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191. Brazil's Rise as an Emerging Power: Implications for the U.S. and Europe

Author:
Stefan A. Schirm
Publication Date:
06-2009
Content Type:
Working Paper
Institution:
Center for Transatlantic Relations
Abstract:
The last 20 years have witnessed the economic emergence of several countries, which are considered today to be “pivotal states”, “regional powers”, and “emerging powers” in world politics. These emerging powers encompass countries such as China, India, Brazil and Russia, (the BRICs), which have in common both that they have experienced rapid economic growth and that they seek to influence the global economy and world politics to a greater degree than they did before their rise. The BRICs have become leading exporters and lenders (especially China to the US) as well as holders of currency reserves, and they (plus Mexico) are expected to surpass the GNP of the G7 industrialized countries by the year 2040. The reasons for the assignment of a new role, and often of increased power, to these states are their demographic and geographic size, their economic and military capacities, and their political aspirations.
Topic:
Economics, Emerging Markets, and Globalization
Political Geography:
Russia, United States, China, Europe, India, Brazil, and Latin America

192. Russia and the Global Meltdown: Domestic and Foreign Policy Responses to the International Financial Crisis

Author:
Robert Jellinek
Publication Date:
03-2009
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
This paper has its origins in the observation that government responses to the global financial crisis are as much political phenomena as they are economic. The current global financial crisis, among its many consequences, has on a very high level shaken up the world political order. And while the crisis is international in origin—its roots lie in the breadth and the degree of the dispersal of risk associated with mortgagebacked securities, as well as the growing imbalance in international capital flows—its resolution is necessarily being carried out first and foremost on a domestic level. This is not least of all because, in the decade since the Asian financial crises, states have begun to play a dramatically increased role in international finance in relation to both multilateral financial institutions such as the IMF and traditional private actors. In an age where global economic ties are integral to domestic economies and where states themselves are becoming some of the biggest players in international capital markets, a state's global financial standing will more than ever determine its political clout on the world stage. With states acting as market makers, lenders of last resort, and regulators of last resort, the key to understanding the future of individual states in the global economic order can be found only by analyzing states' domestic and foreign policy decisions within the context of the specific constraints facing those states at home and abroad.
Topic:
Economics, Emerging Markets, Human Rights, International Trade and Finance, and Financial Crisis
Political Geography:
Russia and Asia

193. The Impact of Macroeconomic Announcements on Real Time Foreign Exchange Rates in Emerging Markets

Author:
Fang Cai and Hyunsoo Joo
Publication Date:
05-2009
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper utilizes a unique high-frequency database to measure how exchange rates in nine emerging markets react to macroeconomic news in the U.S. and domestic economies from 2000 to 2006. We find that major U.S. macroeconomic news have a strong impact on the returns and volatilities of emerging market exchange rates, but many domestic news do not. Emerging market currencies have become more sensitive to U.S. news in recent years. We also find that market sentiment could sway the impact of news on these currencies systematically, as good (bad) news seems to matter more when optimism (pessimism) prevails. Market uncertainty also interacts with macroeconomic news in a statistically significant way, but its role varies across currencies and news.
Topic:
Emerging Markets, Exchange Rate Policy, and Macroeconomics
Political Geography:
North America and United States of America

194. Labor Market Search in Emerging Economies

Author:
Emine Boz, Ceyhun Bora Durdu, and Nan Li
Publication Date:
12-2009
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper shows that labor markets of emerging economies are characterized by large fluctuations in wages while employment fluctuations are subdued. We find that a real business cycle model of a small open economy that embeds a Mortensen-Pissarides type of search-matching frictions can account for these aforementioned regularities. Moreover, the joint interaction of countercyclical interest rates and search-matching frictions can go a long way in accounting for higher consumption variability relative to output and countercyclical current account observed in emerging markets. Extending this baseline model to incorporate procyclical variations in the technical efficiency at which matches are generated, the model can match the unemployment variability observed in the data.
Topic:
Economics, Emerging Markets, and Labor Issues
Political Geography:
Global Focus

195. Emerging Market Business Cycles Revisited: Learning about the Trend

Author:
Emine Boz, Christian Daude, and Ceyhun Bora Durdu
Publication Date:
04-2008
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The data reveal that emerging markets do not differ from developed countries with regards to the variance of permanent TFP shocks relative to transitory. They do differ, however, in the degree of uncertainty agents face when formulating expectations. Based on these observations, we build an equilibrium business cycle model in which the agents cannot perfectly distinguish between the permanent and transitory components of TFP shocks. When formulating expectations, they assign some probability to TFP shocks being permanent even when they are purely transitory. This is sufficient for the model to produce "permanent-like" effects in response to transitory shocks. The imperfect information model calibrated to Mexico predicts a higher variability of consumption relative to output and a strongly negative correlation between the trade balance and output, without the predominance of trend shocks. The same model assuming perfect information and calibrated to Canada accounts for developed country business cycle regularities. The estimated relative variance of trend shocks in these two models is similar.
Topic:
Economics, Emerging Markets, and Markets
Political Geography:
Canada and Mexico

