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Ben Bernanke’s Economic Contributions

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Ben Bernanke is best known for being the Chairman of the Federal Reserve Board, but he has had a long and distinguished research career with great influence. Here are some of his contributions:

1. In a series of papers, often With Alan BlinderBernanke argued that “credit and money” are a better leading indicator than money alone. More generally, it helped us rethink the relationship of money to income that Milton Friedman promoted. This work was more correct than not, but as money as a leading indicator lost preference (in part because of Bernanke’s Later Actions!), these contributions are seen as less significant than they have been for nearly fifteen years. see also this piece on the import of (formerly) the federal funds rate as a measure of monetary policy. The son of Working group on money and credit It was the first thing that brought him fame.

2. Bernanke has The famous 1983 paper About how the brokerage crash was a major component of the Great Depression. Earlier, Milton Friedman emphasized the import of the money supply contraction, but Bernanke’s work led to a richer picture of how the crash occurred. The savers were cut off from the borrowers, due to the failure of the banks, and the economy could not mobilize its capital very effectively. This article also describes the integration between Bernanke’s work and that of Diamond and Dybvig. This piece has held up very well.

3. Bernanke has Related business, with Gertler, Gilchrist and others, on how financial problems can worsen the business cycle. This action, of course, fueled his subsequent decisions as Fed Chairman. in after another jobBernanke showed how an economic downturn can reduce the value of collateral, thereby straining the lending process and exacerbating a downturn in the business cycle.

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4. Bernanke’s doctoral thesis was on the concepts of option value and irreversible investment. Modest increases in business uncertainty can lead to significant declines in investment, due to a willingness to wait, exercise “option value” and sample more information. this work It was published in QJE in 1983. I’ve always felt that Bernanke doesn’t get enough credit for this particular idea, which was later fleshed out by Pindyck and Rubinfeld.

5. Bernanke wrote a lot of pieces – This is with Myshkin – Targeting inflation as a new way to conduct monetary policy. Those were the days! Much of the OECD has lived under this system for a few decades.

6. Here Ben with co-authors: “First we document that all recessions in the United States in the past 30 years have been preceded by an increase in oil prices and monetary tightening…” Uh oh!

7. Here 2004 Ben About what to do when the economy reaches zero. over here Bin on the previous Japanese monetary policy, and what he called their “self-paralysis” at ground zero. He’s really been training for the Fed job all those years. over here Ben on “The Great Moderation.” over here 1990 Ben On clearing and settlement during the 1987 crash.

8. Bin made Great contributions Our understanding of how the gold standard and international deflationary pressures caused the Great Depression, carried it across borders, and made it much worse. This business has held up well and is now part of the mainstream account. and more over here.

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9. Bernanke coined the term “Global savings abundance.”

Here it is all Swedish information on researchers and their work. I haven’t read it yet, but it’s usually pretty good. over here Ben on scholar.google.com.

In short, Ben is a broad and impressive thinker and researcher. This award is clearly well deserved. In my admittedly unorthodox opinion, his most important work is my history and about the Great Depression.

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Airbus drops 2022 delivery forecast after slow November By Reuters

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© Reuters. FILE PHOTO: An image of the Airbus logo on a flag at the entrance to the Airbus facility in Beaugnet near Nantes, France, November 14, 2022. REUTERS/Stephane Mahe/File Photo

Airbus on Tuesday dropped its forecast for aircraft deliveries in 2022 but maintained other financial guidance after making 66 deliveries in November.

The company said in a statement that the world’s largest aircraft maker does not expect 2022 shipments to be “materially lower” than a previous forecast of “about 700” which is now “far out”.

Reuters reported on Friday that the target was under review after November shipments missed expectations.

The announcement, originally scheduled for December 8, was brought forward by two days.

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Airbus said it would also revise the pace of its planned production increase of its best-selling A3200neo family to 65 per month for both 2023 and 2024.

It gave no other details but reaffirmed plans to reach the ultimate goal of 75 per month by the middle of the decade.

Airbus had previously said it planned to reach 65 months by early 2024, after backtracking from mid-2023 earlier this year, citing problems in its supply chain.

