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Puerto Rico: Is it America’s Greece? (Part II)

By Dr. Pierre Canac—This is the continuation of last week’s blog, and thus, it is advised to first read Part I if you haven’t done so. Remedies The ball is now in Congress’ court and the speaker of the House, Paul Ryan, indicated that he would push for a solution by March 2016. Commissioner Pierluisi…

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Puerto Rico: Is it America’s Greece? (Part I)

By Dr. Pierre Canac—This is a two-part blog; the second part will appear next week. I usually write about international economics; however, this time I will let the reader decide whether this is what I am doing in this post. The Status of Puerto Rico Puerto Rico is a Commonwealth or a territory that belongs…

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Can There Be Too Much Finance?

By Dr. Pierre Canac –Finance certainly plays an indispensable and positive role in promoting economic growth and overall employment. However there is some evidence that the relationship between financial development and GDP growth is not linear, but instead has an inverse U-shape. As the size of the financial sector gets larger, at first GDP growth…

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Does the U.S. Government Debt Fit in a Bucket?

By Dr. Pierre Canac —Nobody will disagree that $12.8tn is a large and potentially scary number! That is the U.S. Gross Federal Debt held by the public at the end of 2014. However, if you divide this number by the U.S. Gross Domestic Product which is $17.7tn, we get about 73%. Is this a large…

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Is it Time for Europe to Call in the Helicopter?

By Dr. Pierre Canac–   “Let us suppose now that one day a helicopter flies over this community and drops an additional $1000 in bills from the sky, …. Let us suppose further that everyone is convinced that this is a unique event which will never be repeated,” (Friedman 1969, pp 4–5). In one of…

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Germany and Greece Need to Learn How to Tango Together

By Dr. Pierre Canac—Prior to the 2007-2008 financial crisis, cross-countries financial flows triggered global imbalances whereby some countries experienced large current account surpluses (and capital outflows) while others faced large current account deficits (and capital inflows). Current Account and Capital Flows A country with a large current account deficit by definition has a large excess…

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Negative Interest Rates: Unusual and a Difficult Phenomenon to Explain

With respect to interest rates, we live in a very interesting and indeed historical time. In some European countries, nominal interest rates are negative (while they are close to zero in the United States). A short while back this was thought to be impossible. Until it actually happened, it would have been difficult to imagine…

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Where is the Inflation Monster Hiding?

For the past several years, there has been concern that higher inflation is just around the corner. It is a valid concern, given the damage that high inflation can wreak on an economy and the Fed’s expansion of the money supply. But caution should be exercised in attempting to preempt rising inflation since the facts…

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A Meeting of the Minds: Alexis de Tocqueville and Thomas Piketty

Alexis de Tocqueville (1805-1859) is a French historian and political thinker who is best known in the United States for his book Democracy in America, which was published in 1835 following a trip to study the U.S prison system. Coming from Old Europe where wealth inequality was extremely large, he was impressed by the more…

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