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Follow the Money

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

Latest Post

Trump's Stimulus Trumps his Trade Policy

It is hard to think of a President more committed—at least rhetorically—to closing the trade balance than President Trump. The usual criticism of his trade policy is that it is overly focused on a single goal—reducing the bilateral, and ultimately the overall, trade deficit, to the exclusion of more traditional goals like liberalization (e.g. expanding trade) or expanding the scope of the traditional rules governing trade. President Trump has made it equally clear he cares about the manufacturing balance.    Read More

October 9, 2018

International Finance
Russia, China, and (the Absence of ) Global Funding of the U.S. Fiscal Deficit… Russia, China, and (the Absence of ) Global Funding of the U.S. Fiscal Deficit…

A technical post on the q2 global reserves and balance of payments data … wonky.

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September 27, 2018

Puerto Rico
Will the Proposed Restructuring of COFINA Bonds Assure Puerto Rico’s Return to Debt Sustainability? Will the Proposed Restructuring of COFINA Bonds Assure Puerto Rico’s Return to Debt Sustainability?

Puerto Rico’s government and the bulk of the holders of Puerto Rico’s Sales tax backed bonds (COFINA) appear to have reached agreement on restructuring terms (details here). The deal will reduce Puerto Rico’s near-term payments, freeing up a bit more money to support Puerto Rico’s reconstruction. But the terms, in my view, still fall short of providing Puerto Rico with a clear path back to debt sustainability.   

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September 24, 2018

China
How Did China Manage its Currency Over the Summer? How Did China Manage its Currency Over the Summer?

China still manages its currency. That’s hardly a shocking statement, I know. But I don’t fully subscribe to the view that China’s depreciation in the summer was simply a market move, given the dollar's broad strength.   If China’s currency appreciates, that means that China’s authorities decided to allow the appreciation—and not enter the market to block “market” pressure to appreciate. And if China’s currency depreciates, that means that China’s authorities decided to allow the depreciation, and not enter the market to block “market” pressure to depreciate.

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