The Venezuelan Crisis and the Political Costs of Reforms

by Pablo Duarte* Venezuela is in deep political and economic crisis. According to Reuters – quoting a leaked document from the Venezuelan Central Bank – output fell 19% and prices increased 800% during 2016. Even though the “Socialism of the 21st Century”, the political program initiated by former President Hugo Chavez, has been losing support … Continue reading The Venezuelan Crisis and the Political Costs of Reforms

No Way to Escape for the Swiss National Bank

by Andreas Hoffmann and Gunther Schnabl It came as a surprise to many: the Swiss National Bank announced an exchange rate target. Accordingly, the Swiss franc will be held above the level of 1.20 francs per euro. Switzerland gives up a part of its sovereignty, when the ECB makes bad press in buying trash-rated euro … Continue reading No Way to Escape for the Swiss National Bank

The US is “Taking on China”

by Andreas Hoffmann and Gunther Schnabl* In a recent New York Times column Paul Krugman is “Taking on China” again. He argues that the Chinese dollar peg contributes to global imbalances, depressing US and world growth perspectives. Bashing China’s fixed exchange rate is also fashionable in academics. Bernanke blames China’s dollar peg for contributing to a … Continue reading The US is “Taking on China”

A Keynesian in China

by Mario Rizzo Paul Krugman is complaining about China’s exchange rate policy. Its government is maintaining an artificially cheap renmimbi (yuan) against the US dollar. This has stimulated the purchase of Chinese exports by US companies and individuals. It has expanded the Chinese trade surplus with the US. The relatively rich (compared to their Chinese … Continue reading A Keynesian in China