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Kenneth Rogoff

Kenneth Rogoff

Thomas D Cabot Professor of Public Policy, Harvard University, former chief economist IMF, International Grandmaster of Chess, Latest book: The Curse of Cash

Articles by Kenneth Rogoff

The Uncertainty Pandemic

September 3, 2020

Policymakers’ most important task is to try to reduce the massive lingering uncertainty regarding COVID-19 while continuing to provide emergency relief to the hardest-hit individuals and economic sectors. But the insecurity fueled by the pandemic is likely to weigh on the global economy long after the worst is in the past.

CAMBRIDGE – The next few months will tell us a lot about the shape of the coming global recovery. Despite ebullient stock markets, uncertainty about COVID-19 remains pervasive. Regardless of the pandemic’s course, therefore, the world’s struggle with the virus so far is likely to affect growth, employment, and politics for a very long time.

The Post-Pandemic Economy’s

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COVID Coin?

August 5, 2020

The COVID-19 pandemic is accelerating the long-term shift away from cash, and monetary authorities risk falling behind. A recent report from the G30 argues that if central banks want to shape the outcome, they need to start thinking fast.

CAMBRIDGE – As the COVID-19 crisis accelerates the long-term shift away from cash (at least in tax-compliant, legal transactions), official discussions about digital currencies are heating up. Between the impending launch of Facebook’s Libra and China’s proposed central-bank digital currency, events today could reshape global finance for a generation. A recent report from the G30 argues that if central banks want to shape the outcome, they need to start moving fast.

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Will Universities Learn from Lockdowns?

July 6, 2020

The COVID-19 crisis is likely to bring about further rapid and far-reaching shifts in the economic ground beneath us. But we need not view these changes with dread if the pandemic also propels a transition to better and more universal higher education.

CAMBRIDGE – Will COVID-19 finally trigger a long-overdue technological disruption of higher education? Throughout the world, sudden mid-semester lockdowns aimed at combating the pandemic forced universities to switch to distance learning almost overnight. But while this rapid transition has been tough for faculty and students alike, some good might yet come of it.

Priorities for the COVID-19 Economy

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Deglobalization Will Hurt Growth Everywhere

June 3, 2020

Even if the United States turns a blind eye to deglobalization’s effects on the rest of the world, it should remember that the current abundant demand for dollar assets depends heavily on the vast trade and financial system that some American politicians aim to shrink. If deglobalization goes too far, no country will be spared.

CAMBRIDGE – The post-pandemic world economy seems likely to be a far less globalized economy, with political leaders and publics rejecting openness in a manner unlike anything seen since the tariff wars and competitive devaluations of the 1930s. And the byproduct will be not just slower growth, but a significant fall in national incomes for all but perhaps the largest and most diversified

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The Case for Deeply Negative Interest Rates

May 4, 2020

Only monetary policy addresses credit throughout the economy. Until inflation and real interest rates rise from the grave, only a policy of effective deep negative interest rates, backed up by measures to prevent cash hoarding by financial firms, can do the job.

CAMBRIDGE – For those who viewed negative interest rates as a bridge too far for central banks, it might be time to think again. Right now, in the United States, the Federal Reserve – supported both implicitly and explicitly by the Treasury – is on track to backstop virtually every private, state, and city credit in the economy. Many other governments have felt compelled to take similar steps. A once-in-a-century (we hope) crisis calls for massive government

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That 1970s Feeling

March 2, 2020

Policymakers and too many economic commentators fail to grasp how the next global recession may be unlike the last two. In contrast to recessions driven mainly by a demand shortfall, the challenge posed by a supply-side-driven downturn is that it can result in sharp drops in production, generalized shortages, and rapidly rising prices.

CAMBRIDGE – It is too soon to predict the long-run arc of the coronavirus outbreak. But it is not too soon to recognize that the next global recession could be around the corner – and that it may look a lot different from those that began in 2001 and 2008.
Solidarity Now

PS OnPoint

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Fantasy Fiscal Policy

February 3, 2020

Many leading central bankers now argue that, instead of just playing its traditional role of deciding the allocation of government spending, investment, taxes, and transfers, fiscal policy must substitute for monetary policy in economic fine-tuning and fighting recession. That would be a big mistake.

LONDON – Will the next recession be worse than you think? With the major central banks having little space for further interest-rate cuts, might the next cyclical downturn become a crash? In theory, fiscal policy can go far in filling the void. The past decade has seen a rise in fiscal evangelism among many economists and policymakers, and it is indeed likely that fiscal fine-tuning will be widely tested in the next downturn. Are

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The Inequality Debate We Need

January 6, 2020

The scientific evidence increasingly indicates that the world may soon reach a point of no return regarding climate change. So, rather than worrying almost exclusively about economic and political inequality, rich-country citizens need to start thinking about how to deal with global energy inequality before it’s too late.

