Most recently posted material.
China Economic Watch
China Chart of the Week: Services Lead Growth as Industry Slows
Ryan Rutkowski — September 19, 2014
Earlier this week China’s National Bureau of Statistics released monthly economic data for August, and at first blush it looked pretty scary. Year-over-year growth in value added industrial output slowed to 6.9 percent in A ...
Policy Brief 14-22
Should Korea Join the Trans-Pacific Partnership? [pdf]
Jeffrey J. Schott and Cathleen Cimino — September 19, 2014
Korea should seek to join the Trans-Pacific Partnership as soon as possible if it can manage its bilateral trade issues with Japan in a pragmatic way.
RealTime Economic Issues Watch
Corporate Taxation: Historic Reform Awaits 2017
Gary Clyde Hufbauer — September 19, 2014
In summer of 1975, J. L. Kramer and I published an article in the International Tax Journal entitled "Higher U.S. Taxation Could Prompt Changes in Multinational Corporate Structure." Nearly four decades later, our Delphic predictions may be coming true—evidenced by the widespread p ...
North Korea: Witness to Transformation
Halperin on Striking a Deal
Stephan Haggard — September 19, 2014
We admit to pretty deep skepticism about the prospects for reviving the Six Party Talks, let alone moving toward a more comprehensive security arrangement for Northeast Asia. The US is not seriously interested. To the contrary, the House of Representatives is pushing for more sanctions--as we highli ...
Peterson Perspectives Interview
Battle to Save the Export-Import Bank
C. Fred Bergsten — September 17, 2014
C. Fred Bergsten explains why the US Export-Import Bank is essential to a successful US trade strategy—and what might be done to limit export subsidies worldwide.
RealTime Economic Issues Watch
Rebuttal to Stiglitz on Scotland: Reality of Independence Is Frightening
Adam S. Posen — September 16, 2014
The overwhelming majority of macroeconomists who have commented on the impact of Scotland leaving the United Kingdom have said that the economic costs to Scotland so doing would be very high— ...
China's Rise Is a Credit to Private Enterprise Not State Control
Nicholas R. Lardy — September 16, 2014
China's rapid ascent is the result of the expanding role of the market and the rise of private businesses, and policymakers and commentators decrying Beijing's brand of state capitalism risk provoking short-sighted and counterproductive responses.
China Economic Watch
Taking Stock of the Shanghai FTZ after One Year
Nicholas Borst — September 15, 2014
The Shanghai Free Trade Zone is fast approaching its one-year anniversary. Much of the recent commentary about the FTZ has been negative. It is obvious that the FTZ has not lived up to the extraordinarily high expectations many had when it was first announced. However, as is typical with the Chines ...
The Huge Costs of Scotland Getting Small
Adam S. Posen — September 15, 2014
Scottish political independence would plunge the people of Scotland into a more unstable economy, unavoidably and permanently.
A Strategy to Bolster the Export-Import Bank
C. Fred Bergsten — September 15, 2014
Powerful opponents in Congress want to abolish the Export-Import Bank to reduce government intervention in private markets. C. Fred Bergsten offers a tried-and-true approach to the problem that can satisfy both sides of the debate.
China Economic Watch
China Chart of the Week: Staying the Course on Monetary Support
Kent Troutman — September 12, 2014
In several speeches earlier this week at the World Economic Forum’s summer forum in Tianjin, Premier Li Keqiang reemphasized the government’s ...
Peterson Perspectives Interview
Scotland: To Secede or Not to Secede?
Adam S. Posen — September 11, 2014
Adam S. Posen assesses the dangers to Scotland, the United Kingdom, Europe, and the world economy if Scotland decides to break away from the United Kingdom in a referendum on September 18.
Should the World Fund Food Aid to North Korea?
Marcus Noland — September 10, 2014
Humanitarian activities by the UN's World Food Program and private relief groups constitute the longest ongoing engagement between North Korea and the international community. But the regime's actions create an ethical conundrum that may be reaching its breaking point.
