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92. Five Challenges for Janet Yellen at the Federal Reserve
- Author:
- David J. Stockton
- Publication Date:
- 12-2013
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Janet Yellen, who will serve as the 15th chair of the Board of Governors of the Federal Reserve System after her likely confirmation in December 2013, has the experience, intelligence, and judgment to be an excellent successor to Ben S. Bernanke. But she will need to employ all those strengths, and then some, to deal with the challenges facing the nation's central bank. Her success in confronting these challenges will profoundly affect the United States and world economies. Five key challenges await her.
- Topic:
- Economics, International Trade and Finance, Markets, and Monetary Policy
- Political Geography:
- United States
93. Estimates of Fundamental Equilibrium Exchange Rates, November 2013
- Author:
- William R. Cline
- Publication Date:
- 11-2013
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Since the previous estimates of fundamental equilibrium exchange rates (FEERs) in this series in May (Cline 2013), numerous exchange rates have moved substantially in response to the announcement in late May that the US Federal Reserve would likely begin to "taper" its quantitative easing program of large-scale asset purchases. The new estimates here again take as their point of departure the medium-term current account projections of the most recent World Economic Outlook (WEO) of the International Monetary Fund (IMF 2013b). However, because of a seeming inertia in the Fund's projections despite large exchange rate moves, this round of calculations pays special attention to compiling alternative estimates for economies with large changes in exchange rates.
- Topic:
- Economics, Foreign Exchange, International Trade and Finance, Markets, Monetary Policy, and Governance
- Political Geography:
- United States
94. Stabilizing Properties of Flexible Exchange Rates: Evidence from the Global Financial Crisis
- Author:
- Joseph E. Gagnon
- Publication Date:
- 11-2013
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- There is a long-standing debate among economists and policymakers on the benefits of flexible versus fixed exchange rates (Klein and Shambaugh 2010). In principle, flexible exchange rates allow a country's central bank to focus on stabilizing economic growth and inflation, which are the ultimate goals of monetary policy. However, some argue that in practice central banks often do not use their powers wisely and it may be better to restrict their freedom by requiring them to peg their currency to that of an important trading partner. Others note that flexible exchange rates are far more volatile than fundamental factors can explain (Flood and Rose 1995), raising the possibility that they may introduce wasteful cross-sectoral fluctuations in economic activity. One common viewpoint is that flexible exchange rates may be fine for large countries but that the smallest countries are better off with fixed exchange rates (Åslund 2010).
- Topic:
- Economics, Foreign Exchange, International Trade and Finance, Markets, and Financial Crisis
- Political Geography:
- United States, Japan, China, and United Kingdom
95. US Employment Deindustrialization: Insights from History and the International Experience
- Author:
- Robert Z. Lawrence and Lawrence Edwards
- Publication Date:
- 10-2013
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Manufacturing is a key sector of the US economy. Although value added in manufacturing represented just 11.9 percent of GDP in 2012, manufacturing activity is strongly associated with economic growth, because manufacturing serves as the fulcrum of supply chains that combine and process raw materials and services to produce goods.1 In addition, the sector is among the most dynamic—accounting for about 70 percent of US spending on business research and development—and it regularly outstrips the rest of the economy in productivity growth. Over the long run, the contributions of US manufacturing to total output growth have been steady. Measured in 2005 dollars, for example, the share of manufacturing in US output was about the same in 2005 as in 1947.
- Topic:
- Economics, Emerging Markets, Industrial Policy, and International Trade and Finance
- Political Geography:
- United States
96. Financial Services in the Transatlantic Trade and Investment Partnership
- Author:
- Simon Johnson and Jeffrey J. Schott
- Publication Date:
- 10-2013
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- In July 2013, the United States and the European Union launched negotiations on a Transatlantic Trade and Investment Partnership (TTIP). The talks aim to craft a comprehensive accord matching or exceeding the reforms achieved in their previous trade pacts. Since both sides have included financial services in prior free trade agreements (FTAs), they implicitly recognized that the TTIP accord would also cover this sector. But what will be included in the financial services chapter is still subject to debate.
- Topic:
- Economics, International Trade and Finance, Treaties and Agreements, and Bilateral Relations
- Political Geography:
- United States and Europe
97. Inward FDI in Germany and its policy context, 2012
- Author:
- Thomas Jost
- Publication Date:
- 04-2013
- Content Type:
- Working Paper
- Institution:
- Columbia Center on Sustainable Investment
- Abstract:
- In 2011 and the first half of 2012, inward FDI (IFDI) flows to Germany continued to be relatively strong. Germany attracte market-seeking MNEs, as its economy showed remarkable economic growth despite the ongoing problems in many other countries of the Eurozone. In the second half of 2012, IFDI flows turned sharply negative, declining for the year as a whole to only US$ 7 billion, compared with US$ 49 billion in 2011. This decline reflects the difficult financial situation of many companies, including banks in the Eurozone, and could also dampen inflows in 2013. In the longer-term, Germany could profit again from rising FDI as its economy has successfully implemented reforms over the past decade, and the German Government has continued to keep its investment policy regime open.
- Topic:
- Economics, International Trade and Finance, Markets, and Foreign Direct Investment
- Political Geography:
- United States, Europe, and Germany
98. The global economy: Healing or still hurting?
- Author:
- Leo Abruzzese
- Publication Date:
- 06-2013
- Content Type:
- Working Paper
- Abstract:
- After a series of setbacks, the global economy is slowly mending US economy is strengthening; star performer Jobs market is on a modest upswing Housing is bouncing back China is recovering from a slowdown Boom years are over, but so is the slump European debt crisis is stabilizing but austerity is killing the economy Euro zone remains big drag on global growth Japan is showing signs of recovery under a new government Central banks are supporting the bounce - back in a big way Don't expect a brisk recovery, though; many risks remains Debt levels still high; asset prices are volatile; tensions in Middle East, China, Kore and has stabilised in Europe, but at a low level. In Germany, manufacturing output is rising again.
- Topic:
- Economics, International Trade and Finance, Markets, Monetary Policy, and Infrastructure
- Political Geography:
- United States and China
99. The Global Arctic: The Growing Arctic Interests of Russia, China, the United States and the European Union
- Author:
- Juha Käpylä and Harri Mikkola
- Publication Date:
- 08-2013
- Content Type:
- Policy Brief
- Institution:
- Finnish Institute of International Affairs
- Abstract:
- With exciting economic opportunities and serious environmental challenges, the Arctic is transforming and re-emerging as a geopolitically important region. Major global players within and without the Arctic are paying greater attention to the region. While Russia is a traditional Arctic state with significant economic and security interests in the region, China, the US and the EU have also expressed their Arctic interests more explicitly. They are keen to tap into the economic potential and have a say in the way the region becomes accessed, exploited and governed. As a result, the Arctic is no longer a spatially or administratively confined region, but is instead taking its new form in the midst of contemporary global politics. The globalization and economization of the Arctic will most likely downplay environmentalism and reduce the relative influence of the indigenous people and small Arctic states in Arctic affairs. Arctic governance is also likely to turn more complex and complicated as the economic and political stakes are raised.
- Topic:
- Security, Foreign Policy, Climate Change, Development, International Trade and Finance, Oil, and Natural Resources
- Political Geography:
- Russia, United States, China, and Europe
100. How to Measure Underemployment?
- Author:
- David G. Blanchflower and David N. F. Bell
- Publication Date:
- 08-2013
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- One of the factors that may inhibit reductions in unemployment as the economy recovers is the extent to which existing workers would like to work more hours and employers may prefer to let them work longer hours before making new hires. This phenomenon suggests that the unemployment rate does not capture the full extent of excess capacity in the labor market. But how should it be measured? In this paper we argue that the United States does not have the necessary statistical tools to calibrate this form of underemployment. We describe an index that captures the joint effects of unemployment and underemployment and provides a more complete picture of labor market excess capacity. We show how this index can be implemented using British data and describe its evolution over the Great Recession. Comparisons of our index with unemployment rates suggest that unemployment rates understate differences in labor market excess capacity by age group and overstate differences by gender. We also show that being unable to work the hours that one desires has a negative effect on well-being. Finally, we recommend that the Current Population Survey conducted by the US Bureau of Labor Statistics might be extended to enable the construction of an equivalent US index.
- Topic:
- Economics, International Trade and Finance, Markets, and Labor Issues
- Political Geography:
- United States and Europe