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611. Estimates of Fundamental Equilibrium Exchange Rates, November 2013

Author:
William R. Cline
Publication Date:
11-2013
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Since the previous estimates of fundamental equilibrium exchange rates (FEERs) in this series in May (Cline 2013), numerous exchange rates have moved substantially in response to the announcement in late May that the US Federal Reserve would likely begin to "taper" its quantitative easing program of large-scale asset purchases. The new estimates here again take as their point of departure the medium-term current account projections of the most recent World Economic Outlook (WEO) of the International Monetary Fund (IMF 2013b). However, because of a seeming inertia in the Fund's projections despite large exchange rate moves, this round of calculations pays special attention to compiling alternative estimates for economies with large changes in exchange rates.
Topic:
Economics, Foreign Exchange, International Trade and Finance, Markets, Monetary Policy, and Governance
Political Geography:
United States

612. Stabilizing Properties of Flexible Exchange Rates: Evidence from the Global Financial Crisis

Author:
Joseph E. Gagnon
Publication Date:
11-2013
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
There is a long-standing debate among economists and policymakers on the benefits of flexible versus fixed exchange rates (Klein and Shambaugh 2010). In principle, flexible exchange rates allow a country's central bank to focus on stabilizing economic growth and inflation, which are the ultimate goals of monetary policy. However, some argue that in practice central banks often do not use their powers wisely and it may be better to restrict their freedom by requiring them to peg their currency to that of an important trading partner. Others note that flexible exchange rates are far more volatile than fundamental factors can explain (Flood and Rose 1995), raising the possibility that they may introduce wasteful cross-sectoral fluctuations in economic activity. One common viewpoint is that flexible exchange rates may be fine for large countries but that the smallest countries are better off with fixed exchange rates (Åslund 2010).
Topic:
Economics, Foreign Exchange, International Trade and Finance, Markets, and Financial Crisis
Political Geography:
United States, Japan, China, and United Kingdom

613. US Employment Deindustrialization: Insights from History and the International Experience

Author:
Robert Z. Lawrence and Lawrence Edwards
Publication Date:
10-2013
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Manufacturing is a key sector of the US economy. Although value added in manufacturing represented just 11.9 percent of GDP in 2012, manufacturing activity is strongly associated with economic growth, because manufacturing serves as the fulcrum of supply chains that combine and process raw materials and services to produce goods.1 In addition, the sector is among the most dynamic—accounting for about 70 percent of US spending on business research and development—and it regularly outstrips the rest of the economy in productivity growth. Over the long run, the contributions of US manufacturing to total output growth have been steady. Measured in 2005 dollars, for example, the share of manufacturing in US output was about the same in 2005 as in 1947.
Topic:
Economics, Emerging Markets, Industrial Policy, and International Trade and Finance
Political Geography:
United States

614. Financial Services in the Transatlantic Trade and Investment Partnership

Author:
Simon Johnson and Jeffrey J. Schott
Publication Date:
10-2013
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
In July 2013, the United States and the European Union launched negotiations on a Transatlantic Trade and Investment Partnership (TTIP). The talks aim to craft a comprehensive accord matching or exceeding the reforms achieved in their previous trade pacts. Since both sides have included financial services in prior free trade agreements (FTAs), they implicitly recognized that the TTIP accord would also cover this sector. But what will be included in the financial services chapter is still subject to debate.
Topic:
Economics, International Trade and Finance, Treaties and Agreements, and Bilateral Relations
Political Geography:
United States and Europe

615. Governing the Federal Reserve System after the Dodd-Frank Act

Author:
Simon Johnson and Peter Conti-Brown
Publication Date:
10-2013
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act increased the powers of the Board of Governors of the Federal Reserve System (hereafter the Board) along almost all dimensions pertaining to the supervision and operation of systemically important financial institutions. With Ben S. Bernanke's term as Fed chair ending in January 2014, much of the public's attention has focused appropriately on the identity, views, and experience of candidates for the successor, whose influence on bank regulation will be considerable. President Barack Obama's selection of current Board vice chair Janet L. Yellen as chair—a highly qualified choice—comes at the end of a long public debate on this nomination.
Topic:
Economics, International Trade and Finance, Financial Crisis, Governance, and Reform

