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Barry Eichengreen

Barry Eichengreen

Barry Eichengreen is Professor of Economics at the University of California, Berkeley; Pitt Professor of American History and Institutions at the University of Cambridge; and a former senior policy adviser at the International Monetary Fund.

Articles by Barry Eichengreen

Dancing with the Debt Ceiling

21 days ago

Even in 2013, a year of partisan rancor, Democrats and Republicans agreed to suspend the US federal government’s debt ceiling just a week before the Treasury ran out of cash reserves. But this year might be different.

BERKELEY – In 2011, when still vice chair of the US Federal Reserve, Janet Yellen reassured her colleagues that drama around the federal government’s debt ceiling “usually turns out to be just theater.” Theater of the absurd, one might add. A decade later, the debt-ceiling debate is shaping up as a tragedy for the ages.
The Bretton Woods Credibility Crisis

Samuel Corum/Getty Images

Behind the Modern Malaise

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This SDR Allocation Must Be Different

September 10, 2021

When the International Monetary Fund announced last month a new $650 billion allocation of special drawing rights, the hope was that high-income countries would transfer their SDRs to developing countries in need. With the Fund’s annual meetings coming in October, it’s time for all parties to step up.

BERKELEY – In August, the International Monetary Fund announced, to much fanfare, that its members had reached a historic agreement to issue $650 billion of special drawing rights (SDRs, the Fund’s unit of account) to meet the COVID-19 emergency. SDRs are bookkeeping claims that governments, through the IMF’s good offices, can convert into dollars and other hard currencies to pay for essential imports, such as

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The coming public debt scare should not spook U.S. policymakers from investing in physical and social infrastructure

September 7, 2021

Public debt scaremongering is back in fashion on Capitol Hill. Republican legislators, from Senate Minority Leader Mitch McConnell (R-KY) on down, are invoking the high level of federal government debt—currently approaching 103 percent of Gross Domestic Product—as reason to oppose President Joe Biden’s proposed $3.5 trillion of new social infrastructure and investments in abating the effects of climate change.

Later this month, with the temporary COVID-related suspension of the federal debt limit lifted, the debate is about to acquire another flashpoint. Republicans are likely to insist that the debt ceiling should remain where it is to prevent the further accumulation of debt. They seem ready to go down this road despite understanding that, at some point, failure to raise the

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Will Central Bank Digital Currencies Doom Dollar Dominance?

August 9, 2021

Some say that issuance of central bank digital currencies will transform the international monetary status quo by eroding the US dollar’s dominance of cross-border payments and greatly reducing transaction costs. But this is not going to happen.

BERKELEY – August 13-15 marks the 50th anniversary of “the weekend that changed the world,” when US President Richard Nixon suspended the dollar’s convertibility into gold at a fixed price and rung down the curtain on the Bretton Woods international monetary system. The subsequent half-century brought many surprises. From a monetary standpoint, one of the greatest was the dollar’s continued dominance as a vehicle for cross-border transactions.

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The Stablecoin Illusion

July 13, 2021

An obscure corner of the digital sphere that was poorly understood two years ago is now subject to increasingly intense scrutiny by central bankers, regulators, and investors. Unfortunately, more intense scrutiny has not necessarily meant better understanding.

BERKELEY – The debate over stablecoins has come a long way since Facebook announced the creation of Libra (now rebranded Diem) almost exactly two years ago. An obscure corner of the digital sphere that was poorly understood then is now subject to increasingly intense scrutiny by central bankers, regulators, and investors. The stakes, including for financial stability, are high. Market capitalization, or circulating supply, of the four leading US dollar

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The Logic of Effective Climate Action

June 15, 2021

The starting point for addressing climate change, economists agree, is a tax on carbon. But while the resulting reduction in emissions would benefit virtually everyone on the planet, those who bear a disproportionate share of the costs will mobilize in opposition – that is, unless they are given a reason not to.

BERKELEY – In his classic book, The Logic of Collective Action, the late great Mancur Olson explained that the hardest policies to implement are those with diffuse benefits and concentrated costs. Olson’s argument was straightforward: individuals bearing the costs will vigorously oppose the policy, while the beneficiaries will free ride, preferring that someone else take up the cudgels.

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The Big Float

June 11, 2021

When the US effectively floated the US dollar in 1971, many foresaw the end, or at least the beginning of the end, of the Bretton Woods system and, with it, American monetary and economic hegemony. Yet the dollar-based system survives – along with the same old criticisms of it.

BERKELEY – August 15 is not a red-letter day on most calendars. True, August 15, 1969, was the first day of the Woodstock music festival. And the Panama Canal opened to traffic on August 15, 1914. Mostly, though, mid-August finds officials and others on holiday.But not on Sunday, August 15, 1971. That evening 50 years ago, at the conclusion of three days of crisis meetings, President Richard M. Nixon announced that the United States was

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Will the Productivity Revolution Be Postponed?

