Peterson Institute for International Economics Update Newsletter
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PIIE Update Newsletter
March 6, 2014

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  Fiscal Policy and Income Inequality
Thursday, March 13, 2014
12:15–1:30 pm (EST)
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  The Peterson Institute for International Economics will cohost with the International Monetary Fund (IMF) the release of an important and timely new IMF paper titled "Fiscal Policy and Income Inequality" on Thursday, March 13, 2014. IMF First Deputy Managing Director David Lipton will present the paper and its conclusions, followed by discussion from Nancy Birdsall, president of the Center for Global Development, and Robert Z. Lawrence, PIIE nonresident senior fellow.
  Policy Brief 14-6
A Proposed Code to Discipline Local Content Requirements

Cathleen Cimino, Gary Clyde Hufbauer, and Jeffrey J. Schott
  The global economic crisis in 2008 produced pledges from countries around the world to avoid new barriers to trade and investment. These commitments were largely honored when it came to tariffs and quotas, but not when it came to nontraditional forms of protection, including behind-the-border, nontariff barriers such as local content requirements (LCRs). This Policy Brief analyzes the impact of the widely used requirements that local suppliers of goods, services, and even entire projects be favored. It explains why the steps to prevent such protectionism have been effective and further recommends a new World Trade Organization (WTO) code to constrain the use of LCRs, enhance transparency, expedite dispute resolution, and impose penalties for noncompliance.

>> Read full Policy Brief [pdf]
>> See also: Local Content Requirements: A Global Problem

  Policy Brief 14-7
Rethinking the National Export Initiative

Caroline Freund
  Caroline Freund Four years ago, President Barack Obama set the goal of doubling exports within five years and creating 2 million new export-related jobs. The administration's strategy has failed to achieve its goal, however. This Policy Brief argues that the emphasis on small and medium enterprises in the National Export Initiative, while attractive, was misguided and that the administration should concentrate on boosting exports by the largest firms, which are the most efficient and successful exporters. The United States needs to encourage growth of new highly efficient firms to produce more export superstars. The United States should also encourage exports by (1) maintaining a competitive exchange rate, (2) exercising leadership to reach more market access trade agreements, and (3) improving the business climate by expanding training, encouraging immigration to fill the skills gap, and fostering investment, innovation, and stable energy prices.

>> Read full Policy Brief [pdf]

Abe Has Good Medicine but Japan Needs a Stronger Dose

Adam S. Posen
Published in the Financial Times
  Adam S. Posen Prime Minister Shinzo Abe's reforms correctly diagnose Japan's economic problems and have concentrated government efforts where they can do the most good. The Bank of Japan's shift to positive inflation targeting is contributing to the country's recovery, and Prime Minister Abe has prioritized a few key reforms that are sensible and feasibleónotably increasing female labor force participation, consolidating farms, breaking down labor market divisions, and raising competition in health care. But far greater ambition in each of these areas is required to return the Japanese economy to sustained strength.

>> Read full op-ed

Ukraine Can Now Fix Its Economy, If It Moves Fast

Anders Åslund
Published in the Financial Times
  Anders Aslund Ukraine has achieved a democratic breakthrough, but its economy remains in crisis. The economic ills that impeached president Viktor Yanukovich left behind require comprehensive and swift economic reforms with plenty of international financing from the International Monetary Fund (IMF) and the European Union. The IMF will likely send a mission next week, and it can disburse a considerable amount by late March. The European Union is the best agency to help Ukraine fight corruption, and the new Ukrainian government is willing to comply with EU demands for democracy and the rule of law. The European Union should then sign its long-delayed association agreement, no later than March.

>> Read full op-ed

See also:
>> Why Putin Is Likely to Lose His War over Crimea
>> What Kiev's Democratic Turn Means for Moscow

A Disruptive Proposal by the IMF

Douglas A. Rediker and Angel Ubide
Published in Bloomberg
  Douglas Rediker Angel Ubide Hoping to avoid what it sees as missteps in handling the Greek bailout and other recent crises, the International Monetary Fund (IMF) has come up with a new proposal to balance political, economic, and financial considerations when a country might not be able to pay back its debts. Specifically, the Fund is proposing that, as a precondition for financial assistance, countries be required to force private creditors to accept losses when the borrowing country's debt sustainability is uncertain and market access has been lost. The IMF will act as the lender of last resort only if the private sector shares the pain. However well-intentioned, such a policy shift would probably disrupt markets, increase episodes of default, raise borrowing costs, and discourage countries from seeking the IMF's help when they most need it.

>> Read full op-ed
>> See also: The IMF Is Courting New Risks with a Change in Policy on Debt Restructuring

Group's Action Plan for Growth Will Likely Disappoint

Edwin M. Truman
Published in the Australian Financial Review
  Edwin M. Truman The G-20 ministers and governors pledged at the recent summit in Sydney to boost their real GDP in 2018 by 2 percentage points relative to current projections. While commendable, the action plan to be taken up in Brisbane in November is likely to disappoint. Past summits have shown that growth targets alone are useless without concrete changes in policies to achieve them, and the G-20 record on policy commitments is not encouraging. Most previous G-20 action plans have consisted of vague pledges to continue existing policies along with promises to change policies unlikely to be adopted by legislatures. And the United States and Germany are unlikely to commit to policy changes called for by the International Monetary Fund.

>> Read full op-ed

Peterson Perspectives Interviews

audio  Can Hollande Take On France's "National Champions"?
Nicolas Véron discusses the French president's pledges to make France more business friendly, but it remains to be seen whether he will temper the country's legendary economic nationalism.

audio  PIIE Debate: How Should the ECB Act to Counter Deflation?
Angel Ubide and Jacob Funk Kirkegaard discuss their differing views about whether the European Central Bank should undertake quantitative easing (QE) to combat deflation.

Recent Blog Posts

RealTime Economic Issues Watch   China Economic Watch    North Korea:  Witness to Transformation
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The European Central Bank Remains on Hold

Why Putin Is Likely to Lose His War over Crimea

Can Venezuela Learn from Ukraine?

How to Avoid the Mistakes of the Orange Revolution

Corruption Haunts the Winter Olympics in Sochi
  The Renminbi will Remain Stable Despite Recent Fluctuations

China Has Property Taxes, Just Not The Right Ones

Playing the Cards Right, or Playing the Right Cards: Foreign Political Pressure and China's Currency Policy

A Map of China's Shadow Banking Exposure

Rebalancing and Rising Electricity Prices in China
  Commission of Inquiry Roundup: the UN Role (Part II)

Panel Discussion on Human Rights in North Korea in Washington, DC

The Missile Test

Commission of Inquiry Roundup: the UN Role (Part I)

North Korean Art in the US and Germany

PIIE Noted in the News and on the Web

NPR's All Things Considered
Why Is the Ukrainian Economy Such a Mess?
Anders Åslund walks through the causes of Ukraine's economic crisis.

Diane Rehm Show
US and EU Response to the Crisis in Ukraine
Anders Åslund joins a distinguished panel of experts on the Diane Rehm Show to discuss the US and EU responses to the ongoing crisis in Ukraine.

Bloomberg TV
Economic Analysis: Looking Beyond the Weather
Joseph E. Gagnon discusses why he shares the Federal Reserve's optimism for the US economy in 2014.

NHK World
TPP Talks Struggling
While in Singapore Jeffrey J. Schott sits down with NHK World to discuss the challenges facing US negotiators in the Trans-Pacific Partnership negotiations.

Preview of Next Issue

Policy Brief 14-8
Women, Sports, and Development: Does It Pay to Let Girls Play? [pdf]
Barbara Kotschwar

In This Issue

Featured Book
Local Content Requirements: A Global Problem Local Content Requirements: A Global Problem

Gary Hufbauer
Jeffrey J. Schott
Cathleen Cimino
Martin Vieiro
Erika Wada

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