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Today I am in to Moscow to do a presentation on the Russian economy. It will be yet another chance to tell one of my pet-stories and that is that growth in nominal GDP in Russia is basically determined by the price of oil measured in rubles. Furthermore, I will stress that changes in the oil price feeds through to the Russian economy not primarily through net exports, but through domestic demand. This is what I earlier have termed the petro-monetary transmission mechanism.
Here are two news stories from today:
The Market Monetarist "textbook" will tell you two things:
From to time I will make an argument and then later realize that it really wasn't my own independently thought out argument, but rather a "reproduction" of something I once read. Often it would be Milton Friedman who has been my inspiration, however, Friedman is certainly not my only inspiration.
There has been a lot of focus on the fact that USD/JPY has now broken above 100 and that the slide in the yen is going to have a positive impact on Japanese exports. In fact it seems like most commentators and economists think that the easing of monetary policy we have seen in Japan is about the exchange rate and the impact on Japanese "competitiveness". I think this focus is completely wrong.
The graph below shows the ratio of upward to downward revisions of equity analysts' earnings forecasts in different countries. I stole the graph from Walter Kurtz at Sober Look. Walter himself got the data from Merrill Lynch.
By a complete accident I found a online debate about fiscal policy versus monetary policy in Australia. One of the commentators - "Grim23" - surely is a convinced Market Monetarist. I thought what he is writing is so good that I want to reproduce it here on my blog - I hope he won't mind...
A couple of days ago the young and talented George Mason University economist Alex Salter wrote the following statement on his Facebook account:
I am on the way to London – in fact I am writing this on the flight from Copenhagen – so I thought it would be fitting to write a piece on the challenges for the new Bank of England governor Mark Carney.
My blog posts are spread around the internet in all kind of ways. For example whenever I post a new blog post it is automatically posted on my Facebook, Twitter and Linkedin accounts. Therefore, people will from time to time also comment there on my posts. This exactly what my old Polish friend Pawel Bochniarz has done.