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1591. The US–China trade war and phase one agreement

Author:
Chad P. Bown
Publication Date:
02-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The Trump administration changed US trade policy toward China in ways that will take years for researchers to sort out. This paper makes four specific contributions to that research agenda. First, it carefully marks the timing, definitions, and scale of the products subject to the tariff changes affecting US-China trade from January 20, 2017 through January 20, 2021. One result is that each country increased its average duty on imports from the other to rates of roughly 20 percent, with the new tariffs and counter-tariffs covering more than 50 percent of bilateral trade. Second, the paper highlights two additional channels through which bilateral tariffs changed during this period: product exclusions from tariffs and trade remedy policies of antidumping and countervailing duties. These two channels have received less research attention. Third, it explores why China fell more than 40 percent short of meeting the goods purchase commitments set out for 2020, the first year of the phase one agreement. Finally, the paper considers additional trade policy actions—involving forced labor, export controls for reasons of national security or human rights, and reclassification of trade with Hong Kong—likely to affect US-China trade beyond the Trump administration.
Topic:
Education, Trade Wars, Trade Policy, and Protectionism
Political Geography:
China, Asia, North America, and United States of America

1592. COVID-19 and the 2020 US presidential election: Did the pandemic cost Donald Trump reelection?

Author:
Marcus Noland and Eva (Yiwen) Zhang
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
By Election Day 2020, the COVID-19 pandemic had killed 234,244 Americans and caused the sharpest macroeconomic downturn in US history. Hypothetical calculations using county-level electoral data show that in a “no pandemic” scenario or a scenario in which the severity of the pandemic was mitigated by 30 percent, Donald Trump would have lost the popular vote but won the electoral vote. In the 20 percent mitigation scenario, the electoral vote would have been tied, giving Trump a presumptive victory in the House of Representatives. For the second time in a row (and the third time since 2000), the candidate who lost the popular vote would have been elected president of the United States.
Topic:
Government, Politics, Elections, Donald Trump, and COVID-19
Political Geography:
North America and United States of America

1593. Fiscal and exchange rate policies drive trade imbalances: New estimates

Author:
Joseph E. Gagnon and Madi Sarsenbayev
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
A 2017 PIIE analysis found that fiscal balances and foreign exchange intervention—more broadly, government purchases of foreign assets to influence exchange rates—are the most important factors behind differences in current account balances across countries and over time. The current account is the broadest measure of a country's balance of trade. It records all income received from foreigners and payments made to foreigners. It is dominated by trade in goods and services but also includes income receipts on domestically owned factors of production (capital and labor) that are employed abroad and payments to foreign-owned factors of production at home. A country’s fiscal surplus and official purchases of foreign assets tend to increase its current account balance. Net official purchases by other countries tend to reduce current account balances in the home country, especially when it issues a reserve currency. This paper updates the earlier analysis with three more years (2016–18) and roughly 40 percent more observations. New analysis of net international investment positions (which largely reflect cumulated current account balances) finds even stronger evidence for the dominant role of official reserve positions in explaining differences in current account balances across countries. An increase in a country’s official reserve position causes essentially a dollar-for-dollar increase in its net international investment position.
Topic:
Fiscal Policy, Currency, Trade Policy, and Trade Deficit
Political Geography:
Global Focus

1594. Do gendered laws matter for women’s economic empowerment?

Author:
Marie Hyland, Simeon Djankov, and Pinelopi Koujianou Goldberg
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
reater legal equality between men and women is associated with a narrower gender gap in opportunities and outcomes, fewer female workers in positions of vulnerable employment, and greater political representation for women. While legal equality is on average associated with better outcomes for women, the experience of individual countries may differ significantly from this average trend, depending on the countries’ stage of development (as proxied by per capita GDP). Case studies from the Democratic Republic of the Congo, India, and Spain demonstrate this deviation. Especially in developing countries, legislative measures may not necessarily translate into actual empowerment, due mainly to deeply entrenched social norms, which render legal reforms ineffective. Women are more likely than men to be in vulnerable employment in low- and lower-middle-income economies but less likely than men to be in vulnerable employment in upper-middle- and high-income economies. Analysis of a 50-year panel of gendered laws in 190 countries reveals that country attributes that do not vary or change only slowly over time—such as a country’s legal origin, form of government, geographic characteristics, and dominant religion—explain a very large portion of the variation across countries. This finding suggests that the path to legal equality between men and women may be a long and arduous one. Nevertheless, the data also show that the past five decades have seen considerable progress toward legal gender equality. Gendered laws do evolve, suggesting a role for legal reforms in women’s economic empowerment.
Topic:
Gender Issues, Law, Women, Inequality, and Economy
Political Geography:
Africa, Europe, South Asia, India, Democratic Republic of the Congo, and Spain

