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111. NATO and the Economic and Financial Crisis

Author:
Keith Hartley and Binyam Solomon
Publication Date:
10-2009
Content Type:
Working Paper
Institution:
NATO Defense College
Abstract:
These is some consensus among economic forecasters and international economic organizations that the world economy is stabilizing after the worst global contraction since the end of the Second World War. While it is difficult to ascertain empirically whether the massive fiscal policy support played a role or not, the improving credit conditions and the return of demand in the housing market in North America and the UK point to some evidence that the stimulus is providing the necessary short-term boost. Nonetheless, there remain significant challenges that may constrain a quick recovery including the decline in household wealth (debt-laden consumers rebuilding their savings), persistent unemployment and deleveraging (decreasing the amount of debt a firm holds by paying it off) in the financial system together with future long-term prospects of inflation.
Topic:
Economics, International Trade and Finance, and Financial Crisis
Political Geography:
United Kingdom and North America

112. U.S.-China Energy Security Cooperation Dialogue

Publication Date:
03-2008
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
The 2007 U.S.-China Energy Security Cooperation Dialogue was held in a period when a broad range of activities and policy recommendations have been proposed to address global energy security and environmental issues. The Dialogue identifi ed a number of further steps that China and the United States could cooperatively undertake to accelerate developments.
Topic:
Economics, Energy Policy, Environment, and Bilateral Relations
Political Geography:
United States, China, Asia, and North America

113. U.S.-China Cooperation on Clean and Efficient Transportation

Publication Date:
05-2008
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
Because of their significant contribution to global demand for improved living standards, meaningful actions by the United States and China on transportation and energy will be important in any effort to reduce global consumption of traditional energy sources. Together the United States and China consume 40% of the world's energy and are responsible for 50% of the world's greenhouse gas emissions. Given their economic size and impact on global markets, it is imperative that the U.S. and China join in a mutually beneficial process.
Topic:
Economics, Energy Policy, Environment, and Bilateral Relations
Political Geography:
United States, China, Asia, and North America

114. Foreign Exposure to Asset-Backed Securities of U.S. Origin

Author:
Daniel O. Beltran, Laurie Pounder, and Charles Thomas
Publication Date:
08-2008
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The financial turmoil which began in August 2007 originated, in part, because investors reassessed the quality of the assets underlying many asset-backed securities (ABS), particularly U.S. mortgages. The prominence of European banks in the early stages of the turmoil created the perception that foreigners held an outsized share of risky U.S. securities and prompted questions of why Europeans were so exposed. This paper evaluates that perception by quantifying foreign exposure to ABS with U.S. underlying collateral. Using the latest survey data on foreign portfolio holdings of U.S. securities, we find that the ultimate losses that foreigners could incur arising from U.S. underlying assets are small relative to most scale variables, although initial total mark-to-market losses are estimated to be significantly larger. Among other reasons for this difference between ultimate and initial losses, we demonstrate that the securitization chain can amplify mark-to-market price declines in the presence of uncertainty or illiquidity. Finally, we show that, relative to the size of the market, foreigners’ holdings of U.S. mortgage-backed securities do not appear to be elevated compared with their holdings of other U.S. assets.
Topic:
Economics, Financial Crisis, Financial Markets, and Mortgages
Political Geography:
United States and North America

115. Emerging Market Business Cycles with Remittance Fluctuations

Author:
Ceyhun Bora Durdu and Serdar Sayan
Publication Date:
09-2008
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper analyzes the implications of remittance fluctuations for various macroeconomic variables and Sudden Stops. The paper employs a quantitative two-sector model of a small open economy with financial frictions calibrated to Mexican and Turkish economies, two major recipients, whose remittance receipts feature opposite cyclical characteristics. We find that remittances dampen the business cycles in Mexico, whereas they amplify the cycles in Turkey. Their quantitative effects in the long run, approximated by the stochastic steady state are mild. In the short run, however, remittances have quantitatively large impacts on the economy, when the economy is borrowing constrained. This is because agents in the economy cannot adjust their precautionary wealth to sudden tightening in credit, hence, fluctuations in remittances get magnified through an endogenous debt-deflation mechanism. Our findings suggest that procyclical (or countercyclical) remittances can play a significant deepening (or mitigating) role for Sudden Stops.
Topic:
Debt, Economics, and Credit
Political Geography:
Europe, Turkey, Asia, North America, and Mexico

