balance of payments

Nicholas Kaldor On Floating Exchange Rates

25 April 2013

Martin Wolf has a nice new column on imbalances creating troubles for the UK economy in the Financial Times: What a floating currency gives and what it does not. Why are current account deficits a haemorrhage in the flow of circular income? Weak external trade performance implies a drain in demand and hence pressure on the [...]

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Euro Area Current Account Balances

17 April 2013

Always helps to look at actual data and remember it. From the IMF’s latest World Economic Outlook: (click to expand) Far away from rebalancing!

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Cyprus Rescue

30 March 2013

Cyprus has recently received the attention of academicians and financial professionals in recent weeks. Need I say that? So national bankruptcy is to be resolved by winding down a bank, moving guaranteed deposits (i.e., upto €100,000) to another and as per the latest Reuters article on this, big numbers (anywhere ranging from 20 to 40 per [...]

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A Nation’s Net Indebtedness: An Example

8 February 2013

Over this thread at Matias Vernengo’s blog Naked Keynesianism, I got into an exchange about current account deficits and sustainability with an anonymous commenter – a topic I had blogged on recently in 2-3 posts. The commenter seems to not understand how this works or seems to believe that net indebtedness cannot keep rising relative to [...]

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The Beggar-My-Neighbour Game

19 January 2013

How did Keynes and the Cambridge Keynesians (such as Joan Robinson, Richard Kahn, Nicholas Kaldor and Wynne Godley) think the world economy works? A few important principles relevant here and of course not exhaustive: First, real demand, output and employment is determined by the fiscal and monetary policies of the government with the former having [...]

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“Free Trade Doctrine, In Practice, Is A More Subtle Form Of Mercantilism”

10 January 2013

Dani Rodrik has written a very interesting article The New Mercantilist Challenge for Project Syndicate.  Perhaps it is the main aim of this blog to argue how the sacred tenet of free trade is devastating to the world as a whole and why a sustainable resolution of a crisis can only be achieved by new international agreements on [...]

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Random Tidbits On National Accounts And Keynesian Models Of Income And Expenditure

13 December 2012

I came across this article (via a Tweet from Stephen Kinsella): Accounting As The Master Metaphor Of Economics by Arjo Klamer and Donald McCloskey which discusses how the framework of national accounts has been pushed to the background in economic analysis over the years. It is a nice read – although boring in a few places. I [...]

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Money Supposedly Became Fiat And Hence Balance Of Payments Does Not Matter Kind Of Argument

20 November 2012

So Karl Whelan wrote another article on TARGET2 claiming once more that a loss of TARGET2 claims of the Bundesbank does not matter at all to Germany. He has a new paper as well. Earlier he was arguing there was no loss at all. His argument roughly is that since there is no longer trade [...]

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Not A Balance-Of-Payments Crisis?

27 October 2012

Here’s a new piece by Randall Wray on Economonitor claiming current accounts do not matter (once again!) and didn’t have much of a role on the Euro Area crisis. Part of his arguments are the same as those who participated in public debates 1991 (most, not all) and claimed the balance-of-payments doesn’t matter. Perhaps he should [...]

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U.S. Net Indebtedness Above $5T Now

27 June 2012

The BEA reported yesterday that the U.S. Net International Investment Position at the end of 2011 was minus $4,030.3bn. The large change compared to the end of 2010 (where it was -$2,473.6bn) was due to large revaluations of assets and liabilities in addition to the current account deficit. See the BEA blog on this. For [...]

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