tag:blogger.com,1999:blog-5154389358831836369.post5560557213408679005..comments2024-03-28T02:00:36.854-04:00Comments on The Slack Wire: What Has Happened to Trade Balances in Europe?JW Masonhttp://www.blogger.com/profile/10664452827447313845noreply@blogger.comBlogger45125tag:blogger.com,1999:blog-5154389358831836369.post-17691770709230806442021-12-03T04:10:51.415-05:002021-12-03T04:10:51.415-05:00สล็อต Make way for a time of fun and excitement.<a href="https://www.g2g123.com/" rel="nofollow">สล็อต</a> Make way for a time of fun and excitement.g2g123https://www.blogger.com/profile/03114725113273620618noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-75256383695733067622017-12-21T00:08:39.031-05:002017-12-21T00:08:39.031-05:00VICTORIA FINANCIER HELP MY FAMILY WITH LOAN @ 2% I...VICTORIA FINANCIER HELP MY FAMILY WITH LOAN @ 2% INTEREST RATE with victoriafinancier@outlook.com<br /><br />VICTORIA FINANCIER COMPANY, offers all kind of loan, ranging from $5,000 USD to $100,000,000.00USD Max. if you need a loan amount quickly write to her Email now with ( victoriafinancier@outlook.com) .<br /> She helped me when i was so much in need of money. I lost my job. i and my kids were almost evicted from our house. I seeks assistance from all the people that i know but i could not even get drugs for my child. I also develop brain tumor as a result of stress and excess thinking. In my messed life, i look online for assistance there i found Mrs Victoria Financier Loan Lending company. I read how she always help different people from different countries. I urgently contact her, explain my situations to her same day and then i ask for any assistance that can give because i don't want my kids trow out to street; She advised me to get a loan amount with long term of 10years. The funds was sent into my bank account 4 days of contacting her and she also send the transfer confirmation slip to me and my bank gave me the money in full when i went to withdraw. Victoria Financier service is so amazing. I recommend Victoria Financier Lending Company to you, contact her today and be patient with to assist you because lot's of person contact her daily for assistance. She will help you urgently. Her Email is: victoriafinancier@outlook.com<br /><br />*Full Name:_________<br /><br />*Address:_________<br /><br />*Tell:_________<br /><br />*loan amount:_________<br /><br />*Loan duration:_________<br /><br />*Country:_________<br /><br />*Purpose of loan:_________<br /><br />*Monthly Income:__________<br /><br />*Occupation__________<br /><br />*Next of kin:_________<br /><br />*Email :_________<br />Anonymoushttps://www.blogger.com/profile/09804745917104809738noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-21775198183200863592016-11-10T00:03:02.368-05:002016-11-10T00:03:02.368-05:00Hello Everybody,
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http://www.cepr.ne...Weisbrot on Podemos and Spain:<br /><br />http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/next-up-podemos-in-spain-european-officials-will-have-to-change-course<br /><br />"The International Monetary Fund (IMF) projects unemployment to still be at 18.5 percent in 2019. This is assuming that things go according to plan, and ignoring that IMF projections have tended to be over-optimistic in the past few years. But the most outrageous part of this forecast is that the IMF is also projecting that the Spanish economy in 2019 will be very close to full employment. In other words, the Fund – and by extension the European authorities— are saying that something like 18 percent unemployment is basically full employment for Spain."<br /><br />That's insane. This is related to their estimates of "declining potential output" no?Peterhttps://www.blogger.com/profile/08272747870634233567noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-90829805975801729942015-03-09T13:15:56.558-04:002015-03-09T13:15:56.558-04:00It's very different, yes! I wish I knew more t...It's very different, yes! I wish I knew more trade history to compare this to earlier trade boom periods -- say what happened to the Dutch in the 17th Century, or in the inter-war period.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-54998328324341891392015-03-09T12:24:33.482-04:002015-03-09T12:24:33.482-04:00If there are two countries, but the GDP of A is 1/...If there are two countries, but the GDP of A is 1/2 of B, then when A wants to run a 5% surplus of it's GDP this is only a 2.5% hit to the GDP of B. Not very interesting, but important in that the net imports of B are equivalent to excess savings demands in B’s markets (transferred from A). B can absorb those additional savings demands with a smaller rate reduction than would be the case if A was larger. <br /><br />If you want to think in terms of income flows, the reduction in income from net imports has to be accommodated by a reduction in rates to keep B from going into a recession or, more realistically, to help B get out of a recession. The size of the rate cut will depend on the size of the excess savings demand in B’s economy, not in A’s economy. A can get away with exporting a large share of its GDP to B if the economy of A is small. When the economy of A is big, it’s much harder for B to absorb A’s imports.