Thorsten Beck goes over the different methodologies to assess the relationship between financial development and growth. It is a comprehensive how-to guide.
There has been some recent discussion that the Chinese fiscal stimulus plan could mean the biggest buyer of US Treasuries could end up slowing down its purchases, putting upward pressure on yields. Leaving aside the issue if the low yields might be keeping the effective funds rate artificially low, such a rise might be a blessing in disguise (see my previous Interesting Picks entry), Brad Setser argues that won't be the case.
Chart of the Day: The now-defunct investment bank bonus matrix (inspired by the Lewis article mentioned in the previous Interesting Picks entry).
Menzie Chinn reviews some recent trends in US consumption.
Allan Meltzer proposes to solve the housing problem by boosting demand.
Some more really scary Fed charts (BTW, the charts are from St. Luis Fed, which I mention in my data sources blog entry)
Felix Salmon explains the difference between buying CDS protection and naked short selling).
Bank of America seems to agree with me that Trichet is delusional.
Now, the Fed is buying distressed assets. What next? A swap line with Turkey? Joking aside, it is the Fed, not the Treasury's TARP that is providing the bailouts for now.
The super-contango in the oil forward curve may have some long-lasting consequences.
A recent paper demonstrates that exchange rate movements between high-interest-rate and low-interest-rate currencies are negatively skewed, meaning that carry trades are subject to a currency crash risk. There are other interesting empirical findings in the paper as well, such as the comovement of currencies with similar interest rates.
There has been some recent discussion that the Chinese fiscal stimulus plan could mean the biggest buyer of US Treasuries could end up slowing down its purchases, putting upward pressure on yields. Leaving aside the issue if the low yields might be keeping the effective funds rate artificially low, such a rise might be a blessing in disguise (see my previous Interesting Picks entry), Brad Setser argues that won't be the case.
Chart of the Day: The now-defunct investment bank bonus matrix (inspired by the Lewis article mentioned in the previous Interesting Picks entry).
Menzie Chinn reviews some recent trends in US consumption.
Allan Meltzer proposes to solve the housing problem by boosting demand.
Some more really scary Fed charts (BTW, the charts are from St. Luis Fed, which I mention in my data sources blog entry)
Felix Salmon explains the difference between buying CDS protection and naked short selling).
Bank of America seems to agree with me that Trichet is delusional.
Now, the Fed is buying distressed assets. What next? A swap line with Turkey? Joking aside, it is the Fed, not the Treasury's TARP that is providing the bailouts for now.
The super-contango in the oil forward curve may have some long-lasting consequences.
A recent paper demonstrates that exchange rate movements between high-interest-rate and low-interest-rate currencies are negatively skewed, meaning that carry trades are subject to a currency crash risk. There are other interesting empirical findings in the paper as well, such as the comovement of currencies with similar interest rates.
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