Global Value Chains, International Trade Statistics and Policymaking in a Flattening World
The raise of global production networks since the 1980s changed the way we understand international trade and has profound repercussions on development policies and the conduct of global governance. New comparative advantages allow large developing countries to leap-frog through their industrialization process while smaller economies without large internal market or mining resources are now able to build an industrial base. Offshoring also gave the possibility to firms from industrialised countries to remain competitive in front of fast-expanding firms from emerging countries. But in the process, the relative demand for low and medium skilled workers in industrialised countries contracted, and this employment and income effect became a political issue and fuelled demand for protectionism. Unfortunately, the debate lacks accurate data as traditional statistics give only a blurred picture of what is known as ‘trade in tasks’. Before revising the trade and governance implications, the article calls for a new measurement of international trade based on its value-added content in order to have a better understanding of the actual issues.
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The Value of Value AddedAs production has become more globally integrated, imported components account for a rising share of the value of exports. Many countries may contribute inputs to a good, and the final assembler may capture only a small share of the product’s value. Official trade statistics, which attribute all value to the final exporter, can be uninformative or misleading about a country’s global engagement and its participation in global supply chains. New measures are required that incorporate both production and trade, and track the flow of inputs, and their value, through industries and across national borders. This paper examines the construction and use of value-added measures that incorporate the necessary production and trade data, and evaluates their performance against similar measures based on gross trade. The value-added measures provide a more revealing look into global integration that is consistent across different measures and analytical approaches.
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Bias in the ‘Proportionality Assumption’ Used in the Measurement of OffshoringMost studies of offshoring rely on a ‘proportionality assumption’ where every sector is assumed to import each material and service input in the same proportion as its economy-wide use. We assess the bias resulting from this assumption. Since Germany collects imported inputs directly, we are able to compare the direct and proxy measures, where the proxy is constructed with the proportionality assumption. The proxy fails to accurately capture the variation in services offshoring intensity because – as a result of the proportionality assumption – it is strongly influenced by the variation in demand for domestic inputs. Estimation of the effect of offshoring on labour demand for 35 manufacturing sectors in Germany over 1995–2006 shows that the direct and proxy-based measures of services offshoring give very different results. The implication goes beyond the case of Germany: researchers must be cautious about drawing policy conclusions from estimates using the proxy of offshoring.
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Global Production Sharing in the Australian Automotive TradeThis paper contributes to the literature on global production sharing by investigating the experience of the Australian automotive industry, which has experienced significant structural change following trade liberalisation. Our analysis indicates that the globalisation of the world economy, together with developments in transport and communication, has significantly increased the importance of the global production network in the Australian automotive industry, leading to a substantial rise in value-added share of foreign inputs in its exports, which had reached about 80% by 2011. While foreign technology embodied in imported inputs may have made the industry more competitive, lacklustre production and exports performance, especially during the decade to 2010, suggests that the flow-on effects are weaker. Nonetheless, some welfare gains through improvements in the motor vehicle affordability index were observed. These findings raise important policy questions for ongoing industry assistance, including research and development support.
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Are National Accounts Revisions Harmful for Historical Comparisons?Revisions of national accounts affect economic analysis, calling into question theoretical findings based on earlier data. Revisions to German national accounts have resulted in a markedly higher GDP in absolute terms and a lower volatility in macroeconomic production. According to the revised data, recessions have been less pronounced. Moreover, less volatility in production has changed income accounts and, above all, reduced the fluctuations in property and entrepreneurial income. The stylised fact of declining property and entrepreneurial incomes during recessions in West Germany from 1970 to 1991 has vanished into thin air as a result of the revisions of 2002 and 2006.
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Measuring UK Inflation: Practical Differences and IssuesInflation is a key economic indicator that affects all economic agents. But the mechanisms by which price data are captured and aggregated are less uniform than might be expected, and there are a number of practical issues that can affect measured inflation rates. Focusing on UK data, this article examines the differing processes for measuring consumer prices, producer prices and other measures of inflation. It considers the data collection process at the microeconomic level, how sampling and aggregation methodologies vary, and the implications and impact that different averaging techniques can have on the same underlying data. It also discusses how the aggregation process can affect the time series properties of headline inflation.
