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Begin New Search Topic Monetary Policy Publication Year within 25 Years

151. Restoring Fiscal Equilibrium in the United States

Author:
William R. Cline
Publication Date:
06-2012
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Halfway through this presidential election year, there is great uncertainty about how, when, and even whether the United States will restore fiscal sustainability. As shown by the near-default because of the impasse over the debt ceiling in July 2011, the two parties have been in sharp opposition on this issue. The Republicans have insisted that adjustment be accomplished by spending cuts rather than tax increases. Two hundred and thirty eight Republican congressmen and 41 Republican senators have signed the Grover Norquist pledge to oppose any attempt to raise marginal tax rates or reduce deductions without implementing offsetting tax reductions. In contrast, Democratic lawmakers have tended to emphasize the maintenance of social and entitlement programs and expressed a willingness to restore higher tax rates if necessary.
Topic:
Economics, Monetary Policy, Financial Crisis, Governance, and Law
Political Geography:
United States

152. Right Idea, Wrong Direction: Obama's Corporate Tax Reform Proposals

Author:
Gary Clyde Hufbauer and Martin Vieiro
Publication Date:
05-2012
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The need for US corporate tax reform is blindingly obvious. Conservatives contend that the top corporate tax rate— whether measured in statutory or effective terms—is the second highest in the Organization for Economic Cooperation and Development (OECD). Liberals argue that the US corporate tax system is riddled with complex “loopholes,” enabling many firms—whether incorporated or not—to pay less than their fair share.
Topic:
Economics, International Trade and Finance, Monetary Policy, and Governance
Political Geography:
United States

153. Does Monetary Cooperation or Confrontation Lead to Successful Fiscal Consolidation?

Author:
Adam S. Posen, Tomas Hellebrandt, and Marilyne Tolle
Publication Date:
04-2012
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Active accommodation of fiscal consolidations by monetary policy is controversial, as can be seen in current euro area discussions. While many observers acknowledge that there is usually a place for monetary accommodation in response to fiscal consolidation, a sequencing argument is often heard today that fiscal commitment must precede any loosening. Some analysts go further to suggest that toughness by central banks taking a hard line on adjustment is critical to inducing sustained fiscal stabilization. This policy brief looks at the recent historical record of central bank behavior vis-à-vis fiscal authorities, at least until the current crisis period, and whether accommodative approaches ahead of consolidations have proven dangerous or helpful. The authors also try to assess the market credibility of fiscal consolidations as a function of the central banks' monetary stance prior to fiscal consolidation. They find clear evidence of positive associations between the degree of monetary ease in advance of fiscal consolidation programs and both those programs' success and their market credibility.
Topic:
Economics, Markets, Monetary Policy, Financial Crisis, and Governance

154. Overlooked Opportunity: Tradable Business Services, Developing Asia, and Growth

Author:
J. Bradford Jensen
Publication Date:
11-2012
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper argues that developing Asia is overlooking an opportunity for increased growth and development through trade in business services. Developing Asia would benefit from liberalizing services trade as it has benefited from liberalizing goods trade. This argument rests on these key findings: business services are important for growth, developing Asia is relatively under-endowed with business services, many business services are tradable, and developing Asia has relatively high barriers to services trade.
Topic:
Economics, Emerging Markets, International Trade and Finance, Markets, and Monetary Policy
Political Geography:
Israel and Asia

155. Assessing Potential Inflation Consequences of QE after Financial Crises

Author:
Samuel Reynard
Publication Date:
11-2012
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Financial crises have been followed by different inflation paths which are related to monetary policy and money creation by the banking sector during those crises. Accounting for equilibrium changes and non-linearity issues, the empirical relationship between money and subsequent inflation developments has remained stable and similar in crisis and normal times. This analysis can explain why the financial crisis in Argentina in the early 2000s was followed by increasing inflation, whereas Japan experienced deflation in the 1990s and 2000s despite quantitative easing. Current quantitative easing policies should lead to increasing and persistent inflation over the next years.
Topic:
Development, Economics, Emerging Markets, Monetary Policy, and Financial Crisis
Political Geography:
Latin America

