Olivier Blanchard
Everything, newest first — across every channel.
Their profile → ·
Subscribe
Hiding Show them again
13 October
i do not know dwayne woods, but what he produces is good (and fast). Quoting @twittwoods @ojblanchard1 As Jacques Brel would say, le vent du Nord is a ..... The Nobel Prize given to Mike Woodford and Bob Hall will re-trigger discussions about the so-called New Keynesian model. Some will hail it as an unambiguous success, building macro from micro foundations. Others will dismiss it as an empirically irrelevant construction, leading to complex models without much relation to reality. As often is the case, truth is in between. I expressed my views, as a participant in the enterprise, but not an unconditional believer, in an NBER Macro piece last year. Given that the link has expired, I use this opportunity to repost it. shorturl.at
Quoting @ojblanchard1 @FrancoisGeerolf My criticisms of these equations are well documented 😀. https://t.co/1r4bfFZ3Vx But this is what a useful model does and has to be judged by the work and the discussion it triggers. Why is there more inflation inertia than implied by 1? What about liquidity constraints and limited…
12 October
A quick reaction. Both well deserving of the prize. Research styles could not be more different. Woodford is a cathedral builder, building stone by stone. His main book is an encyclopedia. Hall is an intellectual butterfly, looking for new angles. His main contribution is a superb insight, which changed the way we think about consumption. It takes both to make a field advance. Congratulations. Quoting @NobelPrize BREAKING NEWS The Royal Swedish Academy of Sciences has decided to award the 2026 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Robert E. Hall and Michael Woodford “for microeconomic foundations of macroeconomic stabilisation.” #NobelPrize
7 October
Marine le Pen s’est mise dans une situation interessante. D’un côté : Promesse de mise en place d’un programme d’ajustement budgetaire, avec ajustement du deficit primaire d’au moins 0.5% du PIB par an. Vérification des hypothèses par le Haut Conseil des Finance Publiques, HCFP. Des contraintes qu’un gouvernement allemand pourrait s’imposer… De l’autre : un programme d'ajustement basé sur des hypothèses et des mesures presque toutes illusoires, qui seraient surement rejetées par le HCFP si elles étaient présentées aujourd’hui, et rejetées demain par le HCFP si elle était elue. Que se passe t’… English, from French Marine le Pen has put herself in an interesting situation. On the one hand: Promise to implement a budget adjustment program, with an adjustment of the primary deficit of at least 0.5% of GDP per year. Verification of assumptions by the High Council for Public Finances, HCFP. Constraints that a German government might impose on itself… On the other hand: an adjustment program based on almost entirely illusory assumptions and measures, which would surely be rejected by the HCFP if they were presented today, and rejected tomorrow by the HCFP if she were elected. What is happening…
6 October
The timing of the paper could unfortunately not be better, given the evolution of the spread on French bonds… The central mechanism in the paper: The strength of the effect of the subjective probability of default on the actual probability of default. The main implication, put roughly: spreads can jump a lot in response to even small bad news about the likely evolution of debt. The other implication, nerdier, and more paradoxical: Higher macro of fiscal uncertainty weakens the effect of the subjective probability on the actual probability and makes jumps and multiple equilibria less likely. @… Quoting @GonHuertas When public debt grows, default risk can jump suddenly. Our new paper with @ojblanchard1 and @pmbruera finds that higher fiscal uncertainty reduces (!) the range of debt levels where self-fulfilling defaults can happen. It's been years in the making.
5 October
to those who have me on their contact email list: I have been hacked. Do not open an "invite" email from me. With apologies to all
2 October
Arrêtez les âneries (je reste poli) sur les vilains spéculateurs, la dictature des marchés, etc. Les marchés, ce sont les investisseurs, qui décident d’où placer l’argent des épargnants, qu’ils soient francais, américains, ou autres. Si vous avez un peu d’épargne (vous avez un livret A?), il y a une bonne chance que ce soit vous, et que vous préféreriez etre repayés. Autrement dit, a qui pensez-vous que les gouvernements doivent emprunter , sinon aux épargnants? English, from French Stop the nonsense (I'm being polite) about nasty speculators, the dictatorship of the markets, etc. The markets are the investors, who decide where to put savers' money, whether French, American, or other. If you have a little savings (do you have a savings account?), there's a good chance it's you, and that you'd prefer to be repaid. In other words, who do you think governments should borrow from, if not savers?