<br /><br />Once B cuts rates, this should result in B devaluing against A, so A cuts its own rates. Then B cuts rates, etc. At some point both nations have rates at zero. At that point the game is over for A, in terms of exporting away its excess savings demands. <br /><br />The size of the capital markets is another issue. Suppose the world consists of a small nation, A, that has 10% of the world’s assets, and a large nation, B, that has 90% of the world’s assets. Both exporters store their money in a global basket weighted 90% B and 10% A (no home bias). Then A will naturally end up exporting 9 times what it imports. I.e. being big makes you a natural importer, being small makes you a natural exporter. But say there is a home bias — 80% of the proceeds are always invested at home and 20% in the global basket. In that case, A will export about $100 to B for every $80 that B exports to A. B, the Big Country, is still a natural importer, and the small country is a natural exporter.<br /><br />Now you don’t generally get a lot of trade between small and big countries — trade is more between big countries with each other — and I think this is one reason why. <br /><br />Unless you are swimming in oil, you have to overcome a lot of obstacles and end up with some stringent capital controls or domestic financial controls if you want to be a big country and also be a big exporter for a time period long enough that the chaos of capital flows converges to fundamentals.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-85447334257577551552015-03-08T13:13:59.440-04:002015-03-08T13:13:59.440-04:00It's an interesting change from the old days, ...It's an interesting change from the old days, isn't it? The big criticism of the gold standard, and to some extent of the Washington Consensus era, was that the burden of adjustment was put on the deficit countries which had to move toward current account balance by raising rates, reducing the supply of money and credit. Everybody trying to offer higher returns to attract foreign investment. Now here we have the opposite case, countries competing to offer lower returns to deter capital inflows. It's an interesting change, isn't it? -- and not necessarily for the worse.<br /><br />Seems like the bigger concern is not Switzerland or Australia but poor countries that might be induced to take on foreign debt that will become unsustainable when/if high rates return. But there doesn't seem to be much of that right now.JW Masonhttps://www.blogger.com/profile/10664452827447313845noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-54652607873455792502015-03-08T13:12:24.049-04:002015-03-08T13:12:24.049-04:00Well, this is an empirical question: Are the trade...Well, this is an empirical question: Are the trade balances of countries with floating rates stationary around zero?<br /><br />I think you are correctly describing some obstacles to a generalization of the pattern of persistent trade imbalances offset by persistent net financial flows. But the fact that there are obstacles doesn't mean it's impossible. <br /><br /><i>Having the world's largest economy attempt to run surpluses against them is going to quickly drive rates in these countries up until the marginal exporting firm decides to park the revenues in an EMU asset</i><br /><br />Can you expand on this a little? I don't think I follow the logic here.JW Masonhttps://www.blogger.com/profile/10664452827447313845noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-76186414516919255262015-03-05T08:38:25.498-05:002015-03-05T08:38:25.498-05:00Here's a nice write up on http://fistfulofeuro...Here's a nice write up on http://fistfulofeuros.net/afoe/does-the-arrival-of-negative-interest-rates-change-the-attractivess-of-emu/<br /><br /><br />"While countries like Switzerland and the UK saw their currencies appreciate during the existential Euro crisis due to their “safe haven” status, what is happening now is a quite different phenomenon. In the first phase money was fleeing the currency union fearing conversion risk, now it is being driven out by an explicit policy of the central bank. At the very same moment Greece was being pushed near to the point of introducing capital controls to stop capital flight, Denmark was rumored to be near to introducing them to stop capital inflows."