CAMBRIDGE – While denizens of the world’s wealthiest economies debate the fate and fortune of the middle class, over 800 million people worldwide have no access to electricity. And more than two billion have no clean cooking facilities, forcing them to use toxic alternatives such as animal waste as their main cooking fuel. Furthermore, per capita carbon dioxide emissions in Europe and the United States are

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Government Debt Is Not a Free Lunch

December 6, 2019

With borrowing costs at multi-decade lows, governments seemingly can take on much more debt without any great concern about long-term consequences. But the real risks and costs of higher public borrowing may be hidden.

CAMBRIDGE – With interest rates on government debt at multi-decade lows, a number of leading economists have argued that almost every advanced economy can allow debt to drift up toward Japanese levels (over 150% of GDP even by the most conservative measure) without any great concern about long-term consequences. Advocates of much higher debt might be right, but they tend to downplay or ignore everything that can go wrong.
Mapping the Digital Economy in 2020

PS

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The High Stakes of the Coming Digital Currency War

November 11, 2019

Just as technology has disrupted media, politics, and business, it is on the verge of disrupting America’s ability to leverage faith in its currency to pursue its broader national interests. The real challenge for the United States isn’t Facebook’s proposed Libra; it’s government-backed digital currencies like the one planned by China.

SOUTH BEND – Facebook CEO Mark Zuckerberg was at least half right when he recently told the United States Congress that there is no US monopoly on regulation of next-generation payments technology. You may not like Facebook’s proposed Libra (pseudo) cryptocurrency, Zuckerberg implied, but a state-run Chinese digital currency with global ambitions is perhaps just a few months away, and

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How to Support Developing Countries in Energy Transition

October 11, 2019

Despite the severity of the climate-change crisis, much of the debate in advanced economies is entirely inward-looking, without recognizing that the real growth in carbon dioxide emissions is coming from emerging Asia. In fact, Asia already accounts for a higher share of global emissions than the United States and Europe combined.

CAMBRIDGE – Barring the discovery of a substance like vibranium (the fictional metal in the Marvel Comics universe that can absorb and release large amounts of kinetic energy), the earth is set to experience a sharp rise in global temperatures by the end of this century. Given the severity of the crisis, it is remarkable how much of the debate in advanced economies is entirely

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The IMF After Argentina

October 2, 2019

It’s high time to ask how to refocus the International Monetary Fund’s mandate for dealing with emerging-market debt crises. How can the IMF be effective in helping countries regain access to private credit markets when any attempt to close unsustainable budget deficits is labeled austerity?

CAMBRIDGE – In case you blinked, the Argentine government built up a pile of debt out of almost nothing with surprising speed, and then proceeded to default on it almost as quickly. Compared to the country’s slow-motion 2002 default, the latest crisis feels like 60-second Shakespeare. But in both cases, default was inevitable, because the country’s mix of debt, deficits, and monetary policy was unsustainable, and the political

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The Benefits of a Progressive Consumption Tax

September 3, 2019

Many economists already favor a consumption-based tax system for raising revenue on grounds of efficiency and simplicity. In an environment where wealth inequality is rising inexorably, the case for doing so has become increasingly compelling.

CAMBRIDGE – Is it time for the United States to consider switching from income tax to a progressive consumption tax as a way of addressing growing wealth inequality? Many economists have long favored a consumption-based tax system for raising revenue on the grounds of efficiency and simplicity. However, despite occasional vocal adherents, it has never gained political traction. Is it time to think again?
The Trump Narrative and the Next

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What About Rochester?

August 1, 2019

There is much to be celebrated in the rise of modern megacities, especially in developing countries. But if the trend persists in advanced economies, which is by no means certain, greater public and private innovation will be required to strike a better regional growth balance.

SANTIAGO – The rise of megacities as centers of strong job creation is one of the defining characteristics of the twenty-first-century global economy. But it is not always a positive feature.
What’s Next for China’s Political Economy?

PS OnPoint

Thomas Peter/AFP/Getty Images

Their Faintest Hour

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The Case for a World Carbon Bank

July 8, 2019

To the dismay of many energy experts, the World Bank recently rather capriciously decided to stop funding virtually all new fossil-fuel plants. But phasing out readily available coal is a move that most major developing countries simply cannot afford without adequate incentives.

CAMBRIDGE – Although much derided by climate-change deniers, not least US President Donald Trump, Alexandria Ocasio-Cortez’s Green New Deal hits the nail on the head with its urgent call for the United States to lead by example on global warming. But the sad truth is that, for all the needless waste produced by American’s gluttonous culture, emerging Asia is by far the main driver of the world’s growing carbon dioxide emissions.

