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1231. Simple Monetary Rules Under Fiscal Dominance

Author:
Ricardo Nunes, Michael Kumhof, and Irina Yakadina
Publication Date:
07-2008
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper asks whether an aggressive monetary policy response to inflation is feasible in countries that suffer from fiscal dominance, as long as monetary policy also responds to fiscal variables. We find that if nominal interest rates are allowed to respond to government debt, even aggressive rules that satisfy the Taylor principle can produce unique equilibria. But following such rules results in extremely volatile inflation. This leads to very frequent violations of the zero lower bound on nominal interest rates that make such rules infeasible. Even within the set of feasible rules the optimal response to inflation is highly negative, and more aggressive inflation fighting is inferior from a welfare point of view. The welfare gain from responding to fiscal variables is minimal compared to the gain from eliminating fiscal dominance.
Topic:
Economics, Government, and Political Economy

1232. AK Party Survives Closure Case: What Is Next?

Author:
Ihsan D. Dagi
Publication Date:
08-2008
Content Type:
Policy Brief
Institution:
SETA Foundation for Political, Economic and Social Research
Abstract:
The Constitutional Court ruled not to close down the AK Party, relieving Turkey from an unprecedented level of political uncertainty, social and economic turmoil, and potential chaos. Instead, the court chose to keep the ruling party under close scrutiny by declaring it “a focal point of anti-secular activities,” and imposing financial measures.
Topic:
Government, Islam, and Politics
Political Geography:
Europe, Turkey, and Middle East

1233. Burundi: Restarting Political Dialogue

Publication Date:
08-2008
Content Type:
Working Paper
Institution:
International Crisis Group
Abstract:
En dépit des progrès enregistrés dans la mise en œuvre de l'accord de paix avec le Parti pour la libération du peuple hutu – Forces nationa les de libération (Palipe-hutu-FNL), dernier mouvement rebelle en activité dans le pays, le Burundi traverse une crise politique dange-reuse qui risque de compromettre la tenue d'élections libres et démocratiques en 2010 et d'affecter la stabi-lité du pays. Le retour du chef rebelle Agathon Rwasa à Bujumbura, et la signature de l'accord politique de Magaliesburg le 11 juin 2008 sont des pas importants pour le processus de paix burundais. Toutefois, le processus de désarmement commence à peine, et la question de l'intégration du mouvement rebelle dans les institutions politiques et les corps de défense et de sécurité n'est toujours pa s réglée. Dans ce contexte, l'absence de dialogue avec les partis politiques d'opposition est dommageable à la bonne gestion du pays. Il est urgent que les acteurs politiques locaux et les partenaires extérieurs du Burundi prennent la mesure de ces risques et s'efforcent de les conjurer par un renouveau du dialogue national.
Topic:
Conflict Resolution, Conflict Prevention, Government, and Political Economy
Political Geography:
Africa and Burundi

1234. Crime, Poverty and Police Corruption in Non-Rich Countries

Author:
Odd Helge Fjeldstad and Jens Chr.1 Andvig
Publication Date:
07-2008
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
The paper examines (i) how and why corruption may arise in the daily routines of the police and whether it may have impacts on crime rates; (ii) empirical indications of whether the police may be more corrupt than other groups of public officials; (iii) how and why police corruption may vary across countries; and (iv) the wider impacts of police corruption on development.
Topic:
Corruption, Crime, Government, and Poverty

1235. Between Boy Scouts and Paramilitary Storm Troops: The Young Communist League of Nepal

Author:
Harald Olav Skar
Publication Date:
07-2008
Content Type:
Working Paper
Institution:
Norwegian Institute of International Affairs
Abstract:
A retired colleague at NUPI, who had been a prisoner of war during the Nazi occupation of Norway, once remarked: “The problem of youth movements has always been that they take on a life of their own, and are not easily controlled by the mother party.” On the other hand the mother party may use exactly this 'unruliness' to its favour when illegitimate targets are to be achieved. If the youth branch can be used to do political “dirty work”, while the mother party itself remains “clean” and lawful, then an additional strategic advantage may be gained. My colleague remembered the deeds of the Third Reich and the Nazi youth movement with apprehension, hoping that the new world would not see the likes of these.
Topic:
Political Violence, Civil Society, and Government
Political Geography:
Norway, Asia, and Nepal

