Professor of Economics @Harvard.
Infrequently tweet thoughts and re-post links, rarely engage on this platform, looking forward to a less toxic social media.
Apr 11 • 5 tweets • 1 min read
What tariff policy closes a long-run trade deficit? As it turns out, this is an ill-posed question, as we explain in this note. (1/n)
dropbox.com/scl/fi/9j4c80x…
A tariff policy cannot, in general, close a long-run trade deficit, unless it inflicts a negative valuation effect on the international financial position of the country. Absent such valuation effects, the long-run trade deficit is exogenous to any tariff policy. (2/n)
Apr 5 • 20 tweets • 3 min read
*Trade war: my theory of the case* 1. What is the goal/ideal outcome/trump admin hopes: 10% tariff across the board with no retaliation + direct non-tariff favors from other countries to settle this at 10% + a possible full-scale bilateral trade war with China. (1/n)
Indeed, a major financial win for the US which would justify a financial market optimism. Trump proxies are essentially begging other countries to call him and negotiate this scenario. (2/n)
Apr 8, 2022 • 4 tweets • 1 min read
A comment I often hear: oil/gas embargo has little effect on Putin’s ability to continue the war. This is wrong.
In fact, the correct calculus: each marginal euro received from energy exports to Europe contributes exactly one euro to the war in Europe, as simple as that. 1/n
Why? Because domestic constraints are kept tight and all spare resources are devoted to the war, right now or later after a short break to regroup (it is myopic to expect Putin stops with an effective military defeat when the original goal was to occupy Kyiv in one week). 2/n
Mar 23, 2022 • 7 tweets • 4 min read
w/@sguriev we argue that European embargo on Russian oil and gas is the fastest way to end the war by stopping Putin’s ability to finance it. Any other policy option is more costly and dangerous. It is not just a humanitarian, but also an economic imperative for Europe. 1/nspiegel.de/wirtschaft/oel…
I am bewildered by the arguments I occasionally hear from my European colleagues and friends, including that putin needs a “face-saving exit so he can gracefully resign” and that the costs of shutting down gas supplies from Russia are too high. 1/n
I applaud the work of @ben_moll and co-authors to quantify the costs of gas supply shut down and share the moral arguments in tweets by @HannoLustig and @BachmannRudi against financing putin’s war in Ukraine. 2/n
