Webinar on China, the Renminbi, and the IMF’s Special Drawing Rights

The Bretton Woods Committee is hosting what I think will be a very interesting Webinar on “China, the Renminbi, and the IMF’s Special Drawing Rights”.

Here are the details:

Date:  Wed, Jan 13, 2016 8:00am – 9:00am ET 
Attendance restrictions: Open to the public
Location: GoToWebinar

 

In November 2015, the International Monetary Fund conducted its 5-year review of the global currencies included in its Special Drawing Rights (SDR) reserve currency basket. The IMF Board of Directors voted to include the Renminbi in its SDR basket which will go into effect in October 2016. What is the significance of the IMF’s decision to include the Renminbi in its SDR currency basket and what are the implications for China, the IMF, and the future of global currencies?

Speakers:

  • Yu Yongding, Senior Fellow, Chinese Academy of Social Sciences (CASS)
  • Warren Coats, Former Assistant Director, IMF Monetary and Capital Markets Department

Moderator: 

  • Randy Rodgers, Executive Director, Bretton Woods Committee.

Time will be reserved at the end for audience Q & A.

Please click here to register.

I am unfortunately traveling on Wednesday so I will not myself be able to listen in but I clearly recommend the webinar to anybody interested in global exchange rate issues and in the China to sign up for the webinar.

 

 

Larry Kudlow is of course right – the Fed should not base policy on labour

Watch this wonderful rant from legendary economist and commentary Larry Kudlow.

Larry is of course right – it is highly problematic that the Federal Reserve now seems to have gone back to the kind of Phillip curve inspired monetary policy that caused the inflationary failures back in the 1970s. This time around it will led to deflation rather than inflation. The Fed should focus on nominal (NGDP or inflation) rather than real (unemployment or RGDP) variables.

I have of course written extensively about this. See here:

Yellen should re-read Friedman’s “The Role of Monetary Policy” and lay the Phillips curve to rest

Talking to Ambrose about the Fed

Yellen is transforming the US economy into her favourite textbook model

The market’s message to Yellen: You have become too hawkish

Inching closer to a US recession, while Yellen is eager to hike

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If you want to hear me speak about these topics or other related topics don’t hesitate to contact my speaker agency Specialist Speakers – e-mail: daniel@specialistspeakers.com or roz@specialistspeakers.com.

Fear strikes policymakers as ‘dollar bloc’ begins to unravel

I am happy to announce that I in the future will be contributing to Geopolitical Information Service (GIS).

The fact that I will be contributing to GIS will not change anything in terms of what I write on this blog, which will continue to be focused on monetary policy issues, but it will give it me an opportunity to write about broader macroeconomic issues particularly from a geopolitical perspective. This is something I have long wanted to do.

Contributing to GIS also gives me the opportunity to work closely with two old friends of mine – veteran financial journalists David McQuaid and Andy Kureth. Both David and Andy are American, but both have lived in Poland for many years and share my fascination and love of Poland. David and Andy are editors at Geopolitical Information Service, along with managing editor Mariusz Ziomecki.

My first piece for GIS is on the unfolding break-up of what I have termed the ‘Dollar Bloc’ and given what has been going on in the global financial markets this week I think my first piece for GIS is rather timely.

Here a little appetizer for my first article for Geopolitical Information Service:

On December 11, 2015, the Chinese authorities unveiled a trade-weighted index to track the renminbi’s movements against 13 foreign currencies. Financial markets saw this announcement as a clear signal that the People’s Bank of China – the country’s central bank – would strive to keep the currency stable against the basket, rather than continuing its long-term policy of shadowing the U.S. dollar. Ultimately, this relaxation of the dollar peg could be China’s first step toward adopting a floating exchange rate.

The official policy of shadowing the dollar meant that the Fed has been setting monetary conditions in China for at least 35 years. In a nutshell, for decades the world’s two largest economies have been operating in a quasi-currency union.

