Peterson Institute for International Economics Update Newsletter
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PIIE Update Newsletter
April 2, 2014

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Following the Cash to Promote Competition

Adam S. Posen
  Adam S. Posen Speaking at the China Development Forum Economic Summit, Adam Posen urged China to take three steps to foster competition and productive vitality: 1) develop a financial sector willing and able to fund growth of new businesses beyond micro-size; 2) break down unnecessary regulations that cloak themselves as safety or professional standards; and 3) improve the corporate governance of state-owned enterprises—and of large Chinese corporations more broadly—by combining tax law, shareholder rights, auditing, outside directors, and foreign direct investment. The ultimate goal should be a Chinese economy in which neither the government nor markets let incumbent businesses sleep soundly on piles of cash, but small businesses can dream of growing into dominant players. Research shows that discouraging small businesses from evolving into real competitors reduces long-term productivity growth, as does protecting incumbent large firms (private or state-owned).

>> Read full speech [pdf]

Russia Will Pay Dearly for Putin's Anschluss

Anders Åslund
Published in the Moscow Times
  Anders Aslund President Putin overplayed his hand when he invaded Crimea, and Russia will suffer the consequences. The Western powers are responding quickly—kicking Russia out of the G-8, halting trade negotiations and military cooperation, and imposing sanctions. Russia has significant vulnerabilities: Its GDP is only one-tenth that of the European Union's, and its economy depends on international financial markets and oil and gas exports—which Europe and Ukraine can manage without. War and sanctions usually reinforce state control and repression, rendering economic reforms virtually impossible. Downgraded forecasts indicate that Putin's Anschluss has already cost Russia 1 to 2 percent of GDP for 2014—and economic uncertainty will only grow with additional sanctions.

>> Read full op-ed
  The Economics of Exit: Scotland Out of UK? UK Out of EU?
Monday, April 7, 2014
12:15–1:30 pm (EDT)
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  Jonathan Portes, director of the National Institute for Economic and Social Research (NIESR) in London, will assess the controversial issues of Scottish independence and UK membership in a euro-dominated European Union. Under Portes' leadership, NIESR is playing a leading role in the substantive discussion of the relevant economic factors, including currency options for an independent Scotland and treatment of migrant workers to the United Kingdom from the European Union.

  The International Monetary Fund: What Is It Good for?
Tuesday, April 8, 2014
12:15–4:30 pm (EDT)
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  With the upcoming IMF/World Bank Spring meetings and the current debate over the US government's commitments to increase funding and reform quotas at the Fund, the Peterson Institute will cohost an event with the Centre for International Governance Innovation (CIGI) and the Institute of International Finance, Inc. (IIF) to discuss the true value of the International Monetary Fund (IMF) to the United States and to the world economy. Speakers include C. Fred Bergsten, James Boughton, Charles Collyns, Anna Gelpern, Athanasios Orphanides, and other leading experts.

>> See full agenda and speakers [pdf]

  Global Economic Prospects: Spring 2014
Wednesday, April 9, 2014
12:15–1:30 pm (EDT)
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  The Peterson Institute's semiannual Global Economic Prospects session will focus on major sources of financial instability in the global economy. Leading off with an assessment of the US and global outlook, Senior Fellow David Stockton will argue that, with recovery far from normal and inflation risks clearly on the downside, the fear of creating or ignoring financial instability is all that should hold back further monetary policy easing. Senior Fellow Nicholas R. Lardy will present his analysis that worries about financial instability in China are exaggerated. Senior Fellow Ángel Ubide will focus on the key risks markets may be overlooking. Finally, Visiting Fellow Nicolas Véron will discuss what the run-up to and execution of the European asset quality review and bank recapitalization means for macro outcomes.

  The MIS-PIIE Sovereign Economic Panel: Stresses in Emerging Markets and Their Medium-Term Growth Prospects
Thursday, April 10, 2014
12:15–4:30 pm (EDT)
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  The Peterson Institute for International Economics (PIIE) and Moody's Investor Service will hold their semiannual joint Sovereign Economic Panel on Thursday, April 10, 2014. The panel will address the short-term stresses versus medium-term prospects for key emerging markets. Colombian Finance Minister Mauricio Cárdenas will deliver the opening keynote, leading off a discussion of Latin America. Economists will give complementary but independent assessments of the structural versus cyclical views, both in general and with respect to economies of concern in Eastern Europe and Latin America. Other speakers will include Anders Åslund, Jose De Gregorio, Lucio Vinhas de Souza, Sergei Shatalov, and Arvind Subramanian.

>> See full agenda and speakers [pdf]

Peterson Perspectives Interviews

audio  A Small Step Toward European Banking Union Regulation
Nicolas Véron explains that a European agreement on how to deal with insolvent banks moves the process of more unified banking regulation forward.

Recent Blog Posts

RealTime Economic Issues Watch   China Economic Watch    North Korea:  Witness to Transformation
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No Change in the ECB Outlook despite Ambiguous Signals to the Contrary

The IMF Debacle: Congress Is Making It Harder, Not Easier, to Help Ukraine

Europe's Newest Steps Forward to Deal with Failing Banks

Serious Sanctions on Russia: To Be Imposed or Threatened?

How Ukraine Can Use Sanctions to Counter Russia's Aggression
  Reforms, Fast and Slow: The Near-term Outlook for Reforms to China's Exchange Rate Policy

Don't Get Fooled by China's Tricky FDI Numbers, It is Still Number One

Injecting a Little Risk into the Chinese Financial System

Finally! Good High Frequency Data on China's Purchase of Treasuries

From "We Should" to "We Will": A More Disciplined Approach to Reform in China
  "Wir Sind ein Volk!" The Dresden Speech

Missiles, Nuclear Tests, Border Clashes–and Politics

The Human Rights Council Vote

Foreign Affairs Subcommittee Hearing on North Korea

Why is Kenneth Bae Treated More Harshly Than John Short?

Preview of Next Issue

Working Paper 14-1
Regime Change, Democracy, and Growth
Caroline Freund and Mélise Jaud

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