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As Populists Rise, Latin America’s Economies Will Fall

June 5, 2019

In the space of a year, populists with autocratic tendencies have taken office in Mexico and Brazil, and laid the groundwork to return to power in Argentina. With the three largest economies in Latin America destined for further mismanagement, the prospects for growth in the region are dim.

LONDON – Though US President Donald Trump tends to grab most of the headlines, he is hardly a global exception. Populist autocrats have enjoyed a breathtaking rise to power in countries around the world, and nowhere is the trend more pronounced than in Latin America following the elections of Mexico’s leftist president, Andrés Manuel López Obrador (AMLO), and Brazil’s right-wing president, Jair Bolsonaro.

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How Central-Bank Independence Dies

May 31, 2019

Since the world’s major central banks came to the global economy’s rescue in 2008, they have had more and more tasks foisted upon them, even as some politicians question their expanded role and others seek to undermine their policymaking autonomy. To escape this dilemma, monetary authorities must get back to doing what they do best.

CAMBRIDGE – With the global rise of populism and autocracy, central-bank independence is under threat, even in advanced economies. Since the 2008 financial crisis, the public has come to expect central banks to shoulder responsibilities far beyond their power and remit. At the same time, populist leaders have been pressing for more direct oversight and control over

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Leave the Renminbi Out of US-China Trade Talks

May 3, 2019

A potential agreement could contain many “win-win” elements, notably concerning intellectual property rights and export subsidies. But pushing China to commit to a more stable exchange rate risks creating major problems when the next big Asian recession hits.

CAMBRIDGE – Will a possibly imminent US-China trade agreement exacerbate global business cycles or even plant the seeds of the next Asian financial crisis? If the eventual agreement – assuming there is one – forces China to hew indefinitely to its outmoded, overly rigid exchange-rate regime, then the answer may be yes.
The Economy We Need

Keith Bishop/Getty Images

Brexit Fever is Breaking

Artur

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The Austerity Chronicles

April 5, 2019

After years of mounting polemics against austerity policies, Keynesian dogma has become something close to a secular religion in popular economic-policy debates. But a new study of 16 advanced economies shows that, as with all dogmas, righteousness is no substitute for empirical facts.

CAMBRIDGE – In Austerity: When It Works and When It Doesn’t, the central conclusion reached by economists Alberto Alesina, Carlo Favero, and Francesco Giavazzi is one that most modern-day Keynesians and progressives will hate. In cases when circumstances have forced a country into fiscal retrenchment, the authors show, cutting government spending has cost less than tax increases in terms of foregone output and employment.Readers should

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Elizabeth Warren’s Big Ideas on Big Tech

April 1, 2019

The debate about how to regulate the tech sector is eerily reminiscent of the debate over financial regulation in the early 2000s. Fortunately, one US politician has mustered the courage to call for a total rethink of America’s exceptionally permissive merger and acquisition policy over the past four decades.

CAMBRIDGE – Displaying a degree of courage and clarity that is difficult to overstate, US senator and presidential candidate Elizabeth Warren has taken on Big Tech, including Facebook, Google, Amazon, and Apple. Warren’s proposals amount to a total rethink of the United States’ exceptionally permissive merger and acquisition policy over the past four decades. Indeed, Big Tech is only the poster child for a significant

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Modern Monetary Nonsense

March 4, 2019

A number of leading progressive US politicians advocate using the Federal Reserve’s balance sheet to fund expansive new government programs. Although their arguments have a grain of truth, they also rest on some fundamental misconceptions, and could have unpredictable and potentially serious consequences.

CAMBRIDGE – Just as the US Federal Reserve seems to have beaten back blistering tweets from President Donald Trump, the next battle for central-bank independence is already unfolding. And this one could potentially destabilize the entire global financial system.

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Financial Stability in Abnormal Times

February 5, 2019

Despite improvements in the financial system since the 2008 crisis, the piecemeal reforms that have been enacted fall far short of what is needed. And an inexorably growing financial system, combined with an increasingly toxic political environment, means that the next major financial crisis may come sooner than you think.

CAMBRIDGE – A decade on from the 2008 global financial crisis, policymakers constantly assure us that the system is much safer today. The giant banks at the core of the meltdown have scaled back their risky bets, and everyone – investors, consumers, and central bankers – is still on high alert. Regulators have worked hard to ensure greater transparency and accountability in the banking industry. But are we

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Risks to the Global Economy in 2019

January 11, 2019

Over the course of this year and next, the biggest economic risks will emerge in those areas where investors think recent patterns are unlikely to change. They will include a growth recession in China, a rise in global long-term real interest rates, and a crescendo of populist economic policies.