Among the members of this unspoken union are the Persian Gulf States, which (with the exception of Kuwait) all peg their currencies to the dollar. The most important of these is Saudi Arabia, which has maintained the riyal in a hard peg to the dollar since 1986. Hong Kong has used a currency board to manage its own hard peg against the dollar. In Africa, Angola also retains a fixed exchange rate against the greenback – even though it was forced to undertake a major devaluation in 2015.

Read the rest of the article here (subscription only)

And finally, we all see what is going on in the global financial markets today. It is hardly surprising when the Fed insists on continuing to tighten monetary conditions – and ignoring monetary data and the signals from the markets – and the PBoC is too scared to float the Renminbi that we are seeing a market meltdown in China, which is spreading to global stock and commodity markets. And it is not over yet…

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If you want to hear me speak about these topics or other related topics don’t hesitate to contact my speaker agency Specialist Speakers – e-mail: daniel@specialistspeakers.com or roz@specialistspeakers.com.

 

 

 

 

 

Inching closer to a US recession, while Yellen is eager to hike

Today we got the Minutes from the December 15-16 FOMC meeting where the Fed hiked interest rates.  That in itself is not terribly interesting and there is not much news in the Minutes to shock the markets.

Nonetheless it is another day of tightening of US monetary conditions – stronger dollar, lower inflation expectations, lower commodity prices and lower stock markets. But maybe the most alarming set of information comes from the Atlanta Fed that today published a so-called Nowcast for US real GDP growth in Q4 2015 (GNPNow) indicating the US real GDP slowed to just 1% (annualized quarterly growth rate) in Q4.

 

gdpnow-forecast-evolution

It is in this environment the Fed continues to signal that more monetary tightening is warranted.

So why is the Fed so hawkish despited very clear signs of continued growth deceleration in the economy and despite the fact that basically all monetary indications that we can think of indicates that monetary policy has become too tight?

To me it we should blame the unholy alliance between those FOMC members that are obsessed with looking at labour market data (to the same extent Arthur Burns was in 1970s) and the macro prudential crowd who worry that the Fed is inflating a bubble (somewhere in some asset market).

Needless to say there are no monetarists on the FOMC and as a consequence the FOMC continues to ignore both the signals from monetary indicators and from the market and as a consequence the risk of a US recession during 2016 (or 2017) continues to rise day-by-day.

PS maybe it is about time to start tracking Google Trends for the trend in Google searches for “recession”.

HT Michael Darda

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If you want to hear me speak about these topics or other related topics don’t hesitate to contact my speaker agency Specialist Speakers – e-mail: daniel@specialistspeakers.com or roz@specialistspeakers.com.

PBoC should stop the silliness and float the RMB

This is morning we got this news (from Bloomberg):

China’s central bank conducted the biggest reverse-repurchase operations since September, adding funds to the financial system after money-market rates surged and equities slumped.

The People’s Bank of China offered 130 billion yuan ($19.9 billion) of seven-day reverse repos on Tuesday at an interest rate of 2.25 percent. The monetary authority suspended the operations in the last auction window on Dec. 31, ending a six-month run of cash injections that helped drive borrowing costs lower in an economy estimated to grow at the slowest pace in more than two decades.

The People’s Bank of China (PBoC) continues to behave as if there is not Tinbergen constraint, but the PBoC soon has to realize it cannot continue to try to ease monetary conditions through liquidity injects into the money markets, lowering of reserve requirements and cutting interest rates, while at the same time trying to maintain an artificially strong Renminbi.

What the PBoC effectively is doing it trying to ease monetary policy with the one hand, while at the same time tightening monetary policy with the other hand by intervening in the currency market to prop up the Renminbi.

Instead it is about time that PBoC either let the Renminbi float completely freely (which effectively would cause a significant depreciation of RMB) or implement a large devaluation – for example 30% – so to avoid any speculation of further devaluations and then introduce a peg to a basket of currency as hinted in December.

