DOCSLIB.ORG

[Presentation Title/Subject]

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
[Presentation Title/Subject] May 26, 2017 Global Economic Outlook Willem BuiterAC Global Chief Economist [email protected] +1 212-816-2363 See Appendix A-1 for Analyst Certification, Important Disclosures and non-US research analyst disclosures Citi Research is a division of Citigroup Global Markets Inc. (the "Firm"), which does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.. Investors should consider this report as only a single factor in making their investment decision. Certain products (not inconsistent with the author's published research) are available only on Citi's portals. This presentation was approved for distribution on 21 May 2017; the disclosures in Appendix A1 are current as of the same date. Global growth looks relatively stable with some signs of a pick up We see a cyclical pickup in GDP growth across AEs and EMs with industrial production and trade growth leading the way Global— Real GDP Growth (%YY) Global—Composite, Mfg and Services PMI % YoY Diffusion index (50+= Expansion) 6 56 Global Forecasts Global 5 AE 55 Manufacturing EM Services 54 4 53 3 52 2 51 50 1 49 0 48 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Note: Aggregates at market exchange rates. Global and EM aggregates exclude Sources: Markit and Citi Research. Venezuela. Source: National Statistical Offices, IMF and Citi Research US and China – Industrial Production AE and EM – Goods Exports and Imports %3M/3M saar 20 3m3m saar 30 18 US AE Exports AE Imports 16 25 14 China 20 EM Exports EM Imports 12 15 10 8 10 6 5 4 0 2 0 -5 -2 -10 -4 -15 -6 Mar-17 Feb-17 -8 -20 2010 2011 2012 2013 2014 2015 2016 2017 2014 2015 2016 2017 Sources: FRB, NBS and Citi Research. Sources: CPB and Citi Research 2 We See a Pickup in Growth Across AEs and Ems ex-China… We expect growth to be solid in the euro area and to pick up in the US after a weak Q1. We expect growth to be stable in Japan and to keep moderating in China. US Euro area and main members % YoY % YoY 4 4 Forecasts Forecasts 4 3 3 2 3 1 2 0 2 -1 Euro Area GDP growth GDP growth GDP Germany 1 -2 France US Italy 1 -3 Spain 0 -4 2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018 Sources: National Statistical Offices and Citi Research Sources: National Statistical Offices and Citi Research Japan China % YoY 5 % YoY Forecasts 11 4 Forecasts 3 10 2 9 1 8 GDP growth GDP 0 growth GDP Japan 7 -1 China -2 6 2011 2012 2013 2014 2015 2016 2017 2018 2011 2012 2013 2014 2015 2016 2017 2018 Sources: National Statistical Offices and Citi Research Sources: National Statistical Offices and Citi Research 3 Why are markets so relaxed? The case of Brexit FX and monetary policy moves offset near-term effects on sentiment. But negotiations will be drawn-out and fraught with uncertainty until a likely ‘hard Brexit’ happens (likely by 2025, following an ‘implementation period’) and beyond. UK – Consumer Confidence UK – CPI Actual, BoE and Citi Forecasts (YY %) SD 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 -2.0 GfK Consumer Confidence -2.5 2006 2008 2010 2012 2014 2016 UK– Investment Intentions and Investment Advanced Economies – Change in Cyclically Scores YY % Adjusted Primary Fiscal Balance, 2015-2020F 4 20 3 15 2 10 1 5 0 0 -1 -5 -2 -10 -3 Business Investment (YY %), rhs -15 Investment Intentions: Manufacturing -4 -20 Investment Intentions: Services -5 -25 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 Source: BoE, Markit, ONS, Lloyds, CBI, GfK, Royal Institution of Chartered Surveyors (RICS), Halifax, Nationwide, IMF Fiscal Monitor and Citi Research 4 Reflation prospects boosted sentiment and market optimism Market optimism fueled by pro-growth elements of Trump agenda, notably for small businesses (reducing regulation, reducing cost of healthcare, lowering taxes), a pick up in commodity prices and inflation. US Federal Budget Balance (% of GDP) AE – Headline and Core CPI Inflation (%YY) 3.0 % YoY Forecasts AE Headline CPI Inflation 2.5 AE Core Inflation 2.0 1.5 1.0 0.5 Mar-17 0.0 2011 2012 2013 2014 2015 2016 2017 2018 Sources: CBO and Citi Research Note: PCE for the US, CPI for rest. Core is CPI ex (unprocessed) food and energy. Sources: National Statistical Offices and Citi Research. AE Business Confidence (SD to LT Average) AE – GDP Growth and Confidence measures SD from LT Average SD from LT Average %QQ saar 2.0 1.5 6 1.0 1.5 4 0.5 2 1.0 0.0 0 0.5 -0.5 -1.0 -2 0.0 -1.5 -4 -0.5 -2.0 Consumer Confidence AE Business Confidence -6 US -2.5 Business Confidence -1.0 Japan Mar-16 -3.0 GDP growth (right) -8 Euro Area -1.5 UK -3.5 -10 2014 2015 2016 2017 