Aug. 26, 2022

Among the most salient of economic developments in the last two years have been big movements in the prices of oil, minerals, and agricultural commodities.  It was hard to miss the big rise in commodity prices.  The Brent oil price increased from a low $20 a barrel in April 2020, during the first Covid-19 wave, to a peak of $122, in March 2022, after Russia invaded Ukraine.  But it was not just oil. The price of copper doubled over this period.  Wheat more than doubled. And so on. Global indices of commodity prices almost tripled from April 2020 to March 2022.

Blog Post - Views on the Economy and the World

The July 28 Announcement of Q2 GDP Will Not Mean Recession

| July 21, 2022

On July 28, the US Bureau of Economic Analysis will release its advance estimate of economic growth, as measured by GDP, in the just-completed second quarter of the year.  The announcement is attracting more than the usual eager anticipation.  The reason is that many observers predict that the Q2 GDP number will be negative and that this will officially confirm widespread beliefs that the economy went into recession in the first half of 2022, figuring that growth in national output is already determined to have been negative in the 1st quarter of the year. After all, isn’t a recession defined as two consecutive quarters of negative growth?

Blog Post - Views on the Economy and the World

A Resilience Case for International Trade

| July 03, 2022

Some new problems have afflicted the economy in the last year.  Two examples come from the US:  blockages in supply chain logistics and a critical shortage in infant milk formula. One problem applies to the EU even more than to the US: energy scarcity due to sanctions against Russian fossil fuel exports.  And one applies almost everywhere: inflation.

Blog Post - Views on the Economy and the World

The G20 Agenda, As the Pandemic Continues

| Aug. 28, 2021

Italy hosts the G20 this year.  The 2021 Summit of the Heads of Government will take place in Rome in October. Officials of member countries, including the finance ministers and central bank governors, are preparing.

The G20 meeting will come at a time of great uncertainty as concerns the health and economic effects of the pandemic, midway through its 2nd year.  Although the mechanisms of international cooperation have been badly bruised by events of recent years, they are more important than ever, in light of the interconnectedness across nations that the pandemic so vividly demonstrates.

Of what, specifically, should international cooperation in such bodies as the G20 consist?  To begin with, by “cooperation,” I am not in this case referring to the coordinated setting of national monetary or fiscal policies.  For the most part, countries can, on their own, move those levers in the directions that are right for them.

Areas on which the G20 should focus include three: financial stability, trade, and vaccination.  This is in addition to other important areas, especially the existential issue of global climate change, which should and will receive a lot of attention.

Blog Post - Views on the Economy and the World

What Three Economists Taught Us About Currency Arrangements

| Apr. 29, 2021

A generation of great international economists is passing from the scene.  Richard Cooper died on December 23. An American, he was teaching his classes at Harvard until the very end. Robert Mundell, passed away on April 4.  Originally Canadian, he was a winner of the Nobel Prize in economics.  And John Williamson, on April 11. Originally British, he had been the first scholar hired by the Peterson Institute for International Economics.