The problem with the present policy is that everybody in the market realizes that this is what we will get eventually and that has caused an escalation of the currency outflow from China and this outflow is likely to continue until the PBoC bites the bullet and introduce a completely new monetary regime. This halfway house will not stand for long and if the PBoC keeps fighting it the central bank will just do even more harm to the Chinese economy and potentially also cause an major banking crisis.

PBoC is not alone in making this mistake and the Tyranny of the Status Que is strong within central banks around the world. Two good example are Kazakhstan and Azerbaijan. Both countries have in recent months given up the tighten link to the US Dollar and devalued their currencies significantly. This in my view has been the right decision as both of these oil exporting countries have been suffering significantly from the continued decline in oil prices.

But neither the Kazakhstani nor the Azerbaijani central banks (and governments) have introduce new rule based monetary policy regimes. So one can say they have left the Dollar peg, but forgot to finish the job. Therefore policy makers in both countries should now focus on what regime should replace the Dollar peg. I would recommend an Export Price Norm for both countries, where their currencies are pegged to a basket of the oil prices and the currencies of the countries’ main trading partners.

And China need to do the same thing – not introducing an Export Price Norm, but rather let the Renminbi float and then introduce an NGDP target or a nominal wage growth target and it need to do it very soon to avoid an escalation of the financial distress.

The PBoC has the power to end this crisis right now by floating the Renminbi, but the longer this decision is postponed the bigger the risk of something blowing up becomes.

PS notice that despite the sharp rise in tensions between Saudi Arabia and Iran oil prices are now lower than on at the close of trading last week. That to me is a pretty strong indication just how worried that markets are about China.

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If you want to hear me speak about these topics or other related topics don’t hesitate to contact my speaker agency Specialist Speakers – e-mail: daniel@specialistspeakers.com or roz@specialistspeakers.com.

A horrible start to the year

It has been a horrible start to the year – a sharp escalation of geopolitical tensions between Iran and Saudi Arabia have sent shock waves through the global stock markets today. In China trading was suspended as stocks fell 7% and we have also seen sharp sell-offs in the European stock markets today.

To makes things worse the latest news for the US economy is far from uplifting. Hence, ISM for December fell to 48.2 from 48.6 in November indicating a contraction in the US manufactoring sector.

My good friend Michael Darda – Chief Economist at MKM Partners – makes this interesting observation:

The ISM Manufacturing Index came in at 48.2 in December, the second consecutive month of contraction. The ISM New Orders Index also came in below 50 for the second consecutive month, suggesting ongoing weakness in S&P earnings growth and capital spending trends. Although it is not unusual for the ISM Index to fall below the 50 threshold during an economic expansion, it is unusual for the Fed to hike rates/tighten monetary policy with the ISM Index below 50. Going back to 1948, we count only six instances when the Fed hiked rates with the ISM Index below 50: five of those episodes were associated with a recession occurring between one and six months later.

So is the US facing a recession? I don’t know, but if the Federal Reserve insists on continuing to hike interest rates through 2016 and if we on top of that get a negative supply shock in the form of rising oil prices on the back rising geopolitical tensions in the Middle East then I certainly would think that we could move close to a US recession in 2016.

But that need not to happen if the Federal Reserve acknowledges that US monetary conditions are already tight rather than easy and hopefully cooler heads will also prevail in the Middle East.

A fistful of intellectual power: Goodbye Edward Hugh, R.I.P

Tonight I got the very sad news that British-Catalan economist Edward Hugh has passed away.

This is from Ara in English:

ARA has learned that British economist Edward Hugh (Liverpool, 1948) died of cancer on Tuesday at the Josep Trueta Hospital in Girona. Hugh moved to Catalonia in the 1990s and was considered by The New York Times as the “prophet of eurozone doom”, as he was one of the first to predict and warn of the economic crisis.

