(4/16/2015) The possibility of devaluation is apparently an issue in the upcoming Argentine elections. (The forward rate for next year is about 13 pesos per dollar, which is close to the informal rate and suggests a big devaluation relative to the current official exchange rate of 8.) In this connection, an Argentine newspaper has asked me about “Contractionary Currency Crashes,” a paper that I presented as the 5th Mundell-Fleming Lecture of the IMF’s Annual Research Conference.
(Jan. 22, 2015) What a difference two months make. As recently as November, when Republicans scored strong gains in the US congressional elections, the universally accepted explanation was economic performance that was perceived as disappointingly weak. (As always, “it is the economy, stupid.”) A substantial share of the American public thought that economic conditions were actually deteriorating last year; many held President Barack Obama responsible and voted against the incumbent party.
Now suddenly everybody has discovered that the US economy is doing well after all. So much so that Republican leader Mitch McConnell, newly elevated to Senate Majority Leader, has switched from a position that the economy is bad and Obama is to blame, to a position that the economy is good and the Republicans should get the credit.
Every pundit agrees that President Obama did badly in the first debate. But I can’t help wondering whether he (and VP Joe Biden) would have been able to come out swinging as freely as they have in the subsequent debates, if it were not for what happened in Denver. Obama must have been afraid of sounding unpresidential. But because his initial performance was so roundly criticized for passivity, he was licensed after that to argue aggressively: “What you are saying is not true, Governor Romney.” And it helps that he was right, each time. (My morning-after talking-head comments can be viewed: “Re-cap of 1st Presidential Debate,” Oct.4; and “Re-cap” of 2nd Presidential Debate, Oct.17.)