And to cut off independent reporting www.wsj.com/economy/trum...

📊🅻🅴 𝐆𝐫𝐚𝐩𝐡𝐢𝐪𝐮𝐞-🆃🅷🅴 𝐂𝐡𝐚𝐫𝐭 "La vulnérabilité bilatérale aux importations est plus forte aux États-Unis qu’en Europe" de Kevin Lefebvre et @paulinewbx.bsky.social www.cepii.fr/BLOG/bi/post... @denizunalcepii.bsky.social #econsky #importation

The Fed will likely have a difficult task! "Economic Outlook", speech by Jay Powell at the Economic Club of Chicago "We may find ourselves in the challenging scenario in which our dual-mandate goals are in tension." www.federalreserve.gov/newsevents/s...

The global economy in pictures : last few days have been tough… I truly hope we are heading towards quieter waters. This will require cold blood and … adults in the room !

The US is ignoring WTO rules regarding trade in goods. Why should it enjoy WTO rules regarding trade in services? And how does anyone expect the rules-based system. on which countries like Ireland depend, to survive, if countries can pick and choose what rules to follow? www.rte.ie/news/politic...

Floods, wildfires, devastation— #climate disasters are growing, yet many remain uninsured. A CEPR-AXA Research Fund event explored the future of #insurability & the role of prevention, pricing, & #policy. More here: 🔗https://cepr.org/voxeu/columns/insuring-world-tomorrow @wederdim.bsky.social

1/10 "The loss of German manufacturing jobs has been masked by a broader shift in employment trends," the FT notes, citing employment growth in services industries such as real estate, healthcare, communications and public administration. www.ft.com/content/bdba...

“I want a slice of bread but also I will howl with rage if you start slicing the bread” - my two year old

10/ Want to dig deeper? Full paper: antras.scholars.harvard.edu/sites/g/file... Short version for AEA P&P: antras.scholars.harvard.edu/sites/g/file... Our six-digit NAICS measure of the APP can be downloaded here: antras.scholars.harvard.edu/sites/g/file... Replication package available soon.

1/ 📢 New paper alert! 📄 Together with Vitalii Tubdenov, we propose a measure of the "Average Period of Production" (APP) to capture the temporal dimension of production processes. It is inspired by Böhm-Bawerk’s capital theory.

China has come to dominate global value chains for solar modules & wind turbines, accounting globally for >80% of module production + >70% of production of key turbine components. Is government support part of the success story? Find out more in this new OECD report: www.oecd.org/en/publicati...

terrific interview with @douglasirwin.bsky.social If you're not a fan of podcasts, here's the transcript www.ft.com/content/58ec...

Great interview: @douglasirwin.bsky.social on US trade policy — past and present By @alanbeattie.bsky.social podcasts.apple.com/gb/podcast/t...

Got the ball rolling on a Fed Economists starter pack go.bsky.app/GudXeoo Fed economists, let me know if you’re on Bluesky and I’ll add you

Without comment: Elon Musk today. www.youtube.com/watch?v=-VfY...

Our January 2025 World Economic Outlook Update is out. Global growth will remain steady at 3.3% for 2025-26, broadly aligned with world potential growth that has substantially weakened since before the pandemic. www.imf.org/en/Blogs/Art...

New at JIE: "From macro to micro: Large exporters coping with global crises" by Jean-Charles Bricongne, Juan Carluccio, Lionel Fontagné, Guillaume Gaulier, Sebastian Stumpner https://doi.org/10.1016/j.jinteco.2024.104037

I am excited to be joining @csis.org as the Director of the Economics Program and Scholl Chair in International Business, leading a team conducting rigorous, applied economic analysis to shape U.S. strategic and economic policy. www.csis.org/news/csis-na...

Nice FT write-up of our new Brexit & trade paper by the always excellent @pmdfoster.bsky.social Rightly notes that our findings (goods exports⬇️6.4% due to TCA, imports ⬇️3.1%) suggest OBR's forecast (long-run trade ⬇️15%) may be an over-estimate of the impact of Brexit on.ft.com/4iK8esS

How many lies can one pack into a single paragraph. See Jeffrey Tucker show you! #econsky econbrowser.com/archives/202...

1. No exchange rate effect. In this case imports are 10% more expensive for consumers. Exports are the same (because the exchange rate did not change) and the trade deficit shrinks. The entire tariff is paid by Americans.

