dunnettreader + fx   64

Reading: Barry Eichengreen (2011): Economic History and Economic Policy via Brad DeLong
Barry Eichengreen (2011): Economic History and Economic Policy - EHA Presidential Address 2011
As you read, formulate your answers to the following questions:
1. What does Eichengreen think are the uses of history, as shown in the use of history in trying to understand the macroeconomic crisis that began in 2008?
2.What does Eichengreen think are the abuses of history, as shown in the use of history in trying to understand the macroeconomic crisis that began in 2008?
3.What rules and approaches does Eichengreen arrive it for future people trying to use history better?
Downloaded via iPhone to DBOX
monetary_policy  historiography-postWWII  QE  fiscal_policy  unemployment  historiography-19thC  economic_history  economic_policy  Keynesianism  speech  FX-rate_management  downloaded  central_banks  Great_Depression  historiography  FX  austerity  financial_system  financial_crisis  financial_regulation  Minsky  historiography-20thC  FX-misalignment  Great_Recession  inflation 
january 2017 by dunnettreader
Joseph Joyce - Capital Flows and Financial Crises | Capital Ebbs and Flows - Oct 2016
Prof at Wellesley. The impact of capital flows on the incidence of financial crises has been recognized since the Asian crisis of 1997-98. Inflows before the crisis contributed to…
Pretty much my position re Chile's controls in 1990s - FDI good, portfolio vulnerable to hot money, bad, especially foreign-denominated debt, but also bank deposits attracted by interest rates but easily reversed. But they're finding that it's not just the flows that are destabilizing -- exchange rate appreciation comes with foreign capital buying debt assets as well. So much for developing local bond markets? -- See links to papers, tracking not just macro level but B-schools looking at firm-level incentives, who goes in for leverage, etc.
economic_history  financial_crisis  financialization  emerging_markets  capital_flows  FDI  capital_markets  sovereign_debt  FX-misalignment  FX  economic_policy  from instapaper
october 2016 by dunnettreader
Willem Thorbecke - “Exports, Exchange Rates, and the Return on China’s Investments” - Econbrowser - May 2016
Today, we’re fortunate to have Willem Thorbecke , Senior Fellow at Japan’s Research Institute of Economy, Trade and Industry (RIETI) as a guest contributor. The…
Instapaper  China  China-economy  industrialization  global_imbalance  economic_growth  supply_chains  exports  trade-policy  trade  global_economy  FX  from instapaper
may 2016 by dunnettreader
Pierre-Olivier Gourinchas, Maurice Obstfeld - Understanding past and future financial crises | VOX, CEPR’s Policy Portal
Summary of their long paper, see bookmark -- Reposted 21 July 2015 - What explains the different effects of the crisis around the world? This column compares the 2007–09 crisis to earlier episodes of banking, currency, and sovereign debt distress and identifies domestic-credit booms and real currency appreciation as the most significant predictors of future crises, in both advanced and emerging economies. It argues these results could help policymakers determine the need for corrective action before crises hit. -- downloaded pdf to Note
paper  economic_history  20thC  financial_crisis  emerging_markets  capital_flows  credit_booms  leverage  business_cycles  FX-rate_management  FX  Great_Recession  bibliography  links  downloaded 
august 2015 by dunnettreader
Pierre-Olivier Gourinchas and Maurice Obstfeld - Stories of the 20thC for the 21stC | CEPR via Ideas.repec.org
A key precursor of twentieth-century financial crises in emerging and advanced economies alike was the rapid buildup of leverage. Those emerging economies that avoided leverage booms during the 2000s also were most likely to avoid the worst effects of the twenty-first century’s first global crisis. A discrete-choice panel analysis using 1973-2010 data suggests that domestic credit expansion and real currency appreciation have been the most robust and significant predictors of financial crises, regardless of whether a country is emerging or advanced. For emerging economies, however, higher foreign exchange reserves predict a sharply reduced probability of a subsequent crisis. -- enormous lit review bibliography, see references links on Ideas page -- downloaded pdf to Note
paper  economic_history  20thC  financial_crisis  emerging_markets  capital_flows  credit_booms  leverage  business_cycles  FX-rate_management  FX  Great_Recession  bibliography  links  downloaded 
august 2015 by dunnettreader
Emmanuel Mourlon-Druol - La zone euro est-elle viable? Une perspective historique - La Vie des idées - 20 mai 2014
La crise de la zone euro a révélé les faiblesses constitutives de la monnaie unique ; mais les débats portant sur sa viabilité se limitent trop souvent à une vision purement économique de la zone euro. L’histoire complexe de la création de l’euro éclaire les enjeux financiers et politiques internationaux de l’unification monétaire. -- in many ways it's the same-old, same-old -- a group of countries with intense economic interaction that gets whip-sawed by exchange rates in a constantly evolving world that's increasingly globalized, especially capital movements -- under a series of arrangements from Bretton Woods onwards, they've been trying to manage or mitigate the problem, but they never solve it -- he repeatedly notes that the entire EC budget isn't more than 1% of the aggregate GNP of the member states -- useful aide-mémoire for each step in the evolution of the EU and European money arrangements paralled with each modification of the international monetary system -- though he notes repeatedly that finance is extremely mobile, not only within the Eurozone or within the EU but globally, and that labor and fiscal adjustments are extremely immobile within the Eurozone by comparison, he doesn't draw the obvious link of these severe mismatches to the repeated problems the EU has faced re money -- downloaded pdf to Note
article  economic_history  political_history  European_integration  post-WWII  post-Cold_War  international_monetary_system  Bretton_Woods  EU_governance  FX  FX-rate_management  FX-misalignment  Eurozone  Eurocrsis  Great_Recession  financial_crisis  sovereign_debt  Europe-federalism  EU-regulation  cross-border  Labor_markets  banking  ECB  EU-elections  political_participation  EU-Parliament  EU-parties  monetary_union  monetary_theory  international_economics  capital_flows  capital_controls  EU-fiscal_policy  convergence-econimic  fiscal_policy  Maastricht  downloaded 
july 2015 by dunnettreader
Hélène Rey - Dilemma Not Trilemma: The Global Financial Cycle and Monetary Policy Independence (2013)
Rey, Hélène, 2013, “Dilemma Not Trilemma: The Global Financial Cycle and Monetary Policy Independence” (Kansas City, Missouri: Federal Reserve Bank). -- downloaded pdf to Note
International_economics  international_finance  international_monetary_system  capital_flows  FX  monetary_policy  capital_markets  capital_controls  emerging_markets  downloaded  from notes
july 2015 by dunnettreader
Brad DeLomg - German Economic Thought and the European Crisis - Washington Center for Equitable Growth - July 2017
It is a commonplace among Anglo-Saxon economists that Saxon-Saxon “ordoliberalism” was a post-World War II success only because somebody else–the United… DeLong remarks on his link to the article on why the European Crisis was inevitable given German economic theory -- that the German economists have attributed the country's economic success to ordoliberalism and German virtue when it was based on an incredibly favorable environment and policy postures by the US as global hegemon. Instapaper
Instapaper  economic_history  Germany  international_monetary_system  global_economy  post-WWII  trade-policy  global_imbalance  hegemony  Marshall_Plan  sovereign_debt  export-led  Germany-Eurozone  ordoliberalism  Keynesianism  austerity  budget_deficit  FX  FX-misalignment  Greece-Troika  economic_theory  economic_culture  economic_policy  macroeconomics  from instapaper
july 2015 by dunnettreader
Karl Whelan - The Grexit Mechanism: What It Means For The Future Of the Euro | Medium - June 26 2015
Greek crisis exposes cracks in the euro’s design that won’t be fixed by Greece leaving. Despite the euro’s legal status as an irrevocable currency union, the… Nice review of the tangle of economic, political and legal issues -- Default isn't by itself enough to force Grexit, so it's really what political stance the ECB takes, and even with Grexit there are the other members of the Eurozone suffering from similar problems as Greece -- Whelan: In recent years, the single most important factor that has papered over the cracks in the euro has been Mario Draghi’s “whatever it takes” commitment to preserve the euro. But if whatever-it-takes doesn’t prevent a Greek exit, there would be serious questions about what kind of euro the ECB was actually willing to bother preserving. Worth remembering is that what Draghi actually said was: "Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough." The “within our mandate” bit has provided Draghi with plenty of wiggle room to decide what kind of euro he wants to preserve. It clearly doesn’t have to be one that includes Greece. And there may be others that get jettisoned. Whether this kind of a la carte euro will survive the test of time is highly questionable.