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The Change in Corporate Behaviour Author: , December 2012
Corporate behaviour in both the UK and US has changed because of the change in management incentives. The result is that the savings’ surplus of business is no longer a cyclical problem that will end once the animal spirits of entrepreneurs have revived. It is now a structural problem. This is ignored by those who call for an end to fiscal constraint on the grounds that deficit cutting should follow, not precede, sustained recovery. No sustained recovery can be expected without a change in policy as new problems require new solutions. The UK must change the savings’ surpluses of the foreign sector by currency intervention and that of the corporate sector by changing the bonus culture.
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Things Fall Apart: Doha and the End of the Post-War Trade ConsensusThis paper focuses on the failure of the Doha Round, representing the end of the post-war multilateral consensus on comprehensive trade liberalisation established in the GATT. The need to achieve consensus, combined with the requirement of a single undertaking, created an enormous burden on the WTO’s negotiating structure. The traditional informal methods of committee chair-led consensus building and intervention by the Director-General (D-G) in smallgroup ‘green room’ meetings, inherited from the GATT, could not achieve a final agreement in the Doha Round. The changing balance of bargaining power, the large and diverse membership, and a complicated negotiating agenda appear to have reduced the ‘zone of agreement’ within which WTO members could negotiate. In addition, the disappointments among many developing countries with the Uruguay Round, combined with the concerns of all members regarding the legalisation of trade commitments through dispute settlement, have eroded trust in the informal processes and the effectiveness of the D-G. New negotiating structures are needed in order to make broad-based multilateral trade liberalisation possible.
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Discount Rate Set Too HighThe size of government liabilities is only now becoming apparent, but the choice of discount rate is crucial in estimating these. Historically this has been set using Green Book methods and FRS17 accounting standards, but now government is moving to using a rate based on hoped-for economic growth of 3% plus inflation. The more prudent rate to use would be the much lower gilt rate of under 1% – the government’s long-term index-linked cost of borrowing. Use of the 1% rate would show liabilities more than £2 trillion higher, and these will increase as the effects of using the higher discount rate ‘unwind’. Furthermore, the overoptimism from using a high discount rate can lead to poor policy decisions in pensions, government spending and strategic planning.
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Doing Business and Doing Developmentbenchmarking methodologies used by corporates to provide cross-country comparisons of the quality of business regulation. In doing so, it has demonstrated a radical new approach to catalyzing development, which has proven to have high impact in changing government regulations at low cost. It represents an open-source, knowledge-based approach to development which could be replicated across other development topics, taking into account the limitations of the methodology and the complementary elements of analysis and communication which have enabled Doing Business to have impact.
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When to Buy and When to Sell Equities?This paper reviews three investment models with a basis in economics which try to answer questions about the relative value of equity markets. Three basic approaches are critically analysed from the perspective of their broad conceptual underpinnings, the available evidence and their data requirements. These three are Professor Shiller’s Cyclically Adjusted Price- Earnings Model (CAPE), Tobin’s q (QR) and the Equitisation Ratio (ER). The paper finds that although there still remains disagreement about the signals on relative market valuation given by the different valuation models, an analysis of the period 1952 to 2010 of their performance in relation to the S&P 500 index in the United States shows that the three measures move together very closely and, apart from a limited number of periods, all of them provide the same signal of an over- or undervalued index. However, all of the models have signalled periods of significant length when the stock market is relatively overvalued or undervalued, without any corrections in the value of the S&P 500. The length of these periods, despite the fundamental warnings given by these methods, can make a considerable difference to the return on any fund focused on short-run performance. This limits their use to investors more interested in the long-term.
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The Impact of Reputation on Market ValueCorporate reputations are one of the best known but least understood company assets. Few investment analysts would argue that they have no value but at the same time would struggle to put figures on how much. This paper dispels the myth that intangible means immeasurable. It provides an objective analysis of the scale of the shareholder value tied up in the reputations of many of the largest US and UK public companies. Moreover, it argues that critical understanding of the sources and drivers of reputation value can help corporate leaders to better manage their assets and investors to make more informed decisions.
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Too Loose for ComfortThis paper argues that the benefits of the current US and UK monetary policy are limited and outweighed by significant costs. The policy of low or negative real interest rates, combined with quantitative easing, may be helpful to large companies and large banks. However, due in part to changes in the financial system over the past 30 years, the policy has not resulted in sufficiently lower borrowing costs or increased access to credit, especially by job-producing SMEs, to compensate for the adverse impact on savers, endowments, pension funds, insurance companies and others. We conclude that the policy is probably retarding rather than assisting economic recovery and that funds used for quantitative easing could be more usefully put towards a form of ‘credit easing’.
