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Begin New Search Topic International Trade and Finance Political Geography United States Content Type Working Paper

301. Free Movement of People, Goods, Services and Capital in View of the Context of Stability Pact

Author:
Mladen Stanicic
Publication Date:
02-2003
Content Type:
Working Paper
Institution:
Austrian National Defence Academy
Abstract:
The Stability Pact is a strategic concept whose aim is to warrant long- term peace and stability in South-Eastern Europe. It is becoming an indispensable element of the global security structure which is currently being constructed in relations between the big powers, the USA, Russia and China, with the active participation of the United Nations, the European Union, international financial institutions and individual countries. As one of the sponsors of the pact, the European Union is keenly interested in stability and peace among its next-door neighbours, some of whom are covered by the pending eastern enlargement. This enlargement is intended to transcend centuries of civilisational and religious divisions in Europe, the causes of many political and armed conflicts in the past. The vision of Europe in the 21st century, reaching all the way to the borders of the former Soviet Union, is that of a multicultural community encompassing states with diverse civilisational, religious, ethnic and cultural characteristics.
Topic:
Security, Globalization, International Cooperation, and International Trade and Finance
Political Geography:
Russia, United States, China, Europe, and Eastern Europe

302. Innovation and Social Capital in Silicon Valley

Author:
Martin Kenney and Donald Patton
Publication Date:
07-2003
Content Type:
Working Paper
Institution:
Berkeley Roundtable on the International Economy
Abstract:
The high cost regions of Europe, North America, and Japan recognize that the key to their economic vitality is innovation. Increasingly, many also accept that the primary units of competition based on high quality, innovative products are not nations, but firms within regions, some of which occasionally bridge national boundaries. This has resulted in a significant increase in interest in the nature and functioning of such regional economies, variously known as clusters or industrial districts.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, Europe, Israel, East Asia, and North America

303. The Spatial Distribution of Entrepeneurial Support Networks: Evidence from Semiconductor Initial Public Offerings from 1996-2000

Author:
Martin Kenney and Donald Patton
Publication Date:
03-2003
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Theory and recent research demonstrates that entrepreneurship is a spatially and socially embedded activity. In certain regions, dense support networks of institutions dedicated to assisting entrepreneurial start-ups have been established and a wide variety of authors have given credit to these networks for supporting regional entrepreneurship (Kenney and von Burg 1999; Saxenian 1994; Bahrami and Evans 2000). As Marshall (1890) recognized many, but not all, industries exhibit a strong clustering effect (see also, e.g., Storper and Walker 1988; Porter 1990; 1998). Research on these networks has been hampered by a lack of empirical data that contains spatial variables and identifies the relationship between various actors (i.e., venture capitalists, law firms and investment bankers) and the start-up firm. Thus research has been qualitative and anecdotal or when quantitative limited to certain industries usually biotechnology.
Topic:
Economics, International Trade and Finance, and Non-Governmental Organization
Political Geography:
United States

304. Enron's Missed Opportunity: Enron's Refusal to Build a Collaborative Market Turned Bandwidth Trading Into a Disaster

Author:
Andrew Schwartz
Publication Date:
02-2003
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Why did Enron fail? The easy answer is that Enron was a fraud, a Ponzi scheme designed to enrich scoundrels. But beneath the off-balance sheet transactions and partnerships that have drawn such intense scrutiny, Enron's efforts to reduce complex products into tradable commodities represented one of the most promising ideas of the past twenty-five years. Enron's failure was due in part to a business strategy that regarded competitors as ruthless and uncompromising. That mentality led the company to reject the very real possibility that rivals could, working together, create the new markets that in turn would open up profit opportunities for all. Enron's brilliant vision of the New Economy didn't go far enough; it required a New Economy business model that emphasized cooperation among competitors.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States