Edward Hugh was born in Liverpool and studied Economics at the London School of Economics. He was currently living in the village of Escaules, in Catalonia’s Alt Empordà, where he dedicated himself to research and to macroeconomics. He also wrote a blog about current events and was a contributor to this newspaper. In 2014 he wrote ¿Adiós a la crisis? (Farewell to the crisis?). In his book the British economist addressed issues such as the demographic crisis and its economic implications, as well as the possible road towards sustainable negative growth and the stagnation of the European economy. Hugh also was one of the first economists to predict that Catalonia’s finances would be intervened by Madrid.

Hugh, who turned 67 on Tuesday, was diagnosed with the disease a few months ago, and was aware that his prognosis was not good. While he enjoyed little recognition in Catalonia, he had a great influence on investors and on the principal economic media around the globe. He was noted for having predicted the Euro crisis and the real estate bubble in Spain, which earned him significant prestige and influence. He used this influence to explain Catalonia —and especially Catalonia’s fiscal deficit— to the world, according to ARA’s CEO, Salvador Garcia-Ruiz.

NY Times correspondent Rafael Minder highlighted Hugh’s outgoing personality and, at the same time, his willingness to share his time. Minder recalls Hugh’s ability to see and live the crisis from the front row, but without losing perspective, as well as the importance that the Spanish crisis would have for European construction. The journalist added that, in contrast to the usual image of economists as closed and academic, Hugh “was someone who enthusiastically shared his ideas and tried to win over all types of people”.

Edward Hugh, who spoke English, Catalan, Spanish, and French, decided that he could reflect and write from the small village of Escaules in the Alt Empordà, which he called “little Tuscany”, after years of study and of accumulating experiences throughout his life. 

The economist, born in Liverpool to a Welsh family, never hid the fact that he had wanted to live in a monastery, and this small Empordà hamlet of 60 inhabitants came rather close to this idea of having a place to reflect, read, and write. Satellite television and the internet allowed him to remain connected to the world, while Escaules gave him the peace he needed to work…

…Hugh, who claimed to be one of the top experts on the Spanish economy and assured that he had been correct with more than 80% of his predictions, supported Catalonia’s secession from Spain. “Catalonia could have a future, if it leaves”, he said. This position was based not only on his economic studies, but also on his thoughts, feelings, and actions. “He was a Catalan patriot”, said Salvador Garcia-Ruiz, who also underscored the work Hugh did in explaining Catalonia and its situation to the world: “He did a lot of work, some which can be seen and also of the kind you cannot see”.

I fully agree with this description of Edward Hugh. He was a very kind man who always came across as completely unideological and he was willing to talk to everybody – including to me. We only meet face to face a couple of time but kept in contact over the years.

It was not a close contact, but he would also be kind to respond to mails and he was eager to share his views.

I had the greatest respect for Edward. He was a real free-thinker. A very kind and clever man and a much under-appreciated economist. That being said I also know the deep respect he had particularly among people in the financial markets – including myself.

I often disagreed with Edward – particularly after 2008 – but he was always very nice to me. It says a lot about him that intellectual disagreement never changed the way he interacted with people.

Prior to the crisis we had many of the same worries about the global economy and particularly about Central and Eastern Europe and Southern Europe and I always felt very proud when he quoted my research on his great blog – A Firstful of Euros

Edward’s latest book Is The Euro Crisis Really Over was published in 2014. It is certainly not a monetarist tract and Edward was a lot more skeptical about how potent monetary policy is than I am, but I would still highly recommend the book that focuses on a lot of the major structural problems that faces the European economy also if we get monetary policy right.

Edward, you will be dearly missed. R.I.P.

 

 

Do economists know what will happen in 2016?

For the last couple of months I have been writing a weekly column for the Icelandic newspaper Fréttablaðið. I enjoy it a lot. First of all it keeps me in contact with Iceland – a country that since 2006 has been an important part of my professional and personal life. Second, it is a good alternative to my blog where I mostly focus on monetary policy.

