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411. A Proposed Code to Discipline Local Content Requirements

Author:
Gary Clyde Hufbauer, Jeffrey J. Schott, and Cathleen Cimino
Publication Date:
02-2014
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Proponents of liberalized trade and finance were relieved when the global economic crisis in 2008 produced a broad range of pledges from countries around the world to avoid new barriers to trade and investment (see Evenett 2013). These promises, designed to avert a replay of the Great Depression of the 1930s, were largely honored when it came to classic forms of protection (tariffs and quotas). But the spirit of that pledge was violated as countries shifted from traditional forms of protection to behind-the-border nontariff barriers (NTBs), including local content requirements (LCRs)—policies mandating that local suppliers of goods, services, and even entire projects be favored by governments and private firms, even when foreign firms offer lower costs, better quality, and faster delivery.
Topic:
Debt, Economics, International Trade and Finance, Markets, Financial Crisis, and Reform

412. Is the European Central Bank Failing Its Price Stability Mandate?

Author:
Ángel Ubide
Publication Date:
02-2014
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Inflation in the euro area is too low, just 0.9 percent year-on-year in December 2013, and inflation expectations, measured from inflation derivative contracts, have shifted lower, indicating that markets expect some small probability of deflation in 2014 and average inflation over the next five years in the 1.25 to 1.5 percent range. The European Central Bank (ECB), however, seems to be content with this outlook. Its current projections show a very slow economic recovery and inflation at just 1.3 percent in two years' time. Yet the ECB describes the risks to inflation as balanced. This puzzling assessment might be due to the fact that the ECB's definition of price stability is less precise than that employed by other central banks, and some ECB members may interpret the definition as setting a ceiling, rather than a target, for inflation at close to but below 2 percent. But if one considers the ECB's self-assessment of success since its creation—achieving 2 percent inflation on average—its current inflation forecast of 1.3 percent would fall short of achieving its price stability mandate.
Topic:
Economics, International Trade and Finance, Markets, and Monetary Policy
Political Geography:
Europe

413. Monetary Policy with Abundant Liquidity: A New Operating Framework for the Federal Reserve

Author:
Joseph E. Gagnon and Brian Sack
Publication Date:
01-2014
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The dramatic increase in the Federal Reserve's balance sheet since 2009 has attracted the attention of economists, pundits, and ordinary citizens. The amount of assets held by the Fed recently crossed $4 trillion and will likely continue to rise to a peak of about $4.5 trillion. This run-up in asset holdings has resulted from the Fed's large-scale asset purchase programs, which were intended to support economic growth. However, a side-effect of these asset purchases is the creation of unprecedented amounts of liquidity in the financial system.
Topic:
Economics, International Trade and Finance, Markets, and Monetary Policy
Political Geography:
United States

414. Income Inequality Developments in the Great Recession

Author:
Tomas Hellebrandt
Publication Date:
01-2014
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
The Great Recession, which cost tens of millions of jobs, a collapse of asset values around the world, and threatened the global financial system, has generated renewed concern over the long-standing issue of the fairness of the distribution of wealth and income in many societies. Economic inequality has increased in the United States and many other advanced economies over the past 20 to 30 years. This trend generated less worry in the boom years, when unemployment rates were low and cheap credit enabled consumers to borrow and maintain higher standards of living, masking the impact of growing income disparity on consumption patterns and perceptions of well-being.
Topic:
Debt, Economics, International Trade and Finance, Poverty, Social Stratification, and Financial Crisis
Political Geography:
United States, United Kingdom, Germany, Spain, Italy, and Ireland

415. Addressing Currency Manipulation Through Trade Agreements

Author:
C. Fred Bergsten
Publication Date:
01-2014
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
A bipartisan majority in both Houses of Congress is insisting that the United States include a provision in future trade agreements that would bar currency manipulation. A letter from 60 senators to Secretary of the Treasury Jacob Lew and United States Trade Representative (USTR) Michael From an on September 23, 2013, called for "strong and enforceable foreign currency manipulation disciplines" in the Trans-Pacific Partnership (TPP) while 230 members of the House of Representatives told President Barack Obama on June 6, 2013, that "it is imperative that (the TPP) address currency manipulation.to create a level playing field for American businesses and prevent more US jobs from being shipped overseas." The trade promotion authority (TPA) legislation proposed by congressional trade leaders on January 9, 2014, establishes the avoidance of currency manipulation as a "principal US negotiating objective" in its future trade agreements.
Topic:
Economics, Emerging Markets, International Trade and Finance, and Monetary Policy
Political Geography:
United States

