Peterson Institute for International Economics Update Newsletter
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PIIE Update Newsletter
August 27, 2013

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  Policy Brief 13-19
Progress on Sovereign Wealth Fund Transparency and Accountability: An Updated SWF Scoreboard

Allie E. Bagnall and Edwin M. Truman
  Edwin M. Truman Allie Bagnall Economists and the financial world have grown increasingly excited about or alarmed by the growing influence of sovereign wealth funds (SWFs). Politicians in countries in which the funds invest have generally welcomed the additional financial resources from abroad while expressing concern about the motivations of investors and possible threats to political, economic, and financial security. Popular opinion in countries where the funds are based has favored knowing more about how national wealth is invested. This update on the transparency and accountability of SWFs, based on the SWF scoreboard first developed by Truman in 2007, finds that many of the funds have made substantial progress in providing more information about and accountability for their activities, but that the progress has not been uniform and more is needed.

>> Read full policy brief [pdf]
>> See also Sovereign Wealth Funds: Threat or Salvation?

The New Fed Chair Should Not Be One of the Usual Suspects

Edwin M. Truman
  The next chairman of the US Federal Reserve must be knowledgeable about monetary policy but need not be a monetary expert or an academic. Only two Fed chairs have had academic credentials since the Treasury–Federal Reserve accord of 1951. What the United States needs now is a Fed chair who will shake up the institution. The new chair must be an effective manager as well as an intellectual leader who can implement a transformation of the Fed as it enters its second century. That person is more likely to be a well-informed outsider than an entrenched insider.

>> Read full op-ed
>> See also:
    • After Bernanke, Make Unconventional Policy the Norm
    • What Criteria Should Guide Obama in Selecting a New Fed Chair?

  Working Paper 12-19
The Renminbi Bloc Is Here: Asia Down, Rest of the World to Go?

Arvind Subramanian and Martin Kessler
  Arvind Subramanian Martin Kessler In the last three years, the renminbi has increasingly become a reference currency for emerging-market countries—as manifested in greater co-movement of their currencies with it. In fact, in East Asia the renminbi has already become the dominant reference currency, eclipsing the US dollar. Seven currencies out of 10 co-move more closely with the renminbi than with the dollar, with the average value of the co-movement coefficient relative to the renminbi being about 60 percent greater than that for the dollar. Subramanian and Kessler consider the prospects for the renminbi bloc to move beyond Asia based on a comparison of the renminbi's situation today and that of the Japanese yen in the early 1990s. If trade were the sole driver, a more global renminbi bloc could emerge by the mid-2030s, but complementary reforms of China's financial and external sectors could considerably expedite the process.

>> Read full working paper [pdf]
>> See also The Rise and Rise of the Renminbi: An Update

How Putin Lost Ukraine

Anders Åslund
Published in the Moscow Times
  Anders Aslund President Vladimir Putin's policy towards Ukraine is as aggressive as it is unsuccessful. His latest mistake is to toy with a trade war. In 2003–04, Putin fought for a union between Russia, Ukraine, Belarus, and Kazakhstan, but the Orange Revolution stopped his endeavors. Now, he wants Ukraine to join the three other countries in their Customs Union, but Ukraine prefers to sign the Association Agreement with a deep and comprehensive free trade agreement it has concluded with the European Union. Putin's aggressive actions against Ukraine are more likely to isolate Russia and force Ukraine into the European community.

>> Read full op-ed

Why Has the Fed Given Up on America's Unemployed?

Adam S. Posen
Published in the Financial Times
  Adam S. Posen In the United States, there is a rush to declare stimulus policies ineffective, label much of the persistent unemployment structural, and to claim that the fiscal or financial costs of addressing long-term unemployment are daunting. While labor regulations and skills mismatch clearly have played some role in keeping those who lost jobs in the crash out of work, that impact is exaggerated. The cost of letting long-term unemployment persist is enormous. There is no good reason for members of the Federal Open Market Committee (FOMC) to give up on the US labor market out of fear of inflation, and thus no good argument for allowing the recent de facto tightening of monetary conditions to stand.

>> Read full op-ed

Peterson Perspectives Interviews

audio  What Criteria Should Guide Obama in Selecting a New Fed Chair?
Joseph E. Gagnon discusses the challenges facing the US Federal Reserve in the next five years and what the President and the public should want to know about the candidates.

audio  Economy Picking Up but Facing Challenges this Fall
David J. Stockton says that despite the budget sequester, US economic growth is accelerating, but another bout of budget confrontations in the fall could disrupt the recovery.

audio  Is the Russian Reset Kaput?
Anders Åslund says US-Russia economic relations remain strong but that little further business between the two countries can be expected for the rest of Obama's time in office.

Recent Blog Posts

RealTime Economic Issues Watch   China Economic Watch    North Korea:  Witness to Transformation
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Bye-Bye, Russian "Reset"

From Argentina to Grenada: Will Creditor Options Grow in Future Sovereign Debt Litigation?

The Rise and Rise of the Renminbi: An Update

Carney's Debut at the Bank of England Predictably Sends the Wrong Signal (Just like the FOMC).

Is Europe Still in an Economic Downswing?
  Measuring Excess Credit Growth in China

Ignore the Noise: Why Chinese Household Consumption is Still Too Low

China Rebalancing Update—Q2 2013

China Attempts to Stimulate Household Incomes

Why China's State-Owned Enterprises Want to Diversify their Business
  Freedom of Expression: The South Korean Case Continued

Seoul Dispatch: Movement on the Peninsula?

Witness to Transformation Swiftian Proposal Contest

Stephan Haggard Saturday Interview at The DailyNK

The Little Smartphone That Became an International Star

PIIE Noted in the News and on the Web

National Public Radio
Some Investors Choosing US Over Emerging Markets
Arvind Subramanian discusses how investors seem to be turning away from emerging markets and looking towards the United States for safer investments

Preview of Our Next Issue

Now the BRICs Party Is Over, They Must Wind Down the State's Role
Anders Åslund

India's Unique Crisis - I
Devesh Kapur and Arvind Subramanian

Policy Brief
Role of Apprenticeships in Combating Youth Unemployment in Europe and the United States
Natalia Aivazova

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