Instapaper  Eurozone  EU  ECB  EU_governance  Europe-federalism  monetary_policy  FX  lender-of-last-resort  Greece  Greece-Troika  IMF  sovereign_debt  banking  bank_runs  austerity  FX-misalignment  Spain  Portugal  Italy  political_economy  international_finance  international_monetary_system  from instapaper
june 2015 by dunnettreader
Jonathan D. Ostry , Atish R. Ghosh , and Mahvash S. Qureshi - Managing Capital Flows in Frontier Economies | IMF Direct - April 2015
By Jonathan D. Ostry , Atish R. Ghosh , and Mahvash S. Qureshi  There has been a remarkable increase in financial flows to frontier economies from private… Enfin! Just 20+ years late. Nice roundup of various people (like Rodrik) thinking about all the variables, including what sorts of local institutional capacity (government and financial markets and institutions) are required for (1) absorbing different types of capital flows or (2) if a country wants to restrict flows in some fashion, to manage different types of restrictions. Additionally, there are challenges to the basic premise of encouraging capital flows to frontier markets -- these countries are more likely to be investment constrained than the unproven assumption that they're savings constrained. Macroeconomic impacts are also getting a closer look, not only the dilemmas of managing monetary policy and exchange rates -- e. g., FDI can be defeated if inflows raise the rate to reduce trade advantages. Since the biggest issuers from frontier markets tend to be the state, there's a big potential impact on sustainability of fiscal policy (to say nothing of corruption), and again the exchange rate impacts can be severe in both directions. The post is mainly an outline of an ambitious, multidimensional research program that's emerging among development economists, financial economists, macroeconomics in both the OECD countries and think tanks in emerging markets and the IFIs. -- finally the discussion has moved off the obsession with flight capital that took root in the 1980s and was the trump played anytime anyone questioned the happy-happy conventional wisdom of capital liberalization promoters.
economic_theory  macroeconomics  capital_flows  FDI  IFIs  IMF  capital_controls  fiscal_policy  monetary_policy  FX  FX-misalignment  neoliberalism  globalization  emerging_markets  frontier_markets  competitiveness  technology_transfer  infrastructure  development  financial_system  financial_regulation  financial_sector_development  financial_stability  banking  interest_rates  institutional_investors  institutional_capacity  institution-building  central_banks  governance  bibliography  Instapaper  from instapaper
may 2015 by dunnettreader
Richard Cantillon, An Essay on Economic Theory, Chantal Saucier, trans., Mark Thornton, ed. (2010) Books | Mises Institute
Mark Thornton and Chantal Saucier have accomplished the arduous task of bringing forth a new and improved translation of Cantillon’s famous work. Heretofore the only English translation of the Essai available has been the 1931 edition produced by Henry Higgs for the Royal Economic Society. Though competent, it has become less serviceable over time, as more and more of its shortcomings devolved (not the least of which is the antiquated use of “undertaker” in place of “entrepreneur”). Saucier provides a more accurate and lucid account, better suited to the 21st century. Thornton’s hand shows not only in competent guidance of the translator but in the inclusion of numerous explanatory footnotes that add historical context. Robert F. Hébert writes the foreword. -- downloaded pdf to Note
books  etexts  intellectual_history  18thC  France  Cantillon  political_economy  economic_theory  value-theories  systems_theory  business_cycles  financial_system  interest_rates  FX  capital_flows  banking  profit  risk  entrepreneurs  agriculture  demography  natural_resources  labor  capital  money  money_supply  money_market  mercantilism  trade-policy  trade-theory  downloaded 
february 2015 by dunnettreader
Thornton, Mark. "Cantillon on the Cause of the Business Cycle." - Quarterly Journal of Austrian Economics (2006) | Mises Institute
Thornton, Mark. "Cantillon on the Cause of the Business Cycle." The Quarterly Journal of Austrian Economics 9, No. 3 (Fall 2006): 45–60. -- Richard Cantillon was the first economist to successfully examine the cyclical nature of the capitalist economy. He lived at a time (168?–1734) when the institutions of the modern capitalist economy were first fully and widely established and the first major business cycles occurred. In contrast to the Mercantilists, Cantillon was an astute observer who developed a clear economic understanding of money, banking, international trade, and stock markets because this is where he risked his capital and earned his fortune. He modeled the economy as an interconnected whole and developed what we now know as the circular-flow model of the economy and the price-specie-flow mechanism of international money movements. He discovered that markets were regulated by the movements of prices based on supply and demand and identified equilibrating tendencies with market exchange. -- downloaded pdf to Note
article  intellectual_history  18thC  France  Cantillon  political_economy  economic_theory  economic_culture  business_cycles  mercantilism  speculative_finance  capital_markets  capital_flows  banking  money  money_market  systems_theory  FX  gold_standard  trade_finance  trade_deficits  trade-policy  prices  equilibrium  downloaded 
february 2015 by dunnettreader
Tarascio, Vincent J. "Cantillon's Essai: A Current Perspective." - The Journal of Libertarian Studies (1985) | Mises Institute
Tarascio, Vincent J. "Cantillon's Essai: A Current Perspective." Journal of Libertarian Studies 7, No. 2 (1985): 249–257. -- Professor Spengler's, "Richard Cantiilon: First of the Modems," published in 1954, remains the classic survey article of Cantillon's contributions to economic thought. These contributions consist of views on population and related matters, theory of value, monetary theory, and international trade and finance. Many of his ideas became a part of the economic thought of the closing years of the eighteenth century, and, as Professor Spengler points out, unfortunately, Cantillon's name had been stripped from most if not all of his ideas. Professor Spengler, then, has done both Cantillon and the economics profession a service by restoring to Cantillon his rightful place in the history of economic thought. -- downloaded pdf to Note
article  intellectual_history  18thC  France  Cantillon  political_economy  economic_theory  economic_sociology  macroeconomics  value-theories  monetary_theory  demography  trade-theory  trade_finance  trade_deficits  FX  capital_flows  banking  financial_system  downloaded 
february 2015 by dunnettreader
Forrest Capie, review - Eric Helleiner, The Making of National Money: Territorial Currencies in Historical Perspective | JSTOR - The Economic History Review Vol. 56, No. 3 (Aug., 2003), p. 594
Mostly a 19thC to 20thC phenomenon relying on creation of nation-state and industrial capacity. Discusses what countries did and do without national currency, challenges to establishing e.g. free banking, alternatives e.g. dollarization with or contra to government policy. Downloaded 1 page review to Note
books  reviews  jstor  economic_history  19thC  20thC  nation-state  national_ID  monetary_policy  fiscal_policy  currency  commerce  FX  dollarization  free_banking  downloaded  EF-add 
january 2015 by dunnettreader
How the US Resolved Its First Debt Ceiling Crisis | Liberty Street Economics - March 2013
downloaded pdf to iPhone - the post has full text but without the references in the pdf -- In the second half of 1953, the United States, for the first time, risked exceeding the statutory limit on Treasury debt. How did Congress, the White House, and Treasury officials deal with the looming crisis? As related in this post, they responded by deferring and reducing expenditures, by monetizing “free” gold that remained from the devaluation of the dollar in 1934, and ultimately by raising the debt ceiling.
