Search

Begin New Search Topic Markets Publication Year within 25 Years

801. The Future of European Electricity: Choices before 2020

Author:
Arno Behrens, Henry Neufeldt, Gunnar Eskeland, Eberhard Jochem, Thure Traber, and Nathan Rive
Publication Date:
07-2008
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
The electricity sector plays a central role in the European Union's efforts to achieve greenhouse gas (GHG) reductions of at least 20% by 2020 compared to 1990 levels. While the electricity sector is currently responsible for about one-third of Europe's total energy-related GHG emissions, there are large potentials for reducing emissions. Mitigation strategies will need to focus on more efficient electricity use, but also on improved conversion rates and new technologies such as renewables and carbon capture and storage (CCS). Apart from mitigation of climate change, the sector will also have to adapt to climate change. Global warming will have a significant impact on the ability to generate electricity and to deliver it without interruption. This ADAM-CEPS Policy Brief focuses on four issues relevant to the nexus between climate change and the electricity sector.
Topic:
Energy Policy and Markets
Political Geography:
Europe

802. Is Social Europe Fit for Globalisation?

Author:
Jørgen Mortensen, ain Begg, and Juraj Draxler
Publication Date:
08-2008
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
This policy brief picks up the main observations and arguments included in a study undertaken by CEPS for the Directorate-General for Employment, Social Affairs and Equal Opportunities of the European Commission. It was presented by Iain Begg at a major Commission conference in Brussels on 16 April 2008, which had broad attendance by officials, media people and researchers, and was concluded by a keynote speech by José Manuel Barroso, President of the Commission. The conference took place at a time of emerging financial crisis and rising oil and food prices, aspects emphasised by some speakers as elements throwing new light on some of the arguments in the report. Hans-Gert Pöttering, President of the European Parliament, stressed that promotion of knowledge and innovation constitutes an important condition for enhancing the competitiveness of the European economy. Thus, the Union should take on a leadership role in combining globalisation with social policy, fighting climate change and fostering environmental stability. Mr. Barroso, in his conclusions underlined the necessity of a renewal of social policies based on equal opportunities, access and solidarity.
Topic:
Economics, Globalization, International Political Economy, Markets, and Labor Issues
Political Geography:
Europe

803. Should central banks target stock prices?

Author:
Paul De Grauwe
Publication Date:
09-2008
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
The question of whether central banks should react to stock price developments has been hotly debated. This discussion has intensified since the eruption of the credit crisis. According to some analysts, including myself, the failure of the US Federal Reserve under Alan Greenspan to react to the bubbles in the stock and housing markets helps to explain the financial excesses and the subsequent crisis.
Topic:
Economics, International Trade and Finance, Markets, and Monetary Policy
Political Geography:
United States

804. The Banking Crisis: Causes, Consequences and Remedies

Author:
Paul De Grauwe
Publication Date:
11-2008
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
The paradigm that financial markets are efficient has provided the intellectual backbone for the deregulation of the banking sector since the 1980s, allowing universal banks to be fully involved in financial markets, and investment banks to become involved in traditional banking. There is now overwhelming evidence that financial markets are not efficient. Bubbles and crashes are an endemic feature of financial markets in capitalist countries. Thus, as a result of deregulation, the balance sheets of universal banks became fully exposed to these bubbles and crashes, undermining the stability of the banking system. The Basel approach to stabilise the banking system has as an implicit assumption that financial markets are efficient, allowing us to model the risks universal banks take and to compute the required capital ratios that will minimise this risk. I argue that this approach is unworkable because the risks that matter for universal banks are tail risks, associated with bubbles and crashes. These cannot be quantified. As a result, there is only one way out, and that is to return to narrow banking, a model that emerged after the previous large-scale banking crisis of the 1930s but that was discarded during the 1980s and 1990s under the influence of the efficient market paradigm.
Topic:
Economics, Markets, and Financial Crisis
Political Geography:
Europe

805. Can Exchange Rates Forecast Commodity Prices?

Author:
Kenneth Rogoff, Yu-chin Chen, and Barbara Rossi
Publication Date:
02-2008
Content Type:
Working Paper
Institution:
Weatherhead Center for International Affairs, Harvard University
Abstract:
This paper studies the dynamic relationship between exchange rate fluctuations and world commodity price movements. Taking into account parameter instability, we demonstrate surprisingly robust evidence that exchange rates predict world commodity price movements, both in-sample and out-of-sample. Our results are consistent with a present value relationship in which the exchange rate depends on a present value of fundamentals including, for a core group of commodity exporters, the world price of their commodity exports. Because global commodity prices are essentially exogenous to these countries, we are able to avoid the endogeneity pitfalls that plague most of the related exchange rate literature. More directly, the analysis suggests that where commodity price forward markets are thin or non-existent, exchange rate-based forecasts may be a viable alternative for predicting future price movements.
Topic:
Economics, Markets, and Financial Crisis
Political Geography:
Australia and New Zealand

