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1041. US Lessons for the Eurozone: Restoring Confidence through Transparency

Author:
Julie Chon
Publication Date:
12-2011
Content Type:
Policy Brief
Institution:
Atlantic Council
Abstract:
When it comes to resolving financial crises, size matters, but so does transparency. In both the US and European crises, the drive for size—firing off enough public funds to plug the hole in the financial system—has proven to be self-defeating as markets raise ever higher, unrealistic, and inappropriate expectations for government policy. This strategy addresses some of the economics and none of the politics of crisis management. The race to meet the size test distracts policymakers from addressing the real impediment to restoring investor and public confidence: the inherent uncertainty and lack of transparency associated with extraordinary government actions in times of crisis. The absence of transparent decision-making inflicts a costly blow to the credibility of policymakers because markets and citizens cannot see or believe what leaders are doing to stabilize the financial system.
Topic:
Debt, Economics, International Trade and Finance, and Financial Crisis
Political Geography:
United States and Europe

1042. Mapping the Economic and Financial Future

Publication Date:
07-2011
Content Type:
Working Paper
Institution:
Atlantic Council
Abstract:
In 2008 and 2009 political and business leaders scrambled to stabilize the financial system and avert a slide into world-wide depression as a financial crisis of historic proportions spread across the globe. A series of bold emergency measures succeeded in defusing the crisis, and these same leaders began searching for ways to avoid a similar breakdown in the future. At the same time, the effort to restart economic growth and job creation began in earnest.
Topic:
Economics, International Cooperation, International Trade and Finance, and Financial Crisis
Political Geography:
United States and Europe

1043. Adjusting to China: A Challenge to the U.S. Manufacturing Sector

Author:
Martin Neil Baily
Publication Date:
01-2011
Content Type:
Policy Brief
Institution:
The Brookings Institution
Abstract:
During an "exit interview" with the Wall Street Journal, departing National Economic Council Director Lawrence Summers argued that history would judge the United States based on how well we adjust to China's emergence as a great power, economically and politically. In the face of China's progress, America's manufacturing sector faces major challenges in becoming and remaining competitive and our choice of national economic policies will affect how well we meet those challenges. It is essential that the U.S. trade deficit not balloon as the economy recovers. There is scope to expand our exports in services and agriculture, but improving the competitiveness of U.S. manufacturing is vital.
Topic:
International Trade and Finance, Markets, and Bilateral Relations
Political Geography:
United States, China, and America

1044. Whose Economy? Winners and losers in the new Scottish economy

Author:
Katherine Trebeck
Publication Date:
01-2011
Content Type:
Working Paper
Institution:
Oxfam Publishing
Abstract:
In the UK, persistent poverty exists alongside high economic prosperity, leading to significant inequalities in income and wealth, and in life chances and lifestyles, between individuals and communities. Scottish society is also deeply divided: 'wealthy and secure neighbourhoods are situated next to the most deprived and vulnerable communities [where]… inequality is tangible'.
Topic:
Development, Economics, International Trade and Finance, and Markets
Political Geography:
Europe

1045. A Generalized Fact and Model of Long-Run Economic Growth: Kaldor Fact as a Special Case

Author:
Daniel Danxia Xie
Publication Date:
02-2011
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper provides new evidence on the long-run relationship between economic growth and labor's share in national income, based on a comprehensive panel data set for 123 countries from 1950 to 2004. Xie's primary finding is that labor's share follows a cubic relationship with real GDP per capita over the long process of development. At the beginning of the modern economic growth process, the share of labor in national income first decreases until an initial threshold is reached. After that, labor's share keeps increasing until the country's GDP per capita reaches a second threshold before falling again. Xie argues that these dynamics apply not only to the less developed countries in the postwar years, but also to the advanced countries like the United States and the United Kingdom during their early economic take-offs, starting in the late 18th and 19th century, respectively. Finally, he proposes a two-sector constant elasticity of substitution (CES)-type growth model and simulate the model to replicate and explain the possible mechanism behind such a nonlinear pattern of movements in labor's share.
Topic:
Economics, International Trade and Finance, Labor Issues, and Monetary Policy
Political Geography:
United States and United Kingdom