305. North American Economic Integration Policy Options

Author:
Earl H. Fry
Publication Date:
07-2003
Content Type:
Working Paper
Institution:
Center for Strategic and International Studies
Abstract:
At the end of 2003, the North American Free Trade Agreement (NAFTA) will have been in effect for a decade, and although the accord will not be fully implemented for another five years, almost all of its important provisions are already in place. The model for NAFTA was the Canada-U.S. Free Trade Agreement (CUSFTA), which was put in motion in 1989 and was to be fully implemented within 10 years but was superseded by NAFTA after only five years in operation. NAFTA itself has created the world's largest free-trade area, encompassing the United States, Mexico, and Canada; 21.3 million square miles of territory; 422 million people; almost $12 trillion in yearly production; and $615 billion in annual three-way merchandise trade. North American trade, investment, government-to-government, and people-to-people exchanges have increased dramatically over the past decade and decisionmakers in Washington, D.C., Mexico City, and Ottawa will soon have to consider whether continental economic integration should move to the next level in the form of a customs and monetary union or even a common market possessing many of the attributes of the European Union (EU).
Topic:
Economics and International Trade and Finance
Political Geography:
United States, Europe, Canada, Latin America, Central America, North America, Mexico, and Ottawa

306. Protecting the Environment While Opening Markets in the Americas

Author:
William Krist
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
The North-South Center, University of Miami
Abstract:
Market Access Negotiations are a major element of the efforts to create a Free Trade Area of the Americas (FTAA) by 2020. If successful, these negotiations will remove all tariff and nontariff barriers to trade among the 34 participating countries on all nonagricultural products, including forest and mining products, fish, and manufactured goods.
Topic:
Development, Environment, and International Trade and Finance
Political Geography:
United States, South America, Latin America, Central America, Caribbean, and North America

307. Free Trade, Smart Borders, and Homeland Security: U.S.-Caribbean Cooperation in a New Era of Vulnerability

Author:
Stephen Flynn and Anthony Bryan
Publication Date:
09-2002
Content Type:
Working Paper
Institution:
The North-South Center, University of Miami
Abstract:
In the hours following the collapse of the World Trade Center twin towers on September 11, 2001, the United States applied a tourniquet to the transportation arteries that feed its national economy. The first campaign in the war to protect the U.S. homeland turned out to be an embargo on its own economy. Given the uncertainty surrounding the attacks, freezing its transport networks first and asking questions later was probably appropriate. But then came the hard part—how to resume global trade and travel after U.S. citizens' confidence in the security of their nation had been rocked to core? In the immediate aftermath of the terrorist attacks on the United States, front-line agencies like the U.S. Customs Service, Coast Guard, Immigration and Naturalization Service (INS), Department of Agriculture, and Border Patrol were being called upon to open U.S. borders and seaports once again to legitimate trade and travel. At the same time, they were tasked with exercising increased vigilance in detecting and intercepting would-be terrorists or the means of terrorism, including weapons of mass destruction that might be smuggled in a vehicle, train, truck, or maritime container. Just how the United States arrives at the appropriate balance—between openness to facilitate legitimate commerce and exercising sufficient controls to stem transnational threats to public safety and security—is one of the most critical public policy challenges confronting U.S.-Caribbean relations.
Topic:
International Relations, Security, and International Trade and Finance
Political Geography:
United States and Caribbean

308. Non-Cooperative Dynamics of Multi-Agent Teams

Author:
Robert L. Axtell
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
Results on the formation of multi-agent teams are reviewed and extended. Conditions are specified under which it is individually rational for agents to spontaneously form coalitions in order to engage in collective action. In a cooperative setting the formation of such groups is to be expected. Here we show that in non-cooperative environments—presumably a more realistic context for a variety of both human and software agents—self-organized coalitions are capable of extracting welfare improvements. The Nash equilibria of these coalitional formation games are demonstrated to always exist and be unique. Certain free rider problems in such group formation dynamics lead to the possibility of dynamically unstable Nash equilibria, depending on the nature of intra-group compensation and coalition size. Yet coherent groups can still form, if only temporarily, as demonstrated by computational experiments. Such groups of agents can be either long-lived or transient. The macroscopic structure of these emergent 'bands' of agents is stationary in sufficiently large populations, despite constant adaptation at the agent level. It is argued that assumptions concerning attainment of agent-level (Nash) equilibrium, so ubiquitous in conventional economics and game theory, are difficult to justify behaviorally and highly restrictive theoretically, and are thus unlikely to serve either as fertile design objectives or robust operating principles for realistic multi-agent systems.
Topic:
Economics and International Trade and Finance
Political Geography:
United States and Latin America