1595. COVID-19 credit support programs in Europe’s five largest economies

Author:
Julia Anderson, Francesco Papadia, and Nicolas Véron
Publication Date:
04-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
n 2020, European governments mitigated the economic impact of COVID-19 lockdowns and other pandemic-fighting programs through a host of initiatives, including efforts to support credit, such as guarantees for bank loans, particularly to small and medium-sized enterprises. This paper presents detailed information about these national credit support programs in the largest national economies of the European Union (France, Germany, Italy, and Spain) and the United Kingdom. The information was collected through thorough examination of published material and extended exchanges with national authorities and financial sector participants. The analysis focuses on (1) how countries positioned themselves on the many tradeoffs that emerged in designing and implementing the programs; and (2) what explains differences in usage across countries and its leveling off everywhere in the second half of 2020.
Topic:
Government, European Union, Finance, Fiscal Policy, and COVID-19
Political Geography:
United Kingdom and Europe

1596. How China lends: A rare look into 100 debt contracts with foreign governments

Author:
Anna Gelpern, Sebastian Horn, Scott Morris, Brad Parks, and Christoph Trebesch
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
China is the world’s largest official creditor, but basic facts are lacking about the terms and conditions of its lending. Very few contracts between Chinese lenders and their government borrowers have ever been published or studied. This paper is the first systematic analysis of the legal terms of China’s foreign lending. The authors collect and analyze 100 contracts between Chinese state-owned entities and government borrowers in 24 developing countries in Africa, Asia, Eastern Europe, Latin America, and Oceania, and compare them with those of other bilateral, multilateral, and commercial creditors. Three main insights emerge. First, the Chinese contracts contain unusual confidentiality clauses that bar borrowers from revealing the terms or even the existence of the debt. Second, Chinese lenders seek advantage over other creditors, using collateral arrangements such as lender-controlled revenue accounts and promises to keep the debt out of collective restructuring (“no Paris Club” clauses). Third, cancellation, acceleration, and stabilization clauses in Chinese contracts potentially allow the lenders to influence debtors’ domestic and foreign policies. Even if these terms were unenforceable in court, the mix of confidentiality, seniority, and policy influence could limit the sovereign debtor’s crisis management options and complicate debt renegotiation. Overall, the contracts use creative design to manage credit risks and overcome enforcement hurdles, presenting China as a muscular and commercially savvy lender to the developing world.
Topic:
Foreign Policy, Debt, Government, and Banking
Political Geography:
China and Asia

1597. The role of childcare challenges in the US jobs market recovery during the COVID-19 pandemic

Author:
Jason Furman, Melissa Kearney, and Wilson Powell III
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
This working paper examines how much of the overall decline in employment between the beginning of 2020 and 2021 can be explained by excess job loss among parents of young children, and mothers specifically. Using data from the Current Population Survey (CPS), the authors confirm that, in general, mothers with young children have experienced a larger decline in employment, as compared (unconditionally) with other adults, including fathers. This excess job loss is driven by mothers without a four-year college degree. The main point of the paper is to build off this observation and examine how much of the aggregate employment deficit in early 2021 can be explained by parent-specific issues, such as childcare struggles. To examine this question, the authors construct counterfactual employment rates and labor force participation rates that assign to mothers of young children the percent change in employment and labor force participation rates experienced by comparable women without young children. The paper considers multiple definition, sample, and counterfactual specification alternatives. The analysis yields robust evidence that differential job loss among mothers of young children accounts for a negligible share of the ongoing aggregate employment deficit. The result is even stronger (and flips signs) if all parents are considered, since fathers with young children experienced less job loss than other men. The practical implication of these findings is that nearly all of the aggregate ongoing employment deficit is explained by factors that affect workers more broadly, as opposed to challenges specific to working parents.
Topic:
Labor Issues, Children, Pandemic, COVID-19, and Childcare
Political Geography:
North America and United States of America

