Economics & Global Affairs

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

The Global Economy as of End-2022

| Dec. 24, 2022

Economists spent most of 2022 convincing themselves that the global economy was about to fall into recession, if it wasn’t already in one.  With the year over, the global recession has now been postponed to 2023.

  1. Tour d’horizon

In the US, reports that a recession had begun in the first half of the year clearly were premature, especially given how tight the labor market was.  It still is. The chances of a downturn in the coming year are well below 100%, despite the confidence with which many say it is certain.  It is foolish to think we can predict a recession with certainty. But the chances are indeed far above the usual 15 %.  I would put the odds at perhaps 50-50 in 2023 and 75% at some point during the next two years.  The main reason is the rapid raising of interest rates by the Fed (and other central banks), of course, which in turn is attributable to high inflation.

Two men in front of a computer screen

Michael M. Santiago/Getty Images

Analysis & Opinions - Project Syndicate

Is a Global Recession Really Around the Corner?

| Dec. 22, 2022

While there are signs that the “everything bubble” is about to burst, leading economists’ predictions that the world economy is headed toward a major slump in the coming year seem premature. While hard times are almost certainly coming, the mainstream definition – two consecutive quarters of negative growth – is a very high bar.

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

Let the WTO Referee Carbon Border Tariffs

| Dec. 02, 2022

The most important task in confronting global climate change is the need to enforce serious quantitative limits on Greenhouse Gas emissions, such as the Nationally Defined Contributions which were originally negotiated in the 2015 Paris Agreement.  The 27th Conference of Parties to the UNFCCC,  which concluded in Sharm-el-Sheikh November 20, did not tackle this task.  Carbon border equalization measures, including tariffs against carbon-intensive imports from lax countries, might supply the teeth that have been missing from such agreements.  But they also risk advancing protectionism, which would ultimately slow the needed global energy transition.  Adjudicating the fairness of carbon tariffs would be a good job for a reinvigorated WTO.

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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.

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KAZUHIRO NOGI/AFP via Getty Images

Analysis & Opinions - Project Syndicate

In the Dollar We Trust

| Sep. 21, 2022

Surging inflation and an ongoing economic slowdown should have hurt demand for the US dollar, and yet the greenback is at a 20-year high. The US economy’s relative strength and the Fed’s rapid monetary tightening will likely keep the dollar strong for some time.

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.