Morality Tales and Capital Flows

When the Federal Reserve finally raises its interest rate target, it will be one of the most widely anticipated policy moves since the Fed responded to the global financial crisis. The impact on emerging markets, which have already begun to see reversals of the inflows of capital they received when yields in the U.S. were depressed, has […]

Would US Climate Mitigation Efforts Matter? Yes, If They’re Done Right

A recent post by David Bailey and David Bookbinder on the Niskanen Center blog Climate Unplugged addresses a common Conservative criticism of unilateral climate mitigation efforts by the United States or other developed countries. As the critics point out, emissions from developing countries are expected to grow so rapidly that even if the US or […]

Battle Royale: Saudi v. American Oil

Saudi Arabia is trying to strangle American shale oil. They’ve been going at it for months now, and American shale has resisted. Forced into greater efficiency, production is up and American producers look better equipped to face low prices in the future. The Saudis are a bit surprised, but the battle is far from over. […]

Are the IMF and EU at Loggerheads Over Greece?

Everything has a cost, or so the story goes, especially time. In the Greek case we now know an additional item on the mounting bill: the country is back in recession. The issue is who – apart of course from the long-suffering Greeks themselves – will pay the extra costs of  the latest imbroglio. The […]

Greece Still Has a Fighting Chance

Anatole Kaletsky (2015) has a take on Europe vs. Greece confrontation. He notices that, since coming to power in January, the Greek government has believed that default on its debt would be a strong enough threat to the Eurozone, which would force Europe to choose between two alternatives: either Grexit (with potentially disruptive consequences for […]

Will Iran’s Sanctions End? Iran’s Economic Potential and How US and EU Interests Are Diverging

After decades of international isolation, Iran is eager to enter its post-sanction era, while Washington is divided about Iran’s future and Brussels remains apprehensive. Recently, Peter Wittig, German Ambassador to the US, said that alternatives to a deal to curb Iran’s nuclear program are “not very attractive.” He added that Germany and other nations are […]

Determinants of Banks’ Home Bias

Drawing on our earlier Economonitor column on home bias and public debt sustainability (Asonuma, Bakhache and Hesse, 2015)[1], this blog briefly examines some of the potential determinants of banks’ home bias in sovereign debt. The favorable treatment of sovereign debt in the regulatory framework is sometimes complemented by policies that further support banks’ increased holdings […]

How Natural is Natural Monopoly? The Case of China’s Crumbling Hold on Rare Earths

Rare earth elements (REEs) are a group of seventeen elements with exotic names like neodymium and yttrium that are key ingredients in many high-tech products, many important for national defense. Imagine the consternation of Western officials when they woke up one morning in September 2010 to learn that China held a near-monopoly in the production […]

The Xi-Modi Meeting: China and India Positioned for Asian Era

China and India are ready for breakthrough diplomacy that has the potential to reorder the face of Asia, while supporting global growth prospects. From May 14th to 16th, India’s Prime Minister, Narendra Modi, will make a three-day trip to China and meet President Xi Jinping. It can be seen as Act 2 to the September […]

When Will the Middle East Settle Down?

Sigmund Freud suggested that psychoanalysis could convert one’s neurotic misery to everyday unhappiness. Leaping to geopolitics from psychoanalysis leads to the question of when the Middle East will be converted from massive chaos to everyday turmoil. Thinking about that reminds me of one of my favorite New Yorker cartoons. An important executive is sitting at […]