I normally do not share the stuff I write for Fréttablaðið on this blog, but will do it from time to time in the future if I think that others than an Icelandic audience can benefit from reading it and it fits the “profile” of my blog.

An example of this is the largest op-ed, which has been published today. Have a look at the Icelandic version here.

Here is the English version…

Do economists know what will happen in 2016?

I am not going to lie – I am proud of my forecast in 2006 that Iceland would be facing a server economic and financial crisis. However, I am always very humble about the fact that to forecast something correctly you have to a large extent to be lucky and I generally don’t think that economists or political scientist for that matter are especially good at forecasting.

In fact – and that might be a surprise to most non-economists – when you study economics there is not a course in “forecasting”. It is simply not what economists are educated to do.

What economist on the other hand can do is analysis the impact of different shocks to the economy or analysis the impact of for example an increase in the minimum wage.

Said in another way economists are very good at in hindsight explaining what happened and why it happened. The reason for this is that what economist cannot forecast shocks – for example an earthquake, a terror attack or for that matter a major positive technological development – since a shock by definition is exactly that something you didn’t see coming.

How economists actually “forecast” – reversion to the mean

So what do for example bank economists do when they try to forecast what will happen to the Icelandic economy in 2016? Well, the first thing they do is basically to ask whether present growth is high or low compared to some measure of what is the long-term growth rate for the economy and this essentially is just assumed to be some measure of the historical average growth rate. Or said in another way if the present growth rate is above the historical average then the economist will “forecast” that growth will slow in the next 1-2 years back toward the historical average.

The “forecast” for inflation will typically be done in the same way maybe adjusting for whether the central bank has a target for inflation – for example 2%.

Obviously if a shock just hit – for example that Sedlabanki had hiked interest rates dramatically then the economist would try to take this into account, but the general rule is one of “mean-reversion”.

And this is in fact not a bad forecasting strategy or rather it is the only thing the economist can do and I personally have no problem with that. However, the problem is that economists are not too eager reminding people that this is in fact the way they do forecasting.

Set up prediction markets

So should we stop listening to economists? I certainly don’t think so, but we should also remember the joke that god invented economists to make meteorologists look good!

We are not better at forecasting Icelandic growth in 2016 than meteorologists are at forecasting the Icelandic weather in the Summer of 2016.

I, however, think that there is something else we could do. We could listen to the “wisdom of the crowds”. That is we could set-up so-called “prediction markets”. That is essentially betting markets, where you can bet on for example what real GDP growth will be in the third quarter of 2016. I have no clue what that number will be, but if there was a prediction market for Icelandic GDP in Q3 2016 I am sure it would be a better forecast that any forecast I could come up with.

Happy New Year!

 

 

Oil exporters do not devalue to boost exports, but to stabilize public finances

Yesterday Azerbaijan’s central bank gave up its pegged exchange rate regime and floated the Manat. The Manat plummeted immediately and was essentially halved in value in yesterday’s trading.

Azerbaijan is not the first oil exporter this year to have given up its fixed exchange rate policy. Kazakhstan did the same thing a couple of months ago and last week South Sudan was forced to devalue by 85%. Angola also earlier this year devalued and Russia has now also given up its attempt to manage the float of the rouble.

And Azerbaijan is likely not the last oil exporter to give up maintaining a pegged exchange rate. Given the continued drop in oil prices and the strengthening of the dollar oil exporters with pegged exchange rate (to the dollar) will continue to suffer from currency outflows.

I have said it before – devaluation is not about competitiveness 

Critics of floating exchange rates and of devaluation of the kind the Azerbaijan i central bank undertook yesterday often say that devaluation just will cause higher inflation and any effects on competitiveness will be short-lived and that “internal devaluation” therefore is preferable.

Furthermore, these critics argue that for a country like Azerbaijan a devaluation will not help as oil is priced in US dollars anyway and that the countries have little else than oil to export.

