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Crisis pathologies: Negative interest rates, or more lessons of the 1930s for the 2010s

Friday, 29 January 2016
The Bank of Japan’s (BoJ) made an announcement today that it is joining the European Central Bank (ECB), the Swiss National Bank and the central banks of Denmark and Sweden in charging a negative interest rate on commercial bank reserves. With Japan added to their ranks, countries with negative rates now account for nearly a quarter of the global economy. What is going on here?

Europe’s fashion for negative interest rates now also big in Japan

Friday, 29 January 2016
Negative interest rates could be the biggest cultural export from continental Europe since David Guetta. The Bank of Canada embraced the fad in December when it reset its foreseeable zero lower bound rate to negative 0.5 percent from 0.25 percent. Canada’s central bank hasn’t actually gone there yet. Governor Stephen Poloz left the policy rate at 0.5 percent earlier this month. But fashion-forward Japan showed no such reservations. On Jan. 29, the Bank of Japan took the plunge, setting a rate of minus 0.1 percent on new reserves private lenders stash at the central bank in excess of their regulatory requirements.

Why central bankers should talk more, not less

Wednesday, 20 January 2016
Between June 2013, when he was appointed to the post, and December 2015, Bank of Canada Governor Stephen Poloz uttered barely a word about fiscal policy. Then, on Dec. 8 in Toronto, he broke his silence on the subject, acknowledging in a speech that government spending could play a positive role in saving an economy pushed to the brink.

Hotel California Markets

Friday, 15 January 2016
The vertiginous fall in Chinese stock markets in the first week of the new year is a timely reminder of a key risk in 2016. Data suggesting that China's growth is, indeed, slowing was the proximate cause of the financial market volatility. That wasn't (or shouldn't have been) news. The fear might be that the path from high growth to lower growth may pass through negative territory.

The Trials of IMF Power Player Christine Lagarde

Monday, 11 January 2016
Mirren Gidda
Christine Lagarde, arguably the most powerful woman in the world, is six months away from the end of her term as managing director of the trillion-dollar International Monetary Fund (IMF), but when she talks about the organization it’s clear she considers her work unfinished.

The Difficulty with Central Bankers

Thursday, 7 January 2016
To non-economists — and, sadly, for that matter, economists under the age of 50 — the name Harry Johnson probably doesn't have any particular significance. That is unfortunate. Johnson was a colossus in economics for roughly a quarter century from, say, the mid-1950s to the late 1970s.

Canada’s Stephen Poloz has no time for Summers’s theory of secular stagnation

Friday, 11 December 2015
Bank of Canada Governor Stephen Poloz started 2015 with a surprise interest-rate cut. He followed with a second quarter-point reduction six months later. For some, that might have been enough noise-making for one year. Not Poloz. He used his final speech of the year to take a shot at Harvard University’s Lawrence Summers, one the world’s most prominent thought leaders.

Much Ado about Nothing? The RMB's Inclusion in the SDR Basket

Friday, 4 December 2015
The International Monetary Fund recently concluded its quinquennial review of the composition of the Special Drawing Right (SDR), accepting the Chinese currency into the SDR basket alongside four major international currencies — the US dollar, the euro, the British pound and the Japanese yen. The Chinese government has spent a great deal of energy and political capital to achieve this outcome. This policy paper explains China’s interest in this seemingly exotic and technical pursuit, identifying the political and economic motivations underlying this initiative.

Fallen Shibboleths and Victorian Virtues

Tuesday, 10 November 2015
I was a discussant at a CIGI-Institute for Policy Dialogue conference on sovereign debt restructuring at Columbia University in September hosted by Joe Stiglitz and Domenico Lombardi. In my remarks on one of papers, I identified a key challenge in the global economy: insufficient global aggregate demand that generates deflationary pressures.

Sustainable Climate Finance: From Discussion to Action

Friday, 9 October 2015
In a packed theatre in the middle of Lima at the 2015 International Monetary Fund (IMF) and World Bank Group (WBG) Annual Meetings in Peru, Christine Lagarde (Managing Director of the IMF) declares, “The threat is real!” at the flagship conversation on climate change.
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