Benn Steil


A graphical take on geoeconomic issues, with links to the news and expert commentary.

The Yuan

by Thursday, July 30, 2009


China has long pegged its currency to the Dollar.  After the USD started to depreciate against many currencies in 2002, expectations emerged that China would move away from a tight dollar peg.  Following China’s reforms in 2005, the Yuan appreciated by over 20% against the dollar.  However, since July 2008, the Yuan has been stable against the dollar, leading to expectations, illustrated by the forward price, that China’s repeg will persist. Read more »

China vs. U.S. Central Bank Holdings

by Monday, July 27, 2009


China has expressed concern that the growth of the Federal Reserve’s balance sheet will adversely affect the value of its dollar reserves. But China has plenty of experience of its own with rapid balance sheet growth. The PBOC’s balance sheet is a larger share of China’s GDP than the Fed’s balance sheet is of U.S. GDP. Does China’s own experience sterilizing rapid growth of its central bank balance sheet provide a hint about the U.S.’s future? Read more »

Emerging Markets and World Growth

by Tuesday, July 21, 2009


With the United States and other developed countries no longer serving as the engine of global demand growth, a new source of growth is needed. In the past few years, emerging markets have been an important source of global demand growth. The IMF expects this trend to continue, with demand in the emerging world recovering faster than demand in the advanced economies. Read more »

Twin Deficits

by Tuesday, July 14, 2009


The U.S. federal deficit has increased significantly since the start of the recession, as tax revenues have fallen and spending has increased. But the trade deficit has actually shrunk, reaching its lowest level for ten years in May. So while the risks associated with dependence on external financing have declined, there are new risks stemming from increased fiscal borrowing. Read more »


by Wednesday, July 8, 2009


Until the economic crisis, many praised the U.S. model of flexible labor markets for promoting faster growth and low unemployment. But flexibility has a cost: the United States is leading the G7 in terms of job losses over the past year. Output in Germany has fallen more than in the U.S., but Germany has experienced significantly fewer job losses. This perhaps helps explain the Merkel government’s less aggressive approach toward fiscal stimulus. Read more »