bg
Blogs

Follow the Money

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

Latest Post

Counting Chickens Long Before They Hatch: Should Hurricane Maria Be Modeled as a Large Positive Growth Shock?

One of the most critical parts of any debt sustainability analysis is not the estimated adjustment—though that matters—but rather the forecast for growth. A growing economy makes a fixed stock of debt shrink. A growing economy raises tax revenues, reducing the fiscal burden of paying a fixed coupon. But it also works in reverse. Overestimating future growth can leave a country with an overhang of unpayable debt. Ask Greece. Read More

February 16, 2018

United States
Mapping Capital Flows Into the U.S. Over the Last Thirty Years Mapping Capital Flows Into the U.S. Over the Last Thirty Years

Up until 2014, the growth in central bank dollar reserves closely mapped to the increase in U.S. net external debt. The past few years have been different: for the first time in a long time, yield-starved private investors in Europe and Japan, not emerging market reserve managers, financed the United States' external deficit. 

Read More

February 15, 2018

United States
Trump’s Tax Success Is at the Expense of His Trade Agenda Trump’s Tax Success Is at the Expense of His Trade Agenda

It looks like a combination of tax cuts and spending increases will raise the U.S. fiscal deficit by about 2 percentage points of GDP (that’s the number Krugman used; Goldman’s US economics team puts the increase in the fiscal deficit between fiscal 2017 and fiscal 2019 at 1.7 percent of GDP). The IMF’s standard coefficient relating changes in the fiscal balance to changes in the external balance would imply that the U.S.

Read More

February 12, 2018

China
The Belt and Road Initiative Didn't Quite Live up to its Hype in 2017 The Belt and Road Initiative Didn't Quite Live up to its Hype in 2017

China's balance of payments data doesn't show any material increase in the pace of offshore lending.

Read More