Tag Archives: Krugman

Recalling a Cold War adventure in Portugal

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July 24, 2026 —  Fifty years ago this month, I was one of a team of five MIT graduate students who were in Lisbon working for the Central Bank of Portugal.  Paul Krugman, another member of that  team  has reminisced, on the occasion of the semicentennial of the 1976 mission. I will contribute my own reflections on that summer in light of where we are today, geopolitically.

  1. Portugal in 1976

Two years before, Portugal had ended a 48-year military dictatorship in its “Carnation Revolution” of 1974. It had then swung from right wing to left-wing — the government had taken over some parts of the economy, as marchers in the street chanted, “muerte à CIA,” a slogan that we saw still visible painted on the walls.   But the country had turned back from an attempted left-wing coup in November 1975, setting the stage for a new beginning. read more

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Stan Fischer, the Fed, and Sub-par US Growth

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      Now that Janet Yellen is to be Chair of the US Federal Reserve Board, attention has turned to the candidate to succeed her as Vice Chair.  Stanley Fischer would be the perfect choice.   He has an ideal combination of all the desirable qualities, unique in the literal sense that nobody else has them.  During his academic career, Fischer was one of the most accomplished scholars of monetary economics.  Subsequently he served as Chief Economist of the World Bank, number two at the International Monetary Fund, and most recently Governor of the central bank of Israel.   He was a star performer in each of these positions.   I thought in 2000 he should have been made Managing Director of the IMF.   read more

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McKinnon’s Claim that RMB-$ Appreciation Would Not Reduce Trade Imbalances

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The International Economy magazine (Winter 2013) asks 16 authorities, “Can Changes in Exchange Rate Valuations Affect Trade Imbalances?”   It is referring to the claim in a recent book by Stanford economist Ron McKinnon that pressure on China to let the renminbi appreciate against the dollar is fundamentally misconceived because such a movement in the exchange rate would not reduce China’s trade surplus nor American’s trade deficit.  This is part of an old debate that pre-dates the rise of the China trade problem.  Ron has long claimed that exchange rates don’t determine trade balances because they are “instead” determined by national saving versus investment.   I thought Paul Krugman demolished the argument pretty effectively 25 years ago, with a textbook graph of internal balance versus external balance.   But evidently many still fall for the argument (including some of the experts in the TIE symposium).   So I try again: read more

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