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Follow the Money

Brad Setser tracks cross-border flows, with a bit of macroeconomics thrown in.

Latest Post

Can an Emerging Economy Get Into Financial Trouble by Holding Too Many Foreign Assets?

Emerging economies historically have gotten into trouble by borrowing too much in a foreign currency. They borrow in foreign currencies typically because foreign currency debt appears cheaper—with a lower interest rate than domestic currency debt. And then they face “balance sheet” risk if their currency depreciates. A depreciation raises the real value of their foreign currency debts, and the resulting financial distress means that depreciation—at least in the short-run—is contractionary. Read More

April 25, 2018

Ireland
Tax Avoidance and the Irish Balance of Payments

At this point, profit shifting by multinational corporations doesn’t distort Ireland’s balance of payments; it constitutes Ireland’s balance of payments.

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April 24, 2018

International Economic Policy
Asia's Central Banks and Sovereign Funds Are Back Asia's Central Banks and Sovereign Funds Are Back

East Asia (China, Japan, and the NIEs) ran a $600 billion current account surplus in 2017. "Official" (central bank and sovereign fund) outflows accounted for about half of that. Asia's foreign exchange market intervention isn't as overt as it once was, but also hasn't entirely gone away.

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April 19, 2018

Puerto Rico
The Oversight Board’s Latest Fiscal Plan for Puerto Rico is Still Too Optimistic The Oversight Board’s Latest Fiscal Plan for Puerto Rico is Still Too Optimistic

The power is off in Puerto Rico, again. It may not be restored for a day or two.

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