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Does Weak Intellectual Property Rights Protection Deter Investment in R&D?This article gives an example of an industry where process R&D is not deterred by a lack of Intellectual Property Rights (IPR). We observe that the imitation driven by this lack of IPR acts as a source of competitive pressure on the technological leader who responds by increasing its process R&D. We also find that when IPR are introduced in that industry, firms switch from process to product innovation.
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How Patient are Institutional Investors from Emerging Economies?The global economy faces huge investment needs in infrastructure and other areas requiring patient capital. The public sector is unlikely to meet such needs as unsustainable debt levels demand deep fiscal adjustment measures. At the same time, there is growing concern that private long-term investors in advanced economies, such as pension funds and life insurers, might be unable to provide the necessary capital as they continue to de-risk their portfolios and become subject to more stringent regulation. Against this background, this paper assesses the potential role of new investors in emerging economies as suppliers of patient capital. The paper concludes that continued social security reforms and the dismantling of investment restrictions should allow pension funds and insurance companies in emerging markets, in concert with sovereign wealth funds, to help narrow the gap that is feared to emerge due to the more constrained supply of capital from traditional investors.
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Persian Gulf-based SWFs and Financial Hubs in Bahrain, Dubai and QatarCompetitive branding between Bahrain, Qatar and UAE has occurred on different levels of investment through the medium of the Gulf State Sovereign Wealth Funds (SWFs). This has happened across a number of sectors: oil and gas, finance, real estate, automotive and entertainment, but Vision 2030 for the three states gives a sense of duplicating strategies. As they aim to diversify their economies and create jobs, they have also duplicated efforts, perhaps leading to a misallocation of resources. Does the Gulf really need three or four financial hubs? If it does, then theoretically – ceteris paribus – for all of them to function and thrive, there should be a high level of specialisation to avoid cannibalisation. In order to accumulate assets for future generations of their citizens the Gulf State SWFs need to coordinate efforts.
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Realising the Potential of Islamic FinanceIslamic finance has expanded rapidly over the past three decades, and has continued to perform well through the years since the onset of the global financial crisis in 2008. This class of assets emphasizes risk sharing and has performed well compared to conventional counterparts. The outlook for further growth is bright, but several key regulatory and governance issues will need to be addressed if Islamic finance is to achieve its full potential. Together with other multilateral development institutions, the World Bank has a long-standing engagement supporting the development of the industry, which is helping to meet the preferences of significant numbers of people, enhancing financial inclusion and intermediation, and contributing more broadly to financial stability and development.
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Is the Doha Round Dead? What is the Way Forward?The WTO Doha Round of negotiations has been at an impasse since December 2008. Several academics and opinion makers have argued recently that the Doha Round is ‘dead’. This paper discusses the US narrative on the reasons for the impasse in the Doha Round and the way forward. It contrasts this narrative with that of the major developing country alliances in the WTO and considers some underlying causes for the current impasse in the Doha Round. The paper concludes that the US narrative that the Doha Round is dead is not supported by the majority of the WTO’s members and that whilst a conclusion of the Doha Round is not likely in the near future, there is no viable alternative to concluding the Doha Round on its current development mandate.
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Breaking Up is Hard to DoFrom a position some years ago where the euro was seen as set to challenge the dollar as the world’s leading currency, there are now serious concerns that the ongoing Eurozone crisis will lead to some countries eventually withdrawing from it, beginning a process of European monetary disintegration. In retrospect, insufficient attention was paid to the economics of optimum currency area theory when the Eurozone was set up, and too much to the apparent political imperatives of European unity. Reversing the process of European monetary integration is not straightforward. There are significant uncertainties, but there are also serious doubts as to whether the reforms needed to sustain the Eurozone in its current form will be introduced. The withdrawal of some of the weaker economies does not signal the end of the euro. By analogy, while some marriages are based on close compatibility, and are successful and long lasting, others encounter irreconcilable differences. In these cases divorce, although unpleasant and stressful, may be the preferred outcome.