paper  downloaded  post-WWII  US_economy  US_politics  military-industrial_complex  monetary_policy  Bretton_Woods  international_monetary_system  FX  fiscal_policy  budget_deficit  Congress  sovereign_debt 
january 2015 by dunnettreader
SNB working paper - Konrad Adler & Christian Grisse: “Real exchange rates and fundamentals: robustness across alternative model specifications” (Oct 2014) | via The Big Picture
This paper explores the robustness of behavioural equilibrium exchange rate (BEER) models, focusing on a panel specification with Swiss franc real bilateral rates as dependent variables. We use Bayesian model averaging to illustrate model uncertainty, and employ real exchange rates computed from price level data to explore robustness to the inclusion or exclusion of fixed effects. We find that the estimated coefficients – and therefore also the implied equilibrium values – are sensitive to (1) the combination of explanatory variables included in the model, (2) the set of currencies included in the panel and (3) the inclusion of fixed effects. Increases in government consumption and net foreign assets and improvements in the terms of trade in Switzerland relative to foreign countries are associated with a Swiss franc real appreciation, as predicted by economic theory. By contrast, several macroeconomic variables commonly thought to be linked to real exchange rates are found not to exhibit a robust relationship with Swiss franc real rates. Our findings can help policymakers in understanding the uncertainty associated with estimates of equilibrium exchange rates. - downloaded to iPhone
economic_theory  macroeconomics  intermational_economics  global_economy  FX  fiscal_policy  monetary_policy  central_banks  public_finance  interest_rates  inflation  asset_prices  paper  downloaded 
january 2015 by dunnettreader
Kose, Prasad, Rogoff & Wei (2009) - Financial Globalization: A Reappraisal
downloaded to iPhone - see also papers citing this - The literature on the benefits and costs of financial globalization for developing countries has exploded in recent years, but along many disparate channels with a variety of apparently conflicting results. There is still little robust evidence of the growth benefits of broad capital account liberalization, but a number of recent papers in the finance literature report that equity market liberalizations do significantly boost growth. Similarly, evidence based on microeconomic (firm- or industry-level) data shows some benefits of financial integration and the distortionary effects of capital controls, but the macroeconomic evidence remains inconclusive. At the same time, some studies argue that financial globalization enhances macroeconomic stability in developing countries, but others argue the opposite. This paper attempts to provide a unified conceptual framework for organizing this vast and growing literature, particularly emphasizing recent approaches to measuring the catalytic and indirect benefits to financial globalization. Indeed, it argues that the indirect effects of financial globalization on financial sector development, institutions, governance, and macroeconomic stability are likely to be far more important than any direct impact via capital accumulation or portfolio diversification. This perspective explains the failure of research based on cross-country growth regressions to find the expected positive effects of financial globalization and points to newer approaches that are potentially more useful and convincing.
credit  financial_innovation  spreads  financial_crisis  contagion  investment  financial_sector_development  interest_rates  FDI  emerging_markets  download  bubbles  FX  capital_flows  monetary_policy  fiscal_policy  financial_system  IMF  banking  NBFI  business_cycles  sovereign_debt  global_economy  macroeconomics  globalization 
january 2015 by dunnettreader
Menzie Chin - The Dollar’s Recent Rise in Perspective | Econbrowser Jan 2015
"My own personal worries revolve around emerging markets. As noted (e.g., [3]), and appreciating dollar implies a deterioration in emerging market firm balance sheets when there are large amounts of dollar debt. Fixed or semi-fixed exchange rates will mitigate this effect if sustainable; otherwise, pernicious feedback loops are going to be established. I particularly worry about the dollar appreciation in conjunction with increasing yields in the US. Rising US yields would likely pull financial capital from emerging markets, with particularly negative effects on growth..." -- Saved to Evernote for charts especially for impact of 1980s strong dollar
global_economy  FX  US_economy  dollar  emerging_markets  sovereign_debt  interest_rates  economic_growth  capital_flows  financial_crisis  central_banks  Fed  QE  contagion  international_political_economy  competitiveness  trade  balance_of_payments  capital_markets  commodities  asset_prices  spreads  20thC  post-WWII  Evernote 
january 2015 by dunnettreader
Jordà, Schularick and Taylor - Betting the House - NBER working paper - SSRN
They look at link between loose monetary policy, real estate lending, housing bubbles and financial instability. No surprise, they're correlated. Their added twist is to note that the same egfect can be produced by low intetest rates in effect "imported" by countries maintaining fixed exchange rates even if their domestic economic management is kosher - in a way, importing a business cycle snd misallocation of investment. The effect of these correlations to produce financial instability has increased over the decades. (undoubtedly exacerbated by the push to open capital accounts) SSRN version posted simultaneously with NBER version on SSRN - downloaded pdf to iPhone
capital_flows  business_cycles  credit  21stc  interest_rates  19thc  financial  crisis  financialization  monetary_policy  20thc  paper  asset  prices  bubbles  globalization  Pocket  real_estate  FX  SSRN  downloaded 
january 2015 by dunnettreader
Yogi Berra and the Dollar
great post on relation of exchange rates to interest rates, capital flows and economic growth
FX  Fed  interest_rates  US_economy  economic_growth  Germany  Eurozone  20thC  21stC  capital_flows  balance_of_payments 
december 2014 by dunnettreader