416. Making Labor Market Reforms Work for Everyone: Lessons from Germany

Author:
Jacob Funk Kirkegaard
Publication Date:
01-2014
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics
Abstract:
Mark Twain once wrote an essay about the difficulties of learning what he called "The Awful German Language." Similar barriers to comprehension seem to plague those trying to explain recent German economic performance. By most measures, Germany has the best functioning labor market among large economies in the West, with levels of employment reaching those in the United States at the end of the turbo-charged 1990s. A debate has stirred, however, about whether this success has come with a price—specifically, whether Germany's domestic structural reforms have lowered living standards for Germany's low income workers and worsened income inequality and whether Germany is fortuitously and perhaps selfishly riding a wave of strong foreign demand for German exports.
Topic:
Economics, Industrial Policy, International Trade and Finance, Markets, and Labor Issues
Political Geography:
United States, Europe, and Germany

417. Facing West, Facing North: Canada and Australia in East Asia

Author:
Leonard Edwards and Peter Jennings
Publication Date:
02-2014
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
Canada and Australia have shared interests in bolstering economic prosperity and security cooperation across East Asia. The focus of the world economy has shifted to Asia; Canada should follow the path Australia has taken for decades and orient itself — in economic and security terms — toward the emerging economies of East Asia. The risk of regional instability is growing, however, due to China's re-emergence, continued speculation about US strategic engagement in Asia and increased competition over disputed maritime boundaries. These developments provide opportunities for collaboration between countries like Canada and Australia. Non-traditional security threats, including natural disasters, climate change, food security and cyber security, point to a range of areas where the two countries can work more closely together.
Topic:
Security, Diplomacy, Economics, International Trade and Finance, Bilateral Relations, and Governance
Political Geography:
America, Canada, and Australia

418. Reforming Finance: Macro and Micro Perspectives

Author:
Pierre Siklos
Publication Date:
02-2014
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
Reforms of the financial system in the wake of the global financial crisis are incomplete. Beyond reforms, good judgment is essential in a crisis. Short-termism in finance cannot be completely controlled by regulation and supervision. Financial crises are inevitable but need not be as virulent at the global financial crisis. Central banks will have to rethink their policies and how they interact with other agencies partially responsible for maintaining financial system stability.
Topic:
Economics, Globalization, International Trade and Finance, Financial Crisis, Governance, and Reform
Political Geography:
Europe

419. Worldwide Cost of Living 2014: Which city is the most expensive to live in? Which city is the cheapest?

Publication Date:
03-2014
Content Type:
Working Paper
Abstract:
Despite Abenomics driving consumer confidence and price inflation, a weaker yen has pushed Osaka and Tokyo away from the top of the cost of living ranking. This has paved the way for Singapore, which has been steadily moving up the ranking over the last decade, to claim the unenviable title of world's most expensive city. Singapore's rising price prominence has been steady rather than spectacular. The city-state was 18th most expensive ten years ago and has actually seen the cost of living compared with New York City decline over the last 12 months. However, over the last decade a 40% currency appreciation, coupled with solid price inflation, has consistently pushed Singapore up the ranking.
Topic:
Economics, Energy Policy, International Trade and Finance, Natural Resources, Food, and Infrastructure
Political Geography:
New York, Tokyo, and Singapore

420. The Development of Natural Resource Linkages in Mozambique: The Ruling Elite Capture of New Economic Opportunities

Author:
Lars Buur
Publication Date:
03-2014
Content Type:
Working Paper
Institution:
Danish Institute for International Studies
Abstract:
This paper explores linkage creation in Mozambique related to mega-projects in natural resource extraction and development from a political economy perspective. It explores through a focus on linkage development related to extractive industries in Mozambique the 'best practice' attempts between commodity producers and local content providers. The paper argues that a relatively elaborate state organizational and institutional setup based on policies, strategies and units with funding tools has emerged over time in order to begin to reap the benefits of large-scale investments in the extractive sectors. However, despite the formal acknowledgement, very little has been achieved with regard to forward and backward linkages, state institutions are often despite the official government rhetoric of importance simply bypassed not only by foreign investors, but also by the political leadership.
Topic:
Development, Economics, International Trade and Finance, Political Economy, Natural Resources, and Foreign Direct Investment
Political Geography:
Africa