Peterson Institute for International Economics Update Newsletter
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PIIE Update Newsletter
April 11, 2014

"Washington's premier think tank on the global economy"
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  Brazil in the Global Economy: Where Does This Ship Go?

Carlos Márcio Cozendey

Deputy Minister of Finance
for Brazil
  Monday, April 14, 2014
10:00–11:30 am (EDT)
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  Macroeconomic Options for Very Small Open Economies

DeLisle Worrell

Governor of Central Bank
of Barbados
  Thursday, April 17, 2014
12:15–1:30 pm (EDT)
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  Working Paper 14-1
Regime Change, Democracy, and Growth

Caroline Freund and Mélise Jaud
  Caroline Freund Economic improvements generally accrue to countries that go through regime change but not always when the change leads to democratization, according to a study on the relationship between democracy and growth by Caroline Freund and Mélise Jaud. The authors identify over 100 government type transitions in the last half century with various outcomes, to and from democracy, some partial, and some failed. Their research shows that transition to democracy yields no growth dividend compared to other types of regime change and that countries that democratize slowly do not gain in economic growth from regime change. These results suggest that the growth dividend from political transition results from swift resolution of uncertainty rather than from democratization.

>> Read full working paper [pdf]

How to Reform Ukraine's Economy

Heidi Crebo-Rediker and Douglas Rediker
Published in Fortune
  After weeks of urgent negotiations with Ukraine's interim government, the International Monetary Fund (IMF) has agreed to provide up to $18 billion to prevent the country's default. The loan represents Ukraine's best chance to reform its economy and political institutions, opening a new chapter in its history. The IMF will play the lead role in Ukraine, but the country's success or failure will largely depend on its ability to implement reforms. Besides the IMF, Ukraine needs assistance from the European Union, the United States, and perhaps—most of all—from the European Bank for Reconstruction and Development (EBRD). With its expertise and financial resources, the EBRD can thus return to its core mandate—which includes advancing democratic values—by shifting its focus away from Russia and toward Ukraine.

>> Read full op-ed

The Paradox that Awaits a Prime Minister Modi

Arvind Subramanian
Published in the Financial Times
  Arvind Subramanian In India's elections, a government led by Narendra Modi, leader of the Bharatiya Janata Party (BJP), or Indian People's Party, is likely to assume power. Modi's early objectives will be restoring macroeconomic stability and reviving investment, the latter of which he achieved as chief minister in the western state of Gujarat. But to revive the economy, he will face the challenge of operating in a decentralized fiscal system—where the power to manage infrastructure projects resides with the states—and of determining the tradeoff between short-term expediency and long-term efficiency. There will likely be a tension between his electoral mandate and this economic mission. Modi's electoral appeal has been based on his ability to wield power, ruthlessly if necessary. His success in governing the whole Indian economy, however, will hinge on making the best of highly circumscribed power.

>> Read full op-ed

Peterson Perspectives Interviews

audio  Storming the Opera House in Ukraine
Anders Åslund says Russia's ham-fisted tactics to destabilize Ukraine have backfired, and Moscow may now turn to tougher steps, including an invasion, to halt the country's progress.

audio  The IMF's Existential Crisis
Edwin M. Truman, elaborating on his proposal jointly offered with C. Fred Bergsten, says the International Monetary Fund should walk away from the United States if Congress fails to support its governance and finance reforms.

audio  China's Moderate Growth Slowdown
Nicholas R. Lardy says China is taking sensible steps to counter the moderate slowdown in growth, rejecting the route of expanding credit aggressively as it did in 2009.

audio  French Cabinet Shakeup: Old Wine in New Bottles?
Nicolas Véron analyzes President Hollande's Cabinet rearrangement following the electoral defeat of the Socialists, but the basic rightward thrust of his government is expected to continue.

Recent Blog Posts

RealTime Economic Issues Watch   China Economic Watch    North Korea:  Witness to Transformation
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Time for the United States to Risk Its IMF Veto

Are Countries Better Off with Their Own Monetary Regimes?

What Were They Thinking? The Fed on the Brink of Zero

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
  Flying Blind: Monitoring Shadow Banking in Emerging Markets

Internet Finance: Barbarians in the House

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
  North Korea Events Next Week

The Stephen Kim Case

Sources: Global Asia on the Kim Jong Un Regime

North Korea by Night I: Regional Developments

More on Dresden

PIIE Noted in the News and on the Web

Bloomberg Surveillance
Posen Sees 'Weaker' IMF Without US Involvement
On the sidelines of the IMF–World Bank Spring Meetings, Adam S. Posen and host Tom Keene discuss the United States' failure to advance reforms at the International Monetary Fund.

NPR's To the Point
Turmoil in Eastern Ukraine Prompts Concern over Russia's Next Move
Anders Åslund joins a panel to discuss Russia's next move in the Ukraine crisis

Financial Times
Pacific Alliance Captures Zeitgeist in Era of 'Mega' Trade Agreements
The Financial Times covers an in-depth interview with Barbara Kotschwar on the Pacific Alliance.

ET Now
Macros with Mythili
Arvind Subramanian speaks with Mythili Bhusnurmath about the US Federal Reserve's tapering of its stimulus program and the implications for India and other emerging markets.
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