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Jeffrey Frankel’s Blog

Biden is Better on Economics

TweetOctober 29, 2020 — In a few days, Americans will choose a president.  Polling suggests that voters favor former Vice-President Joseph Biden when it comes to social policy, foreign policy, the environment, and managing the pandemic, not to mention the question of personal character. But on economics, polls have reported that voters favored President Donald Trump, at least until recently. A general impression that the US economy does better under Republicans is long-standing.  The...

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Will the Coronavirus Spur Action on Climate Change?

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...

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What’s wrong with US Treasury claim of Vietnamese undervaluation

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...

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

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,...

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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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