Robert Kahn

Macro and Markets

Robert Kahn analyzes economic policies for an integrated world.

Dutch Elections and the European Economy

by Robert Kahn Thursday, March 16, 2017

European markets celebrated the strong electoral showing by Prime Minister Mark Rutte’s party (VVD), which looks to ensure another term for him leading a center-right coalition in the Netherlands. The far-right party (PVV) led by Geert Wilders finished second, after leading in the polls through much of the campaign. Other parties performed well, supported by a strong turnout, ensuring a pro-euro coalition can be formed. The vote had become an early proxy for the broader nationalistic winds sweeping Europe. Test passed, the euro rallied more than 1 percent to a five week high of 1.07 against the dollar, and stocks rose across Europe on the news.

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The President’s Economic Agenda: the Fight Begins

by Robert Kahn Wednesday, March 1, 2017

President Trump’s address to a joint session of Congress last night highlighted the central economic themes that animated his campaign: a tougher policy on immigration and trade, a focus on infrastructure, broad deregulation, “massive” tax relief and the repeal and replacement of Obamacare. The unifying theme was economic nationalism and renewal.

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The Long-Term Economic Costs of the President’s Executive Order on Immigration

by Robert Kahn Monday, January 30, 2017

For all the human disruption and confusion associated with President Trump’s executive order on immigration released on Friday, it is also worth noting the potential for substantial negative macroeconomic dislocation from increased barriers to travel to the United States.  In October of last year, I along with my colleagues Ted Alden and Hedi Crebo-Rediker published a note looking at the economic effects of a Muslim travel ban. While the title highlighted a prospect of full ban, the central historical experience we drew on for our analysis was the use of intensified security measures after the 9/11 attacks. These measures can tell us a lot about what to expect from the current extreme vetting measures, particularly if the president’s order is expanded to include more countries over time.

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After the Italian referendum: a treacherous period for banks and growth

by Robert Kahn Monday, December 5, 2016

The post-referendum market response to Italy’s referendum mirrored the reaction following the Brexit and U.S. election votes: calm after a knee-jerk negative reaction.  After all, not much has changed—Prime Minister Renzi stays on in a caretaker role (perhaps through end year), after which it is expected a new government with similar political orientation would take over with a rather narrow mandate to pursue a revised constitutional reform plan, address critical governing issues such as migration, and complete a fix of the banks. Most market participants do not expect snap new elections. Italy today in this sense does not look much different than it did yesterday.

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The President’s (Economic) Inbox

by Robert Kahn Wednesday, November 9, 2016

The election of Donald Trump creates extraordinary uncertainty about the future course of U.S. economic policy. Markets don’t like extreme unknowns, and there are valid reasons to fear that Trump’s policy proposals on trade and our economic alliances would be seriously disruptive to the global economy. Global stocks fell sharply when signs of a Trump victory emerged Tuesday, but by mid afternoon Wednesday U.S. stocks were up as markets found their footing on hopes of fiscal stimulus.  Meanwhile, U.S. Treasury yields were up and the Mexican peso weakened. It is reasonable to expect that substantial market volatility will be the norm in coming weeks.

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Brexit, Emerging Markets, and Venezuela in the News

by Robert Kahn Thursday, June 30, 2016

Three things to think about today.

  1.  If you haven’t already done so, subscribe now to my colleague Brad Setser’s blog, which provides excellent commentary on global macro issues. His most recent piece makes a compelling case for European fiscal action against the backdrop of a meaningful UK and European growth shock, a point that I very much agree with (listen also to my conversation with Jim Lindsay and Sebastian Mallaby here).
  2. I remain puzzled that this industrial country growth shock has not had a broader effect on emerging markets. Reports are that portfolio outflows from EM were minor on Friday, with some recovery this week. One view is that as long as China’s economy remains on track, commodity prices hold up, and the Fed is on hold, emerging markets should weather the Brexit shock. Conversely, the IMF has worried that declining trend growth in the emerging world reflects a rising vulnerability to globalization.
  3. The humanitarian situation in Venezuela has become critical. I have focused in past blogs on the severe economic consequences of the crisis, and the need for a comprehensive, IMF-backed reform effort, supported by substantial financing and debt restructuring. China’s recent agreement to push back debt payments due recognizes the inevitable but is unlikely to provide additional free cash flow to the government or the state energy company PDVSA. For investors, default now looks to be coming soon.

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Brexit’s Threat to Global Growth

by Robert Kahn Tuesday, June 28, 2016

Thursday’s Brexit vote wasn’t a “Lehman moment”, as some have feared. Instead, it was a growth moment. And that may be the greater threat. If policymakers respond effectively, the benefits could be substantial: a stronger global economy, and an ebbing of the political and economic forces now pressuring UK and European policymakers. Conversely, failure to address the growth risks could cause broader and deeper global economic contagion.

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Britain’s Bold Leap into the Unknown

by Robert Kahn Friday, June 24, 2016

Britain’s vote to leave the European Union was fueled by a broad range of social and political concerns, including a fear of immigration, resurgent nationalism, and a populist rejection of UK and European policies, institutions and policymakers. But is also an extraordinary economic experiment. Here are a few things to look for in coming days as the global economy tries to absorb the implications of this leap into the unknown.

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