Tariffs & exchange rates. A short explainer of the simple case of 10% across-the-board tariffs. Let's start with no retaliation. Brief version: Tariffs will strengthen the U.S. dollar which will reduce impact on consumers but exacerbate it for exporters. Three cases:

Good Paul Krugman piece on the relationship between the dollar and the US trade deficit: "the trade deficits of the 80s arguably marked the point at which the hollowing out of U.S. manufacturing really got going." open.substack.com/pub/paulkrug...

A useful discussion by @michaelpettis.bsky.social of my piece on tariffs. I agree that if (a) an existing current account deficit is inefficient; and (b) a tariff can reduce/correct the deficit, that a tariff can be efficiency enhancing, in a second-best sense. But the caveats are important. +

This is making me feel young again, it's all very 1980s! Back then Mike Gavin and I independently showed that tariffs can improve the current account in an inter-temporal S-I framework, by hurting income more in the long run than in the short run. So not necessarily to be recommended...

"If Trump insists on his view, the good news, for the rest of the world at least, is that the economic costs will be borne mainly by Americans."

8/8 That is why I often cite Ragnar Nurkse: “the devaluation of a currency is expansionary in effect if it corrects a previous overvaluation, but deflationary if it makes the currency undervalued.” This is true about any policy that changes existing trade relationships.

6/8 That is why the comparison with currency depreciation is useful. If a country's currency is undervalued, or "correctly" valued, devaluing the currency is likely to distort the efficient functioning of the market and to reduce global value creation.

5/8 At least in the short term (see Rodrik's "infant industry" exception). But in a world of highly unbalanced trade, tariffs can actually improve efficiency if they are designed to counter beggar-thy-neighbor policies and reverse the imbalances.

1/8 As always, Dani Rodrik presents a nuanced discussion of tariffs without the hysteria that usually surrounds any such discussion. He notes that "an import tariff is a specific combination of two different policies: a tax on...

High-quality and informative discussion between @drodrik.bsky.social and @michaelpettis.bsky.social on the use cases and effectiveness of tariffs, starting from this piece.

1/7 It is true that the 1930s were a period of beggar-thy-neighbor trade policies and declining global trade that left the global economy collectively worse off, and that this might hold lessons for us today, but it is important to get the story right. www.bloomberg.com/news/newslet...

1/5 NYT: "“Our new approach to trade recognizes people as more than just consumers, but also producers,” Katherine Tai said in a 2023 speech." This is a key point in any serious discussion of US trade or industrial policy. www.nytimes.com/2025/01/04/u...

Prochain séminaire compétitivité CEPII-BdF "L’Europe au défi de Trump 2.0" Présentation d'Antoine Bouët et discussion d'Antoine Berthou @antoineberthou.bsky.social Mercredi 15 janvier 2025 de 11h à 12h30. Inscriptions ici: www.banque-france.fr/fr/webform/l... @cepii-paris.bsky.social

Covid-related lockdowns in 2020 reduced international trade beyond their impact through economic activity, suggesting an important increase in trade costs. This paper shows that World trade in 2020 was reduced by 8%–11%. Welfare losses vary between 0.2%–3% across countries. 2/2

Recently at JIE: "Trade under lockdown" by Antoine Berthou (@antoineberthou.bsky.social) and Sebastian Stumpner doi.org/10.1016/j.ji... 1/2

The opening of the Suez Canal in 1869 led to a 72 percent relative increase in bilateral exports for affected country pairs and a likely permanent increase in world trade, from David S. Jacks, Christopher M. Meissner, and Nikolaus Wolf https://www.nber.org/papers/w33250

Excellent summary of the demographic and labor market dynamics in the US over the last 25 years. econofact.org/immigration-...

Very nice post by Noah Smith about my favorite subject: Me! www.noahpinion.blog/p/how-paul-k...

And the new era begins. My Substack is alive again, and here's my first post paulkrugman.substack.com/p/the-fraudu...

People have been puzzling over Scott Bessent's claim that tariffs can't be inflationary — which is, by the way, completely different from Trump's claim that foreigners will pay. The thing is, there is a kind of model here — one that is clear, consistent, and totally false 1/

The Fed's preferred measure of underlying inflation, measured over 6 mos at an annual rate, has declined from 4.5 to 2.5 over the past 6 months. So, if underlying inflation can fall almost in half without a major rise in unemployment, in what sense was it "underlying"?

If I'm reading the ECB data right, euro area core inflation was 4.1% over the past year, only 3% annualized for the past 6 months. Team Transitory being vindicated over there too