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Fokus fall/winter 2009

We present and discuss current research and economic policy related topics in In-ternational Economics. This quarter about:

  • <link 483#c8501>Whither goes the dollar? </link>
  • <link 483#c8502>International Trade after the crisis</link>

Emerging markets have undergone structural changes that reduced their exposure to a global tightening, but they are still affected by US rates. This column suggests that positive US economic surprises that bring forward the undoing of quantitative easing and steepen the US Treasury yield curve may translate into wider emerging markets spreads. US economic strength may play a welcome sobering role in the surge of emerging market assets.


In November less jobs were lost in the U.S. than expected but contrary to the Investors expectations, Bernanke warns about 'headwinds'. For now the rally of the Dollar has stopped.

FTD (in German)

2009 was the year of the dollar-weakness. Despite the low interest rate policy of the fed, the dollar may strengthen in 2010. On the contrary the Euro suffers from the situation in Greece.

FTD (in German)

Current US fiscal policy is likely to produce current account deficits rising to $1 trillion by 2015 and $3 trillion by 2025; net foreign debt would reach $15 trillion by 2020, taking the US’s foreign-debt-to-GDP ratio far beyond the threshold that normally triggers currency crises and forces painful economic retrenchment. To avoid catastrophic risks stemming from soaring foreign debt, the US needs a plan for long-run fiscal sustainability.

Vox EU

The laissez-faire approach in monetary policy creates a dangerous dynamic: Investors can borrow the dollar for a negative interest rate to buy risky investments – until these carry-trades collapse.

FTD (German)

The greenback is on top of trader’s sales listings. The EURO climbs up to 1,50USD while the Dollar index drops to the lowest point since August, 2008. According to IMF, transnational bets on interest rates are jointly responsible.


FED and Bank of England continue their low interest policy. The same applies for the European Central Bank that keeps the prime rate at 1,0 percent. Trichet, president of ECB, forebodes the end of special liquidity programms.

FTD (in German)

Speculation over a rate cut by the US Federal Reserve today (30 October) has driven oil prices close to US $95 and gold prices to their highest since 1980. The euro has reached a new all-time high of US $1.44.


Business confidence is bouncing back after the sharpest drop in economic activity since World War Two, prompting more industry leaders to start hiring again, found a survey published today (27 January) as the World Economic Forum in Davos opens.

[Translate to English:] Davos. In Davos beginnt heute das 40. Weltwirtschaftsforum. Rund 2.500 Personen aus Wirtschaft, Politik und Gesellschaft aus mehr als 90 Ländern kommen in dem Schweizer Kurort zusammen. Zentrale Themen dürften die Erdbebenkatastrophe in Haiti und die Folgen der Finanzmarktkrise sein.



Japanese exports were hit particularly hard by the crisis. This chapter shows how tumbling US import demand hurt Japanese exports both directly and via indirect exports of goods assembled in China for the US market (the so-called “trade triad”). An investigation into the extensive and intensive margins during Japan’s recent trade collapse shows that most adjustment occurred in existing trade relationships; there is very little evidence of deeper harm to Japan’s export capability via damage to its international supply chain. That means the ongoing recovery of the US economy should produce an especially speedy revival of Japanese exports.



[Translate to English:] Fears that tighter controls on CO2 emissions in Europe will drive factories to relocate abroad has led the EU to grant sweeping exemptions for industries deemed to be at risk. Aluminium, steel, iron and cement producers are likely to benefit from the preferential regime.

The US key interest rate is (near) zero, banks make a lot of money. But what if the interest rates are rising again? Some Fed Members expect them to rise in the near future.

FTD (in German)

So far the biggest free trade area has been created in Eastern Asia, at least as measured by the population with almost 1,8 Billion People.

FAZ (in German)

The recession was less calamitous than many feared. Its aftermath will be more dangerous than many expect.

The economist

"The great trade collapse: Causes, Consequences and Prosopect"

A new Ebook aims to inform the world trade ministers what the economists know about the trade collapse.


Global trade contracted quickly and severely during the crisis. This column, using data on French firms, shows that both small and large exporters were similarly hurt, but the impact of the crisis varied across industries. Intermediate goods, equipment, and the automotive industry were hit hardest. Sectors more dependent on external finance suffered larger export drops.


Europe's economy will rebound next year from a deep slump and accelerate in 2011, the European Commission said on Tuesday (3 November), paving the way for major budget deficit cuts across the 27-nation bloc from 2011 at the latest.

EurActiv (Englisch)

Is the current turmoil unique? This column examines three decades of financial crises and says that it stands out. But the variation in past experiences suggests that the major economies may regain their pre-crisis levels of output by the second half of 2010.