Harvard's Growth Lab’s Post

➡️ Why does the U.S. dollar remain supreme? Professor Gianluca Benigno highlights the U.S. dollar's enduring global dominance, emphasizing its self-reinforcing strength and impact on economic stability. 💵 👉 Learn more on: https://bit.ly/3wj73wI #heclausanne #research #economics HEC Lausanne Department of Economics

Nobody who understands economics would ever say that China’s currency is overvalued. Some economists suggest that the yuan is undervalued by 15% to 40%, while others argue that based on purchasing power parity, the renminbi is undervalued by approximately 30%.  These figures can vary based on different economic indicators and the time of analysis.  The People’s Bank of China manages the value of the yuan against a basket of currencies to keep its value low compared to other countries.  This approach helps to make Chinese exports cheaper and more attractive compared to those of other nations. An overvalued exchange rate means that a country’s exports will be relatively expensive, and imports will be cheaper.  This could depress domestic demand and encourage spending on imports. An undervalued currency makes imports more expensive.  This promotes demand for domestically produced goods and services, supporting local industries. It is a form of protectionism. While promoting domestic industry can be a positive, it also means reduced competition from imports.  This could potentially lead to complacency among local firms and a lack of innovation. Chinese firms are known for copying foreign competitors, not innovation. A weaker currency can stimulate economic growth by making exports cheaper and more attractive to foreign buyers.  This has been a significant factor in China's economic boom, with growth rates hovering around 10% from 1995 to 2010. An undervalued currency can make foreign direct investment more attractive.  Investors can get more of the local currency for their own, reducing the cost of buying land, factories, or other assets in the country. An undervalued currency can reduce the international purchasing power of citizens.  This can make foreign goods and travel more expensive. It also suppresses domestic retail discretionary spending to an extent. The value of a currency can influence inflation and interest rates.  If the economy is booming, an overvalued exchange rate can help reduce inflationary pressure.  But in a recession, an overvalued exchange rate can cause further deflationary pressures. A weak or strong currency can contribute to a nation's trade deficit or trade surplus over time. An overvalued exchange rate can also lead to problems, particularly during periods of sluggish growth.  If a country has a limited labour supply, an undervalued currency can lead to increased wages, which can in turn lead to inflation. China’s dropping birth rates mean this is becoming a prevailing problem. (Continued) Terence Nunis Terence K. J. Nunis, Consultant Chief Executive Officer, Equinox GEMTZ

Nobody who understands economics would ever say that China’s currency is overvalued. Some economists suggest that the yuan is undervalued by 15% to 40%, while others argue that based on purchasing power parity, the renminbi is undervalued by approximately 30%.  These figures can vary based on different economic indicators and the time of analysis.  The People’s Bank of China manages the value of the yuan against a basket of currencies to keep its value low compared to other countries.  This approach helps to make Chinese exports cheaper and more attractive compared to those of other nations. An overvalued exchange rate means that a country’s exports will be relatively expensive, and imports will be cheaper.  This could depress domestic demand and encourage spending on imports. An undervalued currency makes imports more expensive.  This promotes demand for domestically produced goods and services, supporting local industries. It is a form of protectionism. While promoting domestic industry can be a positive, it also means reduced competition from imports.  This could potentially lead to complacency among local firms and a lack of innovation. Chinese firms are known for copying foreign competitors, not innovation. A weaker currency can stimulate economic growth by making exports cheaper and more attractive to foreign buyers.  This has been a significant factor in China's economic boom, with growth rates hovering around 10% from 1995 to 2010. An undervalued currency can make foreign direct investment more attractive.  Investors can get more of the local currency for their own, reducing the cost of buying land, factories, or other assets in the country. An undervalued currency can reduce the international purchasing power of citizens.  This can make foreign goods and travel more expensive. It also suppresses domestic retail discretionary spending to an extent. The value of a currency can influence inflation and interest rates.  If the economy is booming, an overvalued exchange rate can help reduce inflationary pressure.  But in a recession, an overvalued exchange rate can cause further deflationary pressures. A weak or strong currency can contribute to a nation's trade deficit or trade surplus over time. An overvalued exchange rate can also lead to problems, particularly during periods of sluggish growth.  If a country has a limited labour supply, an undervalued currency can lead to increased wages, which can in turn lead to inflation. China’s dropping birth rates mean this is becoming a prevailing problem. (Continued) Terence Nunis Terence K. J. Nunis, Consultant Chief Executive Officer, Equinox GEMTZ

History offers Argentina a cautionary tale on dollarisation | London School of Economics (LSE) 10 April 2024 https://lnkd.in/dZ9e6kqq Argentina’s president, Javier Milei, has promised to dollarise the economy and eliminate the central bank to deal with the country’s fiscal crisis and runaway inflation. Bert van Stiphout-Kramer and Petros Milionis look at the theoretical and historical difficulties of transitioning to a rigid monetary regime and recommend careful consideration of both its economic and political implications before any decision is made. #argentina #economy #finance #politics #inflation #currency #dollar #monetary #economics #emergingmarkets

