Willem Thorbecke, 06 October 2010

The US-China currency dispute remains heated. This column argues that if a real appreciation in the Chinese currency is not achieved through exchange rate adjustment, it will happen through inflation in China and deflation in the US. It says a better Chinese policy mix would involve nominal appreciation of the renminbi combined with absorption-increasing policies such as developing human infrastructure.

Eduardo Levy Yeyati, 30 September 2010

Total foreign exchange holdings are larger than ever, largely due to reserve accumulation by emerging and developing economies. This column investigates the driving forces behind the accumulation of foreign exchange reserves and finds that exchange-rate smoothing, rather than precautionary stockpiling, is the main driver.

Daniel Gros, 08 October 2010

With the US threatening to label China a “currency manipulator”, this column presents a plan to address global imbalances without risking a trade war. It proposes a “reciprocity” requirement – if the US can’t buy Chinese government bonds, then China can’t buy US bonds either.

Anton Brender, Florence Pisani, 04 September 2010

Are low interest rates storing up more trouble for the future? This column argues that low interest rates have been necessary to sustain large current-account imbalances. With global imbalances unlikely to be redressed any time soon, low interest rates may be the best option for a while longer – but this policy is not without its risks.

Luiz de Mello, Pier Carlo Padoan, 01 August 2010

Global imbalances are firmly back on the policy agenda. This column examines evidence from past imbalances that suggests that the current-account reversals can be sizeable and the resulting disruption to capital flows could pose risks for the global recovery.

Barry Eichengreen, Peter Temin, 30 July 2010

The world economy is experiencing tensions arising from inflexible exchange rates – particularly the dollar-renminbi peg and the Eurozone. Drawing on lessons from the gold standard, this column points out that an international monetary system is a system – nations’ policies have spillovers. Now, as in the 1930s, surplus nations’ refusals to increase spending force deficit countries to contract. Keynes drew this lesson from the Great Depression, which is why he wanted measures to deal with chronic surplus countries. Sixty-plus years later, we seem to have forgotten his point.

Luis Servén, Ha Nguyen, 29 July 2010

Global imbalances have taken centre stage in the debate on the global economic outlook. This column surveys the debate over the roots of global imbalances and argues that asymmetries in the supply and demand for assets, rather than goods, are responsible. With this interpretation, global imbalances are unlikely to go away any time soon.

Mona Haddad , Cosimo Pancaro, 08 July 2010

Current discussions over the value of China’s currency demonstrate the controversy that exchange-rate policy is capable of igniting. This column suggests that while a managed real undervaluation can enhance domestic competitiveness, it is difficult to sustain in the post-crisis environment – both economically and politically. It says that a real undervaluation works only for low-income countries, and only in the medium term.

Dayanand Arora, Francis Rathinam , Shuheb Khan, 03 July 2010

Despite the recent drop in capital inflows to India, this column argues that once global markets recover from the latest setback, the country will need to contain volatility in foreign portfolio investment. This column provides a detailed analysis of capital inflows to India and policy recommendations for how to deal with them.

Kati Suominen, 14 June 2010

Did global imbalances cause the global crisis? This column summarises the variety of explanations of the relationship between imbalances and the crisis. While the debate continues, it suggests that, as a matter of prudence, policies to contain global imbalances may still be warranted even if they did not trigger the crisis.

Ambrogio Cesa-Bianchi, M. Hashem Pesaran, Alessandro Rebucci, Cesar Tamayo, TengTeng Xu, 20 May 2010

What would a Chinese currency revaluation mean for Latin America? This column argues that a revaluation is no silver bullet. It will not solve Latin America’s problems with excessive capital inflows, exchange-rate appreciation, and loss of competitiveness. In fact it poses serious risks. A 10% revaluation of the renminbi could reduce growth in Latin America by 0.3%.

Anton Korinek, Luis Servén, 10 May 2010

The large foreign-exchange reserves held by emerging markets continue to stoke debate. This column suggests that reserve hoarding leads to a lower exchange rate and encourages the learning-by-doing externalities of export-led growth without the need for direct subsidies. But while this strategy can be welfare increasing, the chances of this are reduced the more countries embrace it.

Kati Suominen, 16 April 2010

Should the US take action over China’s exchange-rate policy? This column argues “yes”. But while China would be momentarily hurt by the imposition of tariffs, US companies, workers, and consumers would suffer in the long run. The US should instead follow Fred Bergsten’s three-stage plan of engaging the IMF and WTO. The column also suggests that a long-run solution should be worked out within the G20.

Alicia García-Herrero, Tuuli Koivu, 16 April 2010

If China’s currency does appreciate, what impact will it have? This column argues that while Chinese exports will fall, so will Chinese imports, because China imports components from other East Asian countries that are then processed before being exported to western markets. A 10% rise in the renminbi would reduce imports of components by 6%.

Kjetil Storesletten, Zheng (Michael) Song, Fabrizio Zilibotti, 02 May 2010

China has amassed $2.4 trillion of foreign reserves over the last two decades. This column argues that it is wrong, and even dangerous, to blame this on a manipulation of the exchange rate. Instead it proposes a structural theory emphasising that credit market imperfections require private firms to build up internal savings which have been channelled into foreign bonds.

Joseph Francois, 16 April 2010

Will an appreciation of the Chinese currency create more US jobs? This column argues quite the opposite. A 10% appreciation would lead to a rise in the US price level by approximately 0.16%, meaning that in total the US would experience a mix of falling real wages and falling employment.

Andrew Small, 16 April 2010

The approaching US decision over China’s exchange-rate policy is as much about politics as economics. This column argues that the coming months will define broader Sino-US relations. The good news is that Beijing stepped back this month, avoiding an outright confrontation. The bad news is that this is only round one.

François Godement, 16 April 2010

The delayed announcement of a US decision over China’s exchange-rate policy has stoked the fire of debate over trade relations. This column argues that the efforts of China’s main trade partners – the EU as well as the US – would be better spent on ensuring a steady rebalancing of China’s economy towards greater private consumption and imports rather than simply currency revaluation.

Joseph Gagnon, 30 April 2010

This column argues that a 10% revaluation of the Chinese currency would likely increase US employment by at least 670,000. This is in stark contrast to recent Vox contributions by Simon Evenett and Joseph Francois claiming that an appreciation of the Chinese currency would reduce US employment by 400,000 to 600,000 jobs.

Arvind Subramanian, 16 April 2010

As the debate over China’s exchange rate intensifies, several commentators have been left despairing over the wide disparity in estimates of the extent of China’s currency undervaluation. This column argues that a new purchasing-power-parity approach provides a more consistent estimate of renminbi undervaluation at around 30%.



Vox Talks


CEPR Policy Research