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Wealth and Population Data in AfricaThere are very good grounds for challenging much of the conventionally accepted UN and World Bank economic data relating to both the absolute and relative per capita income of many African countries and to their growth rates over time. A recent paper by Morton Jerven published in World Economics demonstrated the unreliability of much if not most African GDP data and a new paper published in this issue by Deborah Potts challenges the accuracy of African population estimates"
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From Berlin to BrusselsThe paper evaluates the economic partnership agreement (EPA) which the European Union is forging with African, Caribbean and Pacific (ACP) countries and concludes that it is a raw deal for these developing countries. Particularly for Africa, the author likens the EPA to the Berlin conference of 1884–1885 that divided Africa among the European powers. EPA as the second scramble for Africa would merely turn Africa into a dumping ground for European goods and severely undermine its nascent development. It is argued that EPA has everything to do with the pressure on Europe to preserve Africa for itself against the ‘threats’ of China and has little to do with African development. For EPA to become a development partnership, the author outlines some key elements of an alternative development partnership between Africa and Europe that is possible.
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Whatever Happened to Africa’s Rapid Urbanisation?It is widely believed that urbanisation is occurring faster in sub-Saharan Africa than anywhere else in the world, as migrants move from rural to urban settlements. This is a fallacy. While the populations of numerous urban areas are growing rapidly, the urbanisation levels of many countries are increasing slowly – if at all. Natural increase, rather than net in-migration, is the predominant growth factor in most urban populations. African governments, policymakers and international donors need to acknowledge fundamental changes in urbanisation trends, and respond to the irrefutable messages these impart about urban employment, incomes and economic development.
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The BRIC group – How Strong a Challenge to the West?This article looks at the BRIC countries with the understanding that countries not only grow, but also undergo structural change. Industrialisation first and the shift from industry to human capital intensive-services economy later. Moreover, it is stressed that the latter transformation requires not only more economic, but also civic and political freedom. From that perspective the ‘tectonic shifts’ in the global economy, predicted by many, are more doubtful than many protagonists of ‘China as the No. 1’ idea would be ready to admit. Especially Russia and China present themselves as countries with a serious problem to overcome. And the assessment excludes a lot of problems all countries of the BRIC group will be facing in the years and decades to come.
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Demographic Change Across the GlobeThis paper investigates the fiscal pressure, or the level of public expenditure on old and young economically inactive people, arising from demographic change in relation to the labour market space, or the proportion of the working age population not in full-time employment. The exercise is carried out for 50 countries that cover 75% of the world population. The pressure-to-space indicator ranks Poland, Turkey and Greece high, although, apart from Turkey and India, developing countries generally rank low due to low spending on the old (pensions, healthcare) and on the young (education, family costs). Peculiarly, economies with higher pressure have more space. The hypothesis that ageing economies have started using their labour market space in anticipation of higher demographic pressure is rejected. It is important to note that raising the retirement age in developed economies by five years alleviates fiscal pressure by almost 30% and creates 10% more labour market space.
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The Limits of Monetary TreatyThis paper examines the viability of monetary treaty. Using time series data, estimates of trade masses, trade trend ratios and the trade accumulation coefficient, it finds that the European monetary union is trade-creating. Descriptive statistics indicate that internal trade has been asymmetric and that a substantial amount of intra-European union real income has been transferred to non-members. The internal trade imbalances threaten the growth and welfare of the deficit members. In the absence of reciprocal intra-European Union trade and structural changes required to offset unemployment, the vitality of the union and the irrevocably pegged currency are severely compromised. The paper concludes that the trade-creating effects of the union is a necessary but insufficient condition for the preservation of the monetary treaty as it is presently constructed.
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The Eurozone’s Next DominoWith Greece’s problems taking a back seat with the approval of the second €130 bailout and bond-swap deal, attention has turned to Portugal – the other most troubled economy in the Eurozone. Will Portugal’s debts also prove unmanageable, requiring debt restructuring where private creditors are forced to take a big haircut, or will the €78 billion bailout Lisbon has received from the European Union and the International Monetary Fund, and domestic structural reforms, be enough to stave off a Greek-style default? This paper illustrates that Portugal’s woes are different from those of Greece, Ireland and Spain. Given the structural conditions and deep commitment to reform and political will demonstrated by the Portuguese leaders and citizens alike, Portugal has a good chance to avoid Greece’s fate.