Atish R Ghosh, Mahvash Saeed Qureshi, Naotaka Sugawara - Regulating capital flows at both ends | VOX, CEPR’s Policy Portal - 30 October 2014
"Capital flows to emerging markets have been very volatile since the global financial crisis. This has kindled debates on whether – and how – to better manage cross-border capital flows. In this column, the authors examine the role of capital account restrictions in both source and recipient countries in taming destabilising capital flows. The results indicate that capital account restrictions at either end can significantly lower the volume of cross-border flows." -- it's an IMF team -- though they look at controls on both ends, and tentatively recommend at least ratcheting up prudential standards in source countries at high parts of the business cycle to reduce pro-cyclical effects of large capital flows to emerging markets and peripheral Europe (good luck with taking away the punch bowl!), just controlling foreign currency denominated lending in recipient countries (especially peripheral Europe) would have made a huge difference to the size of the dilemma of getting out of the debt overhang that's also impaired source country (i.e. German) banks that's made recovery so difficult -- replay of Latin American lost decade during which OECD banks couldn't take the full hit at once, so the problem debts had to be gradually resolved through "growing out of it" and the hot potato game cleared up bank balance sheets gradually through shifting syndicated loans to the vultures in the bond markets -- we've seen this movie before, from Latin American to Asian to Eurozone debt crisis
international_political_economy  international_finance  capital_flows  cross-border  financial_regulation  financial_crisis  emerging_markets  Eurozone  FX  capital_markets  macroprudential_policies  macroprudential_regulation  debt-restructuring  debt_crisis 
november 2014 by dunnettreader
Bianca De Paoli and Anna Lipinska - Capital Controls: A Normative Analysis | FRBNY Staff Reports Number 600 - February 2013
Countries' concerns about the value of their currency have been studied and documented extensively in the literature. Capital controls can be--and often are--used as a tool to manage exchange rate fluctuations. This paper investigates whether countries can benefit from using such a tool. We develop a welfare-based analysis of whether (or, in fact, how) countries should tax international borrowing. Our results suggest that restricting international capital flows through the use of these taxes can be beneficial for individual countries, although it would limit cross-border pooling of risk. The reason is because, while consumption risk-pooling is important, individual countries also care about domestic output fluctuations. Moreover, the results show that countries decide to restrict the international flow of capital exactly when this flow is crucial to ensure cross-border risk sharing. Our findings point to the possibility of costly "capital control wars" and thus to significant gains from international policy coordination. -- enfin! We're making progress in clearing away the accumulated layers of free market ideology. Not sure about the likelihood of "capital control wars" so have to read the thing to see if their global cross-border risk-pooling ("consumption risk-pooling? ) is a significant "common good" for anybody other than financial institutions or the beneficiaries of windfall surpluses like Saudi petrodollars that need recycling. Downloaded pdf to Note
paper  Fed  international_political_economy  international_finance  global_economy  global_imbalance  global_governance  capital_flows  FX  FX-misalignment  emerging_markets  hot_money  contagion  capital_controls  FDI  debt  macroeconomics  central_banks  FX-rate_management  monetary_policy  downloaded  EF-add 
october 2014 by dunnettreader
Lance Taylor - Maynard's Revenge: The Collapse of Free Market Macroeconomics (2011) | Harvard University Press
Taylor argues that the ideas of J.M. Keynes and others provide a more useful framework both for understanding the crisis and for dealing with it effectively. Keynes’s basic points were fundamental uncertainty and the absence of Say’s Law. He set up machinery to analyze the macro economy under such circumstances, including the principle of effective demand, liquidity preference, different rules for determining commodity and asset prices, distinct behavioral patterns of different collective actors, and the importance of thinking in terms of complete macro accounting schemes. Economists working in this tradition also worked out growth and cycle models. Employing these ideas throughout Maynard’s Revenge, Taylor provides an analytical narrative about the causes of the crisis, and suggestions for dealing with it. 1. Macroeconomics. 2. Macroeconomic Thought during the Long 19thC. 3. Gold Standard, Reparations, Mania, Crash, and Depression. 4. Maynard Ascendant. 5. Keynesian Growth, Cycles, and Crisis. 6. The Counterrevolution. 7. Finance. 8. The International Dimension. 9. Keynesianism and the
books  intellectual_history  economic_theory  economic_history  economic_models  18thC  19thC  20thC  social_sciences-post-WWII  entre_deux_guerres  political_economy  macroeconomics  classical_economics  neoclassical_economics  Keynes  Keynesianism  Post-Keynesian  finance_capital  financial_economics  microfoundations  EMH  rational_expectations  rationality-economics  rationality-bounded  behavioral_economics  business_cycles  Great_Depression  Great_Recession  financial_crisis  gold_standard  economic_growth  international_monetary_system  balance_of_payments  FX  uncertainty  liquidity  savings  Labor_markets  wages 
september 2014 by dunnettreader
Joshua Aizenman, Yin-Wong Cheung , Hiro Ito International reserves before and after the Global Crisis: Is there no end to hoarding? | vox 13 September 2014
CIn the aftermath of the global financial crisis new patterns of reserve hoarding have emerged. This column identifies structural changes in international reserve accumulation. Emerging markets with higher savings rates tend to use higher buffers of reserves, partially accounting for the higher levels of reserves in east Asia compared to Latin America. While there is no end in sight for reserve hoarding, some of the newly identified factors may mitigate eventual reserve accumulation.