806. Investment Cycles and Sovereign Debt Overhang

Author:
Mark Aguiar, Manuel Amador, and Gita Gopinath
Publication Date:
02-2008
Content Type:
Working Paper
Institution:
Weatherhead Center for International Affairs, Harvard University
Abstract:
We characterize optimal taxation of foreign capital and optimal sovereign debt policy in a small open economy where the government cannot commit to policy, seeks to insure a risk averse domestic constituency, and is more impatient than the market. Optimal policy generates long-run cycles in both sovereign debt and foreign direct investment in an environment in which the first best capital stock is a constant. The expected tax on capital endogenously varies with the state of the economy and investment is distorted by more in recessions than in booms amplifying the effect of shocks. The government's lack of commitment induces a negative correlation between investment and the stock of government debt, a "debt overhang" effect. Debt relief is never Pareto improving and cannot affect the long-run level of investment. Further, restricting the government to a balanced budget can eliminate the cyclical distortion of investment.
Topic:
Debt, Economics, Markets, and Financial Crisis

807. Economic Aspects of the Cold War, 1962-1975

Author:
Richard N. Cooper
Publication Date:
02-2008
Content Type:
Working Paper
Institution:
Weatherhead Center for International Affairs, Harvard University
Abstract:
US objectives during the Cold War were to prevent Soviet attacks on the United States and its allies and to prevent the spread of communism as a political and economic system to other countries, whether by force or by threat, subversion, persuasion, or bribery. The principal instrument to prevent attack was an extensive build-up of defensive and retaliatory military forces, combined with political and military alliances that extended US protection to other countries in exchange for their engagement and support. The principal instruments for preventing the spread of communism by non-military means involved building an international economic system conducive to economic prosperity; engaging in persuasion, providing incentives, and occasionally imposing economic sanctions; and, not least, promoting a robust US economy that could serve as a stimulant to others and as a beacon for the benefits of a free, enterprise-based, market-oriented economy.
Topic:
Cold War, Communism, Economics, and Markets
Political Geography:
United States

808. Country Economic Forecasts: China

Publication Date:
12-2008
Content Type:
Policy Brief
Institution:
Oxford Economics
Abstract:
A turn in the domestic investment cycle has been coupled with a dramatic slowdown in external demand, leaving China weathering storms on both fronts. But with the government announcing an unprecedented fiscal package and with fewer structural problems to contend with than in earlier downturns, China is likely to fare better than in previous domestically-driven slowdowns such as in the early-1980s and 1990s.
Topic:
Development, Economics, Markets, and Financial Crisis
Political Geography:
China

809. Country Economic Forecasts: Brazil

Publication Date:
12-2008
Content Type:
Policy Brief
Institution:
Oxford Economics
Abstract:
In sharp contrast to many emergers, Brazil was still growing very robustly in Q3. But the intensification of the global crisis, and its numerous repercussions – many of which were unforeseen – since September has been so great that it has stopped the economy in its tracks. The clearest sign of this is that annual import growth, which had been growing at close to 60% mid-year, dropped to only 9.2% in November. This is an indication of the extent to which previously soaring domestic demand growth, particularly investment, has slowed. Export volumes were already weakening in Q3 and the major deterioration in the global background since then is expected to lead to exports falling by nearly 3% in 2009 as a whole. This, together with the much lower commodity prices than firms will have budgeted for and the global fall in business confidence, will cause investment to shrink in 2009 after 15% growth in 2008. Consumer spending growth is also forecast to slow significantly but should at least stay positive, helped by an expected moderation in inflation. Meanwhile, given its healthy fiscal position, the government is likely to step up its spending. Overall, GDP growth is now forecast to slow to 1.3% in 2009. Although scope for the central bank to cut interest rates remains constrained by the weak BRL and 6%+ inflation, the rapid pace of the slowdown in both Brazil and the rest of the world may lead to a substantial reduction in underlying inflation pressures. This could pave the way for interest rate cuts to start in early-2009.
Topic:
Economics, Markets, and Financial Crisis
Political Geography:
Latin America

810. Who Buys Whom in International Oligopolies with FDI and Technology Transfer?

Author:
Leo A. Grünfeld and Francesca Sanna-Randaccio
Publication Date:
01-2008
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
Under what conditions will a technology leader from a small country acquire a laggard from a large country, and vice versa? We answer this question with a two-firm two-country Cournot model, where firms enter new markets via greenfield FDI or acquisition. The model takes into account both technological and market size asymmetries, and allows for M transaction costs, like corporate finance and legal fees. We show that to be the acquirer, a firm from a small country needs not only a strong technological lead but also the ability to exploit it on a global scale, which requires low international technology transfer costs. Moreover, we find that a multilateral greenfield investment liberalization may actually increase the incentives for foreign acquisitions. The effect of such liberalization on the nationality of the acquirer depends largely on the extent of the technology gap.
Topic:
Economics, International Trade and Finance, Markets, and Science and Technology