116. Do Energy Prices Respond to U.S. Macroeconomic News? A Test of the Hypothesis of Predetermined Energy Prices

Author:
Lutz Kilian and Clara Vega
Publication Date:
11-2008
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Models that treat innovations to the price of energy as predetermined with respect to U.S. macroeconomic aggregates are widely used in the literature. For example, it is common to order energy prices first in recursively identified VAR models of the transmission of energy price shocks. Since exactly identifying assumptions are inherently untestable, this approach in practice has required an act of faith in the empirical plausibility of the delay restriction used for identification. An alternative view that would invalidate such models is that energy prices respond instantaneously to macroeconomic news, implying that energy prices should be ordered last in recursively identified VAR models. In this paper, we propose a formal test of the identifying assumption that energy prices are predetermined with respect to U.S. macroeconomic aggregates. Our test is based on regressing cumulative changes in daily energy prices on daily news from U.S. macroeconomic data releases. Using a wide range of macroeconomic news, we find no compelling evidence of feedback at daily or monthly horizons, contradicting the view that energy prices respond instantaneously to macroeconomic news and supporting the use of delay restrictions for identification.
Topic:
Economics, Energy Policy, Oil, and Macroeconomics
Political Geography:
United States and North America

117. Uncertainty over Models and Data: The Rise and Fall of American Inflation

Author:
Seth Pruitt
Publication Date:
12-2008
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
An economic agent who is uncertain of her economic model learns, and this learning is sensi- tive to the presence of data measurement error. I investigate this idea in an existing framework that describes the Federal Reserve’s role in U.S. inflation. This framework successfully fits the observed inflation to optimal policy, but fails to motivate the optimal policy by the perceived Philips curve trade-off between inflation and unemployment. I modify the framework to account for data uncertainty calibrated to the actual size of data revisions. The modified framework ameliorates the existing problems by adding sluggishness to the Federal Reserve’s learning: the key point is that data uncertainty is amplified by the nonlinearity induced by learning. Conse- quently there is an explanation for the rise and fall in inflation: the concurrent rise and fall in the perceived Philips curve trade-off.
Topic:
Economics, Inflation, and Models
Political Geography:
United States and North America

118. Policy Space for Mexican Maize: Protecting Agro-biodiversity by Promoting Rural Livelihoods

Author:
Timothy A. Wise
Publication Date:
03-2007
Content Type:
Working Paper
Institution:
Global Development and Environment Institute at Tufts University
Abstract:
Since the introduction of the North American Free Trade Agreement (NAFTA) in 1994, traditional maize farmers in Mexico have faced difficult economic conditions. In barely more than a decade, as many as one million farmers may have abandoned their land under economic pressure from rising imports, low prices for maize and other traditional crops, weak local and regional demand, and large reductions in public sector support for agriculture. The losses are environmental as well as economic. With the loss of traditional maize, there has been a documented loss of the agricultural biodiversity of which these farmers and their ancestors have been stewards for centuries. With maize trade scheduled to be fully liberalized under NAFTA in 2008, many farm groups are calling for a renegotiation of the treaty's agricultural provisions to prevent further damage. This policy analysis examines the room for alternative policies in Mexico under existing economic and environmental agreements, including NAFTA. It concludes that the Mexican government retains access to many useful policy instruments that could promote rural livelihoods while arresting the losses of important maize diversity. What is lacking is the political will to make use of them.
Topic:
Agriculture, Development, Economics, and Treaties and Agreements
Political Geography:
North America and Mexico

119. The Vital Center: A Federal-State Compact to Renew the Great Lakes Region

Author:
Britany Affolter-Caine and Justin Austin
Publication Date:
10-2006
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
The Great Lakes region of the United States is a unique economic, social, and cultural area made up of all or part of 12 states, including the western portions of New York, Pennsylvania, and West Virginia; northern Kentucky; all of Ohio, Indiana, Michigan, Illinois, and Wisconsin; and eastern Minnesota, Iowa, and Missouri. Home to 97 million people, this region is defined by a shared geography and natural resources, a dynamic political and economic history, and strong principles of social organization that together have shaped its growth and development. One of the largest industrial production centers and consumer marketplaces in the world, this highly urbanized “mega-region” is a vital global hub of economic activity and growth.
Topic:
Development, Economics, and Industrial Policy
Political Geography:
United States, New York, North America, Pennsylvania, Ohio, Wisconsin, Illinois, Indiana, Michigan, West Virginia, North Kentucky, East Minnesota, Iowa, and Missouri

120. Corporate Governance in Canada and the United States: A Comparative View

Author:
Edward J. Waitzer and Jay W. Lorsch
Publication Date:
04-2006
Content Type:
Working Paper
Institution:
The Wilson Center
Abstract:
Drawing on expertise from both sides of the Canada-U.S. border, the One Issue,Two Voices series is designed to stimulate dialogue on policy issues that have a significant impact on the bilateral relationship. This fifth issue in the series provides an up-to-date snapshot of how corporate governance practices differ between Canada and the United States. Authors Jay Lorsch of the Harvard Business School and Edward Waitzer of the Canadian law firm Stikeman Elliott are leading experts on corporate governance.Together they give us a comparison of the way our countries have responded to changes mandated by the Sarbanes-Oxley Act (SOX) passed by the U.S. government in 2002.
Topic:
Civil Society, Economics, and Politics
Political Geography:
United States, Canada, and North America