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751. A Strategy for Launching the Euro

Author:
Maurice Obstfeld
Publication Date:
02-1997
Content Type:
Working Paper
Institution:
Institute of European Studies
Abstract:
This paper studies the constraints placed by the Maastricht Treaty on the rates at which member currencies will exchange against the Euro at the start of stage 3 of economic and monetary union (EMU). The paper shows that the stage 3 bilateral conversion factors for EMU member currencies must correspond to closing market exchange rates as of December 31, 1998; furthermore, currency conversion rates into the Euro cannot be determined until that date. Moreover, official announcements about intended conversion factors will carry no credibility with markets, as market rates must be chosen over any prennounced rates according to the Treaty. Unless there is heavy official intervention in the runup to stage 3, EMU members' bilateral market rates will exhibit excessive volatility and may induce beggar-thy-neighbor policy behavior. On the other, hand, exchange-rate targeting may open the door to speculative currency crises. The only feasible solution appears a widely-publicized institutional reform to subjugate national central banks' policies entirely to the goal of intra-EMU exchange stability in the final months of stage 2.
Topic:
International Political Economy and International Trade and Finance
Political Geography:
Europe

752. Balancing Positive and Negative Integration: The Regulatory Options for Europe

Author:
Fritz W. Scharpf
Publication Date:
11-1997
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
During the golden years from the 1950s to the mid-1970s, the industrial nations of Western Europe had the chance to develop specifically national versions of the capitalist welfare state - and their choices were in fact remarkably different (Esping-Andersen 1990). In spite of the considerable differences between the "Social-Democratic", "Corporatist" or "Liberal" versions, however, all were remarkably successful in maintaining full employment and promoting economic growth, while also controlling, in different ways and to different degrees, the destructive tendencies of unfettered capitalism in the interest of specific social, cultural, and/or ecological values (Scharpf 1991a; Merkel 1993). It was not fully realized at the time, however, how much the success of market-correcting policies did in fact depend on the capacity of the territorial state to control its economic boundaries. Once this capacity is lost, countries are forced into a competition for locational advantage which has all the characteristics of a Prisoner's Dilemma game (Sinn 1994). It reduces the freedom of national governments and unions to raise the regulatory and wage costs of national firms above the level prevailing in competing locations. Moreover, and if nothing else changes, the "competition of regulatory systems" that is generally welcomed by neoliberal economists (Streit/Mussler 1995) and politicians may well turn into a downward spiral of competitive deregulation and tax cuts in which all competing countries will find themselves reduced to a level of protection that is in fact lower than that preferred by any of them.
Topic:
Economics, Government, International Organization, and International Political Economy
Political Geography:
Europe

753. Regulatory Competition and International Cooperation

Author:
Philipp Genschel and Thomas Plumper
Publication Date:
04-1997
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
Recent research has shown that regulatory competition does not necessarily lead to downward pressures on regulation, but may at times also push the level of regulation upwards. Extending David Vogel's "California effect" argument, this paper shows that such upward pressure may not only result directly from the dynamics of the competitive process but also from international cooperation. Evidence from two case studies on international capital market regulation is used to identify the conditions under which cooperation in the shadow of regulatory competition is likely to succeed or fail. The successful multilateral standardisation of banking capital requirements in the BIS is compared to failed attempts to harmonise interest taxation across EC member states.
Topic:
Government, International Cooperation, and International Political Economy
Political Geography:
California

754. The Syndrome of the Ever-Higher Yen, 1971-95: American Mercantile Pressure on Japanese Monetary Policy

Author:
Ronald McKinnon, Kazuko Shirono, and Kenichi Ohno
Publication Date:
12-1996
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
From 1971 through mid-1995, the yen continually appreciated against the U.S. dollar because the Japanese and American governments were caught in a mutual policy trap. Repeated threats of a trade war by the United States caused the yen to ratchet up in 1971-73, 1977-78, 1985-87, and 1993 to mid-1995. While temporarily ameliorating commercial tensions, these great appreciations imposed relative deflation on Japan without correcting the trade imbalance between the two countries. Although resisting sharp yen appreciations in the short run, the Bank of Japan validated this syndrome of the ever-higher yen by following a monetary policy that was deflationary relative to that established by the U.S. Federal Reserve System. The appreciating yen was a forcing variable in determining the Japanese price level. After 1985, this resulted in great macroeconomic instability in Japan--including two endaka fukyos (high-yen-induced recessions).
Topic:
Economics, International Political Economy, and International Trade and Finance
Political Geography:
United States, Japan, America, Israel, and East Asia

755. The China-United States Bilateral Trade Balance: How Big Is It Really?

Author:
K.C. Fung and Lawrence Lau
Publication Date:
04-1996
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
There are huge discrepancies between the official Chinese and U.S. estimates of the bilateral trade balance. The discrepancies are caused by different treatments accorded to re-exports through Hong Kong, re-export markups, and trade in services. Deficit-shifting between China, on the one hand, and Hong Kong and Taiwan, on the other, due to direct investment in China from Taiwan and Hong Kong, is partly responsible for the growth in the China United States bilateral trade deficit.
Topic:
International Political Economy and International Trade and Finance
Political Geography:
United States, China, Taiwan, Asia, and Hong Kong