May 10, 2021

US President Joe Biden clearly has bet on faster productivity growth to pay for his $4.1 trillion American Jobs Plan and American Families Plan. But history suggests that any acceleration of productivity growth is likely to be delayed – perhaps by decades.

BERKELEY – Productivity growth changes everything. In advanced economies with a slowly growing labor force and already-large capital stock, it typically accounts for the majority of output growth.

Waking the Norwegian Green Giant

Sustainability Now

JAN KARE NESS/AFP via Getty Images

Will Corporate Greed Prolong the Pandemic?

PS OnPoint


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Who Needs a Digital Dollar?

March 9, 2021

Recently, the idea of a digital greenback elicited support from US Treasury Secretary Janet Yellen and Federal Reserve Chair Jay Powell. Ultimately, the advantages of a digital dollar will need to be weighed against the potentially high costs and significant risks to the financial system that come with it.

BERKELEY – The idea of a digital dollar has been in the air for some time now. Recently, it descended from the ether to the lips of US Treasury Secretary Janet Yellen and Federal Reserve Chair Jay Powell. At an event in February, Yellen flagged the idea as “absolutely worth looking at,” adding that the Federal Reserve Bank of Boston, in conjunction with academics at MIT, was already doing so. In Congressional testimony the

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New-Model Central Banks

February 9, 2021

Monetary authorities are increasingly expected to address issues such as climate change and inequality, over the objections of those who insist that central banks’ narrow mandate is what sustains their operational independence. But ignoring these issues, or saying they’re someone else’s problem, is no longer an option.

BERKELEY – We are used to thinking about the remit of central banks as focusing narrowly on price stability, or at most as targeting inflation while ensuring the smooth operation of the payment system. But with the global financial crisis of 2008 and now COVID-19, we have seen central banks intervening to support a growing range of markets and activities, using instruments that extend well beyond

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An Infrastructure Inoculation for America’s Recovery

January 13, 2021

In weighing the options for additional stimulus, President-elect Joe Biden’s $2 trillion infrastructure investment plan has much to recommend it. If accompanied by a new independent commission to ensure that the money isn’t wasted on pork-barrel projects, it is a better approach than sending more checks to every household.

BERKELEY – With the Democrats’ stunning sweep of Georgia’s two Senate run-off elections handing them control of both houses of Congress as of January 20, the idea of $2,000 stimulus checks for every household is sure to be back on the agenda in the United States. But although targeted relief for the unemployed should unquestionably be a priority, it is not clear that $2,000 checks for all would in

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The Debt Dogs that Didn’t Bark

December 11, 2020

If global growth resumes in 2021, aided by the rollout of vaccines and the Fed’s continued commitment to ultra-low interest rates, some developing countries may be able to avoid default, because yield-hungry investors will continue to buy their bonds. But other countries will not be so lucky.

BERKELEY– Last March, when COVID-19 infected the world economy, many observers feared that emerging markets and developing countries would suffer the most, financially and otherwise. Economically, they relied on commodity exports, remittances, and tourism, all of which fell through the floor with the pandemic. There was every reason to expect a tsunami of financial crises and debt defaults.

The Costs of Merkel’s

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Scotland after Sterling

October 13, 2020

Scottish advocates of leaving the United Kingdom need a plan for a new currency and an independent central bank, as well as a blueprint for the country’s subsequent transition to the euro. These would go a long way toward reassuring Scots who yearn for independence but worry about what follows sterling.

BERKELEY – The odds of Scotland becoming independent are rising by the day. In Scotland’s 2014 referendum, some 45% of voters favored independence. Brexit, which some 60% of Scotland’s voters opposed, is now forcing the Scottish electorate to choose between staying in the United Kingdom and remaining in the European Union, shifting public opinion further toward independence.

Overruling the

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The Pandemic’s Most Treacherous Phase

September 9, 2020

The most dangerous phase of the COVID-19 crisis in the US may actually be now, not last spring. If the economy falters a second time, whether because of inadequate fiscal stimulus or flu season and a second COVID-19 wave, it will not receive the additional monetary and fiscal support that protected it in the spring.

BERKELEY – April marked the most dramatic and, some would say, dangerous phase of the COVID-19 crisis in the United States. Deaths were spiking, bodies were piling up in refrigerated trucks outside hospitals in New York City, and ventilators and personal protective equipment were in desperately short supply. The economy was falling off the proverbial cliff, with unemployment soaring to 14.7%.

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Dollar Sensationalism

August 12, 2020

The dollar’s fall in July to a two-year low against the euro was the catalyst for sensational headlines shouting that the dollar would soon meet its doom. But too much should not be read into the dollar’s recent moves, which reflect readily explicable fluctuations, not the greenback’s terminal decline.