<br /><br />"SNB lowered the deposit rate rate from -0.25% to 0.75% [...] Negative rates have even started to reach corporate bonds, raising the possibility that companies could eventually be paid to borrow the money to proceed with share buy-backs."<br /><br />"Danmarks Nationalbank’s constant lowering of the deposit rate (3 times in three weeks) to a current global record low of minus 0.75%."<br /><br />etc.<br /><br />RBA, CDN are the only holdouts with positive rates now. RBA cut rates yesterday. "“Global developments have left us with a higher exchange rate and lower interest rates than would otherwise have been the case,” Lowe said in a speech in Sydney Thursday. “We may not like this configuration, but developments abroad give us little choice.”<br /><br />Here, it's a race to the bottom because of the importance of capital flows. E.g. you can run a surplus against whomever you want and put the pain on a third party. So whoever has the highest rates ends up as if the entire surplus was run against them. This is strong incentive for everyone to cut rates as global capital thrashes around in search of the next economy to such dry of demand.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-16395052743597206072015-03-05T08:29:09.901-05:002015-03-05T08:29:09.901-05:00"Lots of countries with floating rates have s..."Lots of countries with floating rates have substantial trade surpluses or deficits persisting over decades."<br /><br />Not really. You're talking about the resource exporting nations + East Asian export-led growth economies. Then Switzerland, Belgium, Netherlands. <br /><br />Generally, 70% of the time, the "average" nation runs a current account balance, and 30% of the time it runs a surplus. A small group of nations run surpluses and everyone else runs deficits. Getting into that surplus group is very difficult, and not possible for a large economy unless you are impose drastic capital controls and domestic financial control. If you are a small nation, then running a surplus against a big nation wont affect the big nation much, so you can keep doing it. When you are a big nation, the reduction in income in your target is going to cause your target to reduce rates and will slow income growth there, making the surplus harder to maintain. So a small group of small nations run surpluses against big nations, but not the other way around. Here the east asian economies are something special, not something that the EU can emulate. Even China's balance is dwindling (as a % of GDP) and Japan is back to a deficit.<br /><br />"They will either go to other safe-asset providers liek Switzerland, or to a rotating mix of middle-income and developing countries that can sustain large financial inflows for a while"<br /><br />They have to go to the safe asset providers. Brazil wont accept EMU capital -- well, it will accept it but tax it, so the EMU holder of reals will park their earning *somewhere safe*. They will park it in the US, and this means that the US bears the ultimate burden of the deficit, not Brazil, even if the EMU runs the surplus against Brazil. The number of safe places where you can park that surplus is small and many are adopting negative rates now -- effectively taxes on capital flows:<br /><br />US <br />UK<br />Japan<br />Canada<br />Australia<br />Sweden<br />Norway<br />Netherlands<br />Denmark<br /><br />They all have problems with current account balances that are headwinds for recovery. The situation is turning into a bloodbath. Having the world's largest economy attempt to run surpluses against them is going to quickly drive rates in these countries up until the marginal exporting firm decides to park the revenues in an EMU asset, at which point the euro will appreciate until the current account balance goes away.<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-53531340118680448702015-03-04T23:32:27.276-05:002015-03-04T23:32:27.276-05:00Thanks! Thanks! Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-38843665891519605302015-03-04T06:56:52.841-05:002015-03-04T06:56:52.841-05:00Thanks for the correction. Thanks for the correction. JW Masonhttps://www.blogger.com/profile/10664452827447313845noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-56334079746466516952015-03-04T01:34:24.644-05:002015-03-04T01:34:24.644-05:00"This despite the fact that the working-age p..."This despite the fact that the working-age population and labor productivity in Spain have continued to rise."<br /><br />Actually things are different (look at AMECO data). Working age population in Spain has been falling since 2009 (it has fallen 2.8% until 2014, a reduction of almost 1mn people). The capital stock has also been increasing with low growth rates. Since 2002 average annual hours per person employed were on a secular decline while at least based on the EC calculations TFP was actually stagnant during the Euro decade with a slight drop up to 2009.