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sources: National Statistical Offices, IMF and Citi Research. Note: GDP-weighted average of US, Japan, UK, Sweden, Switzerland, Denmark, Norway, Australia, NZ, Canada and Euro area. 5 Sources: National Statistical Offices, IMF and Citi Research. But markets appear rather complacent US Equity Valuations Policy Uncertainty and Equity Volatility Sources: IMF Global Financial Stability Report and Citi Research Sources: IMF Global Financial Stability Report and Citi Research US Credit Spreads (YTD Change) Credit to Non-financial sector Sources: Citi Research. Sources: BIS and Citi Research 6 There are quite a few risks to the outlook Including a rise in trade protectionism, a rise in anti-immigration sentiment, political risks in advanced economies, China cyclical risks and structural challenges and geopolitical risks. Many of these don’t seem to be priced Number of Trade Measures Implemented Globally Migration fear index Migration Fear Index Trade measures in first 10 months of each year 1400 600 1200 500 1000 400 800 300 600 200 100 400 0 200 2009 2010 2011 2012 2013 2014 2015 2016 "Net" discriminatory measures Disciminatory Liberalising 0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 UK Germany US France Sources: Global Trade Alert and Citi Research Sources: PolicyUncertainty.com and Citi Research Support for the Euro among euro area members Chinese Debt overhang remains Source: Eurobarometer Survey, October 2016 and Citi Research. Sources: CEIC and Citi Research 7 America First: trade and protectionism remain in focus ‘So far, so good’, but America First still applies. Major increases in protectionism are a risk and not the base case. Buy and Hire American View – There will be more ‘Buy American’ clauses in public and private infrastructure initiatives. • Reviewing ‘free trade agreements’ impact on the • Instructing Federal Agencies to stop buying implementation of ‘Buy American’ laws in Federal Government imported goods. procurement. • Reducing visa allocations sharply • Reviewing (H-1B and other) visa processes. Risk • Cracking down on (illegal) immigration. View – NAFTA renegotiation will include changes to rules of origin and dispute settlement, America First as well as provisions already include in the TPP (dispute settlement, labor and environment standards, IP protection). • Planning to renegotiate NAFTA, including US demands to ‘level • Withdrawing from NAFTA or other trade the playing field on tax treatment’. agreements • Planning to renegotiate other free-trade agreements. • Making major/disruptive changes to NAFTA Risk or other FTAs (e.g. on taxation, bilateral deficit targets, reciprocal tariffs) Make trade fair again View – There will be selective investigations into specific sectors and countries but no official naming of currency or trade manipulators. • Preparing an Omnibus Report on Significant Trade Deficits, due by June 29. • Naming a country as ‘trade manipulator’ or • Launching investigations by the Commerce Department on the ‘currency manipulator’ national security impact of core industries (steel, aluminum, • Imposing broad-based tariffs and other vehicles, aircraft, shipbuilding, semiconductors). Risk sanctions on specific products • Publishing a semi-annual FX Report where the Treasury could • Imposing major trade remedies on China label a country as a Currency Manipulator • Introducing a broad border tax • Has imposed remedial tariffs on Canadian softwood lumber • Withdrawing from WTO imports. 8 Italy: Political Fragmentation -> Lack Reform Momentum Anti-establishment parties poll at more than 40%, PD still polling higher than last general election in Feb-2013. Fragmented political scene will weaken future governments’ stability; end of QE and retirement of Draghi in 2019. Election Results and Opinion Polls (%). 2013 – Jan 17 Support for Alternative Parties (%), Jan 17 Sources: Various pollsters and Citi Research Sources: Various pollsters and Citi Research 9 Geopolitical risks are rising, too Including in North Korea, South-China sea, Implications from Iran presidential elections Source: CSIS and Citi Research 10 What could policy-makers do? Time to build resilience and avoid policy mistakes. CAPB level and Change (% and pp of GDP) How to build resilience? ●Implement structural reforms ●Address excessive indebtedness ●Allow a more flexible fiscal policy ●Normalize policy rates and central bank balance sheet size AE – Annual Change in Policy Rate and (although central bank balance CB Balance Sheet Size sheet size is a political, not a technical/financial matter). Source: Citi Research Note: The Pension Fund Global is excluded