The inauguration of Donald Trump will be on January 20. One of his frequently mentioned policy goals is the reduction of the United States trade deficit. During his first presidency, he pursued the same goal. While the trade deficit with China decreased (excluding circumvented trade via countries such as Vietnam and Mexico), the overall trade deficit was not reduced. This is no surprise because tariffs and other trade restrictions are not the only factors determining the trade balance. The consumption, investment and savings behavior of US households, firms, and the government are the key factors determining the trade deficit.
What does Stephen Miran, who will lead the Council of Economic Advisers, think about tariffs? It’s high time to study his views.
HERE is one of several good summaries that outline his perspectives: „Miran, nominated to chair Trump’s Council of Economic Advisers, has written that the U.S. could be better off with average tariffs of around 20% and as high as 50%, compared with the current 2%.“
And HERE is the link to his report „A User’s Guide to Restructuring the Global Trading System„.
—————————————————————–
Webinar Announcement (January 22, 12:00-1:00 PM): Strategically important technologies – what role do innovation agencies play? (Ylva Strander, Ministry of Climate and Enterprise, Sweden)
In a world with geopolitical uncertainty, rapid technological development and a global arms race, countries need an ambitious technology policy. It is required to cope with future competitiveness, security and to change to a sustainable and resilient society. In a recent report, the Swedish innovation agency Vinnova identified six priority technology areas. Ylva Strander (formerly Head of Department, Systems transformation and Policy, Vinnova) contributed to this report. She now works for the Swedish Ministry of Climate and Enterprise. Vinnova is considered by many as a model for the rest of Europe, and the Swedish innovation ecosystem has been relatively good at producing successful startups.
- Time: January 22, 2025, 12:00 – 1:00 PM
- Online
- Presentation and discussion in English. Click HERE to register.
—————————————————————–
This looks like a must-read!
„Monetary Economics and Policy: A Foundation for Modern Currency Systems“ by Pierpaolo Benigno.
„In Monetary Economics and Policy, Pierpaolo Benigno offers a new way to understand the potency and effectiveness of monetary policy, presenting a unified modeling framework to analyze policy challenges posed by both paper and digital currency systems. He investigates current theoretical and policy controversies, drawing connections with historical themes in monetary economics.“
You can order (or pre-order) the book here:
By the way, Pierpaolo Benigno is a teacher in the Master’s program in International and Monetary Economics of the Universities of Bern and Basel.
—————————————————————–
Great to see this paper now also published as a CEPR working paper!
“The granular origins of inflation” by Santiago Alvarez-Blaser, Raphael Auer, Sarah Lein, and Andrei Levchenko.
“We decompose inflation into the component due to macroeconomic shocks and the granular residuals capturing the impact of individual firms and product categories, respectively. In advanced economies, the firm granular residual accounts for 41% of the variance of overall inflation, while the product category granular residual accounts for another 15%. Most of the variation in the firm granular residual is due to idiosyncratic shocks rather than to higher sensitivity of larger firms to common shocks. In the cross-section of countries, granular residuals are less important in economies with less concentrated market shares and higher inflation, such as emerging markets.”
By the way, Sarah Lein is a teacher in the Master’s program in International and Monetary Economics of the Universities of Bern and Basel.
—————————————————————–
The new editorial board of the Journal of the European Economic Association. Great to see Diego Känzig (an alumnus of the Master’s program in International and Monetary Economics among the new Associate Editors):
—————————————————————–
Wow, this could be very useful for the many economists interested in U.S. inflation and nowcasting!
„Weekly Nowcasting U.S. Inflation with Enhanced Random Forests“ by Philipp Wegmüller and Seton Leonard.
„We develop a random forest model which allows for mixed frequencies and missing observations.“
„The resulting predictions are significantly better than simple univariate benchmarks for U.S. inflation rate indices and match or exceed the accuracy of the nowcasts published by the Cleveland Fed.“
By the way, Philipp is an alumnus of the Master’s program in International and Monetary Economics.
—————————————————————–
Great news!
An update of the External Wealth of Nations database is available. It is an invaluable resource for everyone interested in international investment positions.
An interesting highlight for the year 2023: „FDI positions as a share of global GDP remained below pre-COVID levels, reflecting both the unwinding of financial vehicles by multinational corporations, and to a lesser extent, weakness in flows to China.“
—————————————————————–
This book looks very valuable!
„The Economics of Over-the-Counter Markets: A Toolkit for the Analysis of Decentralized Exchange“ by Julien Hugonnier, Benjamin Lester, and Pierre-Olivier Weill
„An essential primer on an important yet understudied type of financial market„
„Many of the largest financial markets in the world do not organize trade through an exchange but rather operate within a decentralized or over-the-counter (OTC) structure. Understanding how these markets work has become increasingly important in recent years, as illiquidity in certain OTC markets has appeared as the first signs of trouble—if not the cause itself—of the past two financial crises. However, standard models of financial markets are not suitable for studying the causes of illiquidity in OTC markets, nor the optimal policy response.“
—————————————————————–
Highly relevant!
„Commodity prices and monetary policy: old and new challenges“ by Fernando Avalos, Ryan Banerjee, Matthias Burgert, Boris Hofmann, Cristina Manea and Matthias Rottner.
„Growing geopolitical disruptions, climate change and a bumpy transition to green energy threaten to make commodity price shifts larger and more frequent going forward. This potentially raises greater risks for price stability, thereby limiting the scope for monetary policy to look through them.“s to sustained balance sheet expansion.“
Kommentar verfassen