International economics

 

• Mexican peso strength noteworthy among emerging markets during Fed tightening

  Many emerging-market currencies have depreciated modestly during the Federal Reserve’s tightening cycle that began in March 2022. The Mexican peso, however, outperformed the group during the period.

  September 26, 2023

• Globalization Institute Working Paper

  A Theory of Capital Flow Retrenchment

  This paper shows that a negative global shock (rise in global risk-aversion) generates an identical drop in gross inflows and outflows.

  August 23, 2023

• Emerging-market countries insulate themselves from Fed rate hikes

  Earlier episodes of sizable Fed tightening preceded destabilizing currency devaluations in emerging markets, precipitating sovereign debt and banking crises in many of those economies.

  August 08, 2023

• Mexico seeks to solidify rank as top U.S. trade partner, push further past China

  Mexico's emergence followed fractious U.S. relations with China, which had moved past Canada to claim the top trading spot in 2014. The dynamic changed in 2018 when the U.S. imposed tariffs on China’s goods and with subsequent pandemic-era supply-chain disruptions that altered international trade and investment flows worldwide.

  July 11, 2023

• Mexican IT services firm pitches ‘nearshoring’ as alternative to overseas ties

  Softek chief executive Beni Lopez discusses the competitive challenges the firm faces in the North American market, where many of the world’s leading tech services firms are based, and the genesis of the company’s nearshoring strategy.

  July 07, 2023

• Gazing at r-star: Gauging U.S. monetary policy via the natural rate of interest

  While estimating r-star is fraught with difficulty, the latest evidence suggests U.S. monetary policy likely turned restrictive at the start of 2023, after the Federal Reserve started raising rates in March 2022.

  July 03, 2023

• Treasuries’ allure as safe haven noted in short maturities, not in long bonds

  The United States has a large negative net-foreign-asset position, especially in safe assets. In times of crisis, U.S. government debt, especially short-term Treasuries, are viewed as a safe haven. As a result, the U.S. is a net debtor. It is more leveraged and tends to hold more risky assets (mostly equities) and finance those positions by selling safe-asset debt to the rest of the world.

  June 27, 2023

• Globalization Institute Working Paper

  A Theory of Net Capital Flows over the Global Financial Cycle

  This paper develops a theory to account for changes in net capital flows of safe and risky assets over the global financial cycle.

  May 05, 2023

• Mexico awaits ‘nearshoring’ shift as China boosts its direct investment

  When it comes to trading goods with the United States, Mexico would appear a logical sourcing alternative to China. Before the pandemic, increasing friction between the U.S. and China—the top supplier of goods imports to the U.S. in 2019—contributed to an anticipated “nearshoring” shift among companies dependent on Asia.

  April 14, 2023

• Globalization Institute Working Paper

  On the Distributional Effects of International Tariffs

  This paper provides a quantitative analysis of the distributional effects of the 2018 increase in tariffs by the U.S. and its major trading partners.

  March 29, 2023