156. The Services Sector in Asia: Is It an Engine of Growth?

Author:
Donghyun Park and Kwanho Shin
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The underdeveloped services sector in Asia has the potential to become a new engine of economic growth in developing Asia, which has traditionally relied on export-oriented manufacturing to power its growth. In this paper, Park and Shin empirically analyze the prospects for the services sector in Asia. Their analysis of 12 Asian countries indicates that the services sector has already contributed substantially to the region's growth in the past. Somewhat surprisingly, in light of the difficulty of achieving productivity gains in services, they also find that services labor productivity grew at a healthy pace in much of the region. Overall their analysis provides substantial cause for optimism about the role of the services sector as an engine of growth in Asia. However, they caution that some Asian countries where the services sector is currently struggling, such as Korea and Thailand, will find it more challenging to develop the sector.
Topic:
Economics, Emerging Markets, Industrial Policy, International Trade and Finance, Markets, and Monetary Policy
Political Geography:
Asia

157. The Renminbi Bloc Is Here: Asia Down, Rest of the World to Go?

Author:
Arvind Subramanian and Martin Kessler
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
A country's rise to economic dominance tends to be accompanied by its currency becoming a reference point, with other currencies tracking it implicitly or explicitly. For a sample comprising emerging market economies, we show that in the last two years, the renminbi has increasingly become a reference currency which we define as one which exhibits a high degree of co-movement (CMC) with other currencies. In East Asia, there is already a renminbi bloc, because the renminbi has become the dominant reference currency, eclipsing the dollar, which is a historic development. In this region, 7 currencies out of 10 co-move more closely with the renminbi than with the dollar, with the average value of the CMC relative to the renminbi being 40 percent greater than that for the dollar. We find that co-movements with a reference currency, especially for the renminbi, are associated with trade integration. We draw some lessons for the prospects for the renminbi bloc to move beyond Asia based on a comparison of the renminbi's situation today and that of the Japanese yen in the early 1990s. If trade were the sole driver, a more global renminbi bloc could emerge by the mid-2030s but complementary reforms of the financial and external sector could considerably expedite the process.
Topic:
Development, Economics, Emerging Markets, Foreign Exchange, and Monetary Policy
Political Geography:
China and Asia

158. Capital Account Policies and the Real Exchange Rate

Author:
Olivier Jeanne
Publication Date:
09-2012
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper presents a simple model of how a small open economy can undervalue its real exchange rate using its capital account policies. The paper presents several properties of such policies, and proposes a rule of thumb to assess their welfare cost. The model is applied to an analysis of Chinese capital account policies.
Topic:
Development, Economics, Emerging Markets, and Monetary Policy
Political Geography:
China

159. John Williamson and the Evolution of the International Monetary System

Author:
Edwin M. Truman
Publication Date:
08-2012
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Throughout his brilliant career, John Williamson has frequently focused his considerable analytical skills and powers of persuasion on reform of the international monetary system. This paper examines two principal areas of his concern: (1) exchange rates and the adjustment process, and (2) international liquidity, seigniorage, and the stability of the system. With respect to exchange rates, I find that there has been a moderate reduction in variability, but over the past 40 years external imbalances have, if anything, worsened. The adjustment process has malfunctioned. With respect to international liquidity, reserves have expanded rapidly, but their expansion has been demand-determined, has not involved a remonetization of gold or an increase in inflation. I find that concerns about the size and maldistribution of seigniorage are misplaced. Moreover, we are seeing a steady evolution toward a multicurrency international monetary and financial system. However, reserve diversification does not appear to have adversely affected exchange rate volatility to date. I conclude that the principal benefits of the Bretton Woods international monetary system remain and the principal weaknesses remain. But the system is evolving. It could be improved with respect to the adjustment process and the role of the International Monetary Fund as the international lender of last resort.
Topic:
Economics, Foreign Exchange, International Trade and Finance, International Monetary Fund, Monetary Policy, and Financial Crisis

160. The European Crisis Deepens

Author:
Simon Johnson and Peter Boone
Publication Date:
01-2012
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Successive plans to restore confidence in the euro area have failed. Proposals currently on the table also seem likely to fail. The market cost of borrowing is at unsustainable levels for many banks and a significant number of governments that share the euro.
Topic:
Political Economy, Regional Cooperation, and Monetary Policy
Political Geography:
Europe