Argentina: A New Outlook with Hope and Risks

Sunday’s election results marked the beginning of the end of the K era, while the final deadline is 2011, when the new government takes over. It is clear that the Kirchners lost the election, and that they have no chance of a comeback. The next president will almost certainly be more moderate politically and more […]

Hedging Using Derivatives

There is a fascinating article in The Economist about how the world of derivatives has shaped up through the crisis. I often encounter misconceptions about hedging. The one line that summarises the issue is this: The job of a hedging strategy is to combat extraneous economic exposure. Let me focus on currency exposure as an […]

China’s Loan Growth isn’t Boosting my Confidence in China’s “Green Shoots”

“China’s overall surge in credit in the first half of 2009,” an article in yesterday’s People’s Daily assures us, “is normal and healthy; however problems still exist in the structure, quality and flow of credit. China should continue to optimize credit structure and guard against potential risks.” Credible rumors suggest that new loans in June […]

Greenspan Speaks

There comes a time when, however alluring is the limelight, and however strong your thrust for action, you’d better opt for a graceful exit. The exit of former Fed Chairman Alan Greenspan has been anything but graceful, made all the more frustrating by his stern refusal to leave. Greenspan’s latest foray into the stage comes […]

New Papers on International Finance: Crises, Puzzles, and Exchange Rates

Summertime is conference season, especially for those of us who don’t live close to a major airport hub. The first conference I attended was the NBER’s International Seminar on Macroeconomics, co-organized by Lucrezia Reichlin and Ken West. The conference was broken up into several sections: Financial Crises, International Economic Puzzles, Exchange Rates and Financial Development. […]

Should We Pop Bubbles?

This may help Brad DeLong settle his inner conflict over whether Greenspan made an error by not moving interest rates to limit the housing boom. Guillermo Calvo and Rudy Loo-Kung argue that the benefits of bubbles almost always outweigh their costs (and thus there’s no need for regulation to prevent them).I think the authors are […]

Claims, Claims, Wonderful Claims

The labor market is almost surely the key to this recovery; renewed income growth would allow households to spend (i.e., add to the C of Y = C + I + G + NX), while at the same time, save in order to mend overly indebted balance sheets. And the consumer is key to this […]

The Cost of Life

Mark Thoma links to a medical paper that brings up the issue that few people want to talk about: at what point is the cost of medical care to extend life not justified? Like Thoma, I don’t have a great answer, except to point out that in a world of scarce resources, the answer cannot […]

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