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3631. 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
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

3632. In Defense of Europe's Grand Bargain

Author:
Jacob Funk Kirkegaard
Publication Date:
06-2010
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Nothing is easier than pointing fingers at policymakers woring feverishly at 2 a.m. to contain a rapidly spreading financial crisis. Rarely has this been truer for the European Union than during the current crisis's amateurish policy management. Yet, what really matters is the final result, which is far more postive for Europe than the ugly sausage-making process.
Topic:
Economics, International Trade and Finance, and Financial Crisis
Political Geography:
Europe

3633. Hobbling Exports and Destroying Jobs

Author:
Gary Clyde Hufbauer and Theodore H. Moran
Publication Date:
06-2010
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The US House of Representatives has just passed the American Jobs and Closing Tax Loopholes Act (HR 4213). This bill will hurt American workers, reduce American exports, and make American companies less competitive in the international marketplace. Since the US Senate has already passed companion legislation, the American Workers, State, and Business Relief Act (S 3336), these ill-considered bills could soon be reconciled in conference and become the law of the land. If so, American firms and workers will pay the price.
Topic:
Economics, International Trade and Finance, Markets, and Labor Issues
Political Geography:
United States and America

3634. Assessing the American Power Act: The Economic, Employment, Energy Security, and Environmental Impact of Senator Kerry and Senator Lieberman's Discussion Draft

Author:
Trevor Houser
Publication Date:
05-2010
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
On May 12, 2010, Senators John Kerry (D-MA) and Joseph Lieberman (I-CT) released details of their proposed American Power Act, a comprehensive energy and climate change bill developed over the preceding nine months by the two senators, chairmen of the Senate Foreign Relations and Homeland Security Committees respectively, along with Senator Lindsey Graham (R-SC).1 With US unemployment just below 10 percent and the sunken Deepwater Horizon drilling rig's ruptured well pouring thousands of barrels of oil into the Gulf of Mexico each day, the senators promised that if passed the bill will: (1) reduce US oil consumption and dependence on oil imports; (2) cut US carbon pollution 17 percent below 2005 levels by 2020 and over 80 percent by 2050; and (3) create jobs and restore US global economic leadership. In this policy brief we evaluate the effectiveness of the proposed American Power Act in achieving those goals.
Topic:
Climate Change, Environment, and Government
Political Geography:
United States

3635. A Trade Agenda for the G-20

Author:
Jeffrey J. Schott
Publication Date:
05-2010
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
For the past 18 months, the G-20 summit countries have worked together to contain the global economic crisis and encourage a sustainable economic recovery. As part of these efforts, the G-20 leaders have sought to constrain the protectionist pressures that invariably arise during times of economic stress and to maintain an open international trading regime. The G-20 trade agenda, as enunciated in the three summit declarations, has covered two specific trade actions: a “standstill” on new protectionism and a charge to complete the Doha Round of multilateral trade negotiations.
Topic:
Development, Human Rights, International Organization, and International Trade and Finance
Political Geography:
United States and Washington

3636. 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
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

3637. Protection by Stealth: Using the Tax Law to Discriminate against Foreign Insurance Companies

Author:
Gary Clyde Hufbauer
Publication Date:
04-2010
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
These are difficult times. Not only are 10 percent of Americans unemployed but the federal budget is out of whack thanks to the specter of rising entitlement outlays. A natural impulse in difficult times is to protect domestic products and domestic producers. The tone of political economy during the global recession of 2007–09 is no different from that in past recessions—but louder because the economic damage is more severe. Emblematic of this spirit is a proposal to discriminate against foreign-owned insurance companies, using the tax code.
Topic:
Economics, Labor Issues, and Financial Crisis
Political Geography:
United States

3638. Indonesia: The Dark Side of Jama'ah Ansharut Tauhid (JAT)

Publication Date:
07-2010
Content Type:
Policy Brief
Institution:
International Crisis Group
Abstract:
Jama'ah Ansharut Tauhid (JAT), led by Indonesia's bestknown radical cleric Abu Bakar Ba'asyir, has been an enigma since its founding in 2008. An ostensibly aboveground organisation, it has embraced individuals with known ties to fugitive extremists. It has welcomed many members of the militant Jema'ah Islamiyah (JI) but clashed with the JI leadership over strategy and tactics. It preaches jihad against Islam's enemies but insists it stays within the law – though it rejects man-made laws as illegitimate. It is a mass membership organisation but wholly dependent on Ba'asyir, without whom it would quickly disintegrate. It has become an important element in the network of Indonesian jihadi groups but has been the target of harsh criticism from some erstwhile allies. Understanding JAT's nature, its many faces and the ideological rifts it has generated helps illuminate the weakness and divisions within the Indonesian jihadi movement today. It also highlights the ongoing but probably diminishing influence of Ba'asyir.
Topic:
Political Violence, Islam, Politics, Armed Struggle, and Insurgency
Political Geography:
Indonesia and Southeast Asia

3639. Improving Security Policy in Colombia

Publication Date:
06-2010
Content Type:
Policy Brief
Institution:
International Crisis Group
Abstract:
President Álvaro Uribe's eight-year military campaign against the Revolutionary Armed Forces of Colombia (FARC) has taken a heavy toll on Colombia's largest insurgent organisation. The government is now working to consolidate security gains by expanding state presence in several of the formerly most conflict-ridden regions. This strategy faces numerous challenges, not least because FARC's command and control structure has not collapsed. The insurgents are adapting to military pressure through guerrilla warfare tactics, aggressive recruitment among rural populations, broadened involvement in drug trafficking and alliances with other armed groups and drug trafficking organisations. Colombia's next president, Juan Manuel Santos, will take office on 7 August. As part of an integrated conflict resolution strategy, his government must increase the country's law enforcement and military capability against all illegal armed groups, including FARC. It also has to strengthen institutions, expand the rule of law, rigorously protect human rights, reduce poverty and design the political/negotiations component of a successful conflict resolution strategy. Security consolidation can only take root if Colombia tackles its pervasive problems of organised violence, criminality and illegality in an integrated manner.
Topic:
Political Violence, Armed Struggle, and Insurgency
Political Geography:
Latin America

3640. Steps Towards Peace: Putting Kashmiris First

Publication Date:
06-2010
Content Type:
Policy Brief
Institution:
International Crisis Group
Abstract:
India and Pakistan have consistently subjected Kashmiri interests to their own national security agendas and silenced calls for greater autonomy. With the start of their composite dialogue – comprehensive negotiations to resolve all contentious bilateral issues, including Kashmir, launched in February 2004 – both appeared willing to allow more interaction across the Line of Control (LOC) but failed to engage Kashmiris in the process. As a result, they did not take full advantage of opportunities to enhance cross-LOC cooperation by identifying the most appropriate Kashmir-specific confidence-building measures (CBMs), and bureaucratic resistance in both capitals resulted in uneven implementation of even those that had been agreed. India has suspended the composite dialogue since the November 2008 Mumbai attacks by Pakistan based militants, but neither New Delhi nor Islamabad has backtracked on these CBMs. Nevertheless, the CBM process will only achieve major results if the two sides devolve authority to Kashmir's elected representatives and take other vital steps to win over its alienated public.
Topic:
Conflict Resolution, Security, Islam, and Territorial Disputes
Political Geography:
Pakistan, India, and Asia