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111. Managing Credit Booms and Busts: A Pigouvian Taxation Approach

Author:
Olivier Jeanne and Anton Korinek
Publication Date:
09-2010
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
We study a dynamic model in which the interaction between debt accumulation and asset prices magnifies credit booms and busts. We find that borrowers do not internalize these feedback effects and therefore suffer from excessively large booms and busts in both credit flows and asset prices. We show that a Pigouvian tax on borrowing may induce borrowers to internalize these externalities and increase welfare. We calibrate the model with reference to (1) the US small and medium-sized enterprise sector and (2) the household sector and find the optimal tax to be countercy - clical in both cases, dropping to zero in busts and rising to approximately half a percentage point of the amount of debt outstanding during booms.
Topic:
Debt, Economics, Global Recession, and Financial Crisis
Political Geography:
United States

112. Understanding the Geopolitical Implications of the Global Financial Crisis

Author:
Wu Xinbo
Publication Date:
10-2010
Content Type:
Journal Article
Journal:
The Washington Quarterly
Institution:
Center for Strategic and International Studies
Abstract:
Although the global financial crisis breaking out in the fall of 2008 seems to be drawing to an end, it is still too early to tell exactly how big a loss it has caused to the world economy. Viewed through a macro politico-economic lens, the global financial turmoil formally put an end to the unipolar post—Cold War era, in which the U.S. power preponderance, its alleged universal politicoeconomic model of development (often referred to as the Washington Consensus), and its overwhelming international influence had been a defining feature. The looming new era is characterized by the emergence of a multipolar power structure, plural politico-economic models, and multiple players on the international stage.
Topic:
Cold War and Financial Crisis
Political Geography:
United States and Washington

113. Five Surprises of the Great Recession

Author:
Uri Dadush and Vera Eidelman
Publication Date:
11-2010
Content Type:
Policy Brief
Institution:
Carnegie Endowment for International Peace
Abstract:
The Great Recession included five major surprises: (1) the severity of the global trade and output collapse, (2) the United States suffered a milder than expected recession, (3) Europe saw the onset of a severe sovereign debt crisis, (4) China grew at an extraordinary rate even though it's greatly dependent on exports, and (5) Latin America showed remarkable resilience.
Topic:
Economics, Globalization, Global Recession, and Financial Crisis
Political Geography:
United States, China, Europe, and Latin America

114. Rights Interests: Trade Disputes

Author:
Howard Guille
Publication Date:
06-2010
Content Type:
Journal Article
Journal:
Human Rights and Human Welfare - Review Essays
Institution:
Josef Korbel Graduate School of International Studies, University of Denver
Abstract:
The global financial crisis led to the steepest drop in global activity and trade since World War II (International Monetary Fund 2009c). Recession means unemployment of people and resources. It is a bad time to be a worker and a despondent one for worker representatives. The crisis began, publicly at least, with financial panics and ensuing bank failures in the United States in September 2008. The financial bubble of securities and derivatives burst because of “the obesity of banks and shadow banks” (Johnson 2009). However, politicians and governments had given bankers and financiers a license for excess by deregulating finance and trusting open markets. In essence, elected politicians gave small government to bankers, who in turn gave neo-liberal globalization to us.
Topic:
Globalization, Government, War, and Financial Crisis
Political Geography:
United States

115. How Did a Domestic Housing Slump Turn into a Global Financial Crisis?

Author:
Steven B. Kamin and Laurie Pounder DeMarco
Publication Date:
01-2010
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The global financial crisis clearly started with problems in the U.S. subprime sector and spread across the world from there. But was the direct exposure of foreigners to the U.S. financial system a key driver of the crisis, or did other factors account for its rapid contagion across the world? To answer this question, we assessed whether countries that held large amounts of U.S. mortgage-backed securities (MBS) and were highly dependent on dollar funding experienced a greater degree of financial distress during the crisis. We found little evidence of such “direct contagion” from the United States to abroad. Although CDS spreads generally rose higher and bank stocks generally fell lower in countries with more exposure to U.S. MBS and greater dollar funding needs, these correlations were not robust, and they fail to explain the lion’s share of the deterioration in asset prices that took place during the crisis. Accordingly, channels of “indirect contagion” may have played a more important role in the global spread of the crisis: a generalized run on global financial institutions, given the opacity of their balance sheets; excessive dependence on short-term funding; vicious cycles of mark-to-market losses driving fire sales of MBS; the realization that financial firms around the world were pursuing similar (flawed) business models; and global swings in risk aversion. The U.S. subprime crisis, rather than being a fundamental driver of the global crisis, may have been merely a trigger for a global bank run and for disillusionment with a risky business model that already had spread around the world.
Topic:
Financial Crisis, Global Financial Crisis, and Housing
Political Geography:
United States and North America

116. The Young Generation Prepares to Support the United Nations

Author:
Hans Blix and William J. vanden Heuvel
Publication Date:
04-2009
Content Type:
Journal Article
Institution:
Council of American Ambassadors
Abstract:
Today, people throughout the world are experiencing the most severe set of global crises since the United Nations was formed over 60 years ago. They include financial, economic and environmental crises as well as crises of scarcity—of food, fuel and water.
Topic:
Climate Change, United Nations, and Financial Crisis
Political Geography:
United States

117. The G-2 Mirage

Author:
Elizabeth C. Economy and Adam Segal
Publication Date:
05-2009
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
A heightened bilateral relationship may not be possible for China and the United States, as the two countries have mismatched interests and values. Washington should embrace a more flexible and multilateral approach.
Topic:
Foreign Policy and Financial Crisis
Political Geography:
United States, China, Washington, Israel, and Palestine

118. US Taxation of Multinational Corporations: What Makes Sense, What Doesn't

Author:
Gary Clyde Hufbauer and Jisun Kim
Publication Date:
03-2009
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
As the administration and Congress catch their breath from rescuing the economy, their thoughts are quickly turning to other issues—including the structure of the US tax system. Everyone agrees that the US tax system inflicts enormous complexity on the American public. But reform is never easy. Who pays the tax burden ranks among the most contentious issues that Congress has historically faced, and this time around will be no different.
Topic:
Economics, International Trade and Finance, and Financial Crisis
Political Geography:
United States

119. The Internationalization of Chinese and Indian Firms: Trends, Motivations and Policy Implications

Author:
Sandeep Kapur and Suma Athreye
Publication Date:
01-2009
Content Type:
Policy Brief
Institution:
United Nations University
Abstract:
The last two decades have seen a significant rise in the internationalization of firms from developing economies. In addition to their growing participation in international trade, a number of leading emerging economies are contributing to growing outflows of foreign direct investment (FDI) and cross-border mergers and acquisitions. According to the 2008 World Investment Report, outward flows of FDI from developing countries rose from about US$6 billion between 1989 and 1991 to US$225 billion in 2007. As a percentage of total global outflows, the share of developing countries grew from 2.7% to nearly 13.0% during this period.
Topic:
International Relations, Economics, Globalization, International Political Economy, Markets, Foreign Direct Investment, and Financial Crisis
Political Geography:
United States, China, and India

120. Wall Street/Main Street: The Challenge of Building Financial Security in the Obama Era

Publication Date:
04-2009
Content Type:
Working Paper
Institution:
Aspen Institute
Abstract:
The last 18 months have dealt a devastating blow to Americans' sense of financial security. Few have been untouched by the financial crisis. For many, wealth accumulated over years of saving and investing has disappeared almost overnight. For many more, the economic crisis has imperiled their jobs, their ability to provide for their families, and their optimism about the future.
Topic:
Economics, International Trade and Finance, and Financial Crisis
Political Geography:
United States and America