Once Again, The US Has Become A Mighty Emperor In The World Economics Scenario. Reasons Why In over nine years, the US dollar is currently on its longest winning streak. On Friday, the dollar was on track to post its highest week of gains since the winter of 2014–2015—an eighth consecutive week of gains against a basket of other important currencies. Since mid-July, it has increased by 5%. #usabusiness #economicgrowth #economics #superpower #usa #leadership #economicdevelopment #empire #uscitizens #gdp #economicpolicy #globaltrade TYCOONSTORY https://lnkd.in/gD9Ut9Ky

Nobody who understands economics would ever say that China’s currency is overvalued. Some economists suggest that the yuan is undervalued by 15% to 40%, while others argue that based on purchasing power parity, the renminbi is undervalued by approximately 30%.  These figures can vary based on different economic indicators and the time of analysis.  The People’s Bank of China manages the value of the yuan against a basket of currencies to keep its value low compared to other countries.  This approach helps to make Chinese exports cheaper and more attractive compared to those of other nations. An overvalued exchange rate means that a country’s exports will be relatively expensive, and imports will be cheaper.  This could depress domestic demand and encourage spending on imports. An undervalued currency makes imports more expensive.  This promotes demand for domestically produced goods and services, supporting local industries. It is a form of protectionism. While promoting domestic industry can be a positive, it also means reduced competition from imports.  This could potentially lead to complacency among local firms and a lack of innovation. Chinese firms are known for copying foreign competitors, not innovation. A weaker currency can stimulate economic growth by making exports cheaper and more attractive to foreign buyers.  This has been a significant factor in China's economic boom, with growth rates hovering around 10% from 1995 to 2010. An undervalued currency can make foreign direct investment more attractive.  Investors can get more of the local currency for their own, reducing the cost of buying land, factories, or other assets in the country. An undervalued currency can reduce the international purchasing power of citizens.  This can make foreign goods and travel more expensive. It also suppresses domestic retail discretionary spending to an extent. The value of a currency can influence inflation and interest rates.  If the economy is booming, an overvalued exchange rate can help reduce inflationary pressure.  But in a recession, an overvalued exchange rate can cause further deflationary pressures. A weak or strong currency can contribute to a nation's trade deficit or trade surplus over time. An overvalued exchange rate can also lead to problems, particularly during periods of sluggish growth.  If a country has a limited labour supply, an undervalued currency can lead to increased wages, which can in turn lead to inflation. China’s dropping birth rates mean this is becoming a prevailing problem. (Continued) Terence Nunis Terence K. J. Nunis, Consultant Chief Executive Officer, Equinox GEMTZ

Some times ago the Harvard Growth Lab recommended to fully dollarize the Lebanese economy. Theoretically, dollarization mitigate the risk of sudden and sharp currency depreciations, provide credibility to a country and attract foreign direct investments. And perhaps most importantly, it ensures that corrupt politicians won't play with the exchange rate for their own benefits. In practice though, dollarizing means losing any kind of leverage in terms of monetary policy and being at the mercy of a country that barely knows that we exist. https://lnkd.in/dnyRidef

Argentina and Milei: Is This Time Different? Johns Hopkins School of Advanced International Studies (SAIS) Bologna Institute for Policy Research https://lnkd.in/eNkkVRj5 On March 25, BIPR hosted an event featuring Guido Sandleris, the former Governor of the Central Bank of Argentina and a Professor of Practice in Economics at SAIS Europe. Sandleris offered an insightful overview of the Argentine economy over the past five decades, scrutinized the first 100 days of President Javier Milei's administration, and projected a future outlook. Guido Sandleris, Former Governor of the Central Bank of Argentina; Johns Hopkins University SAIS Europe; Universidad Torcuato Di Tella, Argentina #argentina #economy #politics #finance #policy #emergingmarkets #economics #jhu

Dollar Dominance in the International Reserve System: An Update The US dollar continues to cede ground to nontraditional currencies in global foreign exchange reserves, but it remains the preeminent reserve currency. Serkan Arslanalp, Barry Eichengreen , Chima Simpson-Bell International Monetary Fund Dollar Dominance: The US dollar’s significant role in the #globaleconomy is highlighted, with recent trends showing a gradual decline in its share of #centralbanks’ foreign #reserves. Nontraditional Currencies: There’s an increase in the reserve share of nontraditional currencies like the #Australiandollar, #Canadiandollar, and Chinese renminbi, driven by diversification and digital financial technologies1. Chinese Renminbi: Despite efforts to promote the #renminbi ’s internationalization, its reserve share has not increased further and has declined since 20222. Reserve System Evolution: The international #monetary and #reserve #system is evolving, with a slow movement away from #dollar #dominance and a rise in the role of #nontraditional #currencies.

@Scotiabank Economics#Latam Charts (August 12): Rate hikes by Mexico’s Banxico and Peru’s BCRP show there is no holiday from fighting inflation. Full Report: #Argentina #Brazil #Chile #Colombia #Mexico #Peru #ARS #BRL #CHL #COP #MXN #PEN #sovereigndebt #fixedincome #bonds #rates #centralbanks #monetarypolicy #credit #loans #equities #stocks #FX #currencies #commodities #oil #oott #gold #metals #globalmacro #EM #EmergingMarkets #COVID19 #Latam #LatinAmerica #PacificAlliance #AlianzaDelPacifico #Scotiabank #economics #cdnecon