1046. Current Account Imbalances Coming Back

Author:
Joseph Gagnon
Publication Date:
01-2011
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This paper finds statistically robust and economically important effects of fiscal policy, external financial policy, net foreign assets, and oil prices on current account balances. The statistical model builds upon and improves previous explanations of current account balances in the academic literature. A key advance is that the model captures the effect of external financial policies, including exchange rate policies, through data on net official financial flows. Based on current and expected future policies, current account imbalances in major G-20 economies are likely to widen much more in the next five years than projected by the International Monetary Fund (IMF). This paper concludes with a discussion of appropriate policies to prevent widening imbalances.
Topic:
Economics, International Trade and Finance, Markets, and Monetary Policy

1047. Getting Real on Trade with Pakistan: Duty-Free Market Access as Development Policy

Author:
Kimberly Ann Elliott
Publication Date:
02-2011
Content Type:
Working Paper
Institution:
Center for Global Development
Abstract:
The combination of relatively high American barriers to trade in textiles and apparel and the importance of the sector to the Pakistani economy make increased market access a potentially powerful tool of U.S. policy. Unfortunately, recent proposals to extend duty-free market access for Pakistani exports restrict the product and geographic coverage so severely that they would be meaningless in practice. Moreover, the analysis in this paper suggests that the concerns about job loss in the U.S. textile industry from broader coverage are exaggerated. A serious trade package for Pakistan would expand the geographic coverage to allow duty-free imports from all of Pakistan, expand the product coverage for clothing, and cover all other Pakistani exports as well.
Topic:
International Trade and Finance and Markets
Political Geography:
Pakistan and United States

1048. Security developments in East Asia: what implications for the EU?

Author:
Nicola Casarini
Publication Date:
02-2011
Content Type:
Policy Brief
Institution:
European Union Institute for Security Studies
Abstract:
East Asia is home to some of the most important trading partners of the Union. China is foremost among these, ranking second only to the US - in 2009, EU-China trade totalled a massive €296 billion - while the EU is China's most important trading partner. Japan is the sixth-largest trade partner of the EU - in 2009, EU-Japan trade was almost €92 billion. South Korea is the EU's eighth-largest trade partner and the EU has become South Korea's second largest export destination - total trade in 2009 was above €53 billion. Furthermore, on 6 October 2010 the EU and South Korea signed a Free Trade Agreement (FTA) which is the most ambitious bilateral trade agreement ever negotiated by the EU, and the first with an Asian country.
Topic:
International Trade and Finance
Political Geography:
Japan, China, Europe, Israel, Asia, and South Korea

1049. Global Rebalancing: The Dangerous Obsession

Author:
Uri Dadush
Publication Date:
02-2011
Content Type:
Policy Brief
Institution:
Carnegie Endowment for International Peace
Abstract:
The current emphasis on global rebalancing—which aims to reduce trade deficits and surpluses—is misguided. Trade deficits and surpluses narrowed significantly during the Great Recession, can be financed and eased over time, and are largely the result of domestic forces—making further global rebalancing unlikely. The obsession with global rebalancing stokes currency and protectionist tensions and diverts attention from what is really needed—reforms at home. Rather than focusing on global rebalancing, countries should concentrate more on fixing their domestic problems and expanding their domestic demand at the maximum sustainable rate.
Topic:
Debt, Globalization, International Trade and Finance, Global Recession, and Financial Crisis

1050. U.S. Foreign Aid: Investing in Countries that Help Themselves

Author:
Daniel Yohannes
Publication Date:
03-2011
Content Type:
Video
Institution:
Council on Foreign Relations
Abstract:
Daniel Yohannes, CEO of the Millennium Challenge Corporation, discusses the MCC's work with Isobel Coleman, Senior Fellow for U.S. Foreign Policy and Director of the Civil Society, Markets, and Democracy Initiative at the Council on Foreign Relations.
Topic:
Agriculture, International Trade and Finance, Foreign Aid, Infrastructure, and Governance
Political Geography:
United States