616. Beware the discretionary choices of arbitrators

Author:
Gus Van Harten
Publication Date:
12-2013
Content Type:
Policy Brief
Institution:
Columbia Center on Sustainable Investment
Abstract:
Investment treaty arbitration has unfolded rapidly in recent years. Some observations arising from analyses of arbitrator awards are high lighted below. They support broad conclusions that: arbitrators reviewed a wide range of legislative, executive and judicial decisions but typically did not exercise judicial restraint in various ways associated with domestic and international courts; arbitrators typically adopted expansive approaches to their authority and to investor entitlements to compensation, especially where the claimant had the nationality of a major Western capital-exporting state; and decision-making power was highly concentrated amongarbitrators, suggesting a need for closer scrutiny of how the most active individual arbitrators have expanded the meaning of investment treaties and corresponding principles of state liability.
Topic:
Economics, International Trade and Finance, Markets, Treaties and Agreements, Foreign Direct Investment, Law Enforcement, and Law

617. Lessons from South Africa's BITs review

Author:
Xavier Carim
Publication Date:
11-2013
Content Type:
Policy Brief
Institution:
Columbia Center on Sustainable Investment
Abstract:
Proponents tend to argue that bilateral investment treaties (BITs) encourage investment and strengthen the rule of law particularly in jurisdictions where court systems are weak or biased against foreigners. This premise is contested. First, studies on BITs and FDI suggest the relationship is, at best, ambiguous and that BITs are neither necessary nor sufficient to attract FDI. Indeed, South Africa receives FDI from investors in countries with whom it has no BIT and often little or no FDI from others where a BIT was in place.
Topic:
Security, Economics, Emerging Markets, International Trade and Finance, and Treaties and Agreements
Political Geography:
Africa and South Africa

618. Go out and manufacture: Policy support for Chinese FDI in Africa

Author:
Nikia Clarke
Publication Date:
11-2013
Content Type:
Policy Brief
Institution:
Columbia Center on Sustainable Investment
Abstract:
Energy investments and infrastructure contracts remain prominent in China's Africa engagement. However, investment in manufacturing makes up a significant proportion of Chinese outward foreign direct investment (FDI). Its characteristics–large numbers of smaller transactions by privately owned small and medium-sized firms–make these flows difficult to assess or control. However, China and African governments have an interest in effectively channeling this type of FDI.
Topic:
Development, Economics, Industrial Policy, International Trade and Finance, Markets, and Foreign Direct Investment
Political Geography:
Africa and China

619. Eurocriticism: The Eurozone Crisis and Anti-Establishment Groups in Southern Europe

Author:
Nathalie Tocci, Thanos Dokos, Eleonora Poli, Chiara Rosselli, and Eduard Soler i Lech
Publication Date:
12-2013
Content Type:
Working Paper
Institution:
Istituto Affari Internazionali
Abstract:
The Eurozone crisis and the ensuing public disaffection towards what many view as deficient EU institutions and policies have resulted in a surge of euroscepticism across member states. Although euroscepticism is not a new phenomenon, the rise of mass anti- establishment movements notably in southern Europe is. Despite their different political and structural features, Five Star Movement in Italy, Syriza in Greece and several social movements sprung from the Indignados in Spain have recently become key actors in their national political arena by opposing, inter alia, EU-imposed austerity. Yet these movements are not anti-EU in toto; while they criticize what they view as the EU's lack of democracy and rigid economic policies, they are not opposed to the EU integration project as such. While a fine line distinguishes Euro-scepticism from Euro-criticism, provided such distinction is made, the critique of these movements could be galvanized into a constructive force for a more integrated EU political space.
Topic:
Debt, Economics, International Trade and Finance, Financial Crisis, and Reform
Political Geography:
Europe

620. The BRICS and international peacebuilding and statebuilding

Author:
Oliver Richmond and Ioannis Tellidis
Publication Date:
02-2013
Content Type:
Working Paper
Institution:
Norwegian Centre for Conflict Resolution
Abstract:
The emergence of the BRICS has generated a renewed debate about peacebuilding and donor activity. This has slowly influenced the aims, norms and practices of international peacebuilding, statebuilding and development. There are subtle differences in BRICS members' interests, approaches and motives, power, influence, and adherence to or rejection of established standards (such as OECD-DAC principles). These states' activities have often attracted scepticism and criticism from traditional donors. An examination of their engagement with interventionary forms of development, peacebuilding, statebuilding, and their related institutions and practices shows that the BRICS can be both “status-quo” and “critical” actors. On the one hand, they all engage with the liberal peace paradigm and its often-neoliberal agenda that allows them to protect sovereignty and non-intervention, pursue trade interests, and advance their own interests (like a seat on the UN Security Council, regional stability or maintaining their often-ambiguous status of being both aid donors and recipients). On the other hand, their involvement has challenged peacebuilding's and development's Euro-Atlantic character through the unfolding of their own donor and peace agendas. This report highlights the instances in which traditional and emerging actors' agendas converge and diverge – and the motivations behind these agendas.
Topic:
Development, Economics, Emerging Markets, International Trade and Finance, United Nations, Foreign Aid, and Foreign Direct Investment