international_political_economy  international_monetary_system  balance_of_payments  FX  financial_crisis  Great_Recession  emerging_markets  central_banks  China 
september 2014 by dunnettreader
Aluisio Gomien De Lima-Campos - Currency Misalignments and Trade: A Path to a Solution :: SSRN June 16, 2014
American University - Washington College of Law -- Fourth Biennial Global Conference of the Society of International Economic Law (SIEL) Working Paper No. 2014/11 **--** The debate about currency misalignments (CMs) and trade is not new. It was already being discussed in the 1940s. What is new is that the existing mechanisms to deal with CMs at the IMF, under its Article IV, and at the WTO, under its Article XV, have proven to be ineffective. This article seeks to show the problems with these mechanisms, understand the reasons of why so, explore available options to resolve them and suggest a path to a lasting sustainable solution. - downloaded pdf to Note
paper  SSRN  international_law  international_economics  law-and-economics  international_political_economy  global_governance  international_monetary_system  international_organizations  economic_history  diplomatic_history  IMF  entre_deux_guerres  post-WWII  FX  FX-misalignment  global_imbalance  trade-policy  trade-agreements  capital_markets  downloaded  EF-add 
september 2014 by dunnettreader
R. Michael Gadbaw - Existential Risks to the Global Trading System and the Problem of Currency Intervention as a Case Study :: SSRN June 16, 2014
Institute of International Economic Law, Georgetown University Law Center -- Fourth Biennial Global Conference of the Society of International Economic Law (SIEL) - Society of International Economic Law (SIEL) Working Paper No. 2014/10. *&--** As countries seek to promote growth in the aftermath of the financial crisis, currency intervention has become more prevalent and distortions in exchange rates with their resulting imbalances in trade flows have prompted call for new initiatives to address them, including in the negotiations of the Trans-Pacific Partnership (TPP) and of the Transatlantic Trade and Investment Partnership (TTIP). Both economic and legal experts have brought new insight into the impact of currency intervention on trade and a fresh legal perspective on the application of the rules in the WTO against measures that frustrate the intent of the GATT/WTO agreements. This paper reviews the underlying legal and policy issues and provides possible language for inclusion in the TPP or TTIP, and eventually in the WTO, that would build on the existing disciplines in the WTO and IMF agreements by authorizing remedial action in the form of safeguard and countervailing duties in response to a finding of actionable currency intervention. -- Number of Pages: 10 -- downloaded pdf to Note
paper  SSRN  international_law  international_economics  law-and-economics  international_political_economy  global_governance  international_monetary_system  international_organizations  IMF  FX  FX-misalignment  WTO  trade-agreements  global_imbalance  trade-policy  Trans-Pacific-Partnership  Transatlantic_Trade_and_InvestmentPartnership  competition  capital_flows  investment-bilateral_treaties  central_banks  downloaded  EF-add 
september 2014 by dunnettreader
Thorstensen, Fernandes Marçal, Ferraz - WTO x PTAs -- Where to Negotiate Trade and Currency :: SSRN June 16, 2014
Vera Thorstensen - São Paulo School of Economics (EESP) at Fundação Getulio Vargas (FGV) -- Emerson Fernandes Marçal - Sao Paulo School of Economics - FGV; Mackenzie Presbyterian University -- Lucas Ferraz - Sao Paulo School of Economics-FGV. -- Fourth Biennial Global Conference of the Society of International Economic Law (SIEL) Working Paper No. 2014/09. *--* The negotiations of mega agreements between the US and the Pacific countries (TPP) and between the US and the EU (TTIP) are raising the attention of experts on international trade law and economics. TPP and TTIP are proclaimed to be the designers of the rules for the XXI Century. Old trade instruments such as tariffs are said to be no more important for TTIP because tariffs are negligible among those partners but significant to for TPP. Another relevant agreement in negotiation is between the EU and Mercosul, where tariffs are the most important issue in discussion. The main purpose of this paper is to shows that tariff are important for all these agreements, not because of its nominal value, but because the impacts of exchange rate misalignments on tariffs are so significant that all concessions can be distorted by overvalued and by devaluated currencies. The article is divided into six sections: the first gives an introduction to the issue; the second explains the methodologies used to determine exchange rate misalignments and also presents some results for Brazil, US and China; the third summarizes the methodology applied to calculate the impacts of exchange rate misalignments on the level of tariff protection through an exercise of “misalignment tariffication” and examines the effects of exchange rate variations on tariffs and their consequences for the multilateral trading system; the fourth creates a methodology to estimate exchange rates against a basket of currencies (a virtual currency of the World) and a proposal to deal with persistent and significant misalignments related to trade rules. The fifth presents some estimates for the main PTAs. The conclusions are present in the last section. -- downloaded pdf to Note
paper  SSRN  international_law  international_economics  law-and-economics  trade-agreements  tariffs  FX  global_imbalance  US_foreign_policy  China  Brazil  EU  Latin_America  South-South_economics  emerging_markets  capital_flows  international_monetary_system  FX-misalignment  prices  costs  downloaded  EF-add 
september 2014 by dunnettreader
The Works of John Locke, vol. 4 (Essays on money and Two Treatises of Government) [1824 edition] - Online Library of Liberty
Essays on money -- SOME CONSIDERATIONS OF THE CONSEQUENCES OF THE LOWERING OF INTEREST, AND RAISING THE VALUE OF MONEY. IN A LETTER SENT TO A MEMBER OF PARLIAMENT, 1691. Having lately met with a little tract, entitled, “A Letter to a friend concerning usury,” printed this present year, 1660; which gives, in short, the arguments of some treatises, printed many years since, for the lowering of interest; it may not be amiss briefly to consider them. -- Of raising our Coin. *--* SHORT OBSERVATIONS ON A PRINTED PAPER, ENTITLED, For encouraging the coining silver money in England, and after for keeping it here. *--* FURTHER CONSIDERATIONS CONCERNING RAISING THE VALUE OF MONEY. [Dedicated to Lord Somers] -- converted to html -- didn't download
books  etexts  Liberty_Fund  intellectual_history  political_philosophy  economic_history  political_economy  17thC  Glorious_Revolution  1690s  Locke  Locke-2_Treatises  monetary_policy  interest_rates  commerce  currency  bimetalism  FX  prices  usury  Parliament  House_of_Commons  William_III  Whig_Junto 
august 2014 by dunnettreader
Hyman P. Minsky - Review of Susan Strange, "Casino Capitalism" (1987) | Bard Archive
C Description

A Review of: Susan Strange. Casino Capitalism. Oxford and New York, NY: Blackwell, 1986, pp. 1883-1885, Book Reviews, Journal of Economic Literature, Vol. XXV, Dec. 1987. -- Recommended Citation. - Minsky, Hyman P. Ph.D., "Review of "Casino Capitalism"" (1987). Hyman P. Minsky Archive. Paper 158. - http://digitalcommons.bard.edu/hm_archive/158 -- downloaded pdf to Note
books  bookshelf  reviews  Minsky  international_political_economy  international_finance  capitalism  capital_markets  FX  international_economics  international_monetary_system  downloaded 
july 2014 by dunnettreader
Ernst Schaumburg - Has Automated Trading Promoted Efficiency in the FX Spot Market? - Liberty Street Economics March 2014
The relative merits of algorithmic and high-frequency trading are most often discussed in the context of equity markets. In this post, we look at the foreign exchange (FX) spot market. The growth of algorithmic and high-frequency trading in this market has introduced new entrants as well as new complexities and challenges that have important implications for the liquidity landscape and the risk management framework in FX markets. This post focuses narrowly on an important measure of FX market efficiency, absence of arbitrage opportunities, to discuss the improvements in this particular measure of efficiency that have coincided with significant growth in algorithmic and high-frequency trading. -- looking at triangular arbitrage in USD FX, looks like HFT has really squeezed the arbitrage opportunities out of the system, even in the financial crisis when liquidity impairment had a big impact
financial_system  financial_crisis  FX  capital_markets  liquidity  leverage  arbitrage  HFT 
march 2014 by dunnettreader
Adair Turner criticizes economists' adherence to the belief that the benefits of capital-account liberalization outweigh the costs. - Project Syndicate
If volatility becomes extreme, some countries may consider imposing constraints on capital outflows, which the International Monetary Fund now agrees might be useful in specific circumstances. But the fundamental question is how to manage the impact of short-term capital inflows. Until recently, economic orthodoxy considered that question invalid. Financial liberalization was lauded because it enabled capital to flow to where it would be used most productively, increasing national and global growth. But empirical support for the benefits of capital-account liberalization is weak. The most successful development stories in economic history – Japan and South Korea – featured significant domestic financial repression and capital controls, which accompanied several decades of rapid growth.