However, this in my view misses the point completely. Giving up a fixed exchange rate and floating the currency (or introducing an Export Price Norm) is not about exports and competitiveness. Rather it is about avoiding a collapse in domestic demand and more practically it is about stabilizing government revenues.

Hence, for a country like Azerbaijan the majority of government revenues come directly from oil exports – typically directly from a government owned oil company and/or through taxes on oil and gas companies.

This means that if oil prices collapse the government revenues will collapse as well. However, a crucial part of this story that is often missed is that the important thing is what happens not to the oil price in US dollar, but the oil price denominated in local currency as the government’s expenditures primarily are in local currency.

Hence, a government can keep it’s oil revenue completely stable if the government allows the currency to weaken as much as the drop in oil prices (in US dollars).

Therefore, the choice for the government and central bank in Azerbaijan was really not a question about boosting exports. No, it was a question about avoiding public sector insolvency. Of course the Azerbaijani government could also have introduced massive austerity measures to avoid a sovereign default.

However, with a pegged exchange rate regime massive fiscal austerity measures would likely be extremely recessionary – and remember here that under a fixed exchange rate the budget multiplier typically will be positive and maybe even larger than one.

Hence, under a fixed exchange rate regime fiscal policy is at least in the short-term “keynesian” as there is no monetary offset. Said in a more technical the so-called Sumner Critique do not hold in a fixed exchange rate regime.

In that sense we should think of the devaluation in Azerbaijan as a one-off improvement in oil revenues – as oil revenues increases exactly as much as the currency was weakened yesterday.

The alternative to a 50% devaluation was a 20% drop in GDP

Let me try to illustrate this with an example. Let us first assume a oil-elasticity of 1 for Azerbaijani government revenues – meaning a 1% increase in oil prices increases the nominal revenue by 1% as well.

Yesterday USD/AZN jumped from 105 to 155 – so nearly 50%. This of course means that the oil prices denominated in Manat overnight also increases by around 50%.

Given government revenues presently are around 27% of GDP this means that a 50% devaluation “automatically” increases government revenues to around 40% of GDP (27 + 50%).

Said in another way overnight the budget situation was “improved” by 13% of GDP. If the government alternatively should have found this revenue through tax hikes (or spending cuts) without a devaluation then that would have caused a deep recession in the Azerbaijani economy.

In fact if we assume a fiscal multiplier of 1.5 (which I don’t think is unreasonable for a fixed exchange rate economy) then such fiscal tightening could have caused real GDP to drop by as much as 20% relative to what otherwise (now!) would have been the case.

Obviously there is no free lunch here and over time inflation will be higher due to the devaluation and to the extent that is allowed to be translated into higher expenditure some of the impact of the devaluation will be eroded. The extreme example of this is Venezuela or Argentina.

However, there is one very important difference between the two scenarios – devaluation or fiscal austerity – and that is under a fiscal austerity scenario it would be not only real GDP that would drop, but nominal GDP would likely drop even more.

This will not happen in the devaluation scenario where monetary easing exactly means that nominal GDP is kept stable or increases. This means that the debt dynamics will be much more positive than under an “internal devaluation” (fiscal austerity) scenario.

What I am arguing here is not discretionary monetary policy changes, but I am trying to explain why so many oil exporters have chosen to float their currencies this year and to illustrate why this is not about exports and competitiveness, but rather about ensuring government revenue stability and therefore avoiding ad hoc fiscal adjustments that potentially could cause a massive economic contraction.

So once again – I am not advocating “continues devaluations”, but rather I am advocating automatic currency adjustments to reflect shocks to the oil price within a clearly defined rule-based framework and I therefore also continue to advocate that commodity exporters should not peg their exchange rates against the dollar, but rather either float their currencies and implement a nominal GDP target or implement an Export Price Norm, where the currency is pegged to a basket of currencies and the oil price so the currency “automatically” will adjust to shocks to the oil price. This would stabilize not only government revenues, but also stabilize nominal spending growth and over time also inflation.

