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231. US-Brazil Trade Relations in a New Era

Author:
Jeffrey J. Schott
Publication Date:
08-2003
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The United States and Brazil are the largest economies in North and South America, respectively. A generation ago, both were relatively closed economies in terms of the proportion of their trade to gross domestic product (GDP), but for sharply different reasons. The US market was highly competitive except for some light manufactures (e.g., textiles, clothing, and footwear) and a few agricultural sectors with high border barriers. By contrast, Brazilian industry was largely uncompetitive and highly subsidized; important commodities like coffee provided the bulk of exports while a large share of the value of most industrial exports was attributable to export subsidies.
Topic:
International Trade and Finance
Political Geography:
United States, Brazil, South America, Latin America, and Caribbean

232. Empirical Investigations of Inflation Targeting

Author:
Yifan Hu
Publication Date:
07-2003
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
A growing number of countries have anchored their monetary policy to an explicit numerical rate or range of inflation since such an inflation targeting framework was first adopted by New Zealand in 1989. This paper empirically investigates issues associated with inflation targeting using a dataset of 66 countries for the 1980–2000 period.
Topic:
Development, Economics, Emerging Markets, and International Trade and Finance
Political Geography:
New Zealand

233. Revitalizing the Economies of Japan and the United States

Author:
C. Fred Bergsten
Publication Date:
06-2003
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The United States and Japan are the two largest national economies in the world. Since the early 1990s, they have been moving in opposite directions. The United States enjoyed an expansion of record duration from the end of the Gulf War in 1991 until early 2001, growing much faster than any other G-7 country and much faster than it had at any time since the Second World War. Japan's economy, by contrast, has been virtually stagnant since its financial bubble burst in the early 1990s and has clearly experienced its worst performance since its recovery from the ravages of the Pacific War.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, Japan, Israel, and East Asia

234. NAFTA Dispute Settlement Systems

Author:
Gary Hufbauer and Jeffrey J. Schott
Publication Date:
06-2003
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Drawing on the 1989 Canada-US Free Trade Agreement (CUSFTA), the North American Free Trade Agreement (NAFTA) extended dispute settlement provisions to cover more ground. In fact, within NAFTA there are six dispute settlement systems. NAFTA Chapter 11 is designed to resolve investor-state disputes over property rights; Chapter 14 creates special provisions for handling disputes in the financial sector via the Chapter 20 dispute settlement process (DSP); Chapter 19 establishes a review mechanism to determine whether final antidumping (AD) and countervailing duty (CVD) decisions made in domestic tribunals are consistent with national laws; and Chapter 20 provides government-to-government consultation, at the ministerial level, to resolve high-level disputes. In addition, the NAFTA partners created interstate dispute mechanisms regarding domestic environmental and labor laws under the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAAL C), respectively. This chapter examines the first four dispute settlement systems; the NAAEC and NAALC systems are evaluated elsewhere in this book.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, Latin America, and North America

235. Survival of the Best Fit: Exposure to Low-Wage Countries and the (Uneven) Growth of US Manufacturing Plants

Author:
J. Bradford Jensen, Andrew B. Bernard, and Peter K. Schott
Publication Date:
05-2003
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper examines the role of international trade in the reallocation of U.S. manufacturing activity within and across industries from 1977 to 1997. It introduces a new measure of industry exposure to international trade, motivated by the Heckscher-Ohlin model, which focuses on where imports originate rather than their overall level. Results demonstrate that plant survival as well as output and employment growth are negatively associated with the share of industry imports sourced from the world's lowest-wage countries. Within industries, activity is reallocated towards capital-intensive plants. Plants are also more likely to alter their product mix (i.e. switch industries) in response to trade with low-wage countries. Plants altering their product mix switch to industries that are more capital-and skill-intensive.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
United States

236. Falling Trade Costs, Heterogeneous Firms, and Industry Dynamics

Author:
J. Bradford Jensen, Andrew B. Bernard, and Peter K. Schott
Publication Date:
05-2003
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper examines the response of industries and firms to changes in trade costs. Several new firm-level models of international trade with heterogeneous firms predict that industry productivity will rise as trade costs fall due to the reallocation of activity across plants within an industry. Using disaggregated U.S. import data, we create a new measure of trade costs over time and industries. As the models predict, productivity growth is faster in industries with falling trade costs. We also find evidence supporting the major hypotheses of the heterogenous- firm models. Plants in industries with falling trade costs are more likely to die or become exporters. Existing exporters increase their shipments abroad. The results do not apply equally across all sectors but are strongest for industries most likely to be producing horizontally-differentiated tradeable goods.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
United States

237. Improving The Sovereign Debt Restructuring Process

Author:
Brad Setser and Nouriel Roubini
Publication Date:
03-2003
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The recent debate on reforming the international financial system has focused on the need to improve the sovereign debt restructuring process, and in particular on steps that could limit the risk that litigation could disrupt or delay a sovereign debt restructuring. This debate increasingly has focused on the debt restructuring process in those cases where debt reduction is needed to produce a sustainable debt profile. Less attention has been given to those cases where a sovereign lacks the reserves needed to cover its near-term obligations and, absent international support, has a clear need for debt rescheduling to push out near-term maturities.
Topic:
Economics, Government, and International Trade and Finance

238. Further Financial Services Liberalization in the Doha Round?

Author:
Wendy Dobson
Publication Date:
08-2002
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Recent evidence demonstrates strong links between developing countries' long-term growth and financial reform. Deputy Treasury Secretary Kenneth Dam has suggested that developing countries can transform their domestic financial sectors into "engines of growth."
Topic:
Economics, Emerging Markets, International Organization, and International Trade and Finance

239. Is Brazil Next?

Author:
John Williamson
Publication Date:
08-2002
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
This policy brief examines whether the pessimism that recently gripped the financial markets about Brazil's economic prospects is justified, and whether the big IMF program in support of Brazil announced on August 8, 2002, is likely to succeed in turning the tide. It concludes that present policies would be adequate to secure a gradual reduction in the debt/GDP ratio given return of the exchange rate to a less undervalued level and a level of interest rates that is normal by past Brazilian standards though still high by world standards, though not under the recent conditions of a severely undervalued real and astronomical interest rates. It also concludes that the strongly improving trend recently evident in Brazilian trade promises a progressive reduction in external vulnerability, though this again could be jeopardized by the maintenance of sky-high interest rates. It then argues that, despite the mixed records of the two principal opposition candidates for the presidency, neither would be likely to choose a policy of deliberately reneging on Brazil's debts. That being so, the recent market turbulence has to be interpreted as a panic in which even those convinced that Brazil's fundamentals are sound did not dare to speculate in favor of restoration of normality. Such situations are exactly those where the IMF can play a useful role in breaking a panic, and hence the new loan much improves the chances of Brazil avoiding the implosion that would be likely to follow a debt restructuring.
Topic:
Economics and International Trade and Finance
Political Geography:
Brazil and South America

240. The Looming Japanese Crisis

Author:
Adam S. Posen
Publication Date:
05-2002
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
After more than a decade of economic stagnation and minimal structural change, Japan stands on the brink of outright financial crisis—the only debate is whether the Japanese government can dodge its imminent economic threats for another six months at most, or ride the wave of global expansion to throw still more money at these problems with decreasing effectiveness until the public debt becomes unsustainable (which should be no later than 2005). Either way, volatility in Japanese asset markets will be extremely high for the next 36 months, with significant declines on average in asset prices and the yen.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
Japan, Israel, and East Asia