Monday , January 27 2020
Home / Tag Archives: International

Tag Archives: International

Guest Contribution: “The Role of Network Effects in the International Transmission of US Monetary Policy”

Today, we are fortunate to be able to present a guest contribution by Stéphane Dees (Banque de France and Univ. Bordeaux) and Alessandro Galesi (Banco de España). The views expressed here are those of the authors and do not necessarily reflect the views of Banque de France, Banco de España, or the Eurosystem. In 2014, the then Vice-Chairman of the Federal Reserve, Stanley Fisher, declared that “actions taken by the Federal Reserve influence economic conditions abroad. Because these...

Read More »

The Fama Puzzle at 40

Fama (JME, 1984) was published 35 years ago, but the earlier — perhaps the earliest — appearance of the Fama regression is in Tryon (1979). While the puzzle has largely persisted since then, it has seemingly disappeared since the global financial crisis. Figure 1: Ex post one year depreciation of euro/dollar up to 2007M08 against one year offshore US-euro interest differential (up to 2006M08).  Recall the puzzle: If the joint hypothesis of uncovered interest rate parity (UIP) and rational...

Read More »

“New Foreign Direct Investment in the United States”

Some people think that foreign direct investment into the United States has surged as confidence in the American economy has risen under Mr. Trump’s administration. The data do not support such a supposition. From BEA: It is useful to make distinctions between stocks (particularly at market value) and flows. The flow into the US has decreased relative to 2016. The stock can deviate from the cumulation of flows due to valuation changes and movements in the dollar. And in 2017, the inflow of...

Read More »

The Trumpian World as Natural Experiment

The Trump economic policy regime (if it can be called that) has provided several “natural experiments”. Do corporate tax rate reductions “pay for themselves”? Does expansionary fiscal policy at full employment lead to large increases in output? Does increasing trade protection necessarily lead to an increase in the trade balance? Does a bellicose and confused trade negotiating stance accelerate fixed investment? I think the answers are No, No, No, and No. On this last point, see Altig et al....

Read More »

Guest Contribution: “Weaponization of the Dollar May Backfire”

Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A  appeared in Project Syndicate. This is a good time to gauge the rankings of the dollar and its rivals as major international currencies.  The Bank for International Settlements came out in September with its triennial survey of turnover in the world’s foreign exchange markets.  The...

Read More »

Guest Contribution: “It’s Finally Time for German Fiscal Expansion”

Today, we present a guest post written by Jeffrey Frankel, Harpel Professor at Harvard’s Kennedy School of Government, and formerly a member of the White House Council of Economic Advisers. A  appeared in Project Syndicate. As long as the German economy was doing well, as it did during the recovery from the 2008 global financial crisis, there existed a coherent rationale for German fiscal austerity. The national commitment to budget discipline was enshrined in the 2009 “debt...

Read More »

“The Economic Effects of Trade Policy Uncertainty”

That’s the title of a new paper by Dario Caldara, Matteo Iacoviello, Patrick Molligo, Andrea Prestipino, and Andrea Raffo: Abstract: We study the effects of unexpected changes in trade policy uncertainty (TPU) on the U.S. economy. We construct three measures of TPU based on newspaper coverage, firms’ earnings conference calls, and aggregate data on tariff rates. We document that increases in TPU reduce investment and activity using both firm-level and aggregate macroeconomic data. We...

Read More »