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Global Financial Reform - Where Do Things Stand?This article provides an assessment of the progress that has been made since the outbreak of the global financial crisis in 2008 in official efforts to strengthen the international financial architecture with a view to minimising the risks and severity of future crises. These efforts, which have been spearheaded by the G20, have focused on the following four areas where the current arrangements for global financial governance need to operate more effectively: (1) international policy coordination to improve the international adjustment mechanism; (2) an international lender of last resort mechanism for countries confronting liquidity constraints or adverse spillover effects from global financial shocks; (3) the oversight of global financial stability; and (4) the coordination of international financial regulation. The progress to date in improving these four areas or functions of the international financial architecture has been very uneven. In addition, further reform is needed in strengthening the institutional underpinnings of the international financial architecture itself.
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Government AccountingAs the current sovereign debt crisis engulfing Europe broadens and threatens to bring down more governments and lead the world into another, potentially very serious, economic slowdown, minimal commentary and public debate has focused on a fundamental problem, and the need to address it. That problem is the deficient – and sometimes fraudulent – accounting practices employed by many governments around the world. A major shortcoming of many governments has been highlighted by the crisis – that is, the poor quality of public financial management and the lack of public accountability. And, while robust public-sector financial management would not alone solve the crisis, it is clear that the problems presented by the crisis will not be solved without it. Shareholders, debt providers and regulators of publicly listed companies would not tolerate for a minute the poor levels of reporting and disclosure evidenced by governments. Yet while governments recognise the need to impose stringent regulations on companies accessing funds from the public, many – indeed most – make little or no effort to meet such high standards in their own reporting. This is despite the fact that governments seek to raise hundreds of billions – indeed trillions – of dollars from the public. Improved financial reporting, disclosure and financial management of the public sector cannot be achieved until there is recognition that the incentives faced by politicians promote decision-making that works contrary to the public interest and appropriate institutional reforms are implemented.
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Avoiding Fiscal CrisisFiscal activities in the form of contingent liabilities are common in both developed and developing countries, in part because they allow governments to secure public services or economic and financial stability without immediately having to raise taxes or borrow. Yet they pose a fiscal danger as governments may underestimate or under-report their risks and possible future fiscal costs. Although they may not appear in governments’ fiscal reports in the short term, they generate government risk exposures and create fiscal obligations for the medium to long term. The accumulation of such risk exposures and obligations depends on fiscal institutions. Fiscal institutions influence government decisions towards contingent liabilities and fiscal risk, and can contribute to limiting the use and design of contingent liabilities as a form of fiscal activity.
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How to Have Your Cake and Eat ItThis article is about how the capital assets in private finance initiative (PFI) schemes are treated in government accounts. The article begins by describing how public sector obligations in relation to the capital assets of PFI schemes are accounted for in the national accounts, and also, using different accounting standards, in departmental accounts. The article then considers the implications of information obtained using Freedom of Information on the way a sample of PFI schemes actually behave in practice. Analysis of this data suggests that the methods used in the national accounts, and in departmental accounts, seriously underestimate the true scale of PFI obligations. The data also indicates potential weaknesses with the risk-based test for assessing whether a PFI asset should come onto the public sector’s books in the national accounts – with the implication that many more PFI schemes should be brought on-book in the national accounts.
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How Much Red Ink?Under the influence of economics, fiscal policy and government budgets focus on projected cash deficits and bonds issued to finance them. While these numbers are certainly necessary, they overlook the delayed costs of policy decisions and actions. Therefore they should be complemented by actual cash deficit, actual accrual deficit and total liability numbers. Data from the consolidated financial statements of the U.S. Government during the past decade are used to show how much a difference the lapse of time and the accrual method made to the common measures of perceived fiscal realities. It is argued that accrual accounting numbers unveil the severity and important aspects of the fiscal problems facing the United States.
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America’s Dangerously Opaque Public Accounting SystemsThe current global economic crisis has highlighted the problems that result from governments’ archaic and erroneous accounting practices. The Financial Report of the United States Government is scrutinised with the same pedantry that an auditor or long-term investor uses when studying the financial statements of a listed company. What emerges is an all too clear picture of the extent and the root of America’s economic crisis. USA Inc. is found to have a net worth of minus $44 trillion, a symptom of unfunded liabilities that have grown as entitlement expenditure has rocketed. As well as changes in policy, it is the external auditing of government accounts that is suggested as a potential panacea for this global epidemic.