196. An Anatomy of Credit Booms: Evidence From Macro Aggregates and Micro Data

Author:
Enrique G. Mendoza and Marco E. Terrones
Publication Date:
07-2008
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper proposes a methodology for measuring credit booms and uses it to identify credit booms in emerging and industrial economies over the past four decades. In addition, we use event study methods to identify the key empirical regularities of credit booms in macroeconomic aggregates and micro-level data. Macro data show a systematic relationship between credit booms and economic expansions, rising asset prices, real appreciations, widening external deficits and managed exchange rates. Micro data show a strong association between credit booms and firm-level measures of leverage, firm values, and external financing, and bank-level indicators of banking fragility. Credit booms in industrial and emerging economies show three major differences: (1) credit booms and the macro and micro fluctuations associated with them are larger in emerging economies, particularly in the nontradables sector; (2) not all credit booms end in financial crises, but most emerging markets crises were associated with credit booms; and (3) credit booms in emerging economies are often preceded by large capital inflows but not by financial reforms or productivity gains.
Topic:
Economics, Emerging Markets, International Trade and Finance, and Markets

197. The Economics of Nuclear Energy Markets and the Future of International Security

Author:
Erwann O. Michel-Kerjan and Debra Decker
Publication Date:
01-2008
Content Type:
Working Paper
Institution:
Belfer Center for Science and International Affairs, Harvard University
Abstract:
This paper discusses the evolution of nuclear energy markets and key drivers of the growing “nuclear renaissance.” We focus on uranium, the largest part of the nuclear fuel markets, and analyze market demand, supply, and prices since the 1970s. We review the forces impacting this market – historically and prospectively - and note proliferation concerns surrounding nuclear energy: i.e. the same facilities that enrich uranium for electricity generation can also enrich it further for nuclear weapons.
Topic:
Security, Emerging Markets, Energy Policy, International Cooperation, Markets, and Nuclear Weapons

198. Business Constraints and Growth Potential of Micro and Small Manufacturing Enterprises in Uganda

Author:
Esther K. Ishengoma and Robert Kappel
Publication Date:
05-2008
Content Type:
Working Paper
Institution:
German Institute of Global and Area Studies
Abstract:
Ugandan micro- and small enterprises (MSEs) still perform poorly. The paper utilizes data collected in Uganda in March and April 2003 to analyze the business constraints faced by these MSEs. Using a stratified random sampling, a sample of 265 MSEs were interviewed. The study focuses on the 105 manufacturing firms that responded to all questions. It examines the extent to which the growth of MSEs is associated with business constraints, while also controlling for owners' attributes and firms' characteristics. The results reveal that MSEs' growth potential is negatively affected by limited access to productive resources (finance and business services), by high taxes, and by lack of market access.
Topic:
Economics, Emerging Markets, and Political Economy
Political Geography:
Uganda and Africa

199. Economic Integration and Incipient Democracy

Author:
Philip I. Levy
Publication Date:
03-2008
Content Type:
Working Paper
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Contrary to the common approach in the literature, the economic and other forces that push countries toward democratization are continuous rather than discrete. This paper argues that failure to account for the latent variable of "incipient democracy" can bias estimates of democracy's determinants. The paper presents a new avenue by which economic integration can foster democracy, one that focuses on the means for democratization rather than the motive. This strengthening of civil society is identified as a necessary component of economic integration with modern distributed production, though we would not expect to see it in autocracies dependent on natural resource trade. The arguments are applied to the case of China.
Topic:
Democratization, Development, Economics, and Emerging Markets
Political Geography:
China and Asia

200. What if the United States Sneezed and Latin America Didn't Catch a Cold?

Author:
Megan Davy
Publication Date:
05-2008
Content Type:
Policy Brief
Institution:
American Enterprise Institute for Public Policy Research
Abstract:
Latin American and Caribbean (LAC) economies, usually susceptible to international financial turmoil, are especially vulnerable to even minor tremors in U.S. markets. Regional policymakers and entrepreneurs, therefore, have been closely watching the current U.S. subprime credit crisis. Here is the good news: all signs point to relatively minor symptoms in LAC countries—despite a rocky financial history during the 1980s and 1990s—thanks in large part to reforms undertaken in response to previous financial crises, as well as continued high commodity prices that will likely buoy export markets. Although the economic downturn in the United States and other global markets will likely expose lingering weaknesses in the region's economy, this latest crisis can provide an impetus to complete the unfinished business of building more modern, resilient economies.
Topic:
Development, Economics, and Emerging Markets
Political Geography:
United States, South America, Latin America, and Central America