New Book by Nicholas R. Lardy Finds Private Businesses Are the Drivers of China's Economic Growth
September 10, 2014
WASHINGTON—In Markets over Mao: The Rise of Private Business in China, Nicholas R. Lardy's analysis shows the economic reform process that began in the late 1970s has tran ...
RealTime Economic Issues Watch
Alibaba IPO Underlines Rise of Chinese Private Sector
Nicolas Véron — September 9, 2014
On Friday, September 5, Alibaba Group filed details about its forthcoming initial public offering (IPO), suggesting a mid-range valuation of US $155 billion. This would make the Hangzhou-based web retailer the most valuable listed private-sector company headquartered on the Chinese mainland, ahea ...
Is China's Property Market Heading toward Collapse?
China's continuing urbanization, available policy options, and the stage of its property market development all suggest that China's property market is experiencing simply another cyclical adjustment. Policy Brief 14-21 by Li-Gang Liu.
A single measure can free up $3 billion for debt-ridden Ukraine and send a powerful message to Russia: The UK parliament could enact a debt sanctions law making Ukraine’s $3 billion bond issued to Russia in December 2013 unenforceable as against public policy under English law. Policy Brief 14-20 by Anna Gelpern.
NAFTA at 20: Misleading Charges and Positive Achievements
The North American Free Trade Agreement between the United States, Mexico, and Canada, which took effect 20 years ago, continues to face divided public opinion. Gary Clyde Hufbauer, Cathleen Cimino, and Tyler Moran analyze the record of NAFTA in order to clear the air so that the benefits and challenges of trade can be examined objectively. Policy Brief 14-13.
See also related conference.
Free exports of liquefied natural gas, crude oil, and other energy products are an essential complement of US international economic policy, which has long advocated free trade in raw materials. The Obama White House should prod the Department of Energy, the Department of Commerce, the Federal Energy Regulatory Commission, and other agencies to speed up their approvals of such exports. Policy Brief 14-19 by Cathleen Cimino and Gary Clyde Hufbauer.
By targeting some of the largest banks in Russia, the United States has limited both the state's and President Vladimir Putin's private financial prowess, while hardly any ordinary Russian savers are being hit, writes Anders Åslund.
Simon Johnson testifies to Congress that the Federal Reserve Accountability and Transparency Act, as currently drafted, would impose undue and excessive constraints on the ability of officials to respond fully and in a timely manner to changing economic and financial circumstances.
Integrating China into the Trans-Pacific Partnership (TPP) would benefit China, the United States, and Japan, writes Adam S. Posen. See also: This Is Japan's Chance to Lead TPP Talks
While manufacturing employment has steadily declined for many decades, more direct measures of manufacturing productivity show that the growth of the US manufacturing sector has actually been strong and not simply in the subsectors affected by computer production. Policy Brief 14-18 by Theodore H. Moran and Lindsay Oldenski.
David N. F. Bell and David G. Blanchflower examine the amount of slack in the UK labor market and find the downward adjustments made by the Monetary Policy Committee (MPC) to both unemployment and underemployment invalid. Working Paper 14-2
The renminbi cannot become a true international currency until Chinese authorities drop their strict limits on capital flows between China and the rest of the world. Policy Brief 14-15 by Joseph E. Gagnon and Kent Troutman.
Although the Indian rupee continues to be undervalued by 30 percent or more, it would be risky to allow it to appreciate too much beyond the current rate, particularly given India’s continuing high inflation and the recent gains in bringing down the current account deficit from a peak of 5 percent to 2 percent, write Martin Kessler and Arvind Subramanian.
New Book: Economic Normalization with Cuba: A Roadmap for US Policymakers
by Gary Clyde Hufbauer and Barbara Kotschwar, assisted by Cathleen Cimino and Julia Muir
See also: Release Event | News Release
Germany's large current account surpluses have been criticized as a major cause of slower economic growth in the euro area periphery. Jacob Funk Kirkegaard argues that Germany should indeed act to reduce its current account surplus, but not for reasons that critics say. Policy Brief 14-14.