Quoting @OsonsCauser Mais c’est quoi ce chantage ? On devrait s’interdire de débattre ou de proposer parce que « les-marchés-zaiment-pas-beaucoup-ça » ? 1- Il est urgent de débattre de la mainmise des marchés sur nos choix politiques 2- Et les 5,4% de PIB de déficit de Macron, on en parle ? Une réaction à chaud et un message a tous ceux qui sont en campagne présidentielle. Ne mettez pas de l’huile sur le feu. Des propositions irresponsables, au cours des dernières semaines, ont fait augmente les taux sur les obligations françaises, de 0.75% par rapport a l’Allemagne. Une augmentation du taux d’interet de 0.75% implique de trouver 20 milliards de plus d’économies ou d’impots supplémentaires pour stabiliser la dette par rapport au PIB. Le budget propose par le gouvernement est loin d’etre parfait. Mais je pense que vous le préférerez à un budget exigé par la BCE pour aider la Fran… English, from French A hot take and a message to all those running for president. Don't add fuel to the fire. Irresponsible proposals in recent weeks have caused French bond yields to rise by 0.75% compared to Germany. A 0.75% increase in interest rates means finding an additional 20 billion in savings or taxes to stabilize debt relative to GDP. The budget proposed by the government is far from perfect. But I think you'll prefer it to a budget demanded by the ECB to help France...
Reposting a graph, which is unfortunately very relevant for France today. Namely, when it appears that debt may be becoming unsustainable, the interest rate increases first slowly, then suddenly. (The underlying paper comes out this week, and, when it does, I shall tweet more about the actual implications) Quoting @ojblanchard1 Useful to summarize the discussion about debt and spreads in a graph (based on work with @pmbruera and @Gonhuertas. Working paper out soon). The blue line shows the “good equilibrium” if investors are rationally optimistic. At very low debt, no risk of default, no spread, then a slow increase, and… interest rates
25 September
Bad news for the ECB. Great news for the IMF. Hard to think of a more competent person for the IMF finance job. Isabel and I have not always agreed, but I have always learned from our interactions, and she has done an amazing job at the ECB. Her speeches, and especially her slides..., are keepers, remarkable by the quality of the work and the presentation. Quoting @Lagarde Dear Isabel, a heartfelt thank you for your outstanding work at the ECB. Your commitment to public service has been invaluable to our institution and to the people we serve in Europe. Thank you for your dedication to the European project.
24 September
lisez le texte attentivement. Je suis explicite et agnostique sur le fait que l'ajustement peut se faire par les depenses ou les revenus. (J'ai mes propres idees sur la question). Mon argument que la somme doit etre egale a 2700 euros par adulte ne depend pas de ca. English, from French read the text carefully. I am explicit and agnostic about whether the adjustment can be made through spending or income. (I have my own ideas on the matter). My argument that the sum must be equal to 2700 euros per adult does not depend on this.
Quoting @Rabelai85524127 @ojblanchard1 Cher Olivier Blanchard, L'ire que vous avez declenché contre vous est probablement excessive. Souffrez néanmoins la remarque suivante : vous ne coupez dans aucune dépense. C'est inacceptable et suicidaire. Vous avez appris à penser où ? Je suis toujours étonné par la violence de certains commentaires. Mon tweet ne faisait que faire de l’arithmétique. A moins de penser que la dette peut augmenter éternellement plus vite que le PIB, if faut a terme réduire le deficit de 150 milliards. Bien sûr, pas en un an, mais disons sur 5 ans. Qui peut etre en desaccord avec ca ? J’étais explicite sur le fait que l’ajustement pouvait se faire par une combinaison d’une diminution des depenses et une augmentation des revenus. Le tweet etait agnostique sur ce point. Chacun a ses opinions…. Je voulais ensuite traduire ce chiffre en un chiffre… English, from French I am always surprised by the violence of some comments. My tweet was just doing arithmetic. Unless you think debt can increase forever faster than GDP, the deficit must eventually be reduced by 150 billion. Of course, not in one year, but let's say over 5 years. Who can disagree with that? I was explicit that the adjustment could be made by a combination of reduced spending and increased revenue. The tweet was agnostic on this point. Everyone has their opinions... I then wanted to translate this figure into a number...
Quoting @ojblanchard1 Un calcul qui donne à réfléchir. La réduction du déficit (que ce soit par une baisse des dépenses ou/et une hausse des recettes) nécessaire pour stabiliser la dette par rapport au PIB : 150 milliards (par exemple, une diminution du deficit de 30 milliards chaque annee par rapport a l'annee preceden… Un calcul qui donne à réfléchir. La réduction du déficit (que ce soit par une baisse des dépenses ou/et une hausse des recettes) nécessaire pour stabiliser la dette par rapport au PIB : 150 milliards (par exemple, une diminution du deficit de 30 milliards chaque annee par rapport a l'annee precedente, sur un quinquennat). 150 milliards est un chiffre très abstrait. Plus concretement : Il implique un ajustement de 3 750 euros par an par contribuable (foyer fiscal). Si l'on exclut les contribuables qui ne paient pas d'impôt aujourd’hui, il implique un ajustement de 7 500 euros par contribuable.… English, from French A calculation to make you think. The deficit reduction (whether through lower spending or higher revenue) needed to stabilize debt relative to GDP: 150 billion (for example, a decrease in the deficit of 30 billion each year compared to the previous year, over a five-year term). 150 billion is a very abstract figure. More concretely: It implies an adjustment of 3,750 euros per year per taxpayer (tax household). If we exclude taxpayers who do not pay taxes today, it implies an adjustment of 7,500 euros per taxpayer...