emerging_markets  capital_flows  investment  FDI  contagion  FX 
february 2014 by dunnettreader
Larry Neal - Integration of International Capital Markets: Quantitative Evidence from the Eighteenth to Twentieth Centuries | JSTOR: The Journal of Economic History, Vol. 45, No. 2 (Jun., 1985), pp. 219-226
The integration of capital markets is usually tested with an interest rate arbitrage model even though much different financial assets must be compared. This paper compares prices of identical assets that are traded simultaneously in two or more markets. The range, average level, and time series pattern of the differences can be used to infer threshold levels, transaction cost levels, and the efficiency of arbitrage operations, respectively. Examples are given for financial crises from 1745 to 1907, using prices from the London, Amsterdam, Paris, and New York stock exchanges. These show European capital markets to be well integrated by mid-eighteenth century. -- didn't download -- I expect the data is worked into his later books etc
article  jstor  economic_history  finance_capital  capital_markets  18thC  19thC  British_history  capital_flows  FX  financial_crisis  interest_rates  international_finance  EF-add 
february 2014 by dunnettreader
Dani Rodrik - the fundamental lessons about emerging economies that economists have refused to learn. - Project Syndicate Feb 2014
The deeper problem lies with the excessive financialization of the global economy that has occurred since the 1990’s. The policy dilemmas that have resulted – rising inequality, greater volatility, reduced room to manage the real economy – will continue to preoccupy policymakers in the decades ahead. It is true, but unhelpful, to say that governments have only themselves to blame for having recklessly rushed into this wild ride. It is now time to think about how the world can create a saner balance between finance and the real economy
emerging_markets  international_finance  international_political_economy  capital_flows  financial_sector_development  FX  financialization 
february 2014 by dunnettreader
George Soros - Fallibility, reflexivity, and the human uncertainty principle - Journal of Economic Methodology [Soros special issue] - Volume 20, Issue 4 - Taylor & Francis Online
Lead article for special issue devoted to Soros and epistemology in social sciences more broadly compared with natural sciences and Popper's version of falsibility in scientific method -- He's making progress in formalizing his theory and putting it in context of other theorists - sees his fallibility and reflexivity combination as major factor in "Knightian uncertainty" - Downloaded pdf to Note
article  philosophy_of_social_science  philosophy_of_science  epistemology  scientific_method  falsification  deduction  Popper  Soros  uncertainty  economic_theory  economic_models  financial_economics  capital_markets  FX  EMH  rationality-economics  rational_expectations  complexity  equilibrium  reflexivity  ontology-social  free_will  financial_crisis  financial_system  fallibility  downloaded  EF-add  fundamentals  methodology  cognition  agency  intentionality 
january 2014 by dunnettreader
David Fields - More on The Sociology of Development: Towards A Re-articulation of Dependency Theory I The Hampton Institute Nov 2013
Originally posted on Naked Keynesianism -- excellent bibliography from Rostow, Parsons et al modernization theory onwards thru Paul Baran and Paul Sweezy, in Monopoly Capital (1960), [building on the path-breaking work of Michel Kalecki and Joseph Steindl], versions of dependency theory and D Harvey attacks on neoliberalism -- From this perspective [Fields & Vernengo], 'underdevelopment', or 'dependency', is the powerlessness a peripheral country to establish its own unit of account and thus is forced to variably peg its national currency to a foreign reference currency. What ensues is the inability to use monetary policy-central bank purchasing and selling of government bonds denominated in the domestic currency for purposes of controlling the money supply, and thus the cost of credit-, and fiscal policy, via deficit spending, for domestic economic needs. Since the central bank is forced to maintain a certain level reserves of the foreign reference currency such that the price of the domestic currency, in terms of the reference currency, does not change, this produces a negative money-multiplier that sets in motion an inherent deflationary bias, which, if not counteracted by capital inflows to spur aggregate demand, can lead to abrupt contraction of the monetary base, stinting any supposed progress towards economic sustainability (cf. Fields & Vernengo, 2012, 2013). -- concluding paragraph -- Balance of payments constraints can be quite unsupportable, spawning self-fulfilling financial collapses. Moreover, they altogether constitute an ideological mask that normalizes the advance of global cosmopolitan money-capitalist power to dictate the terms of domestic democratic politics (Ingham, 2008). As such, the extent to which a country is 'peripheralized', is the degree to which its creditworthiness is essentially evaluated in terms of the degree to which the state takes steps toward lowering the social wage for the benefit of multinational corporations from the centre (or core).
economic_history  intellectual_history  social_theory  development  social_sciences-post-WWII  modernization  industrialization  globalization  global_economy  global_imbalance  MNCs  Labor_markets  balance_of_payments  capital_markets  sovereign_debt  public_finance  monetary_policy  fiscal_policy  FX  emerging_markets  debt  default  Eurozone  bibliography  sociology  capitalism  capital_flows  finance_capital  EF-add 
november 2013 by dunnettreader
Patrick Jenkins - The forex market is designed to encourage crime - FT.com Nov 2013
The mildest allegation is that some banks routinely pushed clients to use one reference rate when a better deal was available privately, leaving the bank with a potentially bigger profit margin. The most serious is that chummy traders in the City of London and other financial centres would engineer deals, particularly in the run-up to the all-important 4pm fix, to pre-empt client transactions and any subsequent shift in rates.
banking  financial_regulation  FX  financial_system 
november 2013 by dunnettreader
John Williamson, Olivier Jeanne, Arvind Subramanian: International rules for capital controls | vox June 2012
Do we need international rules for capital controls? This column looks at the different regimes in countries such as Brazil and China and argues that we do. -- economists now understand better the theoretical case for such policies with a new literature on the welfare economics of prudential capital controls ...which transposes to international capital flows the closed-economy analysis of the macroprudential policies that aim to curb the boom-bust cycle in credit and asset prices. It finds that it is optimal to impose a countercyclical Pigouvian tax on debt inflows in a boom to reduce the risk and severity of a bust. Interestingly, the optimal tax would fall primarily on the flows (short-term or foreign currency debt) that are the least likely to be conducive to economic growth. -- We see compelling reasons to establish an international regime for capital flows. First, the lack of commonly agreed rules implies that capital controls are still marked by a certain stigma ... but an international regime for capital flows should go further, and take appropriate account of spill-over effects. This is particularly the case of policies that repress domestic demand and, through a combination of reserve accumulation and restrictions on inflows, maintain a current account surplus. Those policies have the same economic effects as trade protectionism and undermine the global public good of free trade. But the point may apply also to prudential capital controls. As recently shown by Forbes et al (2012) in the case of Brazil, capital account restrictions are liable to divert capital flows from one recipient to another, and thereby give third countries a strong interest in the controls imposed by others. The implications of this argument have not yet been absorbed by the profession, but it seems possible that they will turn out to be significant for the optimal international design of capital account policies.
international_political_economy  FX  capital_flows  capital_markets  international_finance  financial_crisis  financial_regulation  emerging_markets  contagion  trade-theory  global_economy  global_governance  global_imbalance  macroprudential_policies  monetary_policy  IMF  WTO  EF-add 
september 2013 by dunnettreader
Michael W Klein: Capital controls: Gates versus walls | vox January 2013
Capital controls are back in vogue. This column argues that we should distinguish between episodic controls (gates) and long-standing controls (walls). Research shows that the apparent success of 'walls' in China and India tells us little about the consequences of capital controls imposed or removed in countries like Brazil and South Korea, as circumstances change. Walls and gates are fundamentally distinct, and policy debate needs to take into account these differences.
