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Jeffrey Frankel

Jeffrey Frankel

Jeffrey Frankel, a professor at Harvard University's Kennedy School of Government, previously served as a member of President Bill Clinton’s Council of Economic Advisers. He directs the Program in International Finance and Macroeconomics at the US National Bureau of Economic Research, where he is a member of the Business Cycle Dating Committee, the official US arbiter of recession and recovery.

Articles by Jeffrey Frankel

Will the Coronavirus Spur Action on Climate Change?

22 days ago

TweetOctober 3, 2020 — From early on in this pandemic, a common reaction has been “at least, maybe now we will get serious about addressing climate change.”  One can see the logic.  The terrible toll taken by Covid-19 should remind us of the importance of three things: the need for science, the role for public policy, and the usefulness of international cooperation.  With these three revelations firmly in mind, we can see that we also need them to respond to the problem of climate change.
We should listen to the scientists who have been warning for decades that greenhouse gas emissions, if left unchecked would also have terrible consequences.  That some of these consequences have dramatically appeared in this same coronavirus year  – the wildfires, cyclones, and even a plague of

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The COVID-Climate Nexus

24 days ago

America’s upcoming election will take place against the backdrop of a dreadful pandemic and mounting climate threats. On both counts, US voters must choose whether to bring back respect for science and sensible public policy, and an awareness that we live in an interconnected world.

CAMBRIDGE – From early on in the COVID-19 pandemic, a common refrain has been, “At least maybe now we will get serious about addressing climate change.” One can certainly see the logic behind this thinking. The terrible toll the pandemic has taken should remind us of the importance of three things that are also necessary to tackle global warming: science, public policy, and international cooperation.

The Way We

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What’s wrong with US Treasury claim of Vietnamese undervaluation

August 28, 2020

TweetAugust 27, 2020 — The US Treasury’s tendentious interpretation of the IMF’s External Balance Approach this week found a 4.7 % undervaluation of Vietnam’s currency.  It may pave the way for the US Commerce Department to impose countervailing duties (in a case involving the tire market), for the first time in a currency case. See Mark Sobel’s useful update of August 27. The Treasury claimed to find undervaluation despite small Vietnamese current account surpluses and fx reserves equal to only four months of imports. This finding is an ominous step in a predictably misguided US movement to use allegations of trading partners’ currency manipulation to justify protectionism.

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The Significance of Gold’s Record $2,000 Price

August 24, 2020

TweetAugust 24, 2020 — The price of gold reached an all-time record high of $2,000 per ounce this month.  Mainstream economic thinking has treated gold as a side-show since the world went off the gold standard. Nevertheless, the recent spiking in the price signals some important trends. It is not merely “sound and fury signifying nothing,” as sometimes seems true of financial markets.
There are three ready explanations for the historic increase in the price of gold: (i) monetary policy, (ii) risk, and (iii) a spreading desire for an alternative to the dollar as a safe haven.  Each of these explanations contains some truth.
Easy money.
The first reason for the high dollar price of gold is that the Fed has eased US monetary policy very strongly since the onset of the coronavirus

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The Dark Heart of Gold

August 21, 2020

The US Federal Reserve has rightly eased monetary policy aggressively since the onset of the coronavirus recession in March. But gold bugs would take the recent record-high price for the metal as a sign that the Fed should tighten monetary conditions sharply.

CAMBRIDGE – The price of gold reached an all-time high of $2,000 per ounce in early August. And while mainstream economists have treated gold as a sideshow since the world abandoned the gold standard in 1971, this recent price spike is a significant signal.

Belarus’s Revolution of Dignity

PS OnPoint

Sergei Supinsky/AFP via Getty Images


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The Impact of the Pandemic on Developing Countries

August 3, 2020

TweetAugust 3, 2020 — The Covid-19 pandemic has had differentiated impacts across countries. This is true even among the set of Emerging Market and Developing Economies (EMDEs), which share the disadvantages of more poverty, less adequate health care, and fewer jobs that can be done remotely, compared to Advanced Economies.
Differentiation across continents
Surprisingly, the rates of infection and death have so far been lower in most EMDEs than in the US and Europe, as pointed out by Pinelopi Goldberg and Tristan Reed, and by Raghuram  Rajan. Undercounting is undoubtedly massive, however. Furthermore, the situation is evolving rapidly.
Across continents, health in Latin America has been the hardest hit in general among EMDEs.  Southeast Asia has been the least affected; for example,

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The Pandemic Pain of Emerging Markets

July 31, 2020

As COVID-19 continues its global march, the whole world is paying the price for some countries’ negligent and incompetent political leadership and the virtual breakdown of the rules-based multilateral order. But emerging and developing economies are likely to suffer the most.

