When it comes to appropriating Russia’s central bank reserves for supporting Ukraine, some influential Western constituencies seem to think that the G7 leadership can and should dish out punishment without considering trifling matters such as due process. Such has been the Western enthusiasm for championing the Ukrainian cause, that they might have been right about […]

Currencies in emerging markets Asia mostly declined in real terms in 2023. Pakistan registered the sharpest real exchange rate depreciation, though China also weakened significantly on the back of much less inflationary pressure in the country relative to its trading partners. REER trends in EM Asia Of the eight EM Asia countries covered below, only […]

Today marks the grim anniversary of Russia’s full-scale invasion of Ukraine on February 24, 2022. Yet the conflict since 2022 is in many ways larger than the current military operations on the ground, both in terms of time and space. It is of course only the latest and most intense iteration of Russian aggression in […]

As in other parts of the world, several Latin American economies saw their real exchange rates weaken during the pandemic only to rebound sharply amid the global inflationary shock. This v-shape trajectory of LatAm REERs is most evident in Peru and Costa Rica but is also visible to varying extents in Brazil, Colombia, the Dominican […]

One way to value a currency is to assess the link between current account balances and real effective exchange rates, which merge the nominal exchange rate with the ratio of domestic to trade-weighted foreign prices. The IMF uses a fair value model that compares “equilibrium” to “underlying” CABs, with any difference a result of REER […]

Following on from my estimates of current account equilibria in advanced economies, here I turn to emerging markets, which is after all the focus of this blog. I initially focused on AEs in an attempt to replicate as closely as possible an IMF empirical investigation of current account balances in this set of countries, as […]

Have you ever wondered what a country’s current account balance should be? If you’re a macroeconomist or investor, then chances are that you have. While plenty has been written on how to measure “equilibrium” current account balances, to my knowledge there is precious little publicly-available information as to what these actually are. So I’ve drawn […]

Building on recent work on how to measure deviations of actual GDP from potential GDP, known as an output gap, I’m pleased to reveal a world map of results for 2023. Remember that an output gap is positive when actual GDP is above potential – or trend – and negative when it is below. In […]

One of the holy grails in the economics profession is to accurately measure an economy’s output gap, which is the difference between its actual GDP and potential GDP. Having an accurate representation of an output gap is useful for all sorts of economic modeling purposes, given statistical relationships with inflation, exchange rates, and a host […]

Following the release of sovereign debt stress heatmaps for 82 market-access countries, the underlying data for nine indicators for near-term risks is now available in the dashboard below. This first iteration facilitates visualization of each variable since 2010, with the possibility of viewing multiple countries simultaneously for comparative purposes. This tool is based directly on […]

Angola, Pakistan, Egypt, Jordan, Argentina, El Salvador, Ecuador, and Belize are among the market-access countries most at risk of sovereign stress, according to the model presented below. Unsurprisingly, several advanced economies appear least at risk, including Norway, Ireland, Denmark, Singapore, the Netherlands, Luxembourg, Hong Kong, and Switzerland. Earlier this year I published the high-level initial […]

The World Bank Group-International Monetary Fund Annual Meetings drew to a close in Marrakech this past weekend, the first time these events have been held in Africa since the 1973 edition in Nairobi. While the Bank-Fund leadership expressed their usual endorsement of international cooperation and optimism for the future, this year’s agenda also explicitly aimed […]