for Norway. Sources: National Central Banks and Citi Research 11 Citi Economic Research Is Available via Email, Websites and Various Research Distribution Providers If you would like to receive any of the research listed below, please contact Ann O’Kelly ([email protected]) Daily Publications Weekly Publications and Data Notes Monthly Publications ●Europe ●Europe ●Global Economic Outlook and Strategy ●US ●US ●Chief Economist Willem Buiter Special Pieces ●Japan ●Japan ●EM Economic Outlook and Strategy ●UK ●Canada ●Australia and New Zealand ●Emerging Markets 12 Appendix A-1 Analyst Certification The research analysts primarily responsible for the preparation and content of this research report are either (i) designated by “AC” in the author block or (ii) listed in bold alongside content which is attributable to that analyst.
Load more

Recommended publications
  • University of Surrey Discussion Papers in Economics By
    råáp=== = = ======råáîÉêëáíó=çÑ=pìêêÉó Discussion Papers in Economics THE DISSENT VOTING BEHAVIOUR OF BANK OF ENGLAND MPC MEMBERS By Christopher Spencer (University of Surrey) DP 03/06 Department of Economics University of Surrey Guildford Surrey GU2 7XH, UK Telephone +44 (0)1483 689380 Facsimile +44 (0)1483 689548 Web www.econ.surrey.ac.uk ISSN: 1749-5075 The Dissent Voting Behaviour of Bank of England MPC Members∗ Christopher Spencer† Department of Economics, University of Surrey Abstract I examine the propensity of Bank of England Monetary Policy Committee (BoEMPC) members to cast dissenting votes. In particular, I compare the type and frequency of dissenting votes cast by so- called insiders (members of the committee chosen from within the ranks of bank staff)andoutsiders (committee members chosen from outside the ranks of bank staff). Significant differences in the dissent voting behaviour associated with these groups is evidenced. Outsiders are significantly more likely to dissent than insiders; however, whereas outsiders tend to dissent on the side of monetary ease, insiders do so on the side of monetary tightness. I also seek to rationalise why such differences might arise, and in particular, why BoEMPC members might be incentivised to dissent. Amongst other factors, the impact of career backgrounds on dissent voting is examined. Estimates from logit analysis suggest that the effect of career backgrounds is negligible. Keywords: Monetary Policy Committee, insiders, outsiders, dissent voting, career backgrounds, ap- pointment procedures. Contents 1 Introduction 2 2 Relationship to the Literature 2 3 Rationalising Dissent Amongst Insiders and Outsiders - Some Priors 3 3.1CareerIncentives........................................... 4 3.2CareerBackgrounds........................................
    [Show full text]
  • Monetary Economics and the Political Economy of Central Banking
    Monetary Economics and the Political Economy of Central Banking: * ** Inflation Targeting and Central Bank Independence Revisited 27-01-2008 Willem H. Buiter Professor of European Political Economy, European Institute. London School of Economics and Political Science * © Willem H. Buiter, 2006, 2007 ** Paper presented at the Session: ‘Changing Doctrinal Perspectives in Central Banking’ at the Central Bank of Argentina 2007 Money and Banking Conference “Monetary Policy Under Uncertainty”, June 4-5 2007, Buenos Aires, Argentina. An earlier version of this paper provided the background to a lecture given at the XI Meeting of the Research Network of Central Banks of the Americas, Buenos Aires, 22 - 24 November 2006. I would like to thank Charlie Bean, Tim Besley, Mario Blejer, Guillermo Calvo, Howard Davies, Katherine Hennings, Christopher Kent, Manuel Ramos Francia, Katerina Smidkova, Klaus Schmidt-Hebbel for comments on earlier versions of this paper. 1 Introduction There is a widespread consensus among practicing and practical central bankers as well as among theoretical and applied monetary economists, that the canonical global best practice central bank is operationally independent 1 and targets inflation 2. Historically, whenever a near-universal consensus takes hold of the economics profession, it tends to be at least half wrong. A concern that this may be happening in the areas of inflation targeting and central bank independence prompted the choice of subject for this lecture. I. Inflation targeting Inflation targeting – the pursuit of a low and stable rate of inflation over the medium-to-long term for some broadly based index of consumer prices or cost-of-living index - is best rationalised as the operational expression of the pursuit of the more fundamental objective of price stability.
