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2. Post-American Moments in Global Financial Governance in the New Millennium
- Author:
- Ilene Grabel
- Publication Date:
- 01-2021
- Content Type:
- Working Paper
- Institution:
- Political Economy Research Institute (PERI), University of Massachusetts Amherst
- Abstract:
- It is difficult to find much to celebrate about the current conjuncture, marked as it is by deeply destructive incoherence. The best that can be said is that we are in an interregnum. But I suggest that today’s incoherence also includes productive and even transformative moments. I argue that incoherence in global financial governance should be understood as productive in several respects. It is creating and widening alternative spaces in which some of the values, practices, tools, objectives, and goals associated with embedded liberalism can be rearticulated in a world in which there is no “order,” American-led or otherwise. The silver lining of incoherence is that it creates space for experimentation and innovation unconstrained by an overarching “ism.” Incoherence is creating exits or leakages from noxious national and global policy environments, rendering it less poisonous than it would be in the absence of ideational aperture and contestation, competing policies, institutions, networks, and poles of power. The abdication by the US of its traditional role of global coordination and discipline, as exerted under the post-war embedded liberal or the neoliberal American-led orders, is creating opportunities for more permissive and varied “reembededness” and diverse forms of economic integration. The emerging regime reflects neither your grandmother’s American-led order 1.0 or 2.0. In this morbid post-American interregnum there is no singular “ism” or “alternative order,” a fact that I do not mourn.
- Topic:
- Governance, Finance, Global Political Economy, and Neoliberalism
- Political Geography:
- Global Focus and United States of America
3. How ‘demos’ met ‘cracy’: debt, inequality, money
- Author:
- Andreas Antoniades and Ugo Panizza
- Publication Date:
- 03-2020
- Content Type:
- Working Paper
- Institution:
- Centre for Global Political Economy, University of Sussex
- Abstract:
- The recurrence of ever more destructive economic crises and patterns of pervasive indebtedness and inequality threaten the social fabric of our societies. Our main responses to these trends have been partial, focusing on symptoms rather than causes, often exacerbating rather than improving the underlying socio-economic dynamics. To reflect on these conditions and on ‘what needs to be done’ this paper turns to a similar socio-economic malaise faced by the city-state of Athens in the 6th century BC. Most historical studies dealing with this crisis focus on the comprehensive debt relief policy (seisachteia) implemented by Solon. We argue that this debt relief, although necessary, was the least important of Solon’s reforms. Solon read the problem of debt as a problem of money so he went on to reform the monetary and exchange system. But he did not think that these reforms alone could restore socioeconomic sustainability. For this, a redefinition of what was counted as valuable economic activity and as income had also to take place. And for all these to work, citizens had to be involved more in the commons. Far from only achieving socioeconomic sustainability, these reforms gave rise gradually to the demos that we meet in the golden age of Democracy. It is indeed interesting that Democracy, in its ideal type of the 5th century BC, finds its origin in the way in which a society responded to a major socioeconomic crisis, characterised by pervasive indebtedness and destabilising inequalities. Such a broader historical horizon may help us grasp better the problems, stakes and challenges of our times.
- Topic:
- Debt, Political Economy, History, Democracy, and Global Political Economy
- Political Geography:
- Greece and Global Focus
4. Forecasting exchange rates of major currencies with long maturity forward rates
- Author:
- Zsolt Darvas and Zoltan Schepp
- Publication Date:
- 04-2020
- Content Type:
- Working Paper
- Institution:
- Bruegel
- Abstract:
- This paper presents unprecedented exchange rate forecasting results based upon a new model which approximates the gap between the fundamental equilibrium exchange rate and the actual exchange rate with the long-maturity forward exchange rate.
- Topic:
- Economics, Governance, Global Political Economy, and Exchange Rate Policy
- Political Geography:
- Global Focus
5. Putting Global Governance in its Place
- Author:
- Dani Rodrik
- Publication Date:
- 08-2019
- Content Type:
- Working Paper
- Institution:
- The John F. Kennedy School of Government at Harvard University
- Abstract:
- In a world economy that is highly integrated, most policies produce effects across the border. This is often believed to be an argument for greater global governance, but the logic requires scrutiny. There remains strong revealed demand for policy and institutional diversity among nations, rooted in differences in historical, cultural, or development trajectories. The canonical case for global governance is based on two set of circumstances. The first occurs when there is global public good (GPG) and the second under “beggar-thy-neighbor” (BTN) policies. However, the world economy is not a global commons, and virtually no economic policy has the nature of a global public good (or bad). And while there are some important BTN policies, much of our current discussions deal with policies that are not true BTNs. The policy failures that exist arise not from weaknesses of global governance, but from distortions of domestic governance. As a general rule, these domestic failures cannot be fixed through international agreements or multilateral cooperation. The paper closes by discussing an alternative model of global governance called “democracy-enhancing global governance.”
