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March 2010

Sovereign Risk in Emerging Europe

Jamus Lim's picture

With the attention of bond market vigilantes focused on the developed economies for a change, it is nonetheless valuable to take a step back and consider sovereign risk in the post-crisis developing world. Indeed, the most recent issue of the Economist fingered Eastern European economies as having narrowly escaped the fate of the Mediterranean Europe. But is the lack of market strutiny of developing economies' debt justified?

Confronting uncertainty

Hans Timmer's picture

The Economist this week led with this subheader: Action on climate is justified, not because the science is certain, but precisely because it is not. The underlying argument is that immediate action is akin to taking an insurance policy—you can’t wait until you have hard evidence in hand, because by that time, you can no longer protect yourself against a catastrophe.

What Does Academic Research Say about the USD/RMB Exchange Rate and Imbalances?

Jamus Lim's picture

After shrinking away from the international economic news for a brief spell, the USD/RMB exchange rate is the hot topic of the day again. Part of this renewed interest is due to the imminent semiannual report by the Treasury to Congress on exchange rate policies (due mid-April), part of it relates to the relevance of a competitive dollar for U.S.

Can China become the engine for world economic growth?

Hans Timmer's picture

Let me admit my transgression upfront: I stole the catchy title from a blog post that David Dollar wrote almost a year ago. David was then the World Bank’s country director for China and Mongolia. It was in fact the title of a conference he had just attended.

I had to think about this question again when we looked this week at high-frequency data (see graph below).

Why We Should Favor (Slightly) Less Efficient Financial Markets

Jamus Lim's picture

Lost in many of the post-crisis financial reform proposals to rein in destructive financial innovation---such as calls to ban naked CDS, establish centralized clearinghouses for derivatives, and eliminate high-frequency trading---is the broader issue of whether these innovations could actually enhance welfa

The good, the bad, and the ugly imbalances

Hans Timmer's picture

In a recent IMF Staff position note Olivier Blanchard and Gian Maria Milesi-Ferretti provide a useful classification of current account imbalances. They argue that deficits and surpluses on current accounts are "good" if they reflect optimal allocation of capital across time and space. That is the case, for example, when savings ratios differ across countries because of different ageing profiles or when investment ratios differ because of different productivity trends.

Do Taylor Rule Deviations Contribute to Asset Bubbles?

Jamus Lim's picture

The notion that systematic Taylor rule deviations has a role to play in the real estate bubble in the United States is an issue that has been rigorously debated---see John Taylor (PDF) and Marco del Negro and Christopher Otrok for opposing views---but broader evidence at the cross-country level is relatively scarce.