CAMBRIDGE – As Mark Twain never said, “It ain’t what you don’t know that gets you into trouble. It’s what you think you know for sure that just ain’t so.” Over the course of this year and next, the biggest economic risks will emerge in those areas where investors think recent patterns are unlikely to change. They will include a growth recession in China, a rise in global long-term real interest rates, and a crescendo of populist economic

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Central Bankers’ Fiscal Constraints

January 4, 2019

With policy interest rates near zero in most advanced economies (and just above 2% even in the fast-growing US), there is little room for monetary policy to maneuver in a recession without considerable creativity. But those who think fiscal policy alone will save the day are stupefyingly naive.

CAMBRIDGE – If you ask most central bankers around the world what their plan is for dealing with the next normal-size recession, you would be surprised how many (at least in advanced economies) say “fiscal policy.” Given the high odds of a recession over the next two years – around 40% in the United States, for example – monetary policymakers who think fiscal policy alone will save the day are setting themselves up for a rude awakening.

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Betting on Dystopia

December 10, 2018

The right way to think about cryptocurrency coins is as lottery tickets that pay off in a dystopian future where they are used in rogue and failed states, or perhaps in countries where citizens have already lost all semblance of privacy. That means that cryptocurrencies are not entirely worthless.

CAMBRIDGE – With the price of Bitcoin down 80% from its peak a year ago, and the larger cryptocurrency market in systemic collapse, has “peak crypto” already come and gone? Perhaps, but don’t expect to see true believers lining up to have their cryptocurrency tattoos removed just yet.

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Why Human Chess Survives

November 28, 2018

At one time, it seemed that computers would sound the death knell for chess, not to mention all human mind games. Yet for followers of the game, the just-concluded world championship in London, won by the 27-year-old Norwegian Magnus Carlsen, was as exciting as any great soccer match.

CAMBRIDGE – With so much angst about artificial intelligence and the future of work, the recent world chess championship in London offers some hope. It is not that mankind has turned the tables on the march of progress. Rather, what is remarkable is what a creative and ultimately human match it was between reigning champion Magnus Carlsen of Norway (the 27-year-old “Mozart of Chess”) and 26-year-old challenger Fabiano Caruana of the United States

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The Global Impact of a Chinese Recession

November 7, 2018

Most economic forecasts suggest that a recession in China will hurt everyone, but that the pain would be more regionally confined than would be the case for a deep recession in the United States. Unfortunately, that may be wishful thinking.

CAMBRIDGE – When China finally has its inevitable growth recession – which will almost surely be amplified by a financial crisis, given the economy’s massive leverage – how will the rest of world be affected? With US President Donald Trump’s trade war hitting China just as growth was already slowing, this is no idle question.

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Typical estimates, for example those embodied in the International

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Crazy Rich Asia

October 9, 2018

With an unexpected hit on its hands, perhaps Hollywood will use more films like “Crazy Rich Asians” to illustrate key concepts about a region that is the biggest economic success story of the last several decades. There are many more stories about that story to be told.

CAMBRIDGE – In the surprise hit movie “Crazy Rich Asians” (based on a 2013 Kevin Kwan novel), a New York University economics professor (Rachel), travels with her boyfriend to Singapore to meet his family. There, she learns, apparently for the first time, that her significant other (Nick) is heir to one of Asia’s largest fortunes and has a mother intent on making sure her son does not marry a commoner, Asian-American or not.

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Crash Time

September 7, 2018

A decade after the collapse of Lehman Brothers and the start of the global financial crisis, it is clear that many lessons have been learned, while many economic misconceptions remain embedded in the public consciousness. If economic history teaches us anything, it is to be mindful of our own limitations in a world of infinite uncertainties.

CAMBRIDGE – Ten years after the collapse of Lehman Brothers, Crashed, by the noted Columbia University historian Adam Tooze, offers a sweeping history of the global financial crisis up to the era of Donald Trump. Above all, it is a scathing critique of the global fiscal-policy response to the crash. To guess the punchline, all one really needs to know is that the word “austerity” appears 102 times

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The Regional Costs of Venezuela’s Collapse

September 5, 2018

The refugee crisis generated by the country’s economic implosion is comparable to that in Europe in 2015. In response, US President Donald Trump has floated the idea of military intervention, when what the US should be doing is increasing financial and logistical aid to Venezuela’s neighbors.

BOGOTÁ – As Venezuela’s great experiment with “Bolivarian” socialism implodes, it is creating a humanitarian and refugee crisis comparable to Europe in 2015. Traveling by bus, boat, and even on foot through treacherous terrain, around one million Venezuelans have fled to Colombia alone, and another two million are estimated to be in other, mostly neighboring, countries.

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Spencer

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