1236. PolicyWatch #1398: Pakistan after Musharraf: Growing U.S. Challenges

Author:
Simon Henderson
Publication Date:
08-2008
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
Today's resignation of Pakistani president Pervez Musharraf creates a power vacuum in the most crucial country in the fight against al-Qaeda and Islamic extremism. For the foreseeable future, political power in Pakistan will not be in the hands of lackluster prime minister Yousef Raza Gilani, but in those of the ruling coalition rivals -- Benazir Bhutto's widower Asif Ali Zardari and former prime minister Nawaz Sharif. Future political contests will likely emphasize Musharraf's perceived closeness to Washington, an issue that united domestic opinion against him. This growing political reality, in addition to Islamabad's unwillingness to confront Islamic militants, further complicates U.S. policy toward Pakistan.
Topic:
Government, Islam, and Terrorism
Political Geography:
Pakistan, United States, and Asia

1237. PolicyWatch #1397: Kirkuk Derails Iraq's Election Law

Author:
Nazar Janabi
Publication Date:
08-2008
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
On August 7, the Iraqi parliament went on summer recess after failing to pass a critical election law, delaying the country's provincial elections until sometime next year. The failure comes after the parliament successfully passed the law on July 22, only to be vetoed by the Iraqi Presidency Council in less than thirty-six hours. The core dispute involves the oil-rich Kirkuk province, which is currently witnessing an alarming escalation of demonstrations and politically motivated attacks. This forced Iraqi prime minister Nouri al-Maliki to send his defense minister and an Iraqi brigade to the region in an attempt to deter further problems. As a result of Baghdad's political squabbling, the desperately needed provincial elections may seem unattainable.
Topic:
Government and Politics
Political Geography:
Iraq and Middle East

1238. PolicyWatch #1396: Financial Crisis Grips Fayad Government

Author:
Mohammad Yaghi
Publication Date:
08-2008
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
Palestinian prime minister Salam Fayad recently appealed to the World Bank in an effort to bridge the current budget gap preventing the Palestinian Authority (PA) from paying government salaries this month. Despite a three-year $7.5 billion assistance pledge from the 2007 Paris donor conference, the PA remains in a financial crisis, with a projected shortfall of $400 million for the second half of 2008, as reported by the Ad Hoc Liaison Committee in May. Since Fayad's technocratic government has no independent political base, its legitimacy stems from the PA's financial solvency. He has survived ongoing attacks from rival Fatah leaders only because Palestinian president Mahmoud Abbas recognizes him as the linchpin to Western donor assistance. If the financial crisis persists, however, Fayad's political future is in doubt.
Topic:
Government, International Political Economy, Financial Crisis, and World Bank
Political Geography:
Middle East and Palestine

1239. PolicyWatch #1391: Can Lebanon's March 14 Reverse the Tide?

Author:
David Schenker
Publication Date:
07-2008
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
This week, Lebanon's new national unity government is slated to announce its ministerial statement (bayan waziri), the policy document that will define Beirut's working parameters and agenda through the spring 2009 elections. For the pro-West majority March 14 coalition, the priority will be to incorporate into the statement a reference to UN Security Council Resolution (UNSCR) 1701, which prohibits weapons movement to Hizballah and expands government sovereignty throughout Lebanon. Hizballah, for its part, will look to maintain the legitimacy of "the resistance." Although March 14 still maintains a government majority, three years of hostility and self-inflicted wounds have left the ruling party dramatically weakened, making it unclear whether the coalition will be able to prevent Hizballah from consolidating further political gains.
Topic:
Government, Politics, and Terrorism
Political Geography:
Middle East and Lebanon

1240. PolicyWatch #1389: Hizballah's Military Wing Under Pressure Despite Political Gains

Author:
David Schenker
Publication Date:
07-2008
Content Type:
Policy Brief
Institution:
The Washington Institute for Near East Policy
Abstract:
This week, Lebanon's new national unity government is slated to announce its ministerial statement (bayan waziri), the policy document that will define Beirut's working parameters and agenda through the spring 2009 elections. For the pro-West majority March 14 coalition, the priority will be to incorporate into the statement a reference to UN Security Council Resolution (UNSCR) 1701, which prohibits weapons movement to Hizballah and expands government sovereignty throughout Lebanon. Hizballah, for its part, will look to maintain the legitimacy of "the resistance." Although March 14 still maintains a government majority, three years of hostility and self-inflicted wounds have left the ruling party dramatically weakened, making it unclear whether the coalition will be able to prevent Hizballah from consolidating further political gains.
Topic:
Government
Political Geography:
Middle East and Lebanon