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1132. Labor Markets in Eastern Europe and Eurasia
- Author:
- Robyn Murphy, Ron Sprout, and Ayo Heinegg
- Publication Date:
- 01-2007
- Content Type:
- Working Paper
- Institution:
- United States Agency for International Development
- Abstract:
- This research attempts to look systematically at the available data regarding labor market characteristics of the transition in Eastern Europe and Eurasia. A primary focus is the examination of the data in light of a World Bank working hypothesis that “there are signs of an emerging divide between labor markets in the transition economies of Eastern Europe and those of low-income Eurasian countries.” We find significant labor market gaps and differences between the CEE countries (particularly the Northern Tier CEE) and Eurasia but mixed evidence at best that these gaps are growing. We also find that there remain some key challenges and adverse trends in labor markets even among the Northern Tier CEE countries.
- Topic:
- Development, Economics, and Markets
- Political Geography:
- Eurasia and Eastern Europe
1133. India's Future: It's About Jobs
- Author:
- Geoffrey N. Keim and Beth Anne Wilson
- Publication Date:
- 11-2007
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- Projections of sustained strong growth in India depend importantly on the utilization of the huge increase in India's working-age population projected over the next two decades. To date, however, India's economic growth has been concentrated in high-skill and capital-intensive sectors, and has not generated strong employment growth. In this paper, we highlight the tension between India's performance in output and employment, describe the characteristics of India's demographic dividend, and discuss impediments to India's shift away from agriculture.
- Topic:
- Development, Economics, and Markets
- Political Geography:
- South Asia and India
1134. The Role of China in Asia: Engine, Conduit, or Steamroller?
- Author:
- Beth Anne Wilson, Jane T. Haltmaier, Shaghil Ahmed, Brahima Coulibaly, Ross Knippenberg, Sylvain Leduc, and Mario Marazzi
- Publication Date:
- 09-2007
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- This paper assesses China's role in Asia as an independent engine of growth, as a conduit of demand from the industrial countries, and as a competitor for export markets. We provide both macroeconomic and microeconomic evidence. The macroeconomic analysis focuses on the impact of U.S. and Chinese demand on the output of the Asian economies by estimating growth comovements and VARs. The results suggest an increasing role of China as an independent source of growth. The microeconomic analysis decomposes trade into basic products, parts and components, and finished goods. We find a large role for parts and components trade consistent with China playing an important and increasing role as a conduit. We also estimate some regressions that show that China's increasing presence in export markets has had a negative effect on exports of some products for some other Asian economies, but not for other products, including those of the important electronic high-technology industry.
- Topic:
- Development, Economics, International Trade and Finance, and Markets
- Political Geography:
- United States, China, and Asia
1135. Oil Shocks and External Adjustment
- Author:
- Luca Guerrieri, Martin Bodenstein, and Christopher J. Erceg
- Publication Date:
- 06-2007
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- This paper investigates how oil price shocks affect the trade balance and terms of trade in a two country DSGE model. We show that the response of the external sector depends critically on the structure of financial market risk-sharing. Under incomplete markets, higher oil prices reduce the relative wealth of an oil-importing country, and induce its nonoil terms of trade to deteriorate, and its nonoil trade balance to improve. The magnitude of the nonoil terms of trade response hinges on structural parameters that affect the divergence in wealth effects across oil importers and exporters, including the elasticity of substitution between oil and other inputs in production, and the discount factor. By contrast, cross-country wealth differences effectively disappear under complete markets, with the implication that oil shocks have essentially no effect on the nonoil terms of trade or the nonoil trade balance.
- Topic:
- Economics, Foreign Exchange, International Trade and Finance, Markets, and Oil
1136. Exchange Rate Pass-Through to Export Prices: Assessing Some Cross-Country Evidence
- Author:
- Robert Vigfusson, Nathan Sheets, and Joseph Gagnon
- Publication Date:
- 09-2007
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- A growing body of empirical work has found evidence of a decline in exchange rate pass-through to import prices in a number of industrial countries. Our paper complements this work by examining pass-through from the other side of the transaction; that is, we assess the exchange rate sensitivity of export prices (denominated in the exporter's currency). We first sketch out a streamlined analytical model that highlights some key factors that determine pass-through. Using this model as reference, we find that the prices charged on exports to the United States are more responsive to the exchange rate than is the case for export prices to other destinations, which is consistent with results in the literature suggesting that import price pass-through in the U.S. market is relatively low. We also find that moves in the exchange rate sensitivity of export prices over time have been significantly affected by country and region-specific factors, including the Asian financial crisis (for emerging Asia), deepening integration with the United States (for Canada), and the effects of the 1992 ERM crisis (for the United Kingdom).