309. Spatial and Temporal Patterns in Civil Violence: Guatemala 1977-1986

Author:
Timothy R. Gulden
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
The Brookings Institution
Abstract:
This paper examines detailed records from the civil conflict in Guatemala between 1977 and 1986. It reveals a number of novel patterns which support the use of complex systems methods for understanding civil violence. It finds a surprising, non-linear relationship between ethnic mix and killing; thereby inviting analysis based on group dynamics. It shows the temporal texture of the conflict to be far from smooth, with a power spectrum that closely resembles that of other, better understood, complex systems. The distribution of incident sizes within the data seems to fall into two distinct sets, one of which, corresponding to "regular" conflict, is Zipf distributed, the other of which includes acts of genocide and is distributed differently. This difference may indicate that that agents of the state were proceeding under different types of orders. These results provide an empirical benchmark for the modeling of civil violence and may have implications for conflict prevention, peace keeping, and the post-conflict analysis of command structures.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, Latin America, Central America, and Guatemala

310. Environment's New Role in U.S. Trade Policy

Author:
John Audley
Publication Date:
09-2002
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
Trade Act of 2002 integrates environmental policy priorities into U.S. trade negotiations. The manner in which resulting tensions between trade and environment are resolved requires greater involvement by Congress. Of particular short-term importance to Congress should be how bilateral negotiations with Chile and Singapore are concluded and regional negotiations with Central America begun. Congress should also use its oversight power to develop clearer instructions regarding a host of environmental policy issues, including investment and services negotiations, environmental reviews of trade agreements, and clarification of U.S. foreign assistance regarding technical assistance and capacity building for our trading partners. In short, TPA presents Congress with the leverage it needs to oversee trade negotiations, an opportunity to work with the administration and win back public support for U.S. trade policy that respects worker rights and protection of the environment.
Topic:
Environment, International Trade and Finance, and Politics
Political Geography:
United States and Chile

311. Politics and Parallel Negotiations: Environment and Trade in the Western Hemisphere

Author:
John Audley and Edward Sherwin
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
IN DECEMBER 1994, at the behest of then–U.S. president Bill Clinton, the leaders of the 34 Western Hemisphere democracies convened in Miami for the first comprehensive hemispheric summit in more than 25 years. The assembled heads of state pledged that their countries would forge a path toward regional integration based on four overarching principles: Governments should build strong democratic institutions, prosperity should be promoted through free trade and economic cooperation, poverty and discrimination should be eliminated, and the natural environment should be preserved through policies promoting sustainable development. “Future generations,” Clinton said at the time, “will look back on the Miami summit as a moment when the course of history in the Americas changed for the better.”
Topic:
Environment and International Trade and Finance
Political Geography:
United States, America, South America, Latin America, Central America, and North America

312. Rethinking the Export-Import Bank

Author:
Aaron Lukas and Ian Vásquez
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
The Export-Import Bank of the United States (Ex-Im Bank) was created in 1934 as an independent federal agency operating under a renewable congressional charter. That charter most recently expired on September 30, 2001. Since then, the Ex-Im Bank has been operating under a series of continuing resolutions set to expire on March 31, 2002.
Topic:
Economics and International Trade and Finance
Political Geography:
United States

313. The European Union and North America

Author:
Edward A. Fogarty
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Institute of European Studies (IES), UC Berkeley
Abstract:
This paper assesses the past, present, and future of transatlantic commercial relations in terms of EU trade strategies. After surveying the medium-term trajectories of the relationships with the United States, Mexico, and Canada-both separately and as a group-it will consider several possible sources of European Union trade preferences vis-à-vis NAFTA, including interest groups' incentives to seek to capture national and European governing institutions, the balance between the European Commission and the Council of Ministers, European leaders' desire to balance against overweening American power, and possible attempts to construct either a common Western identity or, alternatively, a European identity in contradistinction what the United States seems to represent. The hope is that these different approaches provide a contrasting set of interpretations whose comparison side-by-side allows new insights into the dynamics governing EU-North American trade relations.
Topic:
International Trade and Finance
Political Geography:
United States, Europe, Canada, North America, and Mexico

