Robert Kahn

Macro and Markets

Robert Kahn analyzes economic policies for an integrated world.

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Russian Sanctions: The United States Takes the Lead

by Robert Kahn

The United States has taken what, on first read, looks to be a significant step today, extending sanctions ( see also here) to block new debt and equity issuance by a number of energy, financial and military companies.  It is not quite full “sectoral” sanctions–both because it is limited in what it blocks (new debt and equity of maturity greater than 90 days) and because it excludes Sberbank, which holds the majority of Russian deposits. But I would argue that the reach of this new executive order in terms of institutions covered is sufficiently broad that the effects on the Russian financial system could be systemic.

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Changing Course: Financial Sanctions on Russia

by Robert Kahn

There are reports this morning that the Obama administration is contemplating extending economic sanctions against two large Russian banks– Gazprombank and  Vnesheconombank (VEB).  This is a step I have called for here and here.  If true, this is a significant event and, given the magnitude of Russia’s links to global financial markets, introduces a new era in the use of economic sanctions.  It also makes sense to do this now, as the current strategy is not working to deter Russian aggression against Ukraine.

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Tunisia’s Historic Transformation Deserves U.S. Support

by Guest Author

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Fischer to the Fed

by Robert Kahn

President Obama announced that he intends to nominate Stan Fischer, the former head of Israel’s central bank, to serve as the vice chairman of the Federal Reserve.  It also was announced that he would nominate Lael Brainard, the former Treasury undersecretary for international affairs, and would renominate current Fed Governor Jerome Powell to another term on the Fed Board.  The moves had been expected–nonetheless, it is worth celebrating an excellent set of appointments.  Stan Fischer is one of the leading macroeconomists and economic policymakers of our generation, and the Fed is fortunate to have him.  (Full disclosure–Stan is a former professor of mine, and currently a colleague at CFR.)  Jerome Powell has, by all accounts, played an important role at the Fed, and Lael Brainard brings a wealth of international policy experience to the position.

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Doing Business at the World Bank

by Robert Kahn

A showdown is looming at the World Bank over whether to discontinue or water down the Bank’s annual “Doing Business” Report.  As reported here, and blogged about here, and here, China is leading the charge against the report, which is one of the Bank’s most controversial and influential projects.  The U.S. government has been lobbying in favor of Doing Business, but so far has failed to generate the degree of high-level support from other G-20 countries or thought leaders that will likely be needed to save the report.  A committee established by the Bank and headed by South African Planning Minister (and former finance minister) Trevor Manuel to assess the future of Doing Business will report as early as next week.  Based on comments from advisors to the Manuel Committee, it looks as if its conclusion will be negative.  After the report is received, President Kim will make his recommendation, which could involve eliminating the report or gutting it through presenting its results qualitatively or in buckets that reduce the transparency that is at the core of the exercise.

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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 »

U.S. Budget Policy: Problem Solved?

by Robert Kahn

Long-term budget forecasts are more art than economics.  Small changes in assumptions and initial conditions, extrapolated over 25, 50 or 75 years, produce dramatically different outcomes.  Should one assume current law remains in effect, producing structural improvement in the deficit over time, or rather that Congress acts as in the past in extending temporary cuts, adjusting tax brackets, and easing spending constraints as new needs arise? Will the recent slowdown in the rate of increase in health care costs persist? Your answer to these questions can swing the budget in the long term from unsustainable deficit to surplus.  Still, these forecasts matter, as a statement of principle, as a description of philosophy, and in framing the debate.

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