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121. Affinity and International Trade

Author:
Marcus Noland
Publication Date:
06-2005
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper examines the impact of American public attitudes toward foreign countries on the volume of trade. The issue is whether popular attitudes, as elicited in these surveys, convey any information about trust, risk, or transactions costs beyond what can be explained through standard economic models. The results of this paper suggest that they do, with a one standard deviation increase in warmth of feeling associated with a 20 to 31 percent larger trade volume when evaluated at the sample means. These public attitudes are in turn correlated with indices of cultural affinity and political ideology. A one standard deviation increase in the democracy score is associated with a 5 to 7 percent increase in trade. There might be additional secondary effects if democratization was associated with an increased likelihood of the removal of sanctions or the initiation of preferential trade relations.
Topic:
Foreign Policy, Economics, and International Trade and Finance
Political Geography:
United States

122. The Euro and the World Economy

Author:
Fred Bergsten
Publication Date:
04-2005
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The dollar has been the dominant currency of the world economy for almost a century for a single overwhelming reason: It had no competition. No other economy came close to the size of the United States. Hence no currency could acquire the network externalities, economies of scale and scope, and public goods benefits necessary to rival the dollar at the global level. A similar situation for the United Kingdom explains sterling's dominance in the 19th century.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, United Kingdom, and Europe

123. The US Economic Outlook

Author:
Martin Neil Baily and Jacob Funk Kirkegaard
Publication Date:
04-2005
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Oil prices have risen and are expected to remain high. Slow job and wage growth result in slow income growth. Low interest rates kept housing and auto sales strong after 2000 – borrowing future growth. No new stimulus from monetary or fiscal policy. The Iraq war and the terrorism threat may be a drag on confidence. Because 9/11 did not have significant macroeconomic effects, the impact of the war and terrorism seems to be mostly on oil prices No new stimulus from monetary or fiscal policy.
Topic:
Debt, Economics, and International Trade and Finance
Political Geography:
United States and Iraq

124. Global Economic Prospects: Slower But Still Solid Growth in 2005; Worries About Growth and Inflation for 2006

Author:
Michael Mussa
Publication Date:
04-2005
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
After surging to the highest growth rate in a generation, world real GDP is set to slow from a rate of just over 5 percent for 2004 to about 4 percent for 2005 and a tad slower for 2006. The economic slowdowns in several important economies in the second half of last year, including much of continental Europe and Japan, already make it clear that year-over-year growth will slow for 2005. But the continued strong growth of domestic demand in other countries, most notably the United States and China, virtually assures that global growth this year will not fall below potential.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, Japan, China, Europe, Israel, and East Asia

125. China's Role in the Revived Bretton Woods System: A Case of Mistaken Identity

Author:
Nicholas R. Lardy and Morris Goldstein
Publication Date:
03-2005
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
According to a popular argument put forward by three Deutsche Bank economists (Dooley, Folkerts-Landau, and Garber, here after DFG), one needn't worry about the sustainability of either the large US current account deficit or the undervalued exchange rates of a group of Asian economies (Dooley, Folkerts-Landau, and Garber 2003, 2004a, 2004b, 2004c; Folkerts-Landau 2004). In their view, the United States and the Asian economies have entered into an implicit contract—the so-called revived Bretton Woods system (hereafter BW2)—that can comfortably carry on for another decade or two, with significant net benefits to both parties.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, China, and Asia

126. The Potential of International Policy Coordination

Author:
John Williamson
Publication Date:
03-2005
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
International economic policy coordination is an idea that is not nowadays at the top of the international agenda. The usual idea these days is that if each country pursues its own national interests, then the world will do as well as possible: There are no exploitable bargains of the type "it will pay [both][all] of us to change policies simultaneously even though if one of us made the change individually we would suffer" available. Even if there are no opportunities of that type (let us call them type A) available, there might still in principle be the chance of gaining by subscribing to a set of rules: Country X might expect to gain more over time from countries Y and Z respecting the rules than it would lose at other times from being obliged to modify its behavior according to the rules. Let us call these type B gains.
Topic:
International Relations and Economics
Political Geography:
United States and East Asia

127. Reflections

Author:
Edwin M. Truman
Publication Date:
03-2005
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
My reflections on the new operating procedures that were adopted by the Federal Open Market Committee (FOMC) on October 6, 1979, derive from my responsibilities at the Federal Reserve Board at the time. Those responsibilities included preparation of the international component of the staff forecast, analysis of economic and financial developments in other countries, and assisting the Chairman and members of the Board (primarily Henry C. Wallich) with international responsibilities in connection with their attendance at international meetings. Therefore, mine was and is an international perspective. I was not involved in the design of the new operating procedures, although I was informed that the project was under way.
Topic:
Development, Economics, and Emerging Markets
Political Geography:
United States

128. Managing Energy Insecurity

Author:
John Browne
Publication Date:
02-2005
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
It is great to be in Washington again and a privilege to be invited to speak here for the first time. You asked me to talk about energy security, and I think the basic question is whether, to use the words of one of your recent papers, there is "a gathering storm" around energy supply, and what, if anything, should and could be done to avert that storm.
Topic:
Economics, Energy Policy, and Science and Technology
Political Geography:
United States and Washington

129. US Trade Policy in 2005

Publication Date:
02-2005
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Some time ago, Fred Bergsten and I were talking about the fact that, if trade liberalization is to move forward and retrogression is to be prevented, the focus of the policy community and the public on the benefits of trade-in the full sense, including imports-and on the issues around trade needs to increase. The adverse effects trade has on some people are very keenly felt and often lead to vociferous opposition, while the benefits of trade for a far greater number of people are diffuse and usually little if at all understood-for example, by consumers-and seldom generate political activity on behalf of trade.
Topic:
Economics, Human Welfare, and International Trade and Finance
Political Geography:
United States

130. A Revived Bretton Woods System? Implications for Europe and the United States

Author:
Edwin M. Truman
Publication Date:
02-2005
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This note addresses three topics: (1) Do the recent musings by Dooley, Folkerts-Landau, and Garber (DFG), in particular their argument that the world is operating under a revived Bretton Woods system (BW2), provide a useful framework for thinking about international economic and financial developments and prospects? (2) What does the DFG framework imply for the euro area, and are those implications reasonable? (3) What does the DFG framework imply for the United States, and are those implications reasonable?
Topic:
Development and Economics
Political Geography:
United States and Europe