756. The Coming Global Pension Crisis: The Aging of the World's Population and Its Implications for Capital Flows

Author:
Laura D'Andrea Tyson, Haruhiko Kuroda, Dr. Norbert Walter, Robert C. Pozen, Thomas W. Jones, Alice M. Rivlin, Marshall Carter, Olivia S. Mitchell, Russell J. Cheetham, Yves Guerard, Jan Svejnar, David Hale, Martin S. Feldstein, and Robert D. Hormats
Publication Date:
11-1996
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
Social Security has been described as the crown jewel of American federal government programs. It is widely recognized to be the major reason why the poverty rate among the elderly in the United States has fallen in half since 1959 and is lower today than the poverty rate for any other population group as a whole. Fifteen million older Americans are kept out of poverty by Social Security.
Topic:
Economics, Government, and International Political Economy
Political Geography:
United States and America

757. Global Cooperation in Science, Engineering, and Medicine

Author:
Susan Raymond and Rodney Nichols
Publication Date:
02-1996
Content Type:
Working Paper
Institution:
New York Academy of Sciences
Abstract:
Many experienced observers have noted a persistent fatigue in current systems of international cooperation on research in science, engineering, and medicine. The institutions designed to serve global science since the end of World War II are not keeping pace with the changes sweeping science and technology. In the mid–1990s, the unease and uncertainty has become acute. Yet, simultaneously, research and education in science, engineering, and medicine are themselves becoming increasingly international in scope. This trend is not created by formal collaborative institutions. Instead, the factors setting the global pace include the rise of high–capacity, rapid modes of electronic communications; the end of the Cold War and the defense–based motivations that drove much innovation; the expanding scientific capacity throughout the world; and the emergence of new scientific problems that are increasingly global in nature and widely acknowledged as common priorities among scientists and nations. The uncertain “fit” between traditional institutional arrangements and tomorrow's generation of scientific activities has engendered widespread concern. A central question is how best to re–tool existing mechanisms to serve most effectively international collaboration in addressing the societal goals and research frontiers of the 21st century. The prescription for possible therapies, however, must be accompanied by a clear understanding of the nature of the symptoms and a careful analysis of the current state of existing, collaborative mechanisms.
Topic:
Government, International Cooperation, International Political Economy, and Science and Technology
Political Geography:
New York

758. Meeting on the Viability of International Economic Sanctions

Publication Date:
03-1996
Content Type:
Working Paper
Institution:
The Carter Center
Abstract:
The Carter Center convened a small, informal meeting to examine the question of whether there might be developed "more effective" international economic sanctions -- those which better achieve desired political goals without causing great suffering to innocent people. President Carter and others have expressed frustration that recent sanctioning efforts have fallen short of their objectives, yet sanctions appear to be one of the only tools available to the international community short of a resort to force. This meeting, chaired by Harry Barnes, Director of the Conflict Resolution and Human Rights programs at The Carter Center, set out to identify 1) what factors might be involved in designing more effective sanctions; 2) what obstacles must be overcome; 3) what steps governments and international bodies such as the United Nations might take to improve sanctions; and 4) what steps might be taken by non-governmental organizations (NGOs). The following is a summary of the discussion and possible follow-up actions, paying particular attention on potential roles for NGOs.
Topic:
International Political Economy
Political Geography:
United Nations

759. From Free Trade to Supranational Polity: The European Court and Integration

Author:
Alec Stone Sweet and James A. Caporaso
Publication Date:
11-1996
Content Type:
Working Paper
Institution:
University of California Institute on Global Conflict and Cooperation (IGCC)
Abstract:
In this paper, we propose a dynamic theory of legal integration, test the model quantitatively, and then cross-check it by way of process tracing. We show that transnational exchange, litigation, and the production of Euro-rules have evolved interdependently, and argue that this interdependence provokes and reinforces the spillover effects that partly drive the construction of supranational governance. In case studies of the impact of the legal system on outcomes in two areas, the free movement of goods and European social provisions, we show that our model outperforms the dominant framework for understanding how the EC legal system operates - intergovernmentalism. In each of these areas, the data show that the legal system functions to reduce member-state government control over policy outcomes, and to enhance the influence of supranational institutions, national judges, and private actors.
Topic:
Government, International Law, International Organization, and International Political Economy
Political Geography:
Europe

760. Emergence of a Supranational Telecommunications Regime

Author:
Wayne Sandholtz
Publication Date:
11-1996
Content Type:
Working Paper
Institution:
University of California Institute on Global Conflict and Cooperation (IGCC)
Abstract:
The patchwork of national telecommunications monopolies in the EU was incapable of meeting a rapidly growing need on the part of societal actors for efficient, technologically advanced, cross-border telecommunications. The Commission mobilized various transnational actors -- equipment manufacturers, business users, providers of new services, suppliers of alternative infrastructures -- to support its plans for EU-level liberalization and harmonization. Whereas in a first phase the Commission acted as a source of initiatives and models for states whose policies were in flux, the second phase saw a dramatic shift in the nature of governance. Employing its powers under Article 90 of the Treaty (which does not require Council approval), the Commission set out to abolish national monopolies in telecoms equipment, services, and, finally, infrastructures. The telecoms case thus supports three of the project's central propositions: that societal transactions drive movement toward supranational governance; that changes in EU rules, organizations, and transnational society are interlinked; and that member states do not always control these processes of institutionalization.
Topic:
Government, International Political Economy, and Science and Technology
Political Geography:
Europe