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352. What now for the 'peripheral' Eurozone countries?
- Publication Date:
- 05-2010
- Content Type:
- Working Paper
- Institution:
- Oxford Economics
- Abstract:
- Over the weekend the EU put together a large-scale package worth up to €720 billion aimed at stabilising all the 'peripheral' Eurozone countries, in the face of mounting contagion risks. This came on top of an earlier financial support package for Greece worth €110 billion. The latest move has brought some relief to bond markets, but major challenges remain. Investors remain concerned about the capacity of Greece to stick to the immense fiscal adjustment needed in the face of a very deep recess ion and mounting social unrest. With the debt/GDP ratio set to keep rising to almost 150% in the next few years, concerns remain that some kind of debt restructuring or default cannot be avoided. For the other peripherals, too, the outlook remains bleak – while the immediate threat of a collapse in their debt markets has been averted, years of fiscal austerity and slow growth remain ahead.
- Topic:
- Debt, International Political Economy, Global Recession, Monetary Policy, and Financial Crisis
- Political Geography:
- Greece
353. Towards a Euro(pean) Monetary Fund
- Author:
- Daniel Gros and Thomas Mayer
- Publication Date:
- 05-2010
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- The case of Greece has ushered in the second phase of the financial crisis, namely that of sovereign default. Members of the euro area were supposed to be shielded from a financial market meltdown. But, after excess spending during the period of easy credit, several euro area members are now grappling with the implosion of credit-financed construction and consumption booms. Greece is the weakest of the weak links, given its high public debt (around 120% of GDP), compounded by a government budget deficit of almost 13% of GDP, a huge external deficit of 11% of GDP and the loss of credibility from its repeated cheating on budget reports.
- Topic:
- Economics, Monetary Policy, and Financial Crisis
- Political Geography:
- Europe
354. Regulatory Challenges for the EU Asset Management Industry
- Author:
- Karel Lannoo
- Publication Date:
- 04-2010
- Content Type:
- Policy Brief
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- The European asset management industry is feeling squeezed from all sides, as a result of growing prudential, product and conduct regulation. A new Directive, UCITS IV, has only just been enacted, and already new challenges are emerging in the regulation of hedge and venture capital funds, the review of the regulatory regime for depositaries (or financial custodians) and amendments to the MiFID Directive.2 In addition, a new European supervisory framework is in the making, which implies much stricter controls on enforcement. These changes are taking place in the context of one of the largest declines suffered by the industry in the last two decades, from which many fund managers have not yet recovered. The era of light regulation is thus definitely over.
- Topic:
- Markets, Monetary Policy, and Financial Crisis
- Political Geography:
- Europe
355. The G20 Framework for Strong, Sustainable And Balanced Growth: A Study in Credible Cooperation
- Author:
- Daniel Schwanen
- Publication Date:
- 06-2010
- Content Type:
- Working Paper
- Institution:
- Centre for International Governance Innovation (CIGI)
- Abstract:
- The G20 has launched far-ranging reforms of economic governance institutions and the manner in which key economies should cooperate in the future. Its ambitious aim is not only to stabilize the world economy following the economic crisis of 2007-09, but also to anticipate and, as far as possible, prevent future crises and foster sustainable growth going forward. A central element of the promised reform is the “Framework for Strong, Sustainable and Balanced Growth,” introduced at the 2009 summit in Pittsburgh, in which the G20 agreed to accept joint and individual responsibility for the health of the global economy. By specifying the key elements of growth, agreeing to assess their policies mutually with the help of the International Monetary Fund (IMF) and other institutions and agreeing to discuss actions required in light of these assessments, the G20 leaders have launched a potentially effective vehicle for delivering on their promises.
