Quite impressive, really, the effect that an unpublished research paper by an unknown analyst can have. After the WSJ’s Bob Davis got his hands on a leaked paper about sovereign wealth funds from the Milken Institute’s Christopher Balding, I expressed great skepticism about the results. And now RGE’s Rachel Ziemba has chimed in with a long and reasonably definitive take on just how big they are. She also notes that the IIE’s Ed Truman has an estimate close to her own. In any case, we seem to be quite solidly in the $2 trillion to $3 trillion range, rather than the much smaller numbers apparently being bandied about by Balding.
In a very nice turn of phrase, Ziemba does say that as far as Balding’s paper is concerned, "the jury will be out until the paper is". Right now the paper’s being peer reviewed, although it seems that the obvious peers to review this paper – the likes of Ziemba, Truman, and Brad Setser – haven’t seen it. So all we have to go on is Davis’s short summary. And, I guess, the picture of Balding on the Milken website, complete with dubious barbichette. I knew I was going to be able to use that "facial hair" category again!