CAMBRIDGE – The public-health and economic consequences of the COVID-19 pandemic have varied across countries. This is true even among emerging-market and developing economies (EMDEs), which, compared to advanced economies, have higher poverty rates, poorer health care, and a lower share of jobs that can be performed remotely.

How to Prevent the Looming Sovereign-Debt Crisis


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Defining recessions when negative growth is too common or too rare

June 20, 2020

TweetJune 20, 2020 — This post follows up on “What Determines When a Recession is Recession?” which pointed out some drawbacks of defining a recession by two negative quarters of growth.
In some countries there is another, more fundamental, basis for questioning the two-quarter rule for determining recession, or any GDP-based rule. Some countries experience sharp slowdowns or periods of diminished economic activity and yet their long-term trend growth rates are either so high or so low that the negative-growth rule does not capture what is needed to describe the cyclical state of the economy. For such countries, the problem is that perhaps there is nothing special about the number zero.  This is particularly true for the global economy considered as a whole.
Consider first a country

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What Determines when a Recession is a Recession?

June 18, 2020

TweetJune 18, 2020 — The Business Cycle Dating Committee of the National Bureau of Economic Research declared on June 9 that US economic activity had peaked in February 2020, formally marking the start of the recession.
We all knew about the recession already and even the likely date when it started.  Looking at the numbers gave the same answer as “looking out the window.”  Measures of employment had fallen sharply from February to March.  Real personal consumption expenditures (PCE) and real personal income less transfers (which are  numbers that the NBER Committee looks at) both peaked sharply in February as well.  Official measures of GDP only exist on a quarterly basis; but the economic freefall in late March was enough to pull first-quarter GDP growth down to an annual rate of

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What’s in a Recession?

June 15, 2020

After months of plummeting output and employment, the National Bureau of Economic Research has determined its official start date for the current recession in the United States. Far from being late to the disaster, the NBER is early by its usual standards – and has provided the most definitive ruling one can hope for.

CAMBRIDGE – On June 8, the Business Cycle Dating Committee of the National Bureau of Economic Research declared that economic activity in the United States had peaked in February 2020, formally marking the start of a recession. But we already knew that we were in a recession that had likely begun around that date. So, why does the NBER’s formal declaration matter?


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Germany’s Defeat of France in 1940

June 10, 2020

TweetJune 10, 2020 — Evidently France is re-reading Strange Defeat, a 1940 book by Marc Bloch that analyzed how the country fell so quickly to German invasion in World War II.  The French are looking for clues as to why they have done less well in the current pandemic than Germany.
I recommend a later 2000 account of that surprising French defeat: Strange Victory, by the late Harvard historian Ernest May.  Hitler’s plan was a reckless gamble, which his generals thought would fail.   What I got out of the subsequent events described in the May book is not what is described on the dust jacket.  The invasion in the spring of 1940 succeeded, not because of a lack of French will to fight or a lack of awareness that the Germans would go around the Maginot Line, but rather by luck.  The

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How China Compares Internationally in New GDP Figures

May 31, 2020

TweetMay 31, 2020 — The World Bank on May 19, as it does every six years, released the results of the most recent International Comparison Program (ICP), which measures price levels and GDPs across 176 countries.  The new results are striking.  It is surprising that they have received almost no attention so far, perhaps overshadowed by all things coronavirus.
For the first time, the ICP shows China’s total real income as slightly larger than the US.  It reports that China’s GDP was $19,617 billion in 2017, in Purchasing Power Parity (PPP) terms, while the United States’ GDP stood at $19,519 billion.
Income per capita
On the other hand, when China’s income is divided by its population, it is revealed to be still far from a wealthy country: its income per capita has pulled ahead of

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Who Has the World’s Largest Economy?