- Topic:
- International Trade and Finance, Governance, Global Political Economy, and Trade Wars
- Political Geography:
- Global Focus and Global Markets
6. How ETFs Amplify the Global Financial Cycle in Emerging Markets
- Author:
- Nathan Converse, Eduardo Levy Yeyati, and Tomas Williams
- Publication Date:
- 05-2019
- Content Type:
- Working Paper
- Institution:
- The John F. Kennedy School of Government at Harvard University
- Abstract:
- Since the early 2000s exchange-traded funds (ETFs) have grown to become an important in- vestment vehicle worldwide. In this paper, we study how their growth affects the sensitivity of international capital flows to the global financial cycle. We combine comprehensive fund- level data on investor flows with a novel identification strategy that controls for unobservable time-varying economic conditions at the investment destination. For dedicated emerging mar- ket funds, we find that the sensitivity of investor flows to global financial conditions for equity (bond) ETFs is 2.5 (2.25) times higher than for equity (bond) mutual funds. In turn, we show that in countries where ETFs hold a larger share of financial assets, total cross-border equity flows and prices are significantly more sensitive to global financial conditions. We conclude that the growing role of ETFs as a channel for international capital flows amplifies the global financial cycle in emerging markets.
- Topic:
- Emerging Markets, International Trade and Finance, Global Political Economy, Capital Flows, and Mutual Funds
- Political Geography:
- Global Focus and Global Markets
7. The Political Economy of Europe since 1945: A Kaleckian perspective
- Author:
- Joseph Halevi
- Publication Date:
- 06-2019
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- This paper analyzes the early stages of the formation of the Common Market. The period covered runs from the end of WW2 to 1959, which is the year in which the European Payments Union ceased to operate. The essay begins by highlighting the differences between the prewar political economy of Europe and the new dimensions and institutions brought in by the United States after 1945. It focuses on the marginalization of Britain and on the relaunching of French great power ambitions and how the latter determined, in a very problematical way, the European complexion of France. Because of France’s imperial aspirations, France, not West Germany, emerged as the politically crisis prone country of Europe acting as a factor of instability thereby jeopardizing the process of European integration, Among the large European nations, Germany and Italy appear, for opposite economic reasons, as the countries most focused on furthering integration. Germany expressed the strongest form of neomercantilism while Italy the weakest.
- Topic:
- Economics, Political Economy, Global Political Economy, World War II, and Common Market
- Political Geography:
- United States, Europe, Germany, and Global Focus
8. Technological Disruption in the Global Economy
- Author:
- Commission on Global Economic Transformation
- Publication Date:
- 04-2019
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- Technology has become the most powerful disruptive force in our economy. It bears on the future of work, competition, market power, and national security, and it binds the other major areas of our commission’s investigation: macroeconomics and finance, globalization, and climate change. In essence, technological progress propels global economic transformation. Our gathering on February 6, 2019 brought economists together with leading voices from academia, labor, private industry, and the nonprofit/NGO sector. We heard from industry leaders with deep roots and history in the Silicon Valley technology revolution, academics who have also spent time in the policy arena, and from individuals who are already considering new models and approaches to digital rights and the future of work. Our discussion was by no means exhaustive or conclusive, but we attempted to harness the group’s collective wisdom to address some of the most vexing questions of our day. This document is intended to inform our commissioners as they develop CGET’s final report and to share our timely conversation with policymakers and the general public. Fomenting multidisciplinary, critical discourse is one of the most important responsibilities of this initiative, and we sincerely thank the staff at the Institute for New Economic Thinking (INET), our dedicated commissioners, and our outside thought leaders for helping us to promote this dialogue.
