Russian FX Reserves and Balance of Payments Vulnerabilities

Russian foreign exchange reserves, while large, are declining. Since reserve holdings (or lack thereof) are one of the best predictors of balance of payments/currency crises, it’s worth taking a look at their trajectory. (See Frankel and Saravelos, 2012 for a recent example) First, consider a long span of quarterly data (through end-2014Q1): Figure 1: Russian international reserves ex.-gold, […]

Reserve Accumulation in the Wake of the Great Recession

More from For a Few Dollars More: Reserve Accumulation in Times of Crisis, by Matthieu Bussiere (Banque de France), Menzie Chinn (UW), Gong Cheng (Sciences Po), Noemie Lisack (European University Institute) (also NBER Working Paper No. 19791): …In the immediate aftermath of the crisis, countries that depleted foreign reserves during the crisis quickly rebuilt their stocks. This rapid rebuilding has, however, […]

German and French Growth Engines Slow Down in the Eurozone

During the past two years, Germany and France have driven growth and debt talks in the Eurozone. Now the two economic engines of the Eurozone are slowing down, and bilateral friction is increasing. From ‘Merkozy’ to ‘Merde’? “It is extraordinary that we get questions on frictions and divergences during a joint press conference. The very […]

Mr. Global Economy – Health Check

As requested, I have undertaken an extensive examination of Mr. Global Economy, both physical and psychological. Patient History… The patient’s history includes a seizure in 2007/ 2008 –financial losses, banking problems, a major recession etc. Liberal injections of tax payer cash avoided catastrophic multiple organ failure assisting a modest recovery. Governments ran large budget deficits in […]

The Roots of the Euro Crisis Lie at the Doorsteps of the ECB

This column argues that deficiencies in the Eurosystem[1] monetary policy contributed to the “euro crisis”, which is, in reality, an intra-Eurozone balance of payments and external debt crisis.  It claims that the Eurosystem’s monetary policy instruments and procedures allowed intra-Eurozone external imbalances to accumulate since the start of the third phase of the EMU[2] in […]

Some Brief Thoughts on European Federalism

It is widely appreciated that Europe’s monetary union is problematic because it was not accompanied by fiscal union.  Transfer payments are very limited.   At the end of the day, and despite what you may you may recall from geography classes, Europe is a political and historical construct.    It is the western peninsula of the great […]