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281. Opportunity through Education: Two Proposals

Author:
Grover J. "Russ" Whitehurst
Publication Date:
03-2011
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
The new normal for local, state and federal governments is fiscal austerity. Although President Obama supported education during his State of the Union address and in his budget proposal to Congress, cash-strapped localities and states—which foot most of the bill for educating America's children— may have to balance their budgets with cuts to schools and teachers. The recession exposed a long-developing structural imbalance between public expenditure versus raising the revenue for public services. Especially on education, reality has set in, with a vengeance.
Topic:
Education, Science and Technology, and Financial Crisis
Political Geography:
United States and America

282. Global fiscal consolidation

Author:
Warwick McKibbin
Publication Date:
05-2011
Content Type:
Working Paper
Institution:
Lowy Institute for International Policy
Abstract:
The build up in government debt in response to the 'great recession' has raised a number of policy dilemmas for individual countries as well as the world as a whole. Where the government fiscal stimulus was seen as necessary to restore confidence to markets and stimulate deteriorating economies in the aftermath of the 'great recession' by 2010 the massive fiscal stimulus programs and associated run-up in debt had, for many economies, become a confidence sapping exercise. This need for a change of fiscal policy stance has fuelled another debate that has two related aspects. One is the impact of fiscal consolidation on economies that are tightening and the flow-on effects to the world economy. The other debate is how much tightening there should be and how quickly.
Topic:
Debt, Economics, Global Recession, and Financial Crisis
Political Geography:
Asia and Australia/Pacific

283. Housing Policy in the U.S.: The Evolving Sub-national Role

Author:
Robert M. Buckley and Alex F. Schwartz
Publication Date:
05-2011
Content Type:
Working Paper
Institution:
The New School Graduate Program in International Affairs
Abstract:
This paper provides a general overview of U.S. housing policy, with emphasis on state and local programs. Despite the focus on local programs we also discuss the broader national policy environment. This broader context is necessary because national policies play a crucial role in shaping the country's housing markets. We briefly trace out some of the key features of the housing market, highlighting tenure distributions, housing conditions and costs. Particular emphasis is given to the role of increasing housing costs and the housing opportunities of the poor. The paper also describes: (1) the nation's housing finance and tax systems, focusing on the different ways the government uses the tax code to subsidize homeowners and renters; and (2) state and local government programs, often implemented in the close collaboration of nonprofit organizations. A final section provides a brief overview of the strengths and weaknesses of U.S. housing policy and the evolving role of sub-national governments.
Topic:
Economics, Markets, Global Recession, and Financial Crisis
Political Geography:
United States

284. External versus Domestic Debt in the Euro Crisis

Author:
Daniel Gros
Publication Date:
05-2011
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
As EU leaders muddle through the eurozone crisis, the debate about its root causes continues. CEPS Director Daniel Gros argues in this Policy Brief that the debate is important if we are to understand how to prevent future crises. In his view, external debt is the key to the turmoil in European economies and that the focus on total public debt is therefore misleading.
Topic:
Debt, Economics, and Financial Crisis
Political Geography:
Europe

285. The EU's Response to the Financial Crisis: A mid-term review

Author:
Karel Lannoo
Publication Date:
04-2011
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
Two years after the London G-20, CEPS Chief Executive Karel Lannoo finds that the EU is well advanced in delivering on the commitments made for the 2013 target date. Important steps have been taken on the institutional side, and regulatory changes are moving ahead. On some issues, in fact, such as remuneration, the EU has made even greater headway than the US. But certain key sensitive matters remain, such as bank resolution or structural changes.
Topic:
Debt, Economics, Global Recession, Monetary Policy, and Financial Crisis
Political Geography:
United States, Europe, and London

286. Restoring financial stability in the euro area

Author:
Christian Kopf
Publication Date:
03-2011
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
The pricing of sovereign credit risk is a necessary component of the financial architecture of the European Monetary Union. However, unnecessarily high and volatile risk premia on government bonds are currently preventing effective financial intermediation within the euro area, thereby inhibiting its economic recovery. Several proposals have been made on how these risk premia should be brought down, namely i) permanent pooling of funding through joint bond issuance, ii) temporary liquidity assistance through multilateral funds, iii) debt buybacks using multilateral funds, and iv) debt restructuring.
Topic:
Debt, Economics, Global Recession, Monetary Policy, and Financial Crisis
Political Geography:
Europe