314. Mortgage Default Insurance in the U.S.: Implications for Russia

Author:
Raymond Struyk and Douglas E. Whiteley
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
Urban Institute
Abstract:
The objective of this paper is to introduce the concept of mortgage default insurance as developed in the United States into the context of Russian mortgage lending. The first part of the paper discusses the broad principles and operations of mortgage default insurance offered by private companies as it works in the United States. The pricing of this product and the preconditions for offering such insurance are highlighted. The second section outlines the operation of the U.S. government-supported default insurance offered by the Federal Housing Administration (FHA). The final part applies the foregoing information to the situation in Russia today and concludes that the conditions necessary for launching mortgage default insurance do not currently exist in the country. Nevertheless, there are a number of essential actions that can and should be taken over the next several months to put Russia on the road to establishing such insurance in a few years. The paper finishes with a possible action plan for the next two years.
Topic:
Development, Government, and International Trade and Finance
Political Geography:
Russia, United States, Europe, and Asia

315. Institutional Investors, Corporate Ownership, and Corporate Governance: Global Perspectives

Author:
Stuart L. Gillan and Laura T. Starks
Publication Date:
01-2002
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
We examine the role of institutional investors in financial markets and in corporate governance. In many countries, institutional investors have become the predominant players in financial markets and their influence worldwide is growing, chiefly due to the privatization and development of pension fund systems. Moreover, foreign institutional investors are becoming a significant presence, bringing their trading habits and corporate governance preferences to international markets. In fact, we argue that the primary actors prompting change in many corporate governance systems are institutional investors, often foreign institutional investors. In other countries the role of institutional investors is limited. Instead, large blockholders, often in the form of individuals, family groups, other corporations, or lending institutions are the dominant players. We present the theoretical arguments for the involvement of investors in shareholder monitoring and a brief history of institutional ownership and activism in the United States and other countries. We also discuss studies of the efficacy of such activism.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
United States

316. Chinese and Indian Engineers and their Networks in Silicon Valley

Author:
Rafiq Dossani
Publication Date:
03-2002
Content Type:
Working Paper
Institution:
Walter H. Shorenstein Asia-Pacific Research Center
Abstract:
In recent years, Asian immigrants have played an important role in Silicon Valley's growth, as suppliers of both engineering and entrepreneurial talent. Given their relatively large numbers, the Indian and Chinese communities' contributions have been particularly noted. The Indians' presence became more marked toward the last few years of the century, bolstered by arrivals working on the Year 2000 (Y2K) problem. The Chinese, by contrast, had older roots set down amid long-standing political, economic, and educational links with Taiwan. Both communities have formed extensive ethnic professional networks, with large memberships and well-attended, regular "networking" events, such as monthly meetings and special interest group sessions. The popularity of these events suggests that members find them valuable. While some of the value is probably noneconomic, the avowedly economic mission (see below) and long-term popularity of these gatherings means that most members primarily derive economic benefits. These networks and their members are the subject of this paper. The author acknowledges the collaboration of Professor AnnaLee Saxenian of the University of California, Berkeley, in the design of and data collection for the survey which forms part of this paper. The survey was partially funded by the Public Policy Institute of California.
Topic:
International Trade and Finance and Science and Technology
Political Geography:
United States, India, Taiwan, Asia, California, and Berkeley

317. Building a Transatlantic Securities Market

Author:
Benn Steil
Publication Date:
12-2002
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
This report aims to jump-start the integration of the US and EU securities markets through a mutual recognition agreement on transatlantic exchange access. Under this agreement, securities exchanges on each side of the Atlantic would be permitted to provide direct electronic access to brokers and institutional investors on the other side, for the purpose of trading listed equities and derivatives based on equities. We argue that this initiative will reduce trading costs, increase investment returns, lower the cost of capital, and increase economic growth on both sides of the Atlantic. The success of such an initiative will, over time, encourage its expansion to cover all forms of debt securities, primary issues, and other national markets.
Topic:
International Trade and Finance
Political Geography:
United States and Europe

318. How Shareholder Reforms Can Pay Foreign Policy Dividends

Author:
James J. Shinn and Peter Gourevitch
Publication Date:
06-2002
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
Corporate governance—the rules that govern the relationship between managers and shareholders—belongs on the foreign policy agenda of American decision-makers. The vigorous debates underway about corporate governance, both at home and abroad, present an opportunity for the United States to advance its foreign policy goals of enhancing free trade and financial stability.
Topic:
Foreign Policy, Economics, Government, Industrial Policy, and International Trade and Finance
Political Geography:
United States

