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42. Greenspan's Second Bubble
- Author:
- John H. Makin
- Publication Date:
- 04-2005
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- I knew Alan Greenspan had his first bubble in late 1999 when cab drivers were too busy talking to their brokers on cell phones to talk with customers. The "cab driver test" flashed its second bubble warning light to me just recently when I arrived in Key West for the annual winter vacation with my family. Without any prompting, our cab driver told us of a Key West real estate market on fire. Condos that were selling a year ago for $600,000 could not be touched for $1 million today, while the units under construction were sold four times over before anyone even thought of occupying them. The old hotels were being torn down to be replaced by condos that were selling like hotcakes before construction had begun. Meanwhile, room rates and rental rates in Key West have hardly budged. The implied return on investment in real estate is tied to an expectation of ever-rising prices, not to income from property.
- Topic:
- Economics, International Trade and Finance, and Political Economy
43. Should Americans Save More?
- Author:
- John H. Makin
- Publication Date:
- 03-2005
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- Alarmists who call for American households to save more point to a steady drop in the conventionally measured U.S. saving rate to about 1 percent at the end of last year and to a rise in household debt to a level well over 100 percent of personal disposable income. The current account deficit, our external deficit, measures national dis-saving at close to 6 percent of GDP. The federal government's budget deficit contributes about 4 percentage points to national dis-saving and it, too, is the subject of considerable hand-wringing by those who point to a need for higher U.S. saving at both the household and national levels.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- America
44. Slower Growth
- Author:
- John H. Makin
- Publication Date:
- 02-2005
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- The average forecast for 2005 U.S. growth is 3.5 percent, with some prognosticators hoping for 4 percent. This forecast is predicated upon the assumption that the economy is on a sustainable expansion path, where consumption will be supported by steady growth of employment and household incomes. The 3.5 percent growth forecast for 2005 is identical to the mean growth rate of the U.S. economy since 1947. However, there is good reason to believe that the consensus forecast is too high. This possibility has important consequences because U.S. growth must be sustained at least at average levels to avoid a sharp drop in global growth. There are no signs of higher growth in Europe and Asia. Growth in Japan is looking weaker, while Chinese growth is moderating.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- United States, Japan, China, Europe, and Asia
45. What Determines Interest Rates?
- Author:
- John H. Makin
- Publication Date:
- 01-2005
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- The pundits who have been predicting higher interest rates based on large U.S. budget and current account deficits have some explaining to do. Beyond the fact that very little systematic empirical evidence exists of a close link between deficits of any kind and interest rates, many high-profile commentators such as Robert Rubin and Pete Peterson, not to mention Pimco's Bill Gross, have consistently warned that long-term interest rates would rise as America's budget and current account deficits rose. Actually, U.S. longterm interest rates have been falling-from 4.8 percent in early June to 4.1 percent at year-end. Despite this stellar performance, Gross has even gone so far as to suggest that U.S. government liabilities should be downgraded from their top rating of AAA to AA.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- United States
46. Market Comrades
- Author:
- R. Glenn Hubbard
- Publication Date:
- 09-2005
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- Ceremonial gift-giving is an integral part of doing business in China. The value lies not so much in the gift (whose packaging is often more elaborate), but in the possibility of cementing a mutually beneficial relationship. And so it was a few weeks ago with the headline-grabbing announcement that China would revalue the yuan against the U.S. dollar. The modest gesture may make more possible a comprehensive economic dialogue between China and the United States in the interest of both nations. The announcement on July 21 by the People's Bank of China that it would revalue the yuan, abandoning the eleven-year-old peg of 8.28 yuan per U.S. dollar, caught financial markets by surprise. The jolt led market participants to gauge effects of current (and perhaps future) revaluations on currency values and interest rates. And, some U.S. political leaders claimed a victory in the campaign to blame Chinese “market manipulation” for external imbalances facing the United States.
- Topic:
- Economics, Emerging Markets, and International Trade and Finance
- Political Geography:
- United States, China, and Asia
47. Yuan Answers?
- Author:
- Phillip L. Swagel
- Publication Date:
- 06-2005
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- If China decides to adopt a flexible exchange rate, as many U.S. policymakers have urged, gains in U.S. exports and national savings in the long term will be offset by higher prices on Chinese goods and higher interest rates in the short term.
- Topic:
- Economics, International Trade and Finance, and Politics
- Political Geography:
- China and Asia
48. The United States, China, and the Rise of Asian Regionalism
- Author:
- Claude E. Barfield
- Publication Date:
- 09-2004
- Content Type:
- Working Paper
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- The goal of this paper is to analyze the evolution of trade relations between the United States and China, against the background of rising East Asian regionalism. It will also put forward policy options for the United States and China in response to the changing economic realities in East Asia.
- Topic:
- Foreign Policy and International Trade and Finance
- Political Geography:
- United States, China, Israel, and East Asia
49. European and American Approaches to Antitrust Remedies and the Institutional Design of Regulation in Telecommunications
- Author:
- J. Gregory Sidak and Damien Geradin
- Publication Date:
- 01-2004
- Content Type:
- Working Paper
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- In the United States and the European Union, the topic of remedies in network industries cuts across antitrust law and sector-specific regulation, including telecommunications. The legal and economic understandings of a “remedy” are not always synonymous. In both legal systems, a remedy is the corrective measure that a court or an administrative agency orders following a finding that one or several companies had either engaged in an illegal abuse of market power (monopolization in the US and abuse of dominance in the EC) or are about to create market power (in the case of mergers). With the exception of merger control where remedies seek to prevent a situation from occurring, legal remedies are retrospective in their orientation. They seek to right some past wrong. They may do so through the payment of money (whether that is characterized as the payment of damages, fines, or something else). Or they may seek to do so through a mandated change in market structure (“structural” remedies), as in the case of divestiture, or in the imposition of affirmative or negative duties (“behavioral” remedies). United States v. Microsoft Corp (U.S. Court of Appeals for the D.C. Circuit, 2001). presented the tradeoff between these various remedial alternatives.
- Topic:
- Government and International Trade and Finance
- Political Geography:
- United States and Europe
50. The Decline of the Communists
- Author:
- Leon Aron
- Publication Date:
- 10-2004
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- Overlooked in the victory of the pro-Kremlin party, United Russia, in the Duma election last December and President Vladimir Putin's overwhelming victory in the presidential election three months later was a milestone in Russia's post-Soviet political history: the precipitous decline of the Communist Party of the Russian Federation (KPRF). The single largest faction in the Duma between 1995 and 2003, the KPRF was reduced to 12 percent of the party-list vote in the Duma poll while the Communist candidate for the presidency, who received 40 percent in the 1996 election and 24 percent in 2000, ended up with 14 percent.
- Topic:
- Economics, International Organization, and International Trade and Finance
- Political Geography:
- Russia, Europe, and Asia