287. On the Tasks of the European Stability Mechanism

Author:
Stefano Micossi, Fabrizia Peirce, and Jacopo Carmassi
Publication Date:
03-2011
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
In recent weeks pressures on the euro and eurozone sovereign debtors have subsided. Buoyant growth in the global economy, increasingly benefiting also the European economy, has of course played an important role in calming financial markets. But even more important has been the perception that France and Germany are again working constructively for a strong economic Europe. More broadly, the acute turbulence in financial markets since the spring of 2010 may have finally convinced our political leaders, notably including the German political establishment, that the benefits of a stable currency far outweigh the costs that may have to be borne to make it work properly. The euro will only be trusted if the member states effectively coordinate their economic policies not only to ensure fiscal stability, but also to eliminate persistent divergences in productivity leading to unsustainable imbalances between national savings and investment (Schäuble, 2011).
Topic:
Security, Economics, Regional Cooperation, Monetary Policy, Financial Crisis, and Governance
Political Geography:
Europe, France, and Germany

288. Debt reduction without default?

Author:
Daniel Gros and Thomas Mayer
Publication Date:
02-2011
Content Type:
Policy Brief
Institution:
Centre for European Policy Studies
Abstract:
This paper proposes a two-step, market-based approach to debt reduction: · Step 1.The European Financial Stability Facility (EFSF) would offer holders of debt of the countries with an EFSF programme (probably Greece, Ireland and Portugal = GIP) an exchange into EFSF paper at the market price prior to their entry into an EFSF-funded programme. The offer would be valid for 90 days. Banks would be forced in the context of the ongoing stress tests to write down even their banking book and thus would have an incentive to accept the offer. · Step 2. Once the EFSF had acquired most of the GIP debt, it would assess debt sustainability country by country. a) If the market price discount at which it acquired the bonds is enough to ensure sustainability, the EFSF will write down the nominal value of its claims to this amount, provided the country agrees to additional adjustment efforts (and, in some cases, asset sales). b) If under a central scenario this discount is not enough to ensure sustainability, the EFSF might agree on a lower interest rate, but with GDP warrants to participate in the upside.
Topic:
Debt, Monetary Policy, and Financial Crisis
Political Geography:
Europe

289. Growing Business or Development Priority? Multilateral Development Banks' Direct Support to Private Firms

Author:
Guillermo Perry
Publication Date:
04-2011
Content Type:
Policy Brief
Institution:
Center for Global Development
Abstract:
Direct support to private firms in developing countries constitutes a large and growing share of multilateral development banks' financial activities. This trend contrasts with the advice MDBs gave developing countries until a decade ago to privatize or liquidate the development banks supporting private firms, or to transform them into nonbanking development agencies. Opinion has changed since then, especially after development banks successfully intervened in the recent financial crisis. In this brief, Guillermo Perry assesses whether arguments in favor of such MDB direct support are valid and whether MDBs are living up to priorities coherent with such arguments. He finds that they do so only partially. His recommendations include deepening MDB support to small and medium enterprises, reducing the procyclicality of MDB lending, increasing the share of MDB loans and guarantees to private firms that are made in domestic currencies, and paying more attention to firms in infrastructure and social sectors and to those introducing new products, exports, or technologies.
Topic:
Development, Foreign Aid, Foreign Direct Investment, and Financial Crisis

290. Integrating Reform of Financial Regulation with Reform of the International Monetary System

Author:
Morris Goldstein
Publication Date:
02-2011
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper links reform of the international financial regulatory system with reform of the international monetary system because as this recent global crisis demonstrates so vividly, the root causes can come from both the financial and monetary spheres and they can interact in variety of dangerous ways. On the financial regulatory side, I highlight three problems: developing a better tool kit for pricking asset-price bubbles before they get too large; shooting for national minima for regulatory bank capital that are at least twice as high those recently agreed as part of Basel III; and implementing a comprehensive approach to "too-big-to-fail" financial institutions that will rein-in their past excessive risk-taking. On the international monetary side, I emphasize what needs to be done to discourage "beggar-thy-neighbor" exchange rate policies, including agreeing on a graduated set of penalties for countries that refuse persistently to honor their international obligations on exchange rate policy.
Topic:
Economics, International Trade and Finance, Monetary Policy, and Financial Crisis