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President Trump imposed tariffs in 2017 on several of China’s exports, notably steel. Many papers opposed these tariffs by using a common, invalid argument: rather than arguing these tariffs reduced U.S. welfare, they argue U.S. consumers and businesses pay the tariffs, a different, rhetorical issue. Their main evidence of harm is increases in imported goods’ after-tariff U.S. prices, especially relative to other goods’ U.S. prices. In a standard, small general equilibrium model (two countries, two goods, two factors), this price evidence is wholly ambiguous—it is even consistent with the view that Trump’s tariff was optimal, increasing U.S. welfare. Even sophisticated papers are similarly ambiguous. All fail because they neglect how government uses tariff revenue. Relying on fallacious arguments makes the free-trade position look weak and encourages protectionism.

Court packing greatly threatens democracy. This paper examines, compares and draws conclusions from two attempts: The PiS government is near to packing Polish courts; President Roosevelt tried but failed to pack the U.S. Supreme Court in 1937. In most democracies a head of government with a legislative majority and strong party control can pack courts, giving complete control. The United States escaped; Roosevelt lacked complete party control. Poland is unlucky; PiS is strongly controlled. Peaceful domestic protest is necessary, but Poland’s hope is from EU-level institutional pressure, supported by major democracies, to reverse packing and prevent further seizure of power.

In a four-factor asset-pricing model estimated on daily data, Fed intervention significantly affects betas of surprises in the market return, expected inflation rate, yield curve, and corporate-bond risk premium. Fed foreign-currency sales cause economically and statistically significant increases in the systematic risk premium in appreciation and thus in the dollar's expected appreciation rate, the direction the Fed desires, and consistent with the signaling but not the portfolio balance channel. Intervention's effects on actual appreciation are less reliable; they depend on unpredictable risk-factor realizations. Even successful intervention to strengthen the dollar may be costly; by increasing the dollar's systematic risk, intervention reduces the attractiveness of U.S. relative to foreign investments. Further, uncertainty about future Fed interventions may induce resource misallocation: ceteris paribus, investors find it harder to estimate risk-adjusted discount rates and forecast the home-currency value of cash flows. JEL classifications: F31; G12; G15 Keywords: Foreign-exchange intervention; Asset pricing models; Foreign-exchange market efficiency; Portfolio balance channel; Signaling channel

Substantial evidence sustains the belief that real exchange rates do not possess unit roots but instead demonstrate mean reversion. Longer time horizons enhance the performance of the approximated forecast models in relation to the standard driftless random walks. Longer estimation durations especially enhance performance in relation to the benchmark. The forecasting power in simple statistical model appears authentic, however, the models resolve only a modest part of the uncertainty concerning the revolution of real exchange rates.

The stationarity of real exchange rates over the recent flexible exchange rate period is an issue that has long bedeviled researchers in international finance. Using a constrained multivariate framework, this paper provides the strongest evidence yet that real exchange rates were mean-reverting over the 1973-93 period. We also investigate shifts in long-run real exchange rates, which may be important for the purpose of forecasting. Out-of-sample forecasting shows that the random walk model is outperformed by a mean-stationary model, especially at long horizons. In addition, there are substantial forecasting benefits from using a multivariate approach. (JEL C22, F21). Copyright [C] 1996 Elsevier Science Ltd

Milton Friedman's theory of the business cycle implies two empirical regularities tested for here. One regularity is that business cycles are asymmetric: The size of a contraction affects the size of the following expansion, but not vice versa. The second regularity is that a supply-side ceiling to aggregate output limits the size of expansions. Friedman's correlation methods yield only very weak support for the asymmetry hypothesis when applied to real GNP data of eight OECD countries. A time series model with a ceiling component fits the data well for a majority of the countries., I. INTRODUCTION Milton Friedman |1969; 1993~ discusses two empirical business cycle regularities he finds in U.S. data and conjectures that they may exist in other countries' data. First, Friedman argues [...]

An examination of sovereign defaults over the long term, from 1294 to 2008, shows that serial defaults are far rarer than the much-ballyhooed experience of the 1980s suggests. The only mass default in Europe since 1294 took place in the early nineteenth century during the Napoleonic Wars. The majority of the serial defaults date from after 1975, primarily in Africa, Asia, and Latin America, and were heavily concentrated in the 1980s. These multiple defaults, like some earlier default waves in Latin America, reflected the experiences of newer nation states and were also linked to the inherent vulnerability of periphery countries to events in well-established, major financial centers. This was in sharp contrast to the earlier defaults in Europe and appears largely to be an aberration when viewed against the backdrop of the overall historical record. [ABSTRACT FROM AUTHOR]