May 28, 2020

Once again, new economic readings from the World Bank’s International Comparison Program have fed into the long-going debate over whether China is surpassing the United States as an economic and financial power. And once again, the answer to that question is a qualified "no."

CAMBRIDGE – The World Bank’s International Comparison Program has just released its latest measures of price levels and GDP across 176 countries, and the results are striking. For the first time ever, the ICP finds that China’s total real (inflation-adjusted) income is slightly larger than that of the United States. In purchasing-power-parity (PPP) terms, China’s 2017 GDP was $19.617 trillion, whereas the US’s stood at $19.519 trillion.

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Who Has the World’s Largest Economy?

May 28, 2020

Once again, new economic readings from the World Bank’s International Comparison Program have fed into the long-going debate over whether China is surpassing the United States as an economic and financial power. And once again, the answer to that question is a qualified "no."

CAMBRIDGE – The World Bank’s International Comparison Program has just released its latest measures of price levels and GDP across 176 countries, and the results are striking. For the first time ever, the ICP finds that China’s total real (inflation-adjusted) income is slightly larger than that of the United States. In purchasing-power-parity (PPP) terms, China’s 2017 GDP was $19.617 trillion, whereas the US’s stood at $19.519 trillion.

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Risk of Rapid Re-opening

May 11, 2020

TweetMay 11, 2020 — This interview by Associated Press is the basis of quotes in a story today: “Risk of reopening US economy too fast: A W-shaped recovery.”
AP: To what extent is the push to reopen the economy making a W-shaped recovery more likely?
JF: I believe that the push to reopen the economy is making a W-shaped recovery very much more likely.
AP: What should we be doing to produce the best economic outcome?
JF: Widespread reopening should wait for certain conditions to be met.  The conditions include:
a sustained decline in mortality rates (not just the attainment of a peak);
the easy availability of frequent testing (in reality, not just as a White House claim);
and perhaps ultimately the discovery and testing of a vaccine and/or treatment (which will take time).
AP: At this

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What is different about the coronavirus recession?

May 10, 2020

TweetInterview by El Pais, Madrid, May 9. 2020
In the GFC of 2008/2009 the world fell into recession for a while (one year), but the emerging world almost didn’t suffer: they kept growing, mostly thanks to commodity prices. Now, the story looks pretty different: even emerging countries will experience negative growth in 2020… It seems to be a truly global crisis. Should this worry us more?
JF:  Almost everything about the Coronavirus Recession of 2020 should worry us more than the GFC.  Yes, Emerging Market countries will experience negative growth in 2020, and it will probably be worse than the IMF’s recent forecast of -1.0%.   They have been hit by a loss of export markets (especially in the case of the oil exporters), a loss of emigrants’ remittances, and a loss of capital inflows,

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History Warns Us to Avoid a W-shaped Recession

May 3, 2020

TweetMay 3, 2020 — “Those who do not study history are condemned to repeat it.”  And the rest of us are condemned to repeat George Santayana.
Will the Coronavirus Recession of 2020 be V-shaped?  Or U-shaped?  If we fail to heed the lessons of history it is likely to be W-shaped, with incipient recovery followed by successive relapses into sickness and recession.
As has been widely noted, we would have been better prepared to cope with the Covid-19 pandemic in the first place if everyone had paid more attention to the past history of epidemics. Be that as it may, the world is now deep into the pandemic and its economic consequences, the most severe such events since the interwar period, 1918-1939.  As decision-makers in every country contemplate their next steps, they would do well to

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How to Avoid a W-Shaped Recession

May 1, 2020

As policymakers plan their COVID-19 responses, policymakers should remember a simple rule of thumb: let “W” stand for premature "withdrawal" of public-health or economic-stimulus measures. As previous crises have shown, such proposals should be avoided like the plague.

CAMBRIDGE – “Those who cannot remember the past are condemned to repeat it,” George Santayana famously quipped in 1905. It is a phrase that has been repeated for over a century, but rarely heeded. As COVID-19 decimates the global economy, our understanding of history could be the difference between a V- or U-shaped recession and a W-shaped one, in which incipient recovery is followed by successive relapses.