BERKELEY – The dollar is in free-fall! The global greenback is doomed! scream recent headlines. Actually, such sensational headlines are “too sensational,” to echo that noted authority on currencies, Miss Prism, in Oscar Wilde’s “The Importance of Being Ernest.”

The Master and the Prodigy

PS OnPoint

Tim Gidal/Picture Post/Hulton Archive/Getty Images

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Training for the Pandemic Economy

July 13, 2020

The transition to the world being created by COVID-19 was always going to be difficult for workers in the worst-affected sectors. The main question now is whether policymakers will take the steps – including apprenticeship programs and expanded funding for community colleges and technical schools – that are most likely to make it easier.

BERKELEY – COVID-19 is not going away, and other dangerous viruses may be coming. This means it’s time to face the grim truth: many of the pandemic’s effects on our economies and societies will be persistent, even permanent.

Toward a New Fiscal Constitution

PS OnPoint

Hagen Hopkins/Getty Images

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Rage Against the Pandemic

June 8, 2020

It has been widely noted that the social turmoil unfolding in the wake of George Floyd’s death may worsen the already-acute COVID-19 crisis. But the connection running in the other direction – from the pandemic to the demonstrations – has received far less attention.

BERKELEY – Two weeks of massive, nationwide demonstrations against police violence and racial bias have raised concerns about a second wave of COVID-19 infections in the United States. It’s hard to engage in a collective display of righteous anger over George Floyd’s killing at the hands of the Minneapolis police and remain two meters apart from one’s fellow protesters. And mask wearing is less than universal among the demonstrators, just as it is among

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Managing the Coming Global Debt Crisis

May 13, 2020

The economic crisis that has befallen emerging and developing economies is being treated as temporary, with a moratorium on interest payments and a promise of commercial credits remaining valid only through the end of the year. In other words, the policy response is woefully inadequate to these countries’ situation.

BERKELEY – The developing world is on the cusp of its worst debt crisis since 1982. Back then, three years had to pass before creditors mounted the concerted response known as the Baker Plan, named after then-US Treasury Secretary James Baker. This time, fortunately, G20 governments have responded more quickly, calling for a moratorium on payments by low-income countries.


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Alice in Libraland

April 22, 2020

As the COVID-19 pandemic escalates, and its effects reverberate around the world, Project Syndicate is delivering the expert scientific, economic, and political insights that people need. For more than 25 years, we have been guided by a simple credo: All people deserve access to a broad range of views by the world’s foremost leaders and thinkers on the issues, events, and forces shaping their lives. In this crisis, that mission is more important than ever – and we remain committed to fulfilling it.
But there is no doubt that the intensifying crisis puts us, like so many other organizations, under growing strain. If you are in a position to support us, please subscribe now.
As a subscriber, you will enjoy unlimited access to our On Point suite of long reads and book

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The Human-Capital Costs of the Crisis

April 10, 2020

Unlike a hurricane or earthquake, the coronavirus pandemic has caused no damage to physical capital stock. But firm-specific skills have no value when the firm that uses them goes out of business, which is one reason why US productivity, wages, and economic growth are likely to be affected for years to come.

BERKELEY – US President Donald Trump tells us that once COVID-19 is contained and it is safe to go back to work, the economy will be “great again.” Is he right?

Witnessing Wuhan

PS OnPoint

Xinhua/Xiao Yijiu via Getty Images

Free to read

The Trump

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Coronanomics 101

March 10, 2020

In the fight against the COVID-19 pandemic, economists, economic policymakers, and bodies like the G7 should humbly acknowledge that “all appropriate tools” imply, above all, those wielded by medical practitioners and epidemiologists. Coordination, autonomy, and transparency must be the watchwords.

BERKELEY – Last week, G7 finance ministers and central bank governors vowed to use “all appropriate policy tools” to contain the economic threat posed by the COVID-19 coronavirus. The question left unanswered is what is appropriate, and what will work.
Plagued by Trumpism

Sean Gallup/Getty Images

COVID-19 Trumps Nationalism

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America’s Isolationist Default

February 11, 2020

There is much truth to the view that President Donald Trump’s "America First" policies are an abdication of global leadership, sounding the death knell of the post-World War II multilateral order that the United States shaped and sustained. At the same time, this troubling turn represents a reversion to long-standing US values.

BERKELEY – Donald Trump’s “America First” policies are widely regarded as an abdication of global leadership, sounding the death knell of the post-World War II multilateral order that the United States shaped and sustained. There is much truth to this view. At the same time, this troubling turn represents a reversion to long-standing US values. Acknowledging that the second half of the twentieth century

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Democratizing the ECB

January 14, 2020

Recent tensions within the European Central Bank’s Governing Council have underscored the need to manage disagreement better. The status quo, whereby the president presents a policy decision as a consensus, after which one or more Governing Council members may issue a dissenting statement, makes everyone look silly.

