Economics and International Affairs Blog: June 2018

“Trade is just a way to contain China from moving up the technology ladder, according to Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis SA in Hong Kong. Trump’s ‘America First’ policy is against every nation, but it includes a tech arms race against China, and China will respond by trying to build ties with other nations, and buying technology from wherever it can, she said.”

https://www.washingtonpost.com/business/economy/this-was-not-the-dream-for-us-china-trade/2018/06/15/fef3b794-6a8a-11e8-bea7-c8eb28bc52b1_story.html

Friday, June 15, 2018

US Interest Rates and Global Credit

Global Effect of US Rate Hikes

https://www.economist.com/finance-and-economics/2018/06/14/rate-rises-affect-global-markets-and-may-feed-back-to-america

Currency preferences of investors and borrowers

http://review.chicagobooth.edu/economics/2018/article/foreign-currency-no-thanks-investors-prefer-their-own-currencies-and-us

The rise of the dollar and fall of the euro in global asset trade

https://voxeu.org/article/rise-dollar-and-fall-euro-global-asset-trade

Economic and Political Consequences of Trade Protectionism [Updated]

People Aren’t Rational, and That’s Why We Need Free Trade

https://www.wsj.com/articles/people-arent-rational-and-thats-why-we-need-free-trade-1529096795

US Tariffs start to backfire

https://www.washingtonpost.com/opinions/trumps-tariffs-are-already-backfiring/2018/06/14/896b6c5a-700d-11e8-afd5-778aca903bbe_story.html

https://www.nytimes.com/2018/06/15/opinion/sunday/trump-china-tariffs-trade-farmers.html

America is less open to trade than presumed

https://www.economist.com/finance-and-economics/2018/06/14/how-open-is-america

Critique of US Trade Policy

Anne Krueger on recent US trade policies

https://www.project-syndicate.org/onpoint/trump-s-trade-disaster-by-anne-krueger-2018-06

Harvard’s Jeffrey Frankel notes:

http://thehill.com/opinion/international/389957-what-does-trump-want-in-his-on-again-off-again-china-trade-war

“The least logical of the recurring Trump obsessions is the demand that China reduce the U.S. bilateral trade deficit. The Chinese government has no policy levers that could reduce the bilateral balance by the mooted $100 billion or $200 billion. If China wanted to give Trump a superficial “win,” it could reduce the bilateral trade deficit some by buying more American natural gas or by routing smartphone exports through a third country like South Korea.

But the economics would be illusory. There would be virtually no effect on the overall U.S. trade deficit: We would otherwise sell the natural gas to some other country, and in reality those smartphones already get about 95 percent of their value added from South Korea, the United States and other countries anyway. Focusing on the bilateral balance is a waste of time. Regardless what happens with China, the overall U.S. trade deficit will rise this year as a result of the Republican tax cuts, enacted at a time when the economy is already producing at the limit of its capacity.”

WSJ Editorial: Trump’s Steel Destruction

https://www.wsj.com/articles/trumps-steel-destruction-1527809177

Nobel Prize winning economist Paul Krugman: Oh, What a Stupid Trade War

https://www.nytimes.com/2018/05/31/opinion/oh-what-a-stupid-trade-war-very-slightly-wonkish.html

Cato Institute’s DANIEL J. IKENSON: Steel Yourself as Trump Cuts Off Trade to Spite His Face

https://www.cato.org/blog/steel-yourself-trump-cuts-trade-spite-face