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December 17, 2014

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Posted: 17 Dec 2014 12:06 AM PST

'The Ruble and the Textbooks'

Posted: 16 Dec 2014 08:21 AM PST

Paul Krugman:

The Ruble and the Textbooks: OK, this is a bit funny: This morning Tim Duy addresses the woes of the ruble, which is in free fall despite a big rate hike, and declares that it "appears really quite textbook". Meanwhile Matthew Yglesias says that what Russia is doing is "the textbook approach to handling a currency crisis", and speculates about why it isn't working.
I'm with Duy here; not sure if it's actually in any textbook, but as I explained yesterday, for aficionados of emerging-market currency crises this is all quite familiar. ... When you have big balance-sheet problems involving foreign-currency debt, an interest-rate hike that tries to discourage capital flight damages the economy, and hence those same balance sheets, from another direction, and it's common, even standard, for the effort to fail. Most notably, tight-money policies were really really unsuccessful during the Asian financial crisis of 1997-8, on which you can read my take here. ...
So Russia isn't that unusual a story, except for the nukes.

How Fiscal Policy Failed During the Great Recession

Posted: 16 Dec 2014 08:15 AM PST

I have a new column:

How Fiscal Policy Failed During the Great Recession: Fiscal policy failed us during the Great Recession. We did get a fiscal stimulus package shortly after Obama took office, and it helped. But it wasn't big enough and did not last long enough to make the kind of difference that was needed. Fear of deficits stood in the way, though all the dire predictions that were made about the debt associated with the stimulus package did not come to pass. We could have done so much more. ...

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