In The News

Bloomberg: Japan Buries Cherished Economic Ideas

Noah Smith August 9, 2017
Japan’s economy defies traditional economic theories. High debt and full employment have not led to inflation; the Bank of Japan is resigned that policies won’t achieve a 2 percent inflation target. “Basic econ theory says that as the labor market gets tighter, competition should push up wages, which will then boost consumer prices via increased demand and higher costs,” writes Noah Smith for...

Bloomberg: Can China Really Rein in Credit?

Michael Pettis June 19, 2017
China's regulators and central bankers are trying to control the country’s debt and reduce associated risks, and in turn this may reduce economic growth. explains Michael Pettis, finance professor, in an opinion essay for Bloomberg: “there's a big difference between China's sustainable growth rate, based on rising demand driven by household consumption and productive investment,...

MarketWatch: How Globalization Sunk Many Americans Deeper in Debt

Erik Loualiche June 1, 2017
International trade has uneven effects for regions of the United States and was particularly damaging for communities that relied on manufacturing – with high rates of underemployment, unemployment and debt. Household debt in the United States doubled from 2000 to 2007, peaking at $13 trillion in 2008, and nearly a third of US household debt could be attributed to import competition and...

Bloomberg: China's Downgrade Could Lead to a Mountain of Debt

May 30, 2017
Moody’s Investor Services lowered China’s sovereign debt rating by one level in late May for the first time since 1989. The company cited high levels of corporate debt mostly held by state-owned enterprises as the cause. With an increase in the yield premium on bonds, Chinese companies face higher interest rates when borrowing money, indicating greater risk. Hence, raising capital for investments...

Project Syndicate: Will Economic Illiteracy Trigger a Trade War?

Jeffrey D. Sachs April 28, 2017
An introduction to economics defines a nation’s deficit or surplus – “The current-account balance, measuring the balance of trade in goods, services, net factor income, and transfer payments from abroad, is equal to national saving minus domestic investment.” The Trump administration is mistaken about the source of the US deficit, overlooking the low US rate of saving and instead blaming Germany...

Bloomberg: A Foreign Threat to US Treasuries That Dwarfs Fed's Debt Hoard

Liz McCormick and Brian Chappatta April 11, 2017
Foreigner investors own more than 40 percent of the $13.9 trillion US securities, and options for investing in public debt are expanding, report Liz McCormick and Brian Chappatta for Bloomberg. This comes at a time when the US Federal Reserve is reducing crisis-era investments in US bonds and the Trump administration plans to launch an infrastructure-spending program. “In overseas markets, more...

The Weekly Standard: Of Debt and Detriment

Benn Steil and Emma Smith February 21, 2017
Macroeconomic theory predicts that indebted countries have negative net foreign investment income, while creditor countries have positive flows. The US and China, however, are bucking the trend due to the idiosyncratic natures of both their currencies and governments. One element is China’s willingness, and the world writ large, to accept low returns on the dollar in exchange for stability. About...