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PIIE Update Newsletter
January 10, 2014

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  Japan's Breakthrough in Its Economic Revitalization—Our Efforts in Regulatory Reform
Monday, January 13, 2014
12:30–2:00 pm (EST)
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  The Peterson Institute for International Economics will host Tomomi Inada, Japanese Minister for Regulatory Reform, for a speech and discussion on Monday, January 13. Inada will address "Japan's Breakthrough in Its Economic Revitalization—Our Efforts in Regulatory Reform."

She has been the Minister of State for Regulatory Reform since 2012. Before joining Prime Minister Abe's Cabinet, she served as deputy secretary-general of the Liberal Democratic Party in 2010 and as director of Judicial Affairs Division of the party's Policy Research Council in 2012. Inada is a three-term member of the Japanese House of Representatives representing the Fukui 1st District.

  How Latin America Weathered the Global Financial Crisis
Tuesday, January 14, 2014
12:30–2:00 pm (EST)
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  The Peterson Institute will release its newest book, How Latin America Weathered the Global Financial Crisis, by José De Gregorio, on Tuesday, January 14.

The economy of Latin America has responded better to the global financial crisis than the economies of Europe or the United States. The region's GDP is now 25 percent higher than its precrisis level. De Gregorio, a former governor of the Central Bank of Chile, tells the story of this success from the perspective of a true policy insider. Focusing on the seven largest economies of the region—Argentina, Brazil, Chile, Colombia, Mexico, Peru, and Venezuela, which constitute 90 percent of the region's output—he argues that Latin America was resilient because of good macroeconomic policies, strong financial systems, and "a bit of luck."

De Gregorio, visiting fellow at the Peterson Institute of International Economics, is full professor at the Department of Economics of the Universidad de Chile. He was governor of the Central Bank of Chile from 2007 until 2011. De Gregorio has a degree in civil engineering and a master's degree in engineering from the University of Chile and a PhD in economics from MIT.
  Policy Brief 14-1
Making Labor Market Reforms Work for Everyone: Lessons from Germany

Jacob Funk Kirkegaard
  Jacob Funk Kirkegaard Germany has the best functioning labor market among large economies in the West. In the eyes of some, however, its success comes with a price. Questions have been raised over whether Germany's recent labor reforms have lowered living standards, especially for low-income workers, worsening income inequality. Germany has also been accused of selfishly riding an export-oriented strategy during a global recession. Kirkegaard shows that Germany's recent labor market success—its low unemployment rate, high labor participation rate, and increased productivity—has indeed resulted from the structural labor reforms in the early 2000s. But the expansion of low-wage "mini-jobs"—criticized for allegedly squeezing the low-wage workforce—largely results from their increasing use as second jobs. If generalizable, German experience suggests that labor market success can be achieved at no additional rise in inequality.

>> Read full policy brief [pdf]

International Impacts of the Federal Reserve's Quantitative Easing Program

Arvind Subramanian
  Arvind Subramanian Actions by the US Federal Reserve inevitably affect other countries via trade and exchange rates, capital flows, and overall financial conditions. The Fed's monetary easing policies, including the bond purchasing program known as quantitative easing, have generally, and on balance, had a positive impact on emerging markets (EMs) and the global economy. But in some instances the policies have added to pressures on and volatility for EMs, complicating their macroeconomic management. The EMs can insulate themselves from Fed actions by being less financially integrated, as China has chosen to do, or by following sound macroeconomic policies that would allow them to reap the benefits of capital inflows when the Fed eases monetary policy. To stabilize the global economy, the US Congress should work with the Obama administration to augment the resources of the International Monetary Fund. In addition, greater clarity in US bilateral investment and free trade negotiations with partner countries would help EMs deal better with capital flows and complement the Fed's constructive international role.

>> Read full testimony [pdf]

Examining the GAO Study on Government Support for Bank Holding Companies

Simon Johnson
  Simon Johnson A recent Government Accountability Office study on government support for bank holding companies makes clear that implementation of measures designed to make the financial system less risky has been slow. It is now clear as well that official support went disproportionately to some of the largest bank holding companies and other large financial institutions. The report has several prominent limitations, however. Perhaps most worrying is that the GAO seems to weight all expert opinion equally, irrespective of whether the analyses in question were undertaken by people employed by big banks. If the GAO cannot distinguish objective analysis from sophisticated lobbying, then its follow-up report on the current value of implicit subsidies to large banks is unlikely to have much credibility.

>> Read full testimony [pdf]

Three Lessons of 2013: Will Politics Continue to Dominate Economics?

Angel Ubide
Op-ed published in El Pais
  Angel Ubide Three main lessons can be drawn from the year 2013. First, monetary policy is asymmetric. Central bankers have the tools and the institutional structure to reduce inflation if it is too high, but they are ill-prepared to be aggressive and raise inflation if it is too low. Second, politics continue to dominate economics. The process of restructuring Greek debt was conditioned by the political needs of the various players, for example. Politics have also dominated the issue of bank supervision and the threatened government shutdown in the United States. Third, most emerging markets have wasted a great opportunity in recent years to consolidate economic reforms that could generate higher potential growth. This will be more difficult now in the absence of permanent commodity price gains and declines in interest rates.

>> Read full op-ed

Peterson Perspectives Interviews

audio  Will Congress Confront 'Currency Manipulation' at Last?
C. Fred Bergsten says that a provision in newly proposed Trade Promotion Authority legislation calling for an end to currency manipulation in future trade pacts is only a modest step forward on the issue.

audio  A Step Forward for the Trans-Pacific Partnership?
Jeffrey J. Schott says that if newly proposed Trade Promotion Authority is approved by Congress, a TPP accord could be ready for President Obama to sign in the first half of 2014.

audio  Stalemate in Ukraine
Anders Åslund says that the impasse between President Yanukovych and the opposition leaves the West little choice but to monitor the situation and threaten sanctions if human rights are violated.

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  Are Chinese Interest Rates Too High?

A Bad Year for Chinese Stocks

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  Rodman Recap: You Can't Top This

Park Hyeong-jung on the Course of Economic Reform (Part II)

Park Hyeong-jung on the Course of Economic Reform (Part I)

Rodman Roster Contest Winner!

The Re-Defector Issue
In This Issue

Jeromin Zettelmeyer European Bank for Reconstruction and Development's Transition Report 2013

Jeromin Zettelmeyer presents the EBRD's Transition Report 2013 and its analysis of reforms and economic opportunities in transition countries.
Trevor Houser Fueling Up: The Economic Implications of America's Oil and Gas Boom

Coauthors Trevor Houser and Shashank Mohan present the findings of the latest book from PIIE.

New Book

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