21 September
An important and very good speech by @GabrielAttal on Europe: https://t.co/RoVHCMoJ7q If anything, the case for Europe is stronger than ever. It should be at the center of the political campaigns. Europe
19 September
I realize I did not give the link to the full paper on ratings, debt and deficits. Here it is: imf.org
Reason for specifically citing open weight (and therefore Chinese LLMs, but not only Chinese) is that, even if they have built-in guardrails, somebody with the relevant knowledge can go in and remove them. In principle, harder to do with Anthropic or Open AI LLMs. Quoting @ojblanchard1 A worrisome thought during the night: What Ted Kaczynski would have done, if he had had access to open weight chinese LLMs. LLMs Anthropic
Ratings largely determine spreads. Yet, their construction remains largely a black box. Our paper assesses the relative importance of debt, deficits and country specific effects in the determination of these ratings. The evidence is at odds with a simple model of default: more importance of debt, less importance of forecast deficits, limited role of r-g, surprisingly large role of country effects. We are agnostic. The model may be too simple in some fundamental ways. Or the rating agencies may be using incorrect weights. Or a mix of the two... We hope the paper triggers a useful discussion. Quoting @int_mon_econ Super interesting! "Ratings, Debt, and Deficits: An Exploration" by Olivier J Blanchard, Daniel Leigh, and Prachi Mishra. "We look at the effects of debt and primary fiscal balances on sovereign credit ratings through the lens of a simple model. We find that the ratings differ from the implications… + 1 more A worrisome thought during the night: What Ted Kaczynski would have done, if he had had access to open weight chinese LLMs. LLMs
14 September
Let me stay away from personal remarks. As you kindly invited me to do so, I am happy to continue our exchange. Let me start by reproducing and then commenting on three remarks you make in your two recent tweets. “I know full well what justified the use of OATi in 1998, namely a lower interest rate since the investor takes on less risk. Except that today, with the international context and climate disruption making prices more volatile, the cost of these indexed bonds is rising.” My humble view: More volatile inflation makes inflation protected bonds more, not less attractive. “As such, I sta… Quoting @ericcoquerel Pas de souci pour échanger des arguments avec vous @ojblanchard1 mais un tout petit peu moins de condescendance dans l’échange ne serait pas de trop 🔽. Le résultat des politiques économiques que vous avez soutenues depuis des années devrait, je pense, vous amener à un peu plus d’humilité. Je sais… inflation interest rates
13 September
i was going to write something, but Quentin beat me to it... Let me put it another way, so that Chairman Coquerel @ericcoquerel understands and corrects his statement. When a state issues nominal bonds (bonds that pay in euros), the real value of interest payments varies with inflation, creating risk for investors. So they require a higher interest rate to compensate for the risk. In issuing inflation protected bonds, the state eliminates the risk and thus is able to get a lower rate. This decreases the burden of the debt. This is good. Always happy to help the Chair of the Finance Committee… Quoting @QuentinVandewe2 Est-ce que LFI organise un concours Lépine pour la théorie du complot la plus idiote sur la dette ? Après la Banque de France qui revendrait la dette en secret, Mélenchon découvre que l'État « vient de proposer de nouveau des titres indexés sur le capital et des intérêts compensant l'inflation ». U… inflation interest rates
Nothing matches. Show everything
A korrent is a belief a person has stated in their own words: one
sentence stating the claim, backed by a quote and a source, kept at
korrents.com .
Under a name here, the quoted block is what they actually said.
The korrent beneath it is the claim those words support, in
korrents' wording — tap it to see the record, its source, and who
else holds it.
Nobody here wrote their own korrents. They are compiled from public
statements, and a person can change their mind, which is recorded too.
Got it
About the English under a post
Some people here publish in a language other than English. Where they
do, this site shows a machine translation beneath the post, in
this typeface — the site's own, not theirs.
The post itself is never changed, moved or hidden: what is set in the
serif above is exactly what the person published, and it is what to
quote them on. A translation can be wrong in ways that matter,
especially about tone.
Only the post's own words are translated. A quoted post, a linked
article and a belief on korrents.com
are left in their original language.
Got it