Dirk Niepelt

The new edition features an interview with Itay Goldstein. PDF.

In a letter to the editor of The Economist, Moritz Kraemer, sovereign chief ratings officer of S&P Global Ratings, clarifies what it would mean for France to re-denominate French debt: Buttonwood wondered whether Marine Le Pen’s plan to re-denominate French government euro bonds into new francs might constitute a sovereign default (January 14th). There is no ambiguity here: it would. If an issuer does not adhere to the contractual obligations to its creditors, including payment in the...

L. Rafael Reif, President of MIT, in an open letter to the MIT community: The Executive Order on Friday appeared to me a stunning violation of our deepest American values, the values of a nation of immigrants: fairness, equality, openness, generosity, courage. The Statue of Liberty is the “Mother of Exiles”; how can we slam the door on desperate refugees? Religious liberty is a founding American value; how can our government discriminate against people of any religion? In a nation made...

In the NZZ, Simon Gemperli offers a fact check on Liechtenstein. GDP per employed person: CHF 144’000 (Switzerland: CHF 125’000). 10 countries are even smaller. The people can vote the monarch out of office. Banks contribute a quarter of GDP.

On his blog, Dani Rodrik comments on NAFTA’s implications for US manufacturing and jobs. So here is the overall picture that these academic studies paint for the U.S.: NAFTA produced large changes in trade volumes, tiny efficiency gains overall, and some very significant impacts on adversely affected communities. … Mexico has been one of Latin America’s underperformers. So is Trump deluded on NAFTA’s overall impact on manufacturing jobs? Absolutely, yes. Was he able to capitalize on the...

In the NZZ, Kjell Nyborg questions whether the collateral values of the securities the ECB accepts in monetary policy operations reflect market values. He argues that the valuation is discretionary and politicized. Meine Analyse macht deutlich, dass der Besicherungsrahmen in der Euro-Zone in unterschiedlicher Ausprägung unter all diesen Problemen leidet. Das öffentliche Verzeichnis der zulässigen notenbankfähigen Sicherheiten enthält 30 000 bis 40 000 verschiedene Wertpapiere, von...

On Wired, Andy Greenberger discusses Monero, Dash, and Zcash, krypto currencies that provide more privacy than bitcoin and its derivatives. Unlike commercial services like PayPal, Bitcoin allows anyone to spend money online without providing identifying details. But if someone’s Bitcoin address is linked with their real identity, any transaction from that address is entirely visible on the public blockchain … Hiding those transactions requires taking extra steps, like routing bitcoins...

That’s what Daron Acemoglu and Pascual Restrepo document in an NBER working paper. Figure 2 [below] provides a glimpse of the relevant pattern by depicting the raw correlation between the change in GDP per capita between 1990 and 2015 and the change in the ratio of the population above 50 to the population between the ages of 20 and 49. … even when we control for initial GDP per capita, initial demographic composition and differential trends by region, there is no evidence of a negative...

In the FAZ, molecular biologist and Tibetan monk Matthieu Ricard advises to find “happiness” (“Glück, innere Zufriedenheit”) by acquiring certain attitudes: Wir Buddhisten, aber auch Psychologen, verstehen unter Glücklichsein keinen für sich alleinstehenden Gefühlszustand, sondern eine Gruppe von menschlichen Eigenschaften. Dazu zählen innere Freiheit, emotionale Ausgeglichenheit, altruistische Liebe, Mitgefühl. Für mich kann Glück nicht eigennützig sein. Wer sich selbst die ganze Zeit...

In an Independent Review of BIS Research, Franklin Allen, Charles Bean and José De Gregorio conclude that … BIS research clearly ‘punches above its weight’ compared to its central bank peers. Finally, the relative performance of the BIS has clearly improved over the past five years, a tribute to the influence of the previous (Steve Cecchetti) and current (Claudio Borio and Hyun Shin) leadership … They recommend, among other points: The research programme should have a more clearly defined...