FX  capital_flows  capital_markets  macroeconomics  monetary_policy  emerging_markets  contagion  international_finance  international_political_economy  global_economy  EF-add 
september 2013 by dunnettreader
Hélène Rey Dilemma not Trilemma: The global financial cycle and monetary policy independence | vox August 2013
The global financial cycle has transformed the well-known trilemma into a ‘dilemma’. Independent monetary policies are possible if and only if the capital account is managed directly or indirectly. This column argues the right policies to deal with the ‘dilemma’ should aim at curbing excessive leverage and credit growth. A combination of macroprudential policies guided by aggressive stress‐testing and tougher leverage ratios are needed. Some capital controls may also be useful. -- At the heart of the transmission of monetary conditions is the ability of financial intermediaries to leverage up quickly to high levels when financing conditions are favourable (see Borio and Disyatat (2011)). Hence a sensible policy measure is to cut structurally the ability of financial intermediaries to be excessively procyclical by putting a tougher limit on leverage.
FX  capital_flows  international_finance  international_political_economy  global_system  global_economy  global_imbalance  capital_markets  monetary_policy  macroprudential_policies  emerging_markets  contagion  financial_regulation  leverage  EF-add 
september 2013 by dunnettreader
Michael W Klein, Jay C. Shambaugh: Dilemma with the financial Trilemma | vox Sept 2013
The ‘financial trilemma’ – that open capital markets and pegged exchange rates mean a loss of monetary autonomy – has recently been challenged. Some argue that even flexible exchange rates cannot assure monetary autonomy without capital controls, while others argue even countries with fixed exchange rates can gain autonomy through temporary capital controls. This column argues that free floating exchange rates do in fact allow autonomy, and partially floating ones allow partial autonomy. For countries with fixed exchange rates, capital controls provide monetary autonomy when they are widely applied and longstanding, but not when they are temporary and narrowly targeted.

The argument that the policy trilemma overstates the efficacy of monetary policy has recently been made by Professor Hélène Rey (2013a, 2013b). Her argument is that widespread co-movement in capital flows, asset prices, and credit growth across countries – a global financial cycle – makes the trilemma moot.  -- Financial cycles and large country interest rates certainly have important impacts around the globe, but our evidence suggests that countries that float or close capital markets maintain some freedom over how they approach these shocks.
FX  capital_flows  international_finance  financial_crisis  macroprudential_policies  international_political_economy  global_system  global_economy  global_imbalance  capital_markets  monetary_policy  emerging_markets  contagion  EF-add 
september 2013 by dunnettreader
Karin Knorr Cetina and Urs Bruegger: Global Microstructures: The Virtual Societies of Financial Markets (2002)
JSTOR: American Journal of Sociology, Vol. 107, No. 4 (January 2002), pp. 905-950 -- downloaded pdf to Note -- very heavily cited -- references and footnotes indicate research placed in theory, concepts and method debates -- Using participant‐observation data, interviews, and trading transcripts drawn from interbank currency trading in global investment banks, this article examines regular patterns of integration that characterize the global social system embedded in economic transactions. To interpret these patterns, which are global in scope but microsocial in character, this article uses the term “global microstructures.” Features of the interaction order, loosely defined, have become constitutive of and implanted in processes that have global breadth. This study draws on Schutz in the development of the concept of temporal coordination as the basis for the level of intersubjectivity discerned in global markets. This article contributes to economic sociology through the analysis of cambist (i.e., trading) markets, which are distinguished from producer markets, and by positing a form of market coordination that supplements relational or network forms of coordination.
article  jstor  social_theory  economic_sociology  institutional_economics  markets  networks  sociology_of_knowledge  financial_system  globalization  capital_markets  FX  money_market  20thC  21stC  lit_survey  downloaded  EF-add 
september 2013 by dunnettreader
William D. Grampp: The Third Century of Mercantilism (1944)
JSTOR: Southern Economic Journal, Vol. 10, No. 4 (Apr., 1944), pp. 292-302 -- analogies between 17thC England and France and 20thC entre deux guerres
article  jstor  economic_history  political_history  international_system  intellectual_history  international_political_economy  IR  trade  FX  mercantilism  17thC  20thC  Britain  France  entre_deux_guerres  downloaded  EF-add 
august 2013 by dunnettreader
Carl Wennerlind: David Hume’s Monetary Theory Revisited: Was He Really a Quantity Theorist and an Inflationist? (2005)
JSTOR: Journal of Political Economy, Vol. 113, No. 1 (February 2005), pp. 223-237....Downloaded pdf to Note. ?...see bookshelf for 2011 Hume Political Economy collection. ?... David Hume’s monetary theory has been controversial since its formulation. Lately, the focus has been on Hume’s alleged misapplication of the quantity theory of money. While he appears to subscribe to a simple quantity theory with money neutrality, in a famously contested passage in the essay Of Money, he violates the neutrality condition by claiming that an increase in the money stock has favorable output effects. While most commentators argue about the persistence of the output effect, this paper suggests that we can derive an alternative understanding of Hume’s monetary thinking by recognizing that he made an analytical distinction between endogenous and exogenous money. Realization that only the former has a favorable output effect forces us to overturn the long‐standing consensus that Hume instructed the government to use monetary or trade policy to engineer a gradually increasing money stock.
article  jstor  bookshelf  economic_history  monetary_policy  18thC  economic_models  currency  money  FX  prices  inflation  trade  Hume  downloaded  EF-add 
august 2013 by dunnettreader
Richard C. Wiles: The Theory of Wages in Later English Mercantilism (1968)
JSTOR: The Economic History Review, New Series, Vol. 21, No. 1 (Apr., 1968), pp. 113-126.....Downloaded pdf to Note......another short article with lots of references. ?..Late Mercantilism is for Wiles from late 17thC. Heckscher, Furniss & Viner didn't study period or significantly misrepresented what was going on.
article  jstor  economic_history  political_economy  mercantilism  17thC  18thC  Labor_markets  unemployment  poverty  trade  FX  downloaded  EF-add 
august 2013 by dunnettreader
William D. Grampp: The Liberal Elements in English Mercantilism (1952)
JSTOR: The Quarterly Journal of Economics, Vol. 66, No. 4 (Nov., 1952), pp. 465-501......Downloaded pdf to Note..... I. The goal of full employment, 467.--II. The means to full employment, 473.--III. Economic freedom in mercantilist doctrine, 486.--IV. The exceptions to free exchange, 492.--V. The historical roots of mercantilism, 496.--VI. Economists on mercantilism, 499.