- Topic:
- Economics, International Cooperation, International Organization, Monetary Policy, and Financial Crisis
356. The Design and Effects of Monetary Policy in Sub-Saharan African Countries
- Author:
- Mohsin S. Khan
- Publication Date:
- 07-2010
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- Since the 1990s there have been a number of major changes in the design and conduct of monetary policy. In a globalized environment, there is less time to adjust to shocks and greater need to achieve closer convergence of economic performance among trading partners. As a result, a number of developing countries have adopted exchange rate regimes with more flexibility, and thereby greater scope for monetary policy. Notable examples include a number of sub-Saharan African countries moving from fixed exchange-rate regimes to more flexible regimes and the adoption of formal or informal inflation targeting regimes by some of these countries. These changes have triggered considerable debate on how monetary policy should be conducted and the effects it has on the real economy.
- Topic:
- Economics and Monetary Policy
- Political Geography:
- Africa
357. The Realities and Relevance of Japan's Great Recession: Neither Ran nor Rashomon
- Author:
- Adam S. Posen
- Publication Date:
- 06-2010
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- Japan's Great Recession was the result of a series of macroeconomic and financial policy mistakes. Thus, it was largely avoidable once the initial shock from the bubble bursting had passed. The aberration in Japan's recession was not the behaviour of growth, which is best seen as a series of recoveries aborted by policy errors. Rather, the surprise was the persistent steadiness of limited deflation, even after recovery took place. This is a more fundamental challenge to our basic macroeconomic understanding than is commonly recognized. The UK and US economies are at low risk of having recurrent recessions through macroeconomic policy mistakes—but deflation itself cannot be ruled out. The United Kingdom worryingly combines a couple of financial parallels to Japan with far less room for fiscal action to compensate for them than Japan had. Also, Japan did not face poor prospects for external demand and the need to reallocate productive resources across export sectors during its Great Recession. Many economies do now face this challenge simultaneously, which may limit the pace of, and their share in, the global recovery.
- Topic:
- Economics, Markets, Monetary Policy, and Financial Crisis
- Political Geography:
- United States, Japan, and United Kingdom
358. Estimates of Fundamental Equilibrium Exchange Rates, May 2010
- Author:
- William R. Cline and John Williamson
- Publication Date:
- 06-2010
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- This policy brief updates our estimates of fundamental equilibrium exchange rates (FEERs) to the latest issue of the World Economic Outlook (WEO) published by the International Monetary Fund in April 2010 (IMF 2010a). It is part of what has now become an annual cycle drawing out what we believe to be the implications of the IMF's forecasts for the pattern that exchange rates need to take if the world is to approach a reasonably satisfactory medium-run equilibrium position. This year we also published an interim report (Cline and Williamson 2010), partly drawing on the October 2009 WEO but essentially examining the implications of the pattern of market exchange rates as of January 1, 2010 for how misaligned currencies were at that time, assuming that the FEERs estimated in June 2009 were correct. In this publication we have estimated the FEERs anew on the basis of revisions in the methods employed and new data presented in the April 2010 WEO, after incorporating adjustments to the IMF forecast needed to take account of recent changes in exchange rates and especially the euro.
- Topic:
- International Relations, Economics, International Monetary Fund, and Monetary Policy
359. Higher Taxes on Multinationals Would Hurt US Workers and Exports
- Author:
- Gary Clyde Hufbauer and Theodore H. Moran
- Publication Date:
- 05-2010
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- As presidential candidate, Barack Obama repeatedly advocated tax “reforms” aimed squarely at US-based multinational enterprises (MNEs). As president, he again declared—in the same State of the Union address that laid out an ambitious goal for export expansion—that “it is time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America."
- Topic:
- Economics, International Trade and Finance, Markets, and Monetary Policy
- Political Geography:
- United States
360. The Constitutionalization of Money
- Author:
- James M. Buchanan
- Publication Date:
- 06-2010
- Content Type:
- Journal Article
- Journal:
- The Cato Journal
- Institution:
- The Cato Institute
- Abstract:
- The market will not work effectively with monetary anarchy. Politicization is not an effective alternative. We must commence meaningful dialogue with acceptance of these elementary verities. Far too much has been said and written in elaboration of the first statement, which too often is taken to be equivalent to the assertion that "capitalism" or "the market" has failed. Admittedly claims for market efficacy without qualifiers can be found. But economists should know that anarchy can only generate disorder rather than its opposite.
- Topic:
- Markets and Monetary Policy
- Political Geography:
- United States