    [Show full text]
  • Center on Capitalism and Society At
    CENTER ON CAPITALISM AND SOCIETY AT CCS Conference on the Financial Crisis Friday, February 20, 2009 Italian Academy, Columbia University 1161 Amsterdam Avenue (between 116th and 118th Streets) Program 9:00 am: Introductory Remarks Prof. Edmund S. Phelps, Director, Center on Capitalism and Society, and McVickar Professor of Political Economy, Columbia University. Winner of 2006 Nobel Prize in Economics. 9:10am – 10:40am: Panel 1: Reforming the Financial Sector Chair: To be announced Prof. Edmund S. Phelps, Director, Center on Capitalism and Society, and McVickar Professor of Political Economy, Columbia University. Winner of 2006 Nobel Prize in Economics. [confirmed] Prof. Amar Bhidé, Glaubinger Professor of Business, Graduate School of Business, Columbia University. Co-editor, Capitalism and Society. [confirmed] Dr. Richard Robb, CEO of Christofferson, Robb and Company. Associate Professor of Professional Practice in International Finance, School of International and Public Affairs at Columbia University. [confirmed] Mr. Leo Tilman, President of L.M. Tilman & Co. Author of Financial Darwinism: Create Value or Self-Destruct in a World of Risk. [confirmed] Mr. John Kay, Member, Council of Economic Advisers, Scottish Government. Author of The Truth about Markets and contributor, Financial Times. [confirmed] Prof. Jose A. Scheinkman, Theodore A. Wells Professor of Economics, Princeton University 10:40 – 10:55am: Coffee 10:55am – 12:25pm: Panel 2: Regulating the new Financial Sector Chair: To be announced Mrs. Christine Lagarde, Minister of Economics, Industry and Employment, France. [confirmed] Dr. Malcolm Knight, Vice-Chairman, Deutsche Bank. Former General Manager, BIS. [confirmed] Prof. Joseph Stiglitz, University Professor, Columbia University. Chair, Committee on Global Thought, Columbia University. Executive Director, Initiative for Policy Dialogue, Columbia University.
    [Show full text]
  • Transforming Uncertainty Into Opportunity
    Citi Private Bank cordially invites you to: Transforming Uncertainty into Opportunity Print Next > Close Foreword It is my pleasure to cordially invite you to Citi Private Bank’s Global Outlook 2013: Transforming Uncertainty into Opportunity. At this annual Outlook roadshow that runs across the Europe, Middle East and Africa region, you will hear from Citi’s top analysts and strategists on various topical issues — views on investment opportunities and challenges awaiting investors; perspectives on global and regional geopolitical and economic developments; markets insight by asset class and geography; and informed opinions about managing one’s wealth in 2013. We look forward to your participation at the event, and for the opportunity of more thoughtful and productive discussions with our bankers and investment specialists on your wealth management plans. Luigi Pigorini Chief Executive Officer Citi Private Bank, Europe, Middle East and Africa Print < Back Next > Close Date & Time Thursday 17 January 2013 15.30 — 18.15 Location Ballroom The Berkeley Wilton Place The Berkeley Knightsbridge London SW1X 7RL Dress code Business-casual RSVP (by 8/1/13) Please email [email protected] or contact your Private Banker. Please let us know if you have any special dietary requirements Print < Back Next > Close Agenda 15.30 Welcome Refreshments 16.00 Welcome Address 16.05 2012 Retrospective and 2013 Outlook Willem Buiter, Chief Economist, Citi 16.30 2012 Political Review and 2013 Political Outlook Tina Fordham, Senior Political Analyst, Citi 17.00
    [Show full text]
  • Inflation Report