- Topic:
- Economics, Science and Technology, Global Markets, Digital Economy, Global Political Economy, and Macroeconomics
- Political Geography:
- United States and Global Focus
9. The Evolution and Current Status of De Facto Stare Decisis in International Trade and Investment Tribunals: How to Understand the Present by Looking into the Past
- Author:
- Chanya Punyakumpol
- Publication Date:
- 02-2019
- Content Type:
- Working Paper
- Institution:
- Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
- Abstract:
- Is there a doctrine of 'stare decisis' in international trade and international investment law? From a positive law perspective, the answer is a definite no. However, as many scholars have observed, in practice, there has been a strong level of deference from the Appellate Body to its previous rulings, but less so from investment tribunals. Using social network analysis to assess actual citations from the Appellate Body Reports and investment arbitrations from the inception to the current time, this paper examines the evolution and 'status quo' of citation networks in international trade and international investment arbitrations. It asks, not only whether there is a 'de facto' rule of precedent in the two regimes, but also when it occurs and how the development links with the institutional design of dispute settlement. The results show how the doctrine of 'stare decisis' diverges in international trade and international investment, as well as the importance of institutional design in shaping and constraining the behaviors of tribunals.
- Topic:
- Economics, Globalization, International Trade and Finance, Law, Finance, and Global Political Economy
- Political Geography:
- Global Focus
10. Tax Audits as Scarecrows: Evidence from a Large-Scale Field Experiment
- Author:
- Ricardo Perez Truglia, Matias Giaccobasso, Guillermo Cruces, Rodrigo Ceni, and Marcelo Bergolo
- Publication Date:
- 11-2019
- Content Type:
- Working Paper
- Institution:
- Center for Distributive, Labor and Social Studies (CEDLAS)
- Abstract:
- The canonical model of Allingham and Sandmo (1972) predicts that firms evade taxes by optimally trading off between the costs and benefits of evasion. However, there is no direct evidence that firms react to audits in this way. We conducted a large-scale field experiment in collaboration with Uruguay’s tax authority to address this question. We sent letters to 20,440 small- and medium-sized firms that collectively paid more than 200 million dollars in taxes per year. Our letters provided exogenous yet nondeceptive signals about key inputs for their evasion decisions, such as audit probabilities and penalty rates. We measured the effect of these signals on their subsequent perceptions about the auditing process, based on survey data, as well as on the actual taxes paid, based on administrative data. We find that providing information about audits had a significant effect on tax compliance but in a manner that was inconsistent with Allingham and Sandmo (1972). Our findings are consistent with an alternative model, risk-as-feelings, in which messages about audits generate fear and induce probability neglect. According to this model, audits may deter tax evasion in the same way that scarecrows frighten off birds.
- Topic:
- Economics, Global Political Economy, Tax Systems, Economic Policy, and Macroeconomics
- Political Geography:
- United States, Argentina, and Global Focus
11. Emerging Countries in Global Financial Standard Setting: Explaining Relative Resilience and Its Implications
- Author:
- Andrew Walter
- Publication Date:
- 11-2019
- Content Type:
- Working Paper
- Institution:
- Centre for International Governance Innovation
- Abstract:
- This special report explores the role of emerging-country members in the Basel process, a key aspect of global financial standard setting. It argues that this process has been significantly more politically resilient than adjacent aspects of global economic governance, in part because major emerging countries have perceived continuing “intra-club” benefits from participation within it. Most important among these are learning benefits for key actors within these countries, including incumbent political leaders. Although some emerging countries perceive growing influence over the international financial standard-setting process, many implicitly accept limited influence in return for learning benefits, which are valuable because of the complexity of contemporary financial systems and the sustained policy challenges it creates for advanced and emerging countries alike. The importance of learning benefits also differentiates the Basel process from other international economic organizations in which agenda control and influence over outcomes are more important for emerging-country governments. This helps to explain the relative resilience of the Basel process in the context of continued influence asymmetries and the wider fragmentation of global economic governance. The report also considers some reforms that could further improve the position of emerging countries in the process and bolster its perceived legitimacy among them.
- Topic:
- International Trade and Finance, Financial Markets, Global Political Economy, and Emerging States
- Political Geography:
- Africa, Europe, Asia, South America, Australia, North America, and Global Focus
12. Dealing with the Offshore Economy
- Author:
- Alan Riley
- Publication Date:
- 04-2019
- Content Type:
- Working Paper
- Institution:
- Atlantic Council
- Abstract:
- Given that offshore tax havens are largely located in small, independent states or self-governing territories, it could be assumed that they have little connection to OECD states and major financial centers such as London and New York. This is not the case. The so-called tax havens are in fact part of a much larger network of financial and corporate services that depends on lawyers, accountants, and bankers located in major Western cities. Only one part of the havens’ business actually involves providing lower tax rates to individual foreign account holders
- Topic:
- International Affairs and Global Political Economy
- Political Geography:
- Global Focus