Robert Kahn

Macro and Markets

Robert Kahn analyzes economic policies for an integrated world.

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Sanctions: What’s Next?

by Robert Kahn

Sunday’s referendum in Crimea looks set to lead to escalating tensions and an intensification of sanctions. To date, U.S. and EU sanctions proposed or introduced have been modest and targeted, focused on individuals (presumably mostly Ukrainian) regarded as responsible for “infringements on Ukrainian sovereignty,” and do not include measures on Russian corporations, financial transactions or cross-border trade. That could change next week.

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IMF Reform and the Ukraine Package

by Robert Kahn

The debate over congressional passage of IMF reform has reached a critical juncture. The Senate Foreign Relations Committee  today approved legislation providing loan guarantees for Ukraine and supporting sanctions, and the bill includes language implementing the long-delayed IMF reform. Assuming passage by the full Senate, the debate next moves to conference, where both sides will need to step up and negotiate in good faith. In her companion piece on this blog, Heidi Crebo-Rediker makes a compelling argument that there are significant geo-strategic benefits from this legislation.  There are meaningful economic benefits as well that make it important to reach a deal.

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Obama’s Modest Proposals for Growth

by Robert Kahn

As signaled in recent days, President Obama’s State of the Union address puts the spotlight firmly on domestic policy. Creating economic opportunity was a major theme. In addition to a hike in the minimum wage for government contract employees, the president called for a economy-wide minimum wage increase, an extension of unemployment benefits, immigration reform, and other measures to attack income inequality. The only surprise was a new Treasury instrument, MyRA, to encourage retirement savings.

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The Federal Reserve Tapers: In Search of Calmer Waters

by Robert Kahn

Yesterday’s decision by the Federal Reserve’s policy committee to modestly reduce (“taper”) its purchases of U.S. Treasury and mortgage-backed securities was a turning point in a number of respects.  After a long period of public debate that roiled markets, the Federal Reserve has at last begun what is likely to be a gradual and well-telegraphed exit from its period of extraordinary stimulus.  Together, last week’s fiscal deal and the Federal Reserve’s taper decision appears to have marked the start of a period of relative calm where U.S. macro policy uncertainty will be far less of a driver of markets. That’s good news for the global economy.

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Shadow of the Sequester

by Robert Kahn
House Budget Committee member Marsha Blackburn (R-TN) displays a copy of President Obama's FY14 budget proposal upon its arrival on Capitol Hill in Washington. (Courtesy Kevin Lamarque\Reuters). House Budget Committee member Marsha Blackburn (R-TN) displays a copy of President Obama's FY14 budget proposal upon its arrival on Capitol Hill in Washington. (Courtesy Kevin Lamarque\Reuters).

The news shows this weekend were filled with optimism from across the political spectrum that the congressional budget conference, which begins Wednesday, will produce a deal. I am skeptical. The aim of the conference will be to find agreement on spending for the remainder of FY14 at levels of spending above those that resulted from the 2011 Budget Control Act and the failure of the “super committee” (enforced by sequestration, or “the sequester”). All factions are united in their distaste for the sequester, which cuts too deep and too broadly across both defense and domestic areas. But there is little consensus on what to do about it, and no ideas about how to bridge the fundamental divide between Democratic calls for more revenue and Republican insistence that the focus be on entitlement reform. At this point, the most likely scenario is that a deal on spending will come in January, not December, and will be at (or very near) sequester levels of spending.

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