Robert Kahn

Macro and Markets

Robert Kahn analyzes economic policies for an integrated world.

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Showing posts for "Global Economy"

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

by Robert Kahn

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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Brexit, Emerging Markets, and Venezuela in the News

by Robert Kahn

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

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

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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G20 Hopes for a Cure

by Robert Kahn

Five things we learned from this weekend’s G20 meeting of finance ministers and central bankers.

  1. A desire for better. The communiqué candidly acknowledges growing threats to the global economy, and signals a desire for stronger growth at a time when “downside risks and vulnerabilities have risen.” There also was recognition that monetary policy has carried most of the load in recent years, and going forward more responsibility rests on governments to accelerate long-promised fiscal and structural reforms.

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The No-Growth Meetings

by Robert Kahn

My conversations with investors on the margins of the IMF/World Bank meetings shows a broad anxiety about growth.  Europe is first on the list of concerns, along with a slowdown in China and US fiscal drag.  You would think that it would be easy, therefore, to produce G-7 and G-20 communiques that were pro-growth and highlighted the need for countries to act where they have the space.  Apparently, that’s not the case, with the key players as divided as ever. Read more »

Why Another Global Economics Blog?

by Robert Kahn

My intent in starting this blog is to look at how macroeconomic policies are set in a complex and interdependent global economy, and how market forces constrain or reinforce those policies.  We will look at policies in both industrial and emerging market economies, though in the current environment we will pay special attention to the policy challenges and key risks to an already fragile outlook coming from Europe and the United States.

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