How Will the Great

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Is the coronavirus recession of 2020 unprecedented?

April 4, 2020

TweetA reporter asks:  Will this prolonged rut take longer for the American economy to recover from than any recession in their lifetime?
My answer: The coronavirus recession this year is set to be worse than the Great Recession of 2007-09, is unprecedented in its suddenness, and is likely to show the deepest economic trough since the 1930s.  The most natural precedent is the global influenza pandemic of 1918-20, which has been estimated to have caused negative growth of 6% in the typical country, in a recent paper by Robert Barro, Jose Ursua, and Joanna Weng.
My best guess is that the subsequent recovery time from the 2020 recession will not be as long as the Great Depression and perhaps not even as long-lasting as the recovery from the Great Recession of 2007-09.  My instinct is that

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Black Swans Like COVID-19 are Predictable

March 30, 2020

TweetMarch 30, 2020 —   Events like the COVID-19 pandemic of 2020, the US housing crash of 2007-09, and the terrorist attack of September 11, 2001, are called “black swans”: in each case, few people were able to predict them reliably, at least not with precision.  But they were known unknowns, not unknown unknowns.  That is, in each case, knowledgeable analysts were fully aware that such a thing could happen, even that it was likely to happen eventually.  They could not predict that the event would happen with high probability in any given year.  But the consequences of each of these events were severe, and predictably so.  Thus, policymakers should have listened to the warnings and should have taken steps in advance. They could have helped avert or mitigate disaster if they had done

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Foreseeable Unforeseeables

March 27, 2020

Contrary to what US President Donald Trump would like to believe, a pandemic like COVID-19 was predicted as recently as last year. After being caught off guard by yet another catastrophe, one wonders when political leaders, markets, and average citizens will start to take risk seriously.

CAMBRIDGE – Events like the COVID-19 pandemic, the US housing-market crash of 2007-2009, and the terrorist attacks of September 11, 2001, are often called “black swans.” The term is meant to suggest that no one could have seen them coming. But, in fact, these episodes each involved known unknowns, rather than what former US Secretary of Defense Donald Rumsfeld famously called “unknown unknowns.”
Insuring the

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Interview on the Coronavirus Recession

March 25, 2020

TweetInterview by Economychosun, South Korea, March 24, 2020
Q: I’d like to know your opinion on the global economic impact of the Covid-19 crisis.  Do you think the recession is a fait accompli?
JF: We are already in a global recession, even though it will take a bit longer for the most relevant economic statistics to confirm that. It is exceedingly rare that economists can make such a pronouncement in real time with any degree of confidence. But it is clear enough in this case.
Q: How long do you think the recession will last? How big would be the recession impact?
JF: The onset of the recession is very rapid, by historical standards.  The loss in output will probably be deep. However, it is not inevitable that the recession should last a long time.  If countries are able to fight

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Will the Coronavirus Lead to Global Recession?

February 27, 2020

TweetFebruary 27, 2020 —  At the start of the year, the economic mood was tending toward the optimistic.  True, growth had slowed a bit in 2019. US GDP grew 2.3 % in 2019, down from 2.9 % in 2018.  World growth was weak in 2019 as well: 2.9% according to IMF estimates, down from 3.6 % the year before.  Still, there had been no recession.  And forecasts as recently as January called for world growth to rebound in 2020.
Global recession?
Now, just since January, there is new reason for pessimism.  Recessions are exceedingly difficult to forecast and the wise economist avoids trying.  But the odds of a global recession have risen dramatically.  The reason is the coronavirus that originated in Wuhan, technically named COVID-19.
Early appraisals of the economic impact of the virus were

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Will the Coronavirus Trigger a Global Recession?

February 24, 2020

The COVID-19 outbreak seems to have raised the odds of a global recession dramatically. But even if no downturn materializes in the near term, the outbreak, together with US President Donald Trump’s trade policy, may herald the end of the era when steadily rising international trade buttressed global peace and prosperity.

CAMBRIDGE – At the start of this year, things seemed to be looking up for the global economy. True, growth had slowed a bit in 2019: from 2.9% to 2.3% in the United States, and from 3.6% to 2.9% globally. Still, there had been no recession, and as recently as January, the International Monetary Fund projected a global growth rebound in 2020. The new coronavirus, COVID-19, has changed all of that.

