Peterson Institute for International Economics Update Newsletter
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PIIE Update Newsletter
November 15, 2013

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  Balance: The Economics of Great Powers from Ancient Rome to Modern America
Tuesday, November 19, 2013
4:00–5:30 pm (EST)
Calendar  Add to calendar
  R. Glenn Hubbard, former chairman of the US Council of Economic Advisers and dean of the Columbia Business School, will present his new book written with Tim Kane, Balance: The Economics of Great Powers from Ancient Rome to Modern America, on Tuesday, November 19. Hubbard will discuss lessons from the history of powerful nations and civilizations breaking down under the weight of economic imbalances. Charles A. Kupchan, professor of international affairs at the School of Foreign Service at Georgetown University, and Steve Clemons, Washington editor-at-large of The Atlantic, will join the discussion.

What Is Central about Central Banking? A Study of International Models

Adam S. Posen
  Adam S. Posen In testimony before the House Financial Services Committee Subcommittee on Monetary Policy and Trade, Posen stressed that no other major central bank is as detrimentally constrained as the Federal Reserve is by Congress. While Congress should set the goals of policy, the Federal Open Market Committee (FOMC) should be allowed to pursue those goals by what means they think best. Distrust of the Fed's independence by many members of Congress has produced absurd conspiracy theories at a time when the Fed's balance sheet and market operations are more transparent than ever. Central banks have to be ready to intervene across a wide range of asset markets and deal with multiple credit markets, as all other major central banks have the tools to do.

>> Read full testimony [pdf]

Agent of Its Own Decline

Adam S. Posen
Published in Prospect Magazine
  The fiscal follies last month of the US Congress over the federal government debt ceiling and budget sequester are more than simply embarrassing. They are a self-inflicted wound that has slowed the US economic recovery, and have done lasting damage to US financial stability and negotiating power. The ongoing payment of a default premium on US public debt where none existed previously will cost taxpayers; the drag on corporate investment from recurring fiscal uncertainty will be far greater than anything caused by monetary policy. And the ongoing breakdown remains avoidable in economic terms and damaging to the US global reputation.

>> Read full op-ed

India: Two Theories about Gold

Devesh Kapur, Marla Spivack, Arvind Subramanian, and Milan Vaishnav
Published in the Business Standard, New Delhi
  A rise in gold imports has caused India's current account to deteriorate, exacerbating the rupee's vulnerability in recent months. Benign and sinister explanations—not mutually exclusive—are at work. Tougher bank regulations have led wealthy as well as corrupt Indians to buy gold as a "safe haven." By over-invoicing imports from Switzerland, gold hoarders can claim that they imported Swiss gold worth twice the amount actually purchased, with the difference turning up in secret Swiss bank accounts. Switzerland can help by publishing details of its gold trade. Indians deserve greater assurances that these transactions are above board.

>> Read full op-ed

Ukraine's Prisoner's Dilemma

Anders Åslund
Published in Project Syndicate
  Anders Aslund On November 28-29, the European Union and Ukraine are supposed to sign the long-concluded European Association Agreement in Vilnius. This is the most important EU matter this fall and all the more important for Ukraine. Yet, the European Union will sign only if President Viktor Yanukovych pardons and frees the imprisoned former Prime Minister, Yulia Tymoshenko. This is not a matter of one political prisoner, but a fundamental democratic principle. If one opposition leader can be sentenced without legal grounds, others will follow. For Ukraine, there is no viable Russian alternative to EU association. If Yanukovych does not sign, his successor can do so, but he would be well advised to act now.

>> Read full op-ed

Peterson Perspectives Interviews

audio  Tough Questions Confront Yellen and the Fed
Douglas A. Rediker says Janet Yellen is likely to defend her monetary views in a cautious way, and that proposals in Congress to "audit" the US Federal Reserve would jeopardize the central bank's historic independence.

audio  How Will China Give Markets a "Decisive" Role?
Nicholas R. Lardy assesses the prospects for implementation of the Communist Party leadership's new commitment to increase the economy's reliance on markets.

Recent Blog Posts

RealTime Economic Issues Watch   China Economic Watch    North Korea:  Witness to Transformation
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The ECB Is Less Hindered by Euro Area Politics

Do Multinationals That Expand Abroad Invest Less at Home?

The European Council's Latest Three Takeaways

An Encouraging Start to the ECB's Big Bank Review

Why the Dollar-Renminbi Transition Is Getting Much Closer Despite Debt Deal
  The Third Plenum and State-owned Enterprises: A Step Backward or Forward?

Will the Third Plenum Redefine the Role of Local Governments in China?

China's Reserve Accumulation: Where Did it Come From, Where Did it Go?

China Rebalancing Update – Q3 2013

The Economics of Nuclear Power in China
  North Koreans in Syria: Will Fly for Food

Portraying North Korean Refugees: Green and Epstein on "Now On My Way to Meet You"

Build It and They Will Come

The Iranian Non-Deal: The Problem of Reversibility

How to Get a Cell Phone in North Korea

PIIE Noted in the News and on the Web

Germany 'Rips Off' the World
While at the UBS European Conference in London, Adam S. Posen discusses Germany's record-high export surplus.

Marketplace Public Radio
In Asia, Can Jack Lew Succeed Where Others Have Failed?
Jeffrey J. Schott and Robert Z. Lawrence discuss Treasury Secretary Jack Lew's trip to Asia and his efforts to help finish the Trans-Pacific Partnership negotiations.

Kirkegaard on the French Retirement System
In this interview Jacob Funk Kirkegaard discusses the long-term sustainability of the French retirement system.

Preview of Our Next Issue

Policy Brief
Stabilizing Properties of Flexible Exchange Rates: Evidence from the Global Financial Crisis
Joseph E. Gagnon

Don't Shoot the Messenger
Joseph E. Gagnon
Published in the Economist

Ukraine, Moldova, the European Union, and US Interests
Anders Åslund

Working Paper
Why Growth in Emerging Economies Is Likely to Fall
Anders Åslund

In This Issue

David G. Blanchflower Keeping Cyclical Unemployment from Becoming Structural Inequality

At a time of mounting worldwide concern about economic inequality, the Peterson Institute held a session on the challenges to labor markets in the United States and around the globe posed by the Great Recession.
Norihiko Ishiguro Abenomics: From Macroeconomic to Structural Reform

Norihiko Ishiguro, METI, delivered the keynote address at a conference on the dramatic changes under way in Japanese economic policy.

Featured Book
Flexible Exchange Rates for a Stable World Economy Flexible Exchange Rates for a Stable World Economy

Joseph E. Gagnon
Marc Hinterschweiger

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