The recent financial and economic crisis has generated a profound North-South divide in the euro area—between debtors and creditors, between those who dictate what others should do and those who should obey the command—observes Angel Ubide.
Canada can play an important role in the energy security of Ukraine and the rest of Europe in the medium term by developing exports of liquefied natural gas, says Anders Åslund in testimony before the Canadian House of Commons.
Cullen S. Hendrix and Marcus Noland recommend how external policy anchors could help Myanmar lock in recent reforms before the more pernicious effects of the resource curse manifest themselves. Policy Brief 14-11.
Economic improvements generally accrue to countries that go through regime change, but not always when the change leads to democratization, according to a new study on the relationship between democracy and growth. Working Paper 14-1 by Caroline Freund and Mélise Jaud.
The failure in mid-January by the US Congress to approve IMF reform legislation halted progress on Fund governance and damaged the US reputation around the world. The administration and the Congress must make every effort to pass this legislation before the early-April meeting of the International Monetary and Financial Committee (IMFC). Policy Brief 14-9 by Edwin M. Truman.
Flirting with Default: Issues Raised by Debt Confrontations in the United StatesAdam S. Posen, president of PIIE, and other Institute experts analyze the heavy costs [pdf] of the fights in Washington over extending the debt ceiling.
Cathleen Cimino, Gary Clyde Hufbauer, and Jeffrey J. Schott analyze the impact of the widely used local content requirements (LCRs) and recommend a new World Trade Organization code to constrain their use, enhance transparency, expedite dispute resolution, and impose penalties for noncompliance. Policy Brief 14-6.
Caroline Freund finds that the emphasis on small and medium enterprises in the National Export Initiative, while attractive, was misguided and recommends a specific set of policies that the administration should concentrate on to boost exports. Policy Brief 14-7
With the economic recovery incomplete and inflation falling well short of target, the US Federal Reserve needs to be prepared to stop tapering as announced in December 2013 or even reverse course should the forecasted acceleration in real activity show signs of faltering, warns David J. Stockton. See also Five Challenges for Janet Yellen at the Federal Reserve by David J. Stockton.
The crucial international role the Fed played during US Federal Reserve Chairman Ben Bernanke's tenure—a time when domestic economic weakness translated into relatively ineffective American global leadership—should not be overlooked, writes Arvind Subramanian.
Joseph E. Gagnon and Brian Sack propose a new operating framework that will allow the Federal Reserve to conduct monetary policy while maintaining a substantially elevated balance sheet and abundant liquidity in the financial system. Policy Brief 14-4.
Inflation in the euro area is too low, and the European Central Bank (ECB) is at risk of missing its price stability mandate. Angel Ubide offers strategies to restore price stability and generate an environment conducive to sustainable growth. Policy Brief 14-5.
Project on Inequality and Democratic CapitalismUsing detailed data, Jacob Funk Kirkegaard shows that Germany's recent labor market success has resulted from the country’s comprehensive structural labor reforms in the early 2000s and suggests that other euro area economies and the United States should learn from it. Policy Brief 14-1.
Using data on eight advanced economies between 2007 and 2010, Tomas Hellebrandt shows how the Great Recession affected income inequality in different countries and how families and the state tried to mitigate its impact—primarily through redistributing income within households and through benefit and tax policies. Policy Brief 14-3.
How Lowering Youth Unemployment Leads to Consumption Growth
Major ERANDA Foundation Gift to PIIE Supports New Research on What Difference Business and Labor Practices Can Make to Rising Inequality
Labor and UnemploymentThe Federal Reserve should hold off raising interest rates for the sake of fuller employment, argues Adam S. Posen.
Is Unemployment Worse than It Appears?
William R. Cline says the decline in labor participation, which some say has occurred because workers are discouraged from seeking jobs, is largely due to the retirement of the "baby boom" generation.
See also: Demographic versus Cyclical Influences on US Labor Force Participation
Labor Market Slack in the United Kingdom
David N. F. Bell and David G. Blanchflower examine the amount of slack in the UK labor market and find the downward adjustments made by the Monetary Policy Committee (MPC) to both unemployment and underemployment invalid.