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Carbon Prices, not Monetary Policies, Are the Tools to Fight Climate Change

January 23, 2020

TweetJanuary 23, 2020 —  Everyone agrees that Climate Change is at the top of the list of most important policy issues that we face – everyone, with a few exceptions such as Trump supporters who call it a hoax.  Identifying the problem, however, is not much use unless we also identify the appropriate tools to address the problem.
Financial institutions
In my own field of specialization, central bankers have caught Climate Change fever.  Perhaps the first was Governor Mark Carney — recently departed from the Bank of England.   Christine Lagarde – newly arrived at the ECB from the International Monetary Fund —  has declared the global environment to be “mission critical” for her institutions.
Financial institutions do indeed need to fundamentally re-think some things.  Consider a bank or

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The Best Tool to Fight Climate Change

January 20, 2020

If they are serious about tackling climate change, governments must quickly establish the expectation that the price of carbon will follow a generally rising path in the future. Lofty statements from public officials and optimal calculations from climate modelers will not do the job.

AMSTERDAM – Although many supporters of US President Donald Trump seemingly believe that global warming is a hoax, almost everyone else agrees that climate change should be at the top of the list of important policy issues. Identifying the problem, however, is not much use unless we also identify the appropriate tools to address it.
The Truth About the Trump Economy

Bryan R. Smith/AFP via Getty Images

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Most important event of 2020? The US election

December 27, 2019

TweetAn interview question from Chosun Ilbo (the #1 Korean newspaper) for the New Year:   Which political event of 2020 should concern us the most? (E.g., the U.S. presidential election, the geopolitical crisis on the Korean Peninsula, Brexit…?)
My response:
Perhaps I am too US-centric.  But out of all events in 2020, I see November’s presidential election in the United States as warranting the greatest concern, not just for my home country but for the world.
To recap briefly a familiar story, in the 2nd half of the 20th century, a majority of countries enjoyed a historic path of relative peace and prosperity, broadly speaking.  This was largely the result of a liberal multilateral system which had been consciously designed after World War II to avoid mistakes that had been made after

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Six Practical Proposals for Progressive Tax Policy

December 20, 2019

TweetDecember 20, 2019 —  It was quite a surprise, three years ago, when Donald Trump won a majority in the US Electoral College, thus becoming the 45th president.  In the search for explanations, one immediately dominated:  Democrats had not been sufficiently aware of the problem of income inequality or had neglected to propose good solutions to it.
This is presumably the logic behind radical proposals coming from some of the leading contenders for the Democratic nomination in the 2020 presidential election. Senator Elizabeth Warren, for example, has proposed an annual tax on the wealth of the wealthiest Americans (originally to be 2 % per year, but now up to 6 %).
The problem with the wealth tax is not so much that it is radical.  I, like many economists, would for example support a

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Six Tax-Based Ways to Tackle US Inequality

December 17, 2019

Some of the leading candidates for the 2020 Democratic presidential nomination have proposed radical measures to reduce inequality, such as a wealth tax. But there are many other progressive tax policies that would be both easier to enforce and more likely to get a Democratic candidate elected.

CAMBRIDGE – Three years ago, Donald Trump’s victory in the United States’ presidential election triggered a search for explanations of what is still a shocking outcome. One immediately came to dominate: his Democratic opponents had been insufficiently aware of the problem of income inequality, or had neglected to propose effective solutions.
Cronies Everywhere

PS OnPoint

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Let’s Go Back to Good Old Tariff-Cutting

December 1, 2019

TweetNov. 30, 2019  — The “bicycle theory” used to be a metaphor for international trade policy.  Just as standing still on a bicycle is not an option — one has to keep moving forward or else the bike will fall over – so it was said that international trade negotiators must continue to engage in successive rounds of liberalization, or else the open global trading system would be pulled down by protectionist interests.  I don’t know if the theory was ever right.  (And, to be honest, I don’t entirely understand why forward movement keeps a bicycle from falling over.)  But if we had stood still on trade policy over the last three years we would be a lot better off than where we are now.
Trade is faltering — global trade volumes shrank an alarming 1.1 per cent over the 12 months —  but the

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