319. Monetary Policy Rules and the International Monetary Transmission

Author:
Leonor Coutinho
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper analyses alternative monetary policy rules for the ECB, using a two "country" model of the euro area and the US, that assumes monopolistic competition, sticky prices and optimizing agents. The alternative rules analyzed for the ECB are ranked by their ability to stabilize consumption, output, and inflation and maximize consumers' welfare. The analysis contributes toward understanding the trade-offs faced by policymakers in open economies and provides some support for the current design of the ECB's operational framework. The results suggest that stabilizing money-growth, in addition to inflation, gives an additional degree of freedom to stabilize output. Although price stability is likely to remain the primary objective of the ECB, monetary policy must "without prejudice of price stability (...) support the general economic policies in the Community..." (Article 2). Hence monitoring money, under certain assumptions about the shocks hitting the economy, may deliver a better outcome in terms of output stabilization which should allow the ECB to fulfill its secondary but nonetheless important commitment.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
United States

320. Outsourcing and Inequality

Author:
Paul Brenton, Bob Anderton, and Eva Oscarsson
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Centre for European Policy Studies (CEPS)
Abstract:
This paper brings together and analyses the results of empirical analyses which, in contrast to most other studies, find that trade has been a significant cause of labour market inequality in various industrialised countries. The approach is based upon the concept of outsourcing – whereby the low-skill parts of the production chain are 'outsourced' to low-wage countries. A distinguishing feature of the empirical work is the use of highly detailed trade data, which allow imports from high- and low-wage countries to be separately identified at the industry level. Using cost minimisation framework, we show that imports from low-wage countries have made a significant contribution to the decline in the wage-bill share and/or relative employment of less-skilled workers in the UK, the USA, Sweden and Italy. We also show how the country-specific characteristics of outsourcing can lead to quite different inequality outcomes in different countries. In line with other studies, we also find that technology has played an important role in causing the increase in inequality in many countries. However, there is also some evidence that some of the rapid increase in the application of new technologies in recent decades has been trade-induced through mechanisms such as 'defensive innovation'.
Topic:
Economics, Industrial Policy, International Trade and Finance, and Science and Technology
Political Geography:
United States and United Kingdom

321. Government Expenditures and Equilibrium Real Exchange Rates

Author:
Ronald J. Balvers and Jeffrey H. Bergstrand
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
Kellogg Institute for International Studies
Abstract:
Economists have long investigated theoretically and empirically the relationship between government spending and equilibrium real exchange rates. As Frenkel and Razin (1996) summarize for a small open economy, government expenditures (financed by lump-sum taxes) influence real exchange rates via a resource-withdrawal channel and a consumption-tilting channel. Recent theoretical and empirical studies, such as Froot and Rogoff (1991), Rogoff (1992), De Gregorio, Giovannini, and Krueger (1994), De Gregorio, Giovannini, and Wolf (1994), De Gregorio and Wolf (1994), and Chinn and Johnston (1996), have focused only upon the effects of government spending through the resource-withdrawal channel. Extending Frenkel and Razin (1996), this paper generates closed-form theoretical solutions for the relationships among the real exchange rate, relative per capita private consumption, relative per capita government consumption, and relative per capita tradables and nontradables production in a two-country general equilibrium model. Using relative price level, private and government per capita consumption, and relative productivity data from the Summers and Heston (1991) Penn World Tables and OECD (1996) data for a sample of OECD countries relative to the United States, we estimate the model's structural equations. The results suggest that government expenditures influence equilibrium real exchange rates approximately equally via the resource-withdrawal and consumption-tilting channels. Moreover, the results imply that government spending and private consumption are complements in utility.
Topic:
Economics, Government, and International Trade and Finance
Political Geography:
United States

322. The Institutional Dimension of WTO Accession Observations and Practical Guidelines for Improving National Trade-related Governance Capacities

Author:
Uwe Schmidt
Publication Date:
11-2002
Content Type:
Working Paper
Institution:
Institute for Development and Peace
Abstract:
For developing countries and economies in transition, accession to and membership in the global trade body is a delicate and cumbersome experience. The need to bring national legislation into conformity with WTO rules, negotiating and implementing concessions on market access for trade in goods and services, transparency requirements, emerging new trade issues (e. g. environmental standards), and the necessity to establish and maintain professional trade-related research competence places heavy burdens on applicants and developing members that not infrequently exceed their institutional capacity for formulating policy options or negotiation strategies.
Topic:
Development, Economics, Globalization, and International Trade and Finance
Political Geography:
United States

