Peterson Institute for International Economics Update Newsletter
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PIIE Update Newsletter
May 7, 2013

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  Policy Brief 13-10
Four Changes to Trade Rules to Facilitate Climate Change Action

Aaditya Mattoo and Arvind Subramanian
  Arvind Subramanian Aaditya Mattoo and Arvind Subramanian propose several changes to trade rules that would advance climate change goals. The proposed changes would allow global environmental "bads" to be penalized (by permitting border taxes on less clean imports). In addition, they propose ways for global environmental goods and technologies to be promoted by relaxing the constraints on the use of production and export subsidies and strengthening intellectual property rights (IPR) protection. The proposals also would prevent global environmental "goods" from being penalized (by eliminating the export restrictions on natural gas). The authors argue that sufficient technological progress requires deploying the full range of policy instruments, including those related to trade policy.

>> Read full Policy Brief [pdf]
>> See related op-ed

  Policy Brief 13-11
Dealing with Cybersecurity Threats Posed by Globalized Information Technology Suppliers

Theodore H. Moran
  Theodore H. Moran Theodore H. Moran cites recent instances of the US government intervening to block foreign producers of information technology (IT) from selling goods and services to US firms and argues that such actions based on the nationality of the foreign firm is ineffective, discriminatory, and unfair. The dangers and risks of compromise of US national security are real. But in a world where supply chains of IT companies of every nationality are thoroughly globalized, a better way to protect national security would be to establish a multilateral nondiscriminatory system to ensure the integrity of equipment, software, patches, and upgrades from all sources. Much remains to be done to establish an appropriate regime to protect national security and also the rights of investors and companies doing business with foreign firms. The goal should be to strike a balance between protecting national security without discouraging foreigners from investing in and doing business with US firms.

>> Read full Policy Brief [pdf]

  Policy Brief 13-12
Sovereign Damage Control

Anna Gelpern
  Anna Gelpern Italy changed its debt contracts, Belize passed new debt legislation, and Taiwan sued Grenada this year, all in response to a string of court rulings in New York that tried to make Argentina pay its debts from its financial crisis in 2001. The court rulings have gone to unprecedented lengths to isolate Argentina but are unlikely to make the country pay. The rulings, however, do threaten collateral damage to other countries and parts of the financial system. The lawsuit—NML Capital Ltd. et al. v. Republic of Argentina—promises to shift the balance of power from sovereign debtors to their creditors. The shift would come courtesy of one obscure debt contract term, the pari passu clause, that has gained destructive power in a case where the government and its creditors are uniquely willing to test the limits of the law. The impact may be magnified because of possible effects on the public debt distress in Europe, new emerging-market restructurings, and the recent regulatory focus on clearing and payment systems.

>> Read full Policy Brief [pdf]

Reinhart-Rogoff: The Problem and Solutions

Arvind Subramanian
Published in the Business Standard
  Following the controversy over the methodology employed by Professors Carmen Reinhart and Kenneth Rogoff in calculating when debt ratios cause a decline in growth, it would be silly to hold them culpable for austerity and its consequences. Theirs was one among many contending voices in that debate. But in today's high-octane, high-frequency world, a problem arises from the release of preliminary research in a working paper that is disseminated before the formal process that leads to eventual publication (or rejection) of this research. The risks of confusion are greater when the work of well-established experts or superstars is involved. One solution might be for these superstars to voluntarily submit such research to an independent process of prepublication scrutiny.

>> Read full op-ed

Getting Japan to Guzzle American Gas

Gary Clyde Hufbauer
Published on
  Gary Clyde Hufbauer Japanese Prime Minister Shinzo Abe expected a sharp debate at home when he said his country wanted to join the Trans-Pacific Partnership (TPP). He may not, however, have anticipated a sharp debate in the United States as well; the potential benefits of the trade agreement are heavily stacked in the United States' favor, at least in the energy area. Few sectors stand to gain as much as the growing US liquefied natural gas (LNG) industry. Japan's membership in the TPP, coupled with long-term US supply assurances, would deliver exponential LNG export growth to a huge market hungry for alternative energy supplies. The timing could not be better: Right now, America's competitive advantage in exploration and extraction is unrivaled and likely to be enhanced further by a TPP accord.

>> Read full op-ed

Peterson Perspectives Interviews

audio  A Korea-US Summit: Tensions and Opportunities: Part I
Marcus Noland outlines the agenda for Presidents Obama and Park on nuclear issues and dangers posed by North Korea.

audio  A Korea-US Summit: Tensions and Opportunities: Part II
Marcus Noland explains why South Korean President Park is an inspirational and divisive figure at home, but that US-Korea economic ties are healthy now.

audio  Is Austerity Being Reconsidered in Europe?
Angel Ubide says the tough austerity programs adopted by Spain and Italy are being revised, but only on the margins.

audio  Malaise and Paralysis in France?
Nicolas Véron says Franco-German ties are suffering as the French grow sullen over their increasingly challenging economic travails.

audio  Elusive Consensus at IMF Spring Meetings: Part I
Douglas A. Rediker says the debates over growth vs. austerity at the annual IMF–World Bank meetings were lively but inconclusive.

audio  Elusive Consensus at IMF Spring Meetings: Part II
Douglas A. Rediker says the role of central banks in Europe, Japan and the US were a focus of intense discussion at the IMF–World Bank meetings.

Recent Blog Posts

RealTime Economic Issues Watch   China Economic Watch    North Korea:  Witness to Transformation
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Southern Europe's Problem: Poor Education

Obama's Trip to Mexico: Building on NAFTA to Broaden Trade with Asia

Uncertain Prospects for Italy and Cyprus

Ukraine's Banks Are in Turmoil

Putin Is Shocked by Falling Economic Growth, but We Should Not Be
  Is China's Public Debt Level Sustainable?

China's Bank-Centric Shadow Banking System

China's International Investment Position in 2012

China Rebalancing Update—Q1 2013

China's Not So Super Development Bank
  A Korea-US Summit: Tensions and Opportunities, Part II

A Korea-US Summit: Tensions and Opportunities, Part I

Food Aid Reform

Anchor Steam, North Korea Style

NGOs in Action: European Alliance for Human Rights in North Korea

PIIE Noted in the News and on the Web

Financial News
The Top Financial Tweeters to Follow
The Financial News names Adam S. Posen one of the best financially-focused Twitter accounts to be following.

NPR's All Things Considered
Two Nominations Round Out Obama's Second-Term Cabinet
Jeffrey J. Schott expects the newly-nominated US Trade Representative, Mike Froman, to hit the ground running since he has been at the heart of everything the administration has done on trade.

Business News Network
The Political Climate in Russia
Anders Åslund explains to BNN why the number of small enterprises in Russia is declining and how the reduced competition is slowing economic growth.

Preview of Our Next Issue

Working Paper 13-3
Does High Home-Ownership Impair the Labor Market?
David G. Blanchflower and Andrew J. Oswald

In This Issue

Daniel Tarullo Evaluating Progress in Regulatory Reforms to Promote Financial Stability

Federal Reserve Governor Daniel Tarullo examines the issues and difficulties surrounding implementation of reforms of bank capitalization and leverage enacted since 2008.
Hans-Werner Sinn Whitman Lecture: The Euro Crisis

Hans-Werner Sinn, Ifo Institute for Economic Research, presents the Institute's ninth annual Whitman Lecture.


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