Peterson Institute for International Economics Update Newsletter
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PIIE Update Newsletter
February 13, 2014

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  New Book
How Latin America Weathered the Global Financial Crisis

José De Gregorio
  How Latin America Weathered the Global Financial Crisis Why has the economy of Latin America responded more robustly than Asia, Europe, or the United States to being hit by the recent global financial crisis? Three years after the worst of the crisis, Latin America's GDP is 25 percent higher than its precrisis level. José De Gregorio, PIIE Senior Fellow and Governor of the Central Bank of Chile from 2007 to 2011, tells the story of how Latin America has responded to the crisis with a perspective that only an insider can have.

De Gregorio focuses on the seven largest economies of the region, Argentina, Brazil, Chile, Colombia, Mexico, Peru, and Venezuela (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."

>> Preview and purchase book online

Effects of Trade, Investment, and Industrial Policies in India

Arvind Subramanian
  Arvind Subramanian Congress should exercise care in rendering unilateral verdicts on Indian trade and investment policies and avoid making judgments about potential punitive actions based solely on sectoral interests. Given the potential for further integration between our two economies, as India's growth revives, as well as the shared security and strategic interests between the two countries and the likelihood of political change in India, the focus should be on building a framework to constructively address frictions and revive cooperation. Moving toward an eventual free trade agreement can provide such a framework.

>> Read full testimony [pdf]

Trading Places

Caroline Freund
Published in Foreign Policy
  Caroline Freund Tunisia and Egypt exhibited similar aspirations for democracy in 2010, but their political fates appear poised to diverge. Research shows that low per capita income, a history of military control, gender discrimination, and an abundance of natural resources all hinder democratic transition. On all of these points Tunisia has had an advantage over Egypt. Egypt has received more foreign aid than Tunisia, but history suggests that trade is more important than aid. Countries with economies integrated into regional organizations have also had easier political transitions because deeper economic integration brings new business opportunities and better jobs. Tunisia's democratic transition could have positive ripple effects across the Middle East. Offering Tunisia enhanced trade and investment treaties—ideally with a potential for European Union accession—is the best way to help it build on its recent successes.

>> Read full op-ed

The First Step on a Long Path Toward Normalization

David J. Stockton
Published in Intereconomics Review of European Economic Policy
  David J. Stockton Over the past five years, the US Federal Reserve's monetary policies have contributed to repairing the US economy, and there have been increasing signs recently that US economic expansion is picking up. But the growing sense of a steady economic path toward normalization is not warranted. Conditions in the US labor market remain dismal, and inflation is running well below the Federal Reserve's established target of 2 percent. For these reasons, the Fed needs to be prepared to stop the tapering of its monetary stimulus program of bond purchases (known as quantitative easing, or QE), as announced in December 2013. It should also be prepared to reverse course and restart QE should the forecasted acceleration in real activity falter.

>> Read full op-ed

India: A Property Tax Proposal

Devesh Kapur and Arvind Subramanian
Published in Business Standard, New Delhi
  Taxation is the economic glue that binds citizens to the state in a necessary two-way relationship. With only about 10 percent of households paying income taxes, India needs to bring more people into the tax net. As India decentralizes and becomes more urban, wealth is increasingly vested and locked up in land and property. An efficient property tax system is essential for urban revenue generation and may well be essential to sustain Indian democracy itself.

>> Read full op-ed

Recent Blog Posts

RealTime Economic Issues Watch   China Economic Watch    North Korea:  Witness to Transformation
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The German Establishment—Principled but Pragmatic

Just Another Week in the Land of Borgen

If Not Quantitative Easing, What Can the European Central Bank Do?

Has Monetary Cooperation Broken Down?

Yanukovych's Time Is Up in Ukraine; the West Must Prepare
  Meet China's Biggest Shadow Bank

China Maintains its Allure for Foreign Firms

China Rebalancing Update - Q4 2013

Best House in a Bad Neighborhood: China's Holdings of US Assets

State-Owned Enterprise Reform: the Long Wait for a Chinese Temasek Continues...
  The North-South Talks

Myers, Apartheid, and Engagement with North Korea

The BBC on "Educating North Korea"

Now You Can Personally Track the Next Chong Chon Gang!

Reflections on a North Korean Refugee's Time in America

Page 4 of the report Flirting with Default: Issues Raised by Debt Confrontations in the United States [pdf] erroneously stated that higher mortgage interest rates would translate into a $470 per month higher mortgage payment on the median existing home in the United States. The corrected sentence reads:

"If that increase was fully reflected in higher mortgage interest rates, it would translate into roughly a $450 higher annual mortgage payment on the existing home in the United States."
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