323. Sticky Prices, No Menu Costs

Author:
David Bowman
Publication Date:
12-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
A model that contains no costs to changing prices but in which prices do not respond to nominal shocks is presented. In models that do not feature superneutrality of money flexible price equilibria will allow certain types of monetary shocks to affect the real economy. Sticky price behavior may in fact be better at protecting the real economy from the effects of monetary shocks in such environments. This point is demonstrated in a standard monetary model with liquidity effects. An equilibrium in which sticky prices are supported without menu costs is then constructed. In equilibrium firms choose to keep prices fixed in response to nominal shocks because doing so provides a service to their customers, increasing profits by expanding the customer base.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States

324. International Monetary Policy Coordination and Financial Market Integration

Author:
Alan Sutherland
Publication Date:
12-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The welfare gains from international coordination of monetary policy are analysed in a two-country model with sticky prices. The gains from coordination are compared under two alternative structures for financial markets: financial autarky and risk sharing. The welfare gains from coordination are found to be largest when there is risk sharing and the elasticity of substitution between home and foreign goods is greater than unity. When there is no risk sharing the gains to coordination are almost zero. It is also shown that the welfare gain from risk sharing can be negative when monetary policy is uncoordinated.
Topic:
Economics, Human Welfare, and International Trade and Finance
Political Geography:
United States

325. Monetary Policy and the Financial Accelerator in a Monetary Union

Author:
Simon Gilchrist, Jean-Olivier Hairault, and Hubert Kempf
Publication Date:
12-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In this paper, we consider the effect of a monetary union in a model with a significant role for financial market imperfections. We do so by introducing a financial accelerator into a stochastic general equilibrium macro model of a two country economy. We show that financial market imperfections introduce important cross-country transmission mechanisms to asymmetric shocks to supply and demand. Within this framework, we study the likely costs and benefits of monetary union. We also consider the effects of cross-country heterogeneity in financial markets. Both the presence of financial frictions and the use of a single currency have significant impacts on the international propagation of exogenous shocks. The introduction of asymmetries in the financial contract widens the difference in cyclical behavior of national economies in a monetary union, but financial integration compensates the loss of policy instruments.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
United States

326. Productivity, Investment, and Current Accounts: Reassessing the Evidence

Author:
Jaime Marquez
Publication Date:
11-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The most widely accepted explanation for the inverse association between private investments and current accounts [Glick and Rogoff, 1995] rests on data for manufactures through 1990. Is this consensus robust to revisions to the national accounts and the expansion of information technologies since 1990? To address this question I replicate their results and I find that post 1990 developments eliminate the support for such a conclusion. I also implement alternative formulations and find, again, a lack of empirical support for their findings. Thus I examine the role of measurement errors and focus on the treatment of the manufacturing sector as representative of the whole economy and the exclusion of the contribution of capital when measuring productivity. Correcting these two measurement errors restores to Glick and Rogoff's conclusion its original strength.
Topic:
Economics, International Trade and Finance, and Science and Technology
Political Geography:
United States

327. Monetary Union, Price Level Convergence, and Inflation: How Close is Europe to the United States?

Author:
John H. Rogers
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In light of 50 years of economic policies designed to integrate Europe -- culminating in the elimination of euro zone national currencies in early 2002 -- and a vast academic literature on international economic integration, it is of interest to assess how far European integration has come in practice. Using a unique data set, I document the pattern of price dispersion across European and U.S. cities from 1990 to 2001. I find a striking decline in dispersion for traded goods prices in Europe, most of which took place between 1991 and 1994. The level of traded goods price dispersion in the euro area is now quite close to that of the United States. A decline in dispersion of non-tradeables prices in Europe has also taken place, but to a smaller extent. For U.S. cities, there is no evidence of a decline in price dispersion, even for tradeables. I examine several possible explanations for the decline in European price dispersion, including harmonization of tax rates, convergence of incomes and labor costs, liberalization of trade and factor markets, and increased coherence of monetary policy. I also investigate how much of the variation in national inflation rates in Europe can be explained by price level convergence. Finally, after showing that prices in likely next-round entrants into the euro zone are well below prices in Western Europe, I discