Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Eichengreen’

The Central Banker Europe Needs

Posted by hkarner - 10. Juli 2019

Barry Eichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund. His latest book is The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era.

While having a president with specialized training as a monetary economist would benefit the European Central Bank, such training is not essential. If Christine Lagarde is confirmed for the position, Europe will learn that other attributes matter much more.

CAMBRIDGE – The selection of the International Monetary Fund’s managing director, Christine Lagarde, to succeed Mario Draghi as the next president of the European Central Bank caught most observers by surprise. Now the critics are making up for lost time. Some commentators object that Lagarde lacks experience as a central banker. Others complain that she lacks an advanced degree in economics.

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Unconventional Thinking about Unconventional Monetary Policies

Posted by hkarner - 13. Juni 2019

Barry Eichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund. His latest book is The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era.

Defenders of central-bank independence argue that quantitative easing should have been avoided last time and is best avoided in the future, because it opens the door to political interference with the conduct of monetary policy. But political interference is even likelier if central banks shun QE in the next recession.

KONSTANZ – The policy interest rates of advanced-country central banks are stuck at uncomfortably low levels. And not just for the moment: a growing body of evidence suggests that this awkward condition is likely to persist. Inflation in the United States, Europe, and Japan continues to undershoot official targets. Measures of the “natural” rate of interest consistent with normal economic conditions have been trending downward for years.

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Public debt through the ages

Posted by hkarner - 2. April 2019

Barry Eichengreen, Asmaa El-Ganainy, Rui Esteves, Kris Mitchener 01 April 2019, vox.eu

Sovereign debt is a Janus-faced asset class. In the best of times, it relaxes the domestic constraint on saving, smooths consumption, and finances investment. Investors see it as a safe haven, as delivering ‘alpha’, and as a means of portfolio diversification. In the worst of times, it is associated with debt overhangs, banking collapses, exchange rate crises and inflationary explosions.

In a world still reeling from the Global Crisis, the policy debate has been dominated by the downside risks from excessive debt accumulation – be these growth slowdowns (Panizza and Presbitero 2013), financial instability (Brunnermeier et al. 2016), or debt default (IMF 2013, Eichengreen et al. 2018), although now there may be renewed appreciation of the uses and scope for accumulating debt (Blanchard 2019). Den Rest des Beitrags lesen »

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Shelter from the Storm in 2019

Posted by hkarner - 12. Januar 2019

Barry Eichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund. His latest book is The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era.

In the coming year, global economic, financial, and political stability will depend on outcomes in four areas. And what happens on one front is likely to affect the prospects for positive outcomes on all the others.

BRUSSELS – What would have to happen for this to be a tranquil year economically, financially, and politically? Answer: a short list of threats to stability would have to be averted.

First, the trade war between the United States and China would have to be placed on hold. In November and December, financial markets reacted positively to each hint of a negotiated settlement and negatively to each mention of renewed hostilities – and for good reason: tariffs that disrupt trade flows and supply chains do global growth no good. And, as we know, what happens in financial markets doesn’t stay in financial markets: outcomes there powerfully affect consumer confidence and business sentiment.

Second, the US economy will have to grow by at least 2%, the consensus forecast incorporated into investor expectations. If growth comes in significantly lower – whether because the sugar high from the December 2017 tax cuts wears off, the Federal Reserve chokes off the expansion, or for some other reason – financial markets will move sharply downward, with negative implications for confidence and stability.

Third, China will have to avoid a significant intensification of its financial problems. Successfully managing a corporate-debt load of 160% of GDP requires not just selectively restructuring bad loans, but also increasing the denominator of the debt-to-GDP ratio. With infrastructure investment weak and manufacturing production declining, China is increasingly unlikely to achieve the authorities’ 2019 target of at least 6% growth. In that case, slow growth and mounting debt problems will feed on one another, dragging down economic performance in China and much of the emerging-market world.

Fourth, voters in the European Parliament election in May will have to prevent the victory of a right-wing nationalist majority hostile to European integration. Den Rest des Beitrags lesen »

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The Phony US-China Truce

Posted by hkarner - 10. Dezember 2018

Barry Eichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund. His latest book is The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era.

There is no shortage of precedents for the approach to the escalating trade dispute taken by Donald Trump and Xi Jinping. But if the US economy shows signs of falling into recession, Trump will need to blame someone – and in this case, we can be relatively certain about who that will be.

BEIJING – On December 1 in Buenos Aires, US President Donald Trump and his Chinese counterpart, Xi Jinping, agreed on a 90-day moratorium on increases in import tariffs to provide a window for negotiations. Unfortunately, this approach to mediation does not always succeed, and investors were not impressed – as was evident in the 800-point fall in the Dow Jones Industrial Average on December 4. And if markets were skeptical then, they will be even more skeptical now, with the arrest of Huawei Chief Financial Officer Meng Wanzhou for violating US sanctions on Iran.

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Populism’s Common Denominator

Posted by hkarner - 13. November 2018

Barry EBarry Eichengreenichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund. His latest book is The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era.

What unites supporters of authoritarian, upstart politicians like US President Donald Trump and Brazilian President-elect Jair Bolsonaro is revulsion against the corruption of the political process. But voters will learn the hard way that strongman rule exacerbates rather than mitigates corruption.

BRUSSELS – Following Emmanuel Macron’s election as president of France in May 2017, global elites breathed a sigh of relief. The populist wave, they reassured themselves, had crested. Voters had regained their sanity. Helped along by an electoral system in which the two leading candidates faced off in a second round, the “silent majority” had united behind the centrist candidate in the runoff.

But now we have Brazil’s presidential election, in which Jair Bolsonaro, who displays the authoritarian, anti-establishment, and anti-other tendencies of a textbook populist, won decisively in the second round. A two-round electoral system in which the runoff pits a populist outsider against the last mainstream candidate standing is no guarantee, evidently, that the center will hold.

A similar lesson flows from Italy’s election earlier this year. The country’s electoral rules had been reformed to add a majoritarian element to its proportional representation system, the goal being to encourage pre-election coalition building among mainstream parties. Instead, it brought to power a coalition of the populist left and right. Electoral engineering, it would seem, is not only ineffective in beating back the extremist threat; it can have unintended, counterproductive consequences. Den Rest des Beitrags lesen »

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China and the Future of Democracy

Posted by hkarner - 11. Mai 2018

Barry Eichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund. His latest book is The Populist Temptation: Economic Grievance and Political Reaction in the Modern Era.

China’s growing geostrategic influence, rising soft power, and, above all, continued economic success suggest that other countries will see it as a model to emulate. But will China’s power and prosperity really boost the global appeal of its authoritarian model?

LONDON – Will China soon be the world’s leading economic and geopolitical power? Has it achieved this status already, as some suppose? And if the answer to either question is yes, what are the global implications for the future of democracy?

The indicators of China’s rise are clear. China is poised to overtake the United States in terms of aggregate GDP within two decades, although forecasting precisely when depends on what one assumes about the growth rates of the two economies and the exchange rate used to convert renminbi into dollars. China is already the world’s leading trading economy, and its push to internationalize the renminbi has resulted in a growing share of that trade being settled in its own currency, potentially challenging the dollar’s position as the leading global currency. Den Rest des Beitrags lesen »

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The Dollar’s Doldrums

Posted by hkarner - 15. März 2018

Barry Eichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund. His latest book is Hall of Mirrors:The Great Depression, the Great Recession, and the Uses – and Misuses – of History.

Economic commentators are better at rationalizing past exchange-rate movements than at forecasting future trends. So, when it comes to explanations for the dollar’s decline over the past year, we are confronted by an embarrassment of riches. Den Rest des Beitrags lesen »

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Ready or Not for the Next Recession?

Posted by hkarner - 11. Januar 2018

Barry Eichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund. His latest book is Hall of Mirrors:The Great Depression, the Great Recession, and the Uses – and Misuses – of History.

Policymakers normally respond to recessions by cutting interest rates, reducing taxes, and boosting transfers to the unemployed and other casualties of the downturn. But, for a combination of economic and political reasons, the US, in particular, is singularly ill-prepared to respond normally.

COPENHAGEN – A sunny day is the best time to check whether the roof is watertight. For economic policymakers, the proverbial sunny day has arrived: with experts forecasting strong growth, now is the best time to check whether we are prepared for the next recession.

The answer, for the United States in particular, is a resounding no. Policymakers normally respond to recessions by cutting interest rates, reducing taxes, and boosting transfers to the unemployed and other casualties of the downturn. But the US is singularly ill-prepared, for a combination of economic and political reasons, to respond normally. Den Rest des Beitrags lesen »

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Two Myths About Automation

Posted by hkarner - 13. Dezember 2017

Barry Eichengreen is Professor of Economics at the University of California, Berkeley, and a former senior policy adviser at the International Monetary Fund. His latest book is Hall of Mirrors:The Great Depression, the Great Recession, and the Uses – and Misuses – of History.

While many people believe that technological progress and job destruction are accelerating dramatically, there is no evidence of either trend. In reality, total factor productivity, the best summary measure of the pace of technical change, has been stagnating since 2005 in the US and across the advanced-country world.

BERKELEY – Robots, machine learning, and artificial intelligence promise to change fundamentally the nature of work. Everyone knows this. Or at least they think they do.

Specifically, they think they know two things. First, more jobs than ever are threatened. “Forrester Predicts that AI-enabled Automation will Eliminate 9% of US Jobs in 2018,” declares one headline. “McKinsey: One-third of US workers could be jobless by 2030 due to automation,” seconds another.

Reports like these leave the impression that technological progress and job destruction are accelerating dramatically. But there is no evidence of either trend. In reality, total factor productivity, the best summary measure of the pace of technical change, has been stagnating since 2005 in the United States and across the advanced-country world.

Moreover, as the economist Timothy Taylor recently pointed out, the rate of change of the occupational structure, defined as the absolute value of jobs added in growing occupations and jobs lost in declining occupations, has been slowing, not accelerating, since the 1980s. This is not to deny that the occupational structure is changing. But it calls into question the widely held view that the pace of change is quickening.

The second thing everyone thinks they know is that previously safe jobs are now at risk. Once upon a time, it was possible to argue that robots would displace workers engaged in routine tasks, but not the highly skilled and educated – not the doctors, lawyers and, dare one say, professors. In particular, machines, it was said, are not capable of tasks in which empathy, compassion, intuition, interpersonal interaction, and communication are central.

Now, however, these distinctions are breaking down. Amazon’s Alexa can communicate. Crowd-sourcing, together with one’s digital history, can intuit buying habits. Artificial intelligence can be used to read x-rays and diagnose medical conditions. As a result, all jobs, even those of doctors, lawyers, and professors, are being transformed.

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