1598. Do US firms have an incentive to comply with the FLSA and the NLRA?

Author:
Anna Stansbury
Publication Date:
06-2021
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
To what extent do US firms have an incentive to comply with the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA)? Stansbury examines this question through a simple comparison of the expected costs of noncompliance (in terms of legal sanctions) to the profits firms can earn through noncompliance. In the case of the FLSA minimum wage and overtime provisions, typical willful violators are required to pay back wages owed and in some cases additional penalties, if detected by the Department of Labor (DOL). Based on available data on the penalties levied, a typical firm would need to expect a chance of at least 78-88 percent that its violation would be detected in order to have an incentive to comply with the FLSA. In practice, the probability of detection many firms can expect to face is likely much lower than this. In the case of the NLRA, a firm that fires a worker illegally is required to reinstate the worker with back pay if the violation is detected. Based on empirical estimates of the effect of unionization on firm profits, a typical firm may have an incentive to fire a worker illegally for union activities if this illegal firing would reduce the likelihood of unionization at the firm by as little as 0.15-2 percent. These analyses illustrate that neither the FLSA nor the NLRA penalty and enforcement regimes create sufficient incentive to comply for many firms. In this context, the substantial evidence of minimum wage and overtime violations, and of illegal employer behavior toward unions, is not surprising.
Topic:
Labor Issues, Regulation, and Economy
Political Geography:
North America and United States of America

1599. Estimating the Effect of Christian Messages on Civic Engagement: Evidence from a Community-Collaborative Study in Zambia

Author:
Elizabeth Sperber, Gwyneth McClendon, and O'Brien Kaaba
Publication Date:
04-2021
Content Type:
Working Paper
Institution:
Kellogg Institute for International Studies
Abstract:
A significant literature suggests that religious conviction can drive political participation, perhaps because religious people internalize a moral obligation to act toward the common good and/or because religious conviction gives people a sense that their actions will make a difference. This paper presents findings from a community-collaborative pilot study in Zambia that examines these ideas. Zambia is an overwhelmingly Christian state experiencing dramatic democratic backsliding. Zambian churches are among the major providers of civic engagement education and programming. Together with our community partners, we randomly assigned Zambian youth (aged 18-35) volunteers into one-time civic engagement workshops. Identical basic civic educational material was presented in each workshop. Yet, we ended this curriculum with two different sets of pre-recorded Christian motivational messages: In 50% of the workshops, these messages emphasized a religious obligation to sacrifice for the common good. In the other 50%, the messages emphasized the power of faith to make change in the world. We found that the latter message (emphasizing the power of faith) moved workshop participants to be more willing to participate in peaceful protest, to disavow political violence, and to critically evaluate other people who choose not to participate in electoral politics. By contrast, the message focused on sacrifice for the common good did not affect political participation relative to baseline. We discuss how the study advances research on religion and political participation as well as knowledge about Christian civic education programs, which are prevalent but understudied throughout.
Topic:
Civil Society, Politics, Religion, Democracy, and Youth
Political Geography:
Africa and Zambia

1600. Operation Condor, The War on Drugs, and Counterinsurgency in the Golden Triangle (1977-1983)

Author:
Adela Cedillo
Publication Date:
05-2021
Content Type:
Working Paper
Institution:
Kellogg Institute for International Studies
Abstract:
In the late 1960s, the Mexican government launched a series of counternarcotics campaigns characterized by the militarization of drug production zones, particularly in the northwestern region—the so-called Golden Triangle, epicenter of both production and trafficking of marijuana and opium poppy since the 1930s. Operations Canador (1969–1975) and Trizo (1976) served as a laboratory for methods to curb drug production, ranging from harassment of drug growers to the aerial defoliation of illicit crops. Operation Condor (1977–1988) combined and enhanced these strategies, wreaking havoc on communities of alleged drug growers, but without entirely disrupting the drug industry. This paper explores the role of the US government in the militarization of Mexico’s anti-drug policy, underscoring how the ruling party (the Institutional Revolutionary Party, PRI) took advantage of this shift to tackle domestic issues and reassert its hegemony. I argue that Operation Condor functioned as a counterinsurgency campaign oriented to thwart both social and armed movements, eliminate competitors in the narcotics market, and reorganize the drug industry to protect successful drug lords. Operation Condor also caused the decentralization of the drug industry from the northwest and created a new clientelistic pact between drug lords and national security agencies, such as the Federal Security Directorate (DFS), the Office of the Attorney General of Mexico–Federal Judicial Police (PGR-PJF), and the Secretariat of National Defense (SEDENA), which benefited from drug proceeds. Finally, the de facto state of siege imposed in the Golden Triangle produced thousands of victims of harassment, torture, rape, murder, forced-disappearance, and displacement; massive human rights abuses that authorities either concealed or denied.
Topic:
Security, Corruption, Human Rights, Governance, Social Movement, History, Borders, and Violence
Political Geography:
Latin America, North America, Mexico, and United States of America