    Inflation Report November 1998 The Inflation Report is produced quarterly by Bank staff under the guidance of the members of the Monetary Policy Committee. It serves a dual purpose. First, its preparation provides a comprehensive and forward-looking framework for discussion among MPC members as an aid to our decision making. Second, its publication allows us to share our thinking and explain the reasons for our decisions to those whom they affect. Although not every member will agree with every assumption on which our projections are based, the fan charts represent the MPC’s best collective judgment about the most likely path for inflation and output, and the uncertainties surrounding those central projections. This Report has been prepared and published by the Bank of England in accordance with section 18 of the Bank of England Act 1998. The Monetary Policy Committee: Eddie George, Governor Mervyn King, Deputy Governor responsible for monetary policy David Clementi, Deputy Governor responsible for financial stability Alan Budd Willem Buiter Charles Goodhart DeAnne Julius Ian Plenderleith John Vickers The Overview of this Inflation Report is available on the Bank’s web site: www.bankofengland.co.uk/infrep.htm. The entire Report is available in PDF format on www.bankofengland.co.uk/ir.htm. Printed by Park Communications Ltd © Bank of England 1998 ISBN 1 85730 181 1 ISSN 1353–6737 Overview The Monetary Policy Committee sets interest rates to maintain a path for inflation looking ahead that is consistent with the 2.5% target for inflation on the RPIX measure. This requires the Committee to act in response to prospective deviations—downwards or upwards—from the inflation target in a symmetrical fashion.
    [Show full text]
  • Tilburg University Gorby Games Güth, W.; Van Damme, E.E.C
    Tilburg University Gorby games Güth, W.; van Damme, E.E.C. Publication date: 1991 Link to publication in Tilburg University Research Portal Citation for published version (APA): Güth, W., & van Damme, E. E. C. (1991). Gorby games: A game theoretic analysis of disarmament campaigns and the defense efficiency-hypothesis. (Reprint series / CentER for Economic Research; Vol. 62). Unknown Publisher. General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal Take down policy If you believe that this document breaches copyright please contact us providing details, and we will remove access to the work immediately and investigate your claim. Download date: 29. sep. 2021 ~~~~ cBM R for ~mic Research 8823 IIIIIIIIIIIullllIIIIIIIIINIIIIIIIIIIIIIIIIIIII 1991 62 Gorby Games - A Game Theoretic Analysis of Disarmament Campaigns and the Defense Efficiency - Hypothesis - by Werner Guth and Eric van Damme Reprinted from R. Avenhaus, H. Karkar and M. Rudnianski (eds.), Defense Decision Making - Analytical Support
    [Show full text]
  • Unbundling 'Too Big to Fail'
    AP PHOTO/MARK LENNIHAN PHOTO/MARK AP Unbundling ‘Too Big to Fail’ Why Big Is Bad and What to Do About It By Ganesh Sitaraman July 2014 WWW.AMERICANPROGRESS.ORG Unbundling ‘Too Big to Fail’ Why Big Is Bad and What to Do About It By Ganesh Sitaraman July 2014 Contents 1 Introduction and summary 2 Unbundling too big to fail 9 Reforming too big to fail 18 Conclusion 20 Endnotes Introduction and summary Since the 2008 financial crisis, the problem of financial institutions being “too big to fail,” or TBTF, has been front and center in the public debate over the reform and regulation of the financial industry. Commentators across the political spectrum decried bailouts of the biggest Wall Street financial institutions, arguing that bail- outs would establish too big to fail as public policy. When it was time for reform, legislators tried to address this problem, and even incorporated into the full title of the Dodd-Frank Act that one of the bill’s purposes was “to end ‘too big to fail.’”1 Yet more than five years after the financial crash, the biggest banks are 37 percent larger than they were before,2 and the debate over what to do about the size of finan- cial institutions continues. Policy proposals range from improving resolution mecha- nisms, to more stringent prudential standards such as leverage limits, to charging fees to eliminate the implicit government subsidy the biggest banks receive, to capping the size of the banks, to instituting a new Glass-Steagall Act. Each approach is hotly contested, with commentators frequently arguing that the proposed solution will not actually fix the problem of financial institutions that are too big to fail.3 The problem at the heart of the debate over too big to fail is that the popular moniker has come to mean more than the concern that big firms get a government bailout in the event of failure.
