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Jeffrey Frankel’s Blog

The Impact of the Pandemic on Developing Countries

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...

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Defining recessions when negative growth is too common or too rare

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...

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What Determines when a Recession is a Recession?

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...

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Germany’s Defeat of France in 1940

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...

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How China Compares Internationally in New GDP Figures

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...

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Risk of Rapid Re-opening

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. ...

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What is different about the coronavirus recession?

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. ...

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History Warns Us to Avoid a W-shaped Recession

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...

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Is the coronavirus recession of 2020 unprecedented?

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...

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Black Swans Like COVID-19 are Predictable

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...

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