<br /><br />Potential output growth up until the crisis was mainly the result of the increase in the population (driven by immigration) and of the capital stock created by construction investment (which was the main component of investment that registered a substantial increase during the boom years).<br /><br />I totally agree though that the way detrending is done in order to calculate potential output, guarantees that a low growth period will translate into a low potential output growth. For instance AMECO thinks that the Spanish NAIRU has increased from 13% during 2007 to over 19% today (which obviously combined with the lower working age population lowers potential output).Kostas Kalevrashttps://www.blogger.com/profile/12215782761139619874noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-90859321520996552362015-03-03T20:48:42.832-05:002015-03-03T20:48:42.832-05:00But more importantly, the lesson of the Europe-wid...But more importantly, the lesson of the Europe-wide shift toward trade surpluses is that austerity can succeed on its own terms.<br /><br />So most people not having enough money to buy imports is the definition of success? I think it would have been easier to deport the highest importers until exports and imports balanced and not beggar most of the people. But then, I'm an engineer not a neo-liberal economist, so I do have some scruplesBill Murraynoreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-55666462021825914512015-03-03T16:14:49.249-05:002015-03-03T16:14:49.249-05:00What I mean is that I think that german ordolibera...What I mean is that I think that german ordoliberals were more or less the same that italian democristiani [Christian Democrats], and to the french model of dirigisme: these were economic theories that were very "statist" for the standards of today.<br />I stress this because it seems that Merkel is seen as some Hayek fanatic, whereas she is mostly a centrist AFAIK.<br />The problem is that there has been a turn towards anti-statalism since the 80s, not the ordoliberals in particular.<br />Piketty, for example, who is quite leftish, while he is for higer tax rates on capital is against inflation and against government deficits.<br />If Piketty thinks this way then it's not strange that Merkel is also against deficit spending and inflation.<br /><br />This is the reason that I think that this emphasis on competitivity is mostly due to ideological blinkers, I think that Merkel et al. don't really realise that they are causing a chase to the bottom of the wage share.MisterMRhttps://www.blogger.com/profile/03806545811376548828noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-10940763623228401032015-03-03T15:56:48.352-05:002015-03-03T15:56:48.352-05:00I think that "ordoliberalism", in itself...I think that "ordoliberalism", in itself, is actually quite pro welfare state - or at least it was pro welfare state when the term was created, maybe currently the term refers to something that is more neoliberal than ordoliberal.MisterMRhttps://www.blogger.com/profile/03806545811376548828noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-79687490069897341272015-03-03T14:40:33.709-05:002015-03-03T14:40:33.709-05:00"It's evident from this diagram that the ..."It's evident from this diagram that the move toward balanced trade in the deficit countries is about throttling back imports, not boosting exports. "<br /><br />If the fact that the EU moved to an aggregate trade surplus is mostly due to decreased imports, this means that some countries are exporting much less to the EU than they did before, while importing the same. Even if things stay this way, the world would be trapped in an below-potential equilibrium, with high unemployment and an excess of capital goods (that means low real investiment for some time). I don't see this as a stable condition. Plus, those countries that are exporting less to the EU, like China, will face increased unemployment, and might try to increase "competitiveness" themselves.<br /><br />Also, if we frame the story as international trade flows, we lose the point that also in exporting countries debt levels are rising AFAIK, ant at a world level total gross debt to GDP is rising. My opinion is that this happens because there was a general fall in the wage share, and as a consequence much of the consumption of final consumption goods is debt financed (directly or indirectly). I think this trend also can't go on forever.<br /><br />Thus on the whole I don't think that a large EU surplus can be a stable condition.MisterMRhttps://www.blogger.com/profile/03806545811376548828noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-6768654615099340082015-03-03T14:23:49.071-05:002015-03-03T14:23:49.071-05:00I wish I understood this stuff better!