    [Show full text]
  • Central Banks: Powerful, Political and Unaccountable?
    Journal of the British Academy, 2, 269–303. DOI 10.5871/jba/002.269 Posted 19 December 2014. © The British Academy 2014 Central banks: Powerful, political and unaccountable? Keynes Lecture in Economics1 read 18 September 2014 WILLEM H. BUITER Fellow of the Academy Abstract: The economic and political importance of central banks has grown markedly in advanced economies since the start of the Great Financial Crisis in 2007. In this article I argue that the preservation of the central bank’s legitimacy and independence requires that a clear line be drawn between the central bank’s provision of liquidity and the Treasury’s solvency support for systemically important financial institutions. Central banks should not be materially involved in regulation and supervision of the financial sector. All activities of the central bank that expose it to material credit risk should be guaranteed by the Treasury. In addition, central banks must increase their accountability by increasing the transparency of their lender-of- last-resort and market-maker-of-last resort activities. Central banks ought not to engage in quasi-fiscal activities. Finally, central banks should stick to their knitting and central bankers should not become participants in public debates and deeply political arguments about matters beyond their mandate and competence, including fiscal policy and structural reform. Keywords: Quasi-fiscal, independence, legitimacy, accountability, regulation, supervision. JEL Classification: E02, E42, E52, E58, E61, E62, E63, G18, G28, H63 1. INTRODUCTION The economic and political importance of central banks has grown markedly in advanced economies since the start of the Great Financial Crisis (GFC) in 2007.
    [Show full text]
  • CEP Discussion Paper No 786 April 2007 Seigniorage Willem Buiter
    CEP Discussion Paper No 786 April 2007 Seigniorage Willem Buiter Abstract Governments through the ages have appropriated real resources through the monopoly of the ‘coinage’. In modern fiat money economies, the monopoly of the issue of legal tender is generally assigned to an agency of the state, the Central Bank, which may have varying degrees of operational and target independence from the government of the day. In this paper I analyse four different but related concepts, each of which highlights some aspect of the way in which the state acquires command over real resources through its ability to issue fiat money. They are (1) seigniorage (the change in the monetary base), (2) Central Bank revenue (the interest bill saved by the authorities on the outstanding stock of base money liabilities), (3) the inflation tax (the reduction in the real value of the stock of base money due to inflation and (4) the operating profits of the central bank, or the taxes paid by the Central Bank to the Treasury. To understand the relationship between these four concepts, an explicitly intertemporal approach is required, which focuses on the present discounted value of the current and future resource transfers between the private sector and the state. Furthermore, when the Central Bank is operationally independent, it is essential to decompose the familiar consolidated ‘government budget constraint’ and consolidated ‘government intertemporal budget constraint’ into the separate accounts and budget constraints of the Central Bank and the Treasury. Only by doing this can we appreciate the financial constraints on the Central Bank’s ability to pursue and achieve an inflation target, and the importance of cooperation and coordination between the Treasury and the Central Bank when faced with financial sector crises involving the need for long-term recapitalisation or when confronted with the need to mimic Milton Friedman’s helicopter drop of money in an economy faced with a liquidity trap.
    [Show full text]
  • Interpreting the Erm Crisis: Country-Specific and Systemic Issues
    PRINCETON STUDIES IN INTERNATIONAL FINANCE No. 84, March 1998 INTERPRETING THE ERM CRISIS: COUNTRY-SPECIFIC AND SYSTEMIC ISSUES WILLEM H. BUITER GIANCARLO M. CORSETTI AND PAOLO A. PESENTI INTERNATIONAL FINANCE SECTION DEPARTMENT OF ECONOMICS PRINCETON UNIVERSITY PRINCETON, NEW JERSEY PRINCETON STUDIES IN INTERNATIONAL FINANCE PRINCETON STUDIES IN INTERNATIONAL FINANCE are published by the International Finance Section of the Department of Economics of Princeton University. Al- though the Section sponsors the Studies, the authors are free to develop their topics as they wish. The Section welcomes the submission of manuscripts for publication in this and its other series. Please see the Notice to Contributors at the back of this Study. The authors of this Study are Willem H. Buiter, Giancarlo M. Corsetti, and Paolo A. Pesenti. Willem Buiter is Profes- sor of International Macroeconomics at the University of Cambridge and a member of the Monetary Policy Com- mittee of the Bank of England. He has previously served at Princeton and Bristol Universities, at the London School of Economics, and at Yale University, where he was Juan T. Trippe Professor of International Economics. Giancarlo Corsetti is Assistant Professor of Economics at the University of Rome III and has also taught at Yale and Columbia Universities. Paolo Pesenti is Assistant Professor of Economics and International Affairs at the Woodrow Wilson School at Princeton University. He is a research fellow of the National Bureau of Economic Research and has served as a consultant to the World Bank. The authors’ book Financial Markets and European Monetary Coop- eration: The Lessons of the 1992–93 Exchange Rate Mech- anism Crisis will be released this year by Cambridge University Press.