AMSTERDAM – The European Central Bank is undergoing a changing of the guard: a new president, a new chief economist, and two new Executive Board members. And the ECB’s new leadership is facing a contentious year in 2020.
Financial Markets’ Iran Delusion

Wang Ying/Xinhua via Getty Images

Trump’s Near Miss with

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The Policy Debate Europe Needs

December 9, 2019

How can the eurozone get the fiscal stimulus it needs, and which European Central Bank President Christine Lagarde is urging, in the face of the refusal by some countries, starting with Germany, to run budget deficits? There is a good answer, but it doesn’t involve attempting to cicumvent the intent of the ECB’s statute.

SASKATOON – The eurozone is in a bind. Despite successive doses of monetary stimulus by the European Central Bank, inflation remains stubbornly below target. Conventional monetary policy and even quantitative easing evidently have limited potency when interest rates are at or near zero.
Is Growth Passé?

Kanok Sulaiman/Getty Images

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Will China Confront a Revolution of Rising Expectations?

November 11, 2019

Amid much discussion of the challenges facing the Chinese economy, the line-up of usual suspects typically excludes the most worrying scenario of all: popular unrest. While skeptics would contend that widespread protest against the regime and its policies is unlikely, events elsewhere suggest that China is not immune.

ZURICH – For over a decade, China has accounted for a quarter or more of global economic growth. With its economy currently navigating a rough patch, the question is whether this impressive performance will persist.
The Rise of Nationalism After the Fall of the Berlin Wall

Patrick PIEL/Gamma-Rapho via Getty Images

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Tales of the Economy

November 1, 2019

While economic textbooks have long relied on a utility-maximization model of economic decision-making, Robert J. Shiller and other behavioral economists continue to demonstrate that human behavior is not so simple. The stories we use to frame our thinking and guide our actions might not always make sense, but they play a crucial role nonetheless.

LONDON – Robert J. Shiller needs no introduction. Having made fundamental contributions to finance theory and behavioral economics, he was awarded the Nobel Memorial Prize in Economic Sciences in 2013. In his new book, he pushes his interest in behavioral economics in new directions, highlighting the role of economic narratives in individual decision-making, macroeconomic

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Will Libra Be Stillborn?

October 14, 2019

Where the problem for economies and financial services is lack of competition, residents of developing countries need to look to their own regulators and politicians. The remedy for their woes is not going to come from Mark Zuckerberg.

CHICAGO – Plans for Facebook’s proposed “stablecoin,” Libra, appear to be unraveling with the withdrawal of PayPal, Visa, Mastercard, Stripe, eBay, and Mercado Pago as potential sponsors. This is hardly surprising, given growing awareness of Libra’s potential adverse consequences. If it offers anonymity to its users, Libra will become a platform for tax evasion, money laundering, and terrorist finance. If, on the other hand, its privacy protections are lax, Libra will give Facebook

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Did Dudley Do Right?

September 10, 2019

The New York Federal Reserve’s immediate past president recently caused controversy by calling on the Fed to make it “abundantly clear" that President Donald Trump will bear "the consequences" of his fiscal and trade policies. But what does "abundantly clear" entail?

HANALEI, HAWAII – William Dudley, the immediate past president of the Federal Reserve Bank of New York, recently stirred up a hornet’s nest when he called for the Fed to consider the impact of its policies on the 2020 presidential election. In fact, Dudley performed a valuable public service by observing that Fed policy can influence politics, sometimes with profound implications for the course of the United States. But that doesn’t mean his

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The Central Banker Europe Needs

July 9, 2019

While having a president with specialized training as a monetary economist would benefit the European Central Bank, such training is not essential. If Christine Lagarde is confirmed for the position, Europe will learn that other attributes matter much more.

CAMBRIDGE – The selection of the International Monetary Fund’s managing director, Christine Lagarde, to succeed Mario Draghi as the next president of the European Central Bank caught most observers by surprise. Now the critics are making up for lost time. Some commentators object that Lagarde lacks experience as a central banker. Others complain that she lacks an advanced degree in economics.
What’s Driving Populism?

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Unconventional Thinking about Unconventional Monetary Policies

June 10, 2019

Defenders of central-bank independence argue that quantitative easing should have been avoided last time and is best avoided in the future, because it opens the door to political interference with the conduct of monetary policy. But political interference is even likelier if central banks shun QE in the next recession.

KONSTANZ – The policy interest rates of advanced-country central banks are stuck at uncomfortably low levels. And not just for the moment: a growing body of evidence suggests that this awkward condition is likely to persist. Inflation in the United States, Europe, and Japan continues to undershoot official targets. Measures of the “natural” rate of interest consistent with

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