It SEEMS t...I wish I understood this stuff better!<br /><br />It SEEMS to me that starting with a Cobb-Douglas production function and then estimating TFP growth with an HP filter, will get you the exact same results as just using the filter to get trend output directly. So the "theory" is just decoration. But I could be wrong about that?JW Masonhttps://www.blogger.com/profile/10664452827447313845noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-14761016750290078492015-03-03T14:18:41.332-05:002015-03-03T14:18:41.332-05:00Without fiscal transfers it doesn't look like ...<i>Without fiscal transfers it doesn't look like this will work. </i><br /><br />I think it can work fine. The periphery doesn't need deflation, just slower growth. Maybe that will provoke a political reaction -- I hope so! But there's no law of nature or economics that says it can't work. It's just balance of payments constrained growth. History is full of similar arrangements lasting for decades, the gold standard being exhibit A.JW Masonhttps://www.blogger.com/profile/10664452827447313845noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-66153089005351819122015-03-03T14:16:01.371-05:002015-03-03T14:16:01.371-05:00the EU is all about keeping money-claims sacrosanc...<i> the EU is all about keeping money-claims sacrosanct. What is the IMF about? The Washington Consensus?</i><br /><br /><i> I agree that the Eurocrats aren't primarly concerned with "competitiveness' in winning the globalization trade race as perhaps we sterotypically think of with Japan and China. They seem to be more about the ordoliberalism for its own sake and for disciplining the periphery: low inflation, minimum budget surpluses, dismantling of the welfare state and deregulation of labor markets, privatization, etc.</i><br /><br />Right. I probably should have said that in this post. (But I have said it plenty of times elsewhere.) JW Masonhttps://www.blogger.com/profile/10664452827447313845noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-12247105002845588632015-03-03T14:13:28.127-05:002015-03-03T14:13:28.127-05:00The explanation of potential output is interesting...The explanation of potential output is interesting -- thanks for that. It would be interesting to se what's driving the claim of declining potential output in Spain, Italy and Greece. Despite the claim that this is an economic rather than a statistical model, there are a couple of HP filters in there, for labor force participation and TFP growth. The calculation of NAIRU also seems to exclude by construction the possibility of deviations of actual U from the NAIRU lasting more than a few years. So I suspect that for all the song and dance about economic theory, this means that any deviation of output from trend lasting more than a few years is going to get interpreted as a change in potential output, just as much as with purely statistical approaches.<br />JW Masonhttps://www.blogger.com/profile/10664452827447313845noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-82977352866881069552015-03-03T13:54:09.846-05:002015-03-03T13:54:09.846-05:00Thanks -- now I have read it carefully and of cour...Thanks -- now I have read it carefully and of course they did not do anything as silly as I suggested. <br /><br />But in a way, what they do, while logically consistent, is even worse. Look at Fig. 3. Their claim that Spain's current account adjustment has almost all been structural is based on the assumption that potential output in Spain has not risen at all since 2006 or so. This despite the fact that the working-age population and labor productivity in Spain have continued to rise. This is nuts.<br /><br />And then of course the lesson is that there can be no more current account deficits -- n fact Spain must run current account surpluses in order to reduce its external debt. So Spanish income can only increase to the extent there is a shift in demand toward Spanish exports. <br /><br />Of course it's not as if it's physically impossible for Spanish living standards to rise without higher imports. What is the case is that, given current expenditure patterns, an increase in Spanish incomes will result in higher imports as some of the new spending falls on foreign goods, and those imports will have to be financed. The unstated alternative would be to take some policy to change expenditure patterns, either a devalued currency or direct restrictions on trade flows. But that's not even considered. That's where we are at this point -- the benefits of a European free trade area, whatever they may be, are apparently so great that it's worth sacrificing economic growth entirely for them. <br /><br />Thanks for pointing me to this. I hadn't realize dhow bad this stuff was.<br />JW Masonhttps://www.blogger.com/profile/10664452827447313845noreply@blogger.com