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If you want to hear me speak about these topics or other related topics don’t hesitate to contact my speaker agency Specialist Speakers – e-mail: daniel@specialistspeakers.com or roz@specialistspeakers.com.

 

 

 

 

The ‘Dollar Bloc’ continues to fall apart – Azerbaijan floats the Manat

I have for sometime argued that the quasi-currency union ‘Dollar Bloc’ is not an Optimal Currency Area and that it therefore is doomed to fall apart.

The latest ‘member’ of the ‘Dollar Bloc’ left today. This is from Bloomberg:

Azerbaijan’s manat plunged to the weakest on record after the central bank relinquished control of its exchange rate, the latest crude producer to abandon a currency peg as oil prices slumped to the lowest in 11 years.

The third-biggest oil producer in the former Soviet Union moved to a free float on Monday to buttress the country’s foreign-exchange reserves and improve competitiveness amid “intensifying external economic shocks,” the central bank said in a statement. The manat, which has fallen in only one of the past 12 years, nosedived 32 percent to 1.5375 to the dollar as of 2:30 p.m. in the capital, Baku, according to data compiled by Bloomberg.

The Caspian Sea country joins a host of developing nations from Vietnam to Nigeria that have weakened their currencies this year after China devalued the yuan, commodities prices sank and the Federal Reserve prepared to raise interest rates. Azerbaijan burned through more than half of its central bank reserves to defend the manat after it was allowed to weaken about 25 percent in February as the aftershocks of the economic crisis in Russia rippled through former Kremlin satellites.

The list of de-peggers from the dollar grows longer by the day – Kazakhstan, Armenia, Angola and South Sudan (the list is longer…) have all devalued in recent months as have of course most importantly China.

It is the tribble-whammy of a stronger dollar (tighter US monetary conditions), lower oil prices and the Chinese de-coupling from the dollar, which is putting pressure on the oil exporting dollar peggers. Add to that many (most?) are struggling with serious structural problems and weak institutions.

This process will likely continue in the coming year and I find it harder and harder to believe that there will be any oil exporting countries that are pegged to the dollar in 12 months – at least not on the same strong level as today.

De-pegging from the dollar obviously is the right policy for commodity exporters given the structural slowdown in China, a strong dollar and the fact that most commodity exporters are out of sync with the US economy.

Therefore, commodity exporters should either float their currencies and implement some form of nominal GDP or nominal wage targeting or alternatively peg their currencies at a (much) weaker level against a basket of oil prices and other currencies reflecting these countries trading partners. This of course is what I have termed an Export Price Norm.

Unfortunately, most oil exporting countries seem completely unprepared for the collapse of the dollar bloc, but they could start reading here or drop me a mail (lacsen@gmail.com):

Oil-exporters need to rethink their monetary policy regimes

The Colombian central bank should have a look at the Export Price Norm

Ukraine should adopt an ‘Export Price Norm’

The RBA just reminded us about the “Export Price Norm”

The “Export Price Norm” saved Australia from the Great Recession

Should small open economies peg the currency to export prices?

Angola should adopt an ‘Export-Price-Norm’ to escape the ‘China shock’

Commodity prices, currencies and monetary policy

Malaysia should peg the renggit to the price of rubber and natural gas

The Cedi Panic: When prayers don’t work you go for currency controls

A modest proposal for post-Chavez monetary reform in Venezuela

“The Bacon Standard” (the PIG PEG) would have saved Denmark from the Great Depression

PEP, NGDPLT and (how to avoid) Russian monetary policy failure

Turning the Russian petro-monetary transmission mechanism upside-down

 

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If you want to hear me speak about these topics or other related topics don’t hesitate to contact my speaker agency Specialist Speakers – e-mail: daniel@specialistspeakers.com or roz@specialistspeakers.com.

 

 

 

 

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