    [Show full text]
  • NBER WORKING PAPER SERIES NEGATIVE NOMINAL INTEREST RATES: THREE WAYS to OVERCOME the ZERO LOWER BOUND Willem H. Buiter Working
    NBER WORKING PAPER SERIES NEGATIVE NOMINAL INTEREST RATES: THREE WAYS TO OVERCOME THE ZERO LOWER BOUND Willem H. Buiter Working Paper 15118 http://www.nber.org/papers/w15118 NATIONAL BUREAU OF ECONOMIC RESEARCH 1050 Massachusetts Avenue Cambridge, MA 02138 June 2009 ¸˛I would like to thank Anne Sibert, Charles Goodhart, Ben Broadbent and participants in seminars at the Center for Financial Studies at the Goethe University, Frankfurt on May 6th 2009, at the European Central Bank on May 18, 2009 and at the 13th International Conference on Macroeconomic Analysis and International Finance at the University Campus of the University of Crete in Retymno Crete, May 28-30, 2009. Comments by Fabrizio Zilibotti were especially useful in clarifying key issues involving the third method for removing the zero lower bound. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peer- reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications. © 2009 by Willem H. Buiter. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source. Negative Nominal Interest Rates: Three ways to overcome the zero lower bound Willem H. Buiter NBER Working Paper No. 15118 June 2009 JEL No. E31,E4,E41,E42,E43,E44,E5,E52,E58,G01 ABSTRACT The paper considers three methods for eliminating the zero lower bound on nominal interest rates and thus for restoring symmetry to domain over which the central bank can vary its policy rate.
    [Show full text]
  • Monetary and Fiscal Policy: Present Successes and Future Problems
    HOUSE OF LORDS Select Committee on Economic Affairs 3rd Report of Session 2003-04 Monetary and Fiscal Policy: Present Successes and Future Problems Volume 2: Evidence Ordered to be printed 19 October 2004 and published 11 November 2004 Published by the Authority of the House of Lords London : The Stationery Office Limited £24.00 HL Paper 176-II CONTENTS Oral Evidence Page Mr Len Cook, National Statistician, Mr Colin Mowl, Director of Macroeconomics and Labour Market and Mr David Fenwick, Director of Consumer Prices and General Inflation Division, Office for National Statistics Oral Evidence, 9 December 2003 1 Professor David Rhind, Chairman, Mr Richard Alldritt, Chief Executive and Mr Martin Weale, Commissioner, Statistics Commission Written Evidence 17 Oral Evidence, 16 December 2003 18 Supplementary Written Evidence 29 Mr Christopher Allsopp, Head, Mr Geoff Tily, Member, Mr Andrew Holder, Member and Mr Michael Williams, Member, Allsopp Review Team Oral Evidence, 13 January 2004 48 Mr Jon Cunliffe, Mr Nicholas Holgate, Mr Christopher Kelly, Mr Andrew Lewis, Mr Stephen Mitchell and Mr Jitinder Kohli, HM Treasury Oral Evidence, 21 January 2004 63 Written Evidence 78 Mr Mervyn King, Ms Rachel Lomax, Mr Charles Bean, Ms Marian Bell, Mr Richard Lambert, Bank of England Monetary Policy Committee members Oral Evidence, 27 January 2004 86 Mr Ciaran Barr, Chief UK Economist, Deutsche Bank Oral Evidence, 3 February 2004 106 Mr Willem Buiter, Chief Economist, European Bank for Reconstruction and Development Oral Evidence, 10 February 2004 121 Sir
    [Show full text]