(This story has been corrected for a 2023 change to 2022 in the title.)

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The World Bank warns of the increasing debt burden on poor countries

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The World Bank has warned that the world’s poorest countries are facing three years of rising debt servicing costs, draining vital resources from spending on health, education and social assistance, and leaving scores of countries with unsustainable debt.

A group of 69 low- and middle-income countries will make $62 billion in payments on public debt this year, an increase of 35 percent from 2021, according to the bank. Annual data Posted on Tuesday.

Payments for 2023 and 2024 will remain high world bank This, he warned, is due to high interest rates, a large number of bond maturities, and because countries have had to start offsetting debt service that has been deferred during the pandemic.

Rising inflation has prompted central banks to sharply raise interest rates this year, driving up global borrowing costs in the process. The dollar also appreciated on the back of several large interest rate increases by the US Federal Reserve.

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“Increasing liquidity pressures in poor countries go hand in hand with solvency challenges, causing dozens of countries to build up unsustainable debt,” said David Malpass, President of the World Bank.

“With growth projections for 2022 cut in half, interest rates much higher, and many currencies depreciating, the debt burden is likely to grow even further.”

Zambia and Sri Lanka are among the countries that have defaulted on sovereign debt since the start of the pandemic. Ghana and Egypt are in advanced stages of talks with the International Monetary Fund on bailout packages.

This week, Ghana told holders of local currency government bonds to expect this Discounted coupon payments. Last month, it said the value of its foreign-currency bonds could drop by 30 percent, though the International Monetary Fund has yet to complete a debt sustainability analysis that will be the basis of any support package. Its currency, the cedi, has lost more than half of its dollar value this year, making it very difficult to service dollar-denominated debt.

Such problems are not isolated cases. The World Bank said that nearly 60 percent of low-income countries are at high risk of debt distress or are already experiencing it.

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Total external public and private debt for all low- and middle-income countries reached $9.3 trillion in 2021, up from $8.2 trillion in 2019 and $8.6 trillion in 2020, according to the World Bank’s annual debt statistics report published on Tuesday.

Many developing economies achieved a growth spurt as they emerged from the pandemic. As a result, its debt as a share of GNI fell to 25.7 percent in 2021, from a peak of 28.5 percent of GNI in 2020, the first year of the pandemic. This was down from the pre-pandemic level of 26.3 percent of gross national income in 2019, according to bank data.

But the debt of the poorest countries remained high last year, both in absolute terms and as a proportion of national income. For the 69 countries eligible for assistance from the World Bank’s International Development Association, external debt fell only slightly to 36.2 percent of gross national income last year, from 36.8 percent in 2020. This was higher than the 32.8 percent recorded in 2019.

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In dollar terms, their debt totaled $948 billion last year, up from $767 billion in 2019 and $859 billion in 2020, according to World Bank data.

Global central banks cut interest rates to all-time lows and pumped trillions of dollars into the financial system through quantitative easing programs in the aftermath of the global financial crisis. Borrowing costs have remained at very low levels until this year, leading to a significant expansion of global debt.

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Glencore shares fell 3.5 percent as production guidance missed Reuters estimates

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© Reuters. FILE PHOTO: The logo of commodity trading company Glencore is pictured in front of the company’s headquarters in Baar, Switzerland, July 18, 2017. REUTERS/Arnd Wegmann/File Photo

LONDON (Reuters) – Shares in miner and trader Glencore (OTC:) fell as much as 3.5% on Tuesday after guidance for 2023 production across all commodities it mined missed consensus estimates.

The company directed production of 1.04 million tons in 2023, down from 1.06 million tons this year and compared to the analyst consensus of 1.124 million tons.

“Today’s release will prompt a fundamental reshaping of investor expectations,” said Tyler Broda of RBC Capital.

“The market was expecting higher costs, higher capital expenditures and lower production, but the numbers came in behind our expectations below consensus and we expect to materially lower our agreed free cash flow estimates.”

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Glencore expects 2022 EBITDA (earnings before interest, taxes, depreciation, and amortization) of $28.7 billion and free cash flow of $14.7 billion.

Shares rebounded slightly and were down 1.8% in their last trade, still underperforming their peers.

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