Risk Appetite Index in a Panic on EM, Says Economist Sweeney

The video discusses the concept of market contagion, focusing on emerging markets and the risk indices indicating panic. It highlights the unique influence of US policies on global economics, particularly under the Trump administration, and the resulting shifts in policy orthodoxy. The discussion includes the application of Rudi Dornbusch's economic model to current issues, such as Turkish inflation and capital flows, emphasizing the need for aggressive monetary and fiscal policies in response to economic challenges.

What does the risk appetite index indicate in the context of emerging markets?

• A decrease in market volatility

• An increase in foreign investments

• A state of panic due to underperformance

• A stable economic environment

How has the U.S. influenced the current economic climate according to the discussion?

• By reducing fiscal profligacy

• By abandoning certain policy orthodoxies

• By increasing central bank independence

• By maintaining traditional economic policies

What is a significant consequence of the political changes discussed in the second section?

• Challenges to fiscal discipline

• Stability in international dynamics

• Greater central bank independence

• Increased adherence to economic orthodoxies

According to Rudi Dornbusch's model, what should be the response to plummeting real rates in Turkey?

• Increase foreign currency debt

• Maintain current economic strategies

• Implement aggressive monetary and fiscal policies

• Reduce capital flows

What economic issue is highlighted as a potential problem in countries with twin deficits?

• Excessive foreign investments

• Lack of monetary policy adjustments

• Stable inflation rates

• Surplus in fiscal budgets