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762. Tipping Point
- Author:
- John H. Makin
- Publication Date:
- 08-2008
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- The annual report of the Bank of International Settlements (BIS)—the central bankers' central bank—which appeared in late June, was somewhat schizophrenic. On the one hand, the BIS called for world interest rates to rise in order to deal with a “clear and present threat” from global inflation while, on the other hand, it warned that the global economy may be close to a “tipping point” into a “slowdown severe enough to transform the current period of rising inflation into a period of falling prices.” The simultaneous rise in oil prices and the fall in yields in government securities occurring as the BIS released this ambivalent statement captured well the tensions inherent in the stagflationary crosscurrents facing the global economy. Against this ominous background, the release of the BIS report coincided with the onset of a global bear market in equities.
- Topic:
- Economics, Markets, Oil, and Political Economy
- Political Geography:
- United States
763. Risk and Systemic Risk
- Author:
- John H. Makin
- Publication Date:
- 09-2008
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- Speaking on August 22 at the Federal Reserve Bank of Kansas City's Annual Economic Symposium in Jackson Hole, Wyoming, Federal Reserve chairman Ben Bernanke entitled his important address “Reducing Systemic Risk.” Bernanke outlined three key elements of the Fed's response to what he described as “one of the most challenging economic and policy environments in memory.” First, the Fed has eased monetary policy, cutting the federal funds rate from 5.25 percent to 2 percent. Second, the Fed has expanded its liquidity support by developing new special lending facilities to mitigate “very severe strains in short-term funding markets.” The third and, as yet, unfinished element of the Fed's strategy involves “a range of activities and initiatives undertaken in our [the Fed's] role as financial regulator and supervisor.”
- Topic:
- Economics, International Trade and Finance, Markets, and Political Economy
764. Panic
- Author:
- John H. Makin
- Publication Date:
- 09-2008
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- The credit crisis that followed the collapse of the housing bubble turned into a financial panic on Wednesday, September 17, 2008. There was a run by households out of money-market funds and into safe Treasury bills, pushing their yields to zero for the first time since the Great Depression. There was a liquidity trap in the interbank market, in which banks that are supposed to lend to each other hoarded cash for fear of runs by their depositors and the insolvency of other banks. Financial markets simply froze in the midst of chaos.
- Topic:
- Economics, Markets, and Political Economy
- Political Geography:
- Middle East
765. More Panic
- Author:
- John H. Makin
- Publication Date:
- 10-2008
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- Over the past several months as central banks and treasuries have struggled to manage a financial panic and avoid or diminish its soon-to-appear devastating impact on the global economy, I have often thought about the efforts of two great economists to understand the lessons of the Great Depression. John Maynard Keynes's monumental General Theory of Employment, Interest and Money, published in 1936, showed how a failure to understand the nature of the demand for money contributed to the Great Depression. “The importance of money essentially flows from being a link between the present and the future,” Keynes said.
- Topic:
- Economics, Markets, and Political Economy
- Political Geography:
- United States
766. Print Money and Cut the Payroll Tax
- Author:
- John H. Makin
- Publication Date:
- 12-2008
- Content Type:
- Policy Brief
- Institution:
- American Enterprise Institute for Public Policy Research
- Abstract:
- President-elect Barack Obama faces the most difficult economic challenge confronting an incoming American president since the election of Franklin Delano Roosevelt seventy-six years ago in 1932. When he assumes office on January 20, Obama will need to act decisively with heretofore unprecedented fiscal policy steps, in conjunction with measures by the Federal Reserve to increase the money supply and lower long-term interest rates. All of this must be done to help contain and reverse the accelerating global slowdown by halting the rapidly deepening American recession. We can only hope that other national leaders and central banks will follow suit.
- Topic:
- Economics, Markets, and Political Economy
- Political Geography:
- United States and America
767. France and Globalization
- Author:
- Daniel S. Hamilton and Joseph P. Quinlan
- Publication Date:
- 06-2008
- Content Type:
- Working Paper
- Institution:
- Center for Transatlantic Relations
- Abstract:
- Globalization is changing all of our lives as the pace of economic interdependence grows between developed and emerging countries. Debate thrives about whether globalization has been good or bad for European consumers, workers, companies and governments and what are the prospects in the future. In a dynamic and uncertain world can Europe act to take advantage of the opportunities created by globalization and mitigate its challenges?
- Topic:
- Economics, Globalization, International Trade and Finance, and Markets
- Political Geography:
- America, Europe, and France
768. Anatomy of a Fallacy: The Senlis Council and Narcotics in Afghanistan
- Author:
- Frédéric Grare
- Publication Date:
- 02-2008
- Content Type:
- Working Paper
- Institution:
- Centre for International Governance Innovation
- Abstract:
- Supplying the majority of the heroin consumed in Europe and nearly all consumed in Russia, Afghanistan's booming illicit drug market has not only entirely distorted the Afghan economy but also corrupted the country's nascent, fragile political system. While current norms regulating the production and traffic of illicit drugs have established the framework of an international prohibition regime, the policies associated with this regime have so far failed to stop or significantly slow the growing of Afghan opium. In 2005, in response to this situation, the Senlis Council, an international drug policy think tank, proposed the creation of a licensing system in Afghanistan which would allow the cultivation of opium for the production of essential medicines such as morphine and codeine. This system is intended to break the vicious circle of the drug economy by moving the opium trade into a legal system controlled by, and benefiting, the state. This paper adopts a critical view of the Senlis proposals, arguing that their underlying principles–economic, social and political–diverge only marginally from those underpinning previous approaches and have little potential for success under current political conditions. The paper concludes that, despite many imperfections, the current policies in place may be optimum given both Afghanistan's present situation and the structural problems inherent in the global war against drugs.
- Topic:
- Crime, International Law, and Markets
- Political Geography:
- Afghanistan, Russia, and Europe
769. How Globalization Has Impacted Labor
- Author:
- Seymour Spilerman
- Publication Date:
- 12-2008
- Content Type:
- Working Paper
- Institution:
- Institute for Social and Economic Research and Policy at Columbia University
- Abstract:
- This essay outlines the features of globalization in the current era and indicates how conceptualizations of this process differ from the related formulations of the Annales School and of World Systems Analysis. The main theme of the paper is then developed, namely an assessment of the ways that globalization has impacted the organization of work and the structure of employment careers. This assessment is based on results from a variety of recent research studies, especially on findings from the Globalife project.
- Topic:
- Economics, Globalization, International Trade and Finance, Markets, and Political Economy
770. East-West Integration and the Economic Geography of Europe
- Author:
- Arne Melchior
- Publication Date:
- 12-2008
- Content Type:
- Working Paper
- Institution:
- Norwegian Institute of International Affairs
- Abstract:
- Implementation of the European internal market and East-West integration has been accompanied by a dramatic change in the spatial distribution of economic activity, with higher growth west and east of a longitude degree through Germany and Italy. In the east, income growth has been accompanied by increasing regional disparities within countries. We examine theoretically and empirically whether European integration as such can explain these developments. Using a numerical simulation model with 9 countries and 90 regions, theoretical predictions are derived about how various patterns of integration may affect the income distribution. Comparing with reality, we find that a reduction in distance-related trade costs combined with east-west integration is best able to explain the actual changes in Europe's economic geography. This suggests that the implementation of the European internal market or the Euro has “made Europe smaller”. In Central Europe, the dominance of capital regions tends to eliminate east-west growth differences inside countries. There is no convincing support for the hypothesis that European integration had adverse effects on non-members.
- Topic:
- Economics, Markets, and Political Economy
- Political Geography:
- Europe