As the European Central Bank pursues monetary-policy normalization in 2018, it should proceed with caution. It will need to balance mounting pressure from Germany for faster normalization with a realistic assessment of the durability and breadth of the unfolding recovery.
There are significant differences between Puerto Rico and Venezuela regarding the origins of their economic crises, their political systems, their relationship with the US and the rest of the world, and much else. Nonetheless, some notable similarities are likely to emerge as their debt sagas unfold.
Usually, a sudden stop in capital inflows sparks a currency crash, sometimes a banking crisis, and quite often a sovereign default. Why, then, has the worldwide incidence of sovereign defaults in emerging markets risen only modestly?
Atlantic-hugging policymakers and pundits, buffered by a continent and a large ocean, may not fully appreciate the significant effect on global financial markets that the threat posed by North Korea has had in recent months. But competition for safe assets has clearly heated up.
When the world's leading central bankers gathered at their annual meeting in Jackson Hole, Wyoming, the main focus of discussion was global trade and imbalances. And here, the old adage applies: the more things change, the more they stay the same.
Last week, the IMF revised upward its growth projections for the eurozone and Asia’s advanced economies, including Japan, with the US Federal Reserve’s ongoing exit from ultra-easy post-crisis monetary policy adding to the growing sense that normal times are returning. But are they?
Gabriel Garcia Márquez, the Nobel laureate novelist most famous for One Hundred Years of Solitude, was native to Colombia. Nonetheless, as a master of magical realism, Garcia Márquez would have appreciated the Republic of Argentina’s recent combination of fact and fantasy.
Many observers have criticized the White House's budget plan for fiscal year 2018, owing to its optimistic assumptions about underlying economic growth. But the budget appears to be unrealistic in another crucial respect: interest rates – and thus debt-service costs – are supposed to remain low, even as full employment is reached.
The IMF is optimistic about the world economy's growth prospects over the next two years. But the Fund is taking too much comfort in the stabilization of economic conditions: beneath the headline numbers, there is little evidence that underlying problems have been resolved.
The global oil market is a volatile place, and the fate of countries that have treated adverse shocks as temporary and reversible, and were then proven wrong, has seldom been encouraging. Gulf producers, by going on a borrowing binge, could be setting themselves up for future pain.