article  jstor  economic_history  mercantilism  British_history  British_politics  British_Empire  political_economy  17thC  18thC  unemployment  Labor_markets  trade  FX  Navigation_Acts  Smith  Hume  downloaded  EF-add 
august 2013 by dunnettreader
Economic history: What was mercantilism? | The Economist
See linked paper by Grampp..... Grampp argues that, on the whole, we should stop confusing mercantilism and bullionism. Few mercantilists were slaves to the balance of payments. In fact, they were alarmed by the idea of hoarding gold and silver. This is because many mercantilist thinkers were most concerned with maximising employment. Nicholas Barbon—who pioneered the fire insurance industry after the Great Fire of London in 1666—wanted money to be invested, not hoarded. As William Petty—arguably the first “proper” economist—argued, investment would help to improve labour productivity and increase employment. And almost all mercantilists considered ways of bringing more people into the labour force.Mr Grampp even suggests that Keynesian economics "has an affinity to mercantilist doctrine”, given their shared concern with full employment. Keynes, in a short note to his “General Theory”, approvingly quotes mercantilists, noting that an ample supply of precious metals could be key in maintaining control over domestic interest rates, and therefore to ensuring adequate resource utilisation. In some sense the Keynesian theory of underconsumption—that is, inadequate consumer demand—as a cause of recessions was presaged by mercantilist contributions.
economic_history  17thC  18thC  mercantilism  Smith  Keynes  macroeconomics  FX  unemployment  EF-add 
august 2013 by dunnettreader
Paul Krugman:This Age of Bubbles - NYTimes.com August 2013
Yield chasing sent huge capital flows to the big emerging markets which are now, with Fed flirting with taper of QE3, being reversed with a vengeance. Shows this episode as well as previous bubbles not a result of excessively easy money. Just another bubble in our era of banks gone wild and uncontrolled globalized financial markets. Probably not a repeat of Asian crisis since the flows weren't short term foreign currency denominated debt, but still a set of pressures on emerging markets that the sluggish global economy doesn't need right now. I don't think Krugman takes seriously enough the global liquidity sloshing around that's not money created by central banks but that still has impact on asset prices rather than consumer prices, which have been very stable.
financial_system  bubbles  emerging_markets  capital_markets  India  Brazil  FX  Fed  EF-add 
august 2013 by dunnettreader
Chinn, Eichengreen and Ito: "A Forensic Analysis of Global Imbalances" | Econbrowser: August 2013
Just published in Oxford Economic Papers - downloaded working paper pdf to Note. ?..
We investigate whether the determinants of current account balances changed in the run-up to the 2009 financial crisis. Although changes in the budget balance appear to be an important factor for advanced current account deficit countries such as the USA, the effect of the ‘saving glut variables’, that is financial development and openness and legal development, has been relatively stable for emerging market countries, suggesting that those factors cannot explain the bulk of current account movements in recent years. We also find a structural break in current account behavior in 2006–8, in emerging market economies in particular, and attribute the anomalous behavior of precrisis current account balances to financial exuberance as opposed to the nature of the fiscal and monetary policy stance. Our projections suggest that absent drastic policy changes, the imbalances of the USA and China are unlikely to disappear.
21stC  global_system  FX  global_imbalance  US_economy  trade  China  emerging_markets  capital_markets  capital_flows  Great_Recession  financial_crisis  downloaded  EF-add 
august 2013 by dunnettreader
Vickrey, William. 1996. 15 Fatal Fallacies of Financial Fundamentalism
Much of the conventional economic wisdom prevailing in financial circles, largely subscribed to as a basis for governmental policy, and widely accepted by the media and the public, is based on incomplete analysis, contrafactual assumptions, and false analogy. For instance, encouragement to saving is advocated without attention to the fact that for most people encouraging saving is equivalent to discouraging consumption and reducing market demand, and a purchase by a consumer or a government is also income to vendors and suppliers, and government debt is also an asset.
Analytical reality: This "Ricardian equivalence" thesis, while referred to by Ricardo, may not in the end have been subscribed to by him. In any case its validity depends crucially on the system of taxation expected to be used to finance the debt service.At one extreme, in a Georgist economy making exclusive use of a "single tax" on land values, and where land values are expected to evolve proportionally over time, any debt becomes in effect a collective mortgage on the land parcels. Any increase in government debt to offset current tax reduction depresses the market value of land by an equal amount, aggregate wealth of individual is unaffected, Ricardian equivalence is complete and pure fiscal policy is impotent. A larger debt may still be desirable in terms of taking advantage of possibly lower interest rates available on government debt than on individual mortgages, and in effectively endowing property with a built-in assumable mortgage that facilitates the financing of transfers. And there may still be a possibility for stimulating the economy by tax-financed expenditures that redistribute income towards those with a higher propensity to spend.
economic_history  20thC  economic_models  economic_growth  sovereign_debt  investment  central_banks  fiscal_policy  monetary_policy  capital_markets  FX  18thC  taxes  Bolingbroke  EF-add 
august 2013 by dunnettreader
Robert Brenner: What is Good for Goldman Sachs is Good for America - The Origins of the Present Crisis [eScholarship] October 2009
Robert Brenner outlines the long-term causes of the present economic crisis. Rather than understanding the current downturn as merely a function of financial incompetence and miscalculation, he demonstrates that the US economy and that of the G7 has been slower growth in most of the major indices with each passing business cycle since the 1970s. In the last two cycles, asset bubbles inclined US consumers to take on more debt in order to spend and achieve limited GDP growth. Brenner outlines in detail how and why the financial sector played a key role in the creation and inflation of debt bubbles with new financial instruments. The implications for the US and the global economy are also outlined including the US current account deficit, trade imbalances, the rise of China and the East Asian economies as well as declining investment in the real economy and overcapacity in manufacturing worldwide.

Downloaded pdf to Note
economic_history  financialization  international_finance  international_political_economy  capitalism  investment  profit  Labor_markets  Great_Recession  banking  FX  competition  bubbles  financial_crisis  emerging_markets  China  downloaded  EF-add 
august 2013 by dunnettreader
David Fields Matías Vernengo Hegemonic currencies during the crisis: The dollar versus the euro in a Cartalist perspective T & F Online
Review of International Political EconomyVolume 20, Issue 4, 2013, pages 740- 759Available online: 12 Aug 2013DOI: 10.1080/09692290.2012.698997

This paper suggests that the dollar is not threatened as the hegemonic international currency, and that most analysts are incapable of understanding the resilience of the dollar, not only because they ignore the theories of monetary hegemonic stability or what, more recently, has been termed the geography of money, but also as a result of an incomplete understanding of what a monetary hegemon does. The paper argues that the dominant view on the international position of the dollar has been based on a Metallist view of money. In the alternative Cartalist view of money, the hegemon is not required to maintain credible macroeconomic policies (i.e., fiscally contractionary policies to maintain the value of the currency), but to provide an asset free of the risk of default. Further, it is argued that the current crisis in Europe shows why the euro is not a real contender for hegemony in the near future.
FX  US_economy  international_political_economy  hegemony 
august 2013 by dunnettreader
A schematic of QE | FT Alphaville 7-8-2013
With one or two caveats (such as the US economy failing to lift off as instructed), Julian Garran of UBS reckons we’re headed into a “disinflationary boom.” Here’s his “investment clock” and some accompanying comment. [Nifty slides]
international_finance  emerging_markets  FX  capital_markets  Fed  QE 
july 2013 by dunnettreader

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