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Reforming Japan’s Foreign Exchange PolicyAmong major advanced countries Japan stands out with its large-scale, one-sided exchange market interventions and enormous foreign exchange reserves. While the country’s exchange market activism is often attributed to its obsession with export-led growth, there are institutional reasons why such a policy remains unchecked. This paper discusses the problems of Japan’s Foreign Exchange Fund Special Account, their relationship with its exchange rate policy, and their implication for the international financial system.
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The Indices of Transparency of Economic Information and the Latin American e-GovernmentThe aim of this paper is to create a ranking of the Ministries of Economy and Finance on transparency and disclosure of economic and financial information that Latin American countries have at an online level. Our methodological proposal is a questionnaire and indices on the transparency of informative disclosure in a financial and economic context. The questionnaire provides information on the websites of each ministry between September 2008 and September 2009. The application of the indices gives the following results: the Ministries of Mexico, Argentina and Brazil were the most valued or transparent, and the Ministries of Cuba, Panama and Dominican Republic were the least transparent in the disclosure of information.
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Sovereign Credit Risk in the EurozoneWhat is the current state of sovereign credit risk across the Eurozone? Does the recent fiscal crisis extend to other (non-Eurozone) countries? Is Greece the centre of the problem? How did the current fiscal crisis in the Euro area start? Who is behind it? How can it evolve? How can it be addressed? And, is a fiscally challenged country likely to want to leave the Eurozone? This article addresses these questions, argues that a fiscally weak country is better off in the Eurozone than outside it, and finds that a feasible policy tool can be a bailout associated with tough fiscal conditionality. It also shows that sovereign credit risk adjustment in the Eurozone can happen, using various measures, but not without ‘fiscal pain’.
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The New Dynamic Between US Stock Prices and Money HoldingsThe financial crisis has had the effect of focusing attention on the role of liquidity, but more specifically excess liquidity, in driving asset prices to unsustainable bubble levels. We think this focus is fully warranted. However, we consider that, in this critical relationship between money and other financial assets, it is only half the story. Little attention has been devoted to date to examining whether this same money–financial asset interaction might also be responsible for the excess liquidity having been generated in the first place. We argue that it is. A new dynamic is at play in which newly liberalised and democratised financial markets, a hugely expanded role for (Keynesian) liquidity preference (driven by an asset demand for money), and a monetary policy constrained to respond to threats to financial stability, play key roles. We present evidence, using asset pairing, money and equities, which is supportive of our argument. These results have important implications for both monetary policy and financial stability.
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Can Global Payments for Ecosystem Services Work?Recent efforts to establish a financial mechanism to reduce emissions from deforestation and forest degradation (REDD) have sparked hopes for the world’s first global payment system. REDD could help conserve forests in developing countries, lessen greenhouse gas emissions and ecological degradation, and overcome the chronic funding gap for tropical forest conservation. However, two incentives also work against any international agreement for a global payments scheme, such as REDD. First, given the high costs of forest conservation, some wealthy countries may try to forgo contributing to these costs in the hope that other developed countries will cover them fully. Second, any negotiated agreement involves substantial transaction costs for each signatory, including monitoring and verifying changes in deforestation rates and carbon emission in developing countries. The most likely outcome is an international payments scheme that is underwritten by only a handful of rich countries, but provides a level of global protection much lower than is needed. Alternatively, there will be no agreement. To overcome such outcomes, the international community needs to think more creatively as to how to agree, design, implement and verify international mechanisms for payment of ecosystem services.
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Managing Capital SurgesFollowing the global financial and economic crisis, and beginning in mid-2009, there has been a surge of capital into Asian and Latin American emerging economies. While capital inflows have a good side, they also have a bad side. This will be particularly pertinent when the increase in inflows occurs rapidly and when the flows take the form of relatively short-term and debt-related investments. These have been characteristics of the recent surge. Concerns about exchange rate appreciation and the macroeconomic effects of foreign exchange market intervention, as well as the effects on domestic asset and housing markets, have led countries to introduce capital controls of one form or another. Having favoured a move towards greater capital account liberalisation in the 1990s, the IMF’s attitude to controls has moderated, and it is now trying to establish a framework to guide the use of capital flow management measures. This article analyses the issues involved and discusses the chances of such a framework being effective.
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