- Topic:
- Economics, Foreign Exchange, International Trade and Finance, and Markets
- Political Geography:
- United States, United Kingdom, Canada, and Asia
1137. U.S. External Adjustment: Is It Disorderly? Is It Unique? Will It Disrupt the Rest of the World?
- Author:
- Steven B. Kamin and Trevor A. Reeve
- Publication Date:
- 04-2007
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- In recent years, a number of studies have analyzed the experiences of a broad range of industrial economies during periods when their current account deficits have narrowed. Such studies identified systematic aspects of external adjustment, but it is unclear how good a guide the experience of other countries may be to the effects of a future narrowing of the U.S. external imbalance. In contrast, this paper focuses in depth on the historical experience of external adjustment in the United States. Using data from the past thirty-five years, we compare economic performance in episodes during which the U.S. trade balance deteriorated and episodes during which it adjusted. We find trade balance adjustment to have been generally benign: U.S. real GDP growth tended to fall, but not to a statistically significant extent; housing construction slumped; inflation generally rose modestly; and although nominal interest rates tended to rise, real interest rates fell. The paper then compares these outcomes to those in foreign industrial economies. We find that the economic performance of the United States during periods of external adjustment is remarkably similar to the foreign experience. Finally, we also examine the performance of the foreign industrial economies during the periods of U.S. deterioration and adjustment. Contrary to concerns that U.S. adjustment will prove injurious to foreign economies, our analysis suggests that the foreign economies fared reasonably well during past periods when the U.S. trade deficit narrowed: the growth of domestic demand and real GDP abroad generally strengthened during such episodes, although inflation and interest rates tended to rise as well.
- Topic:
- Economics, Foreign Exchange, International Trade and Finance, and Markets
- Political Geography:
- United States
1138. Some Simple Tests of the Globalization and Inflation Hypothesis
- Author:
- Steven B. Kamin, Jaime Marquez, Jane Ihrig, and Deborah Lindner
- Publication Date:
- 04-2007
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- This paper evaluates the hypothesis that globalization has increased the role of international factors and decreased the role of domestic factors in the inflation process in industrial economies. Toward that end, we estimate standard Phillips curve inflation equations for 11 industrial countries and use these estimates to test several predictions of the globalization and inflation hypothesis. Our results provide little support for that hypothesis. First, the estimated effect of foreign output gaps on domestic consumer price inflation is generally insignificant and often of the wrong sign. Second, we find no evidence that the trend decline in the sensitivity of inflation to the domestic output gap observed in many countries owes to globalization. Finally, and most surprisingly, our econometric results indicate no increase over time in the responsiveness of inflation to import prices for most countries. However, even though we find no evidence that globalization is affecting the parameters of the inflation process, globalization may be helping to stabilize real GDP and hence inflation. Over time, the volatility of real GDP growth has declined by more than the volatility of domestic demand, suggesting that net exports increasingly are acting to buffer output from fluctuations in domestic demand.
- Topic:
- Economics, Emerging Markets, Globalization, International Trade and Finance, and Markets
1139. Economic Survey of the United States, 2007
- Publication Date:
- 05-2007
- Content Type:
- Policy Brief
- Institution:
- The Organisation for Economic Co-operation and Development
- Abstract:
- Despite a sharp housing market correction, overall growth has been holding up fairly well. Strong foreign demand and a decline in import growth have slowed the rise in the external deficit. With activity near capacity limits, some inflationary pressures have emerged. Reining them in without stifling growth is the main challenge for monetary policy. Looking further ahead, the key challenges are to sustain healthy growth and ensure fiscal sustainability in the face of population ageing. Against this backdrop, the Survey focuses on the following issues: Enhancing the economy's growth potential. Trend growth is slowing because labour productivity gains, though remaining high, no longer suffice to compensate for the deceleration in potential employment due mainly to demographic factors. Prospects for productivity growth appear favourable, but further efficiency gains could be achieved by tackling unfinished business in the area of structural reform. Labour supply could be boosted by increasing work incentives for the disabled, raising the earned income tax credit and delaying retirement eligibility.
- Topic:
- Development, Economics, and Markets
- Political Geography:
- United States
1140. Prosecuting Cartels without Direct Evidence of Agreement
- Publication Date:
- 06-2007
- Content Type:
- Policy Brief
- Institution:
- The Organisation for Economic Co-operation and Development
- Abstract:
- Cartels are agreements among competitors fixing prices, allocating markets or rigging tenders (bids). They are the most harmful of all types of competition law violations and should be sanctioned severely. Cartel cases are unique. The most important part of a cartel case is simply proving that such an agreement existed. But getting direct evidence of a cartel agreement can be difficult. Cartel operators work in secret and often do not co-operate with investigators. In these circumstances, circumstantial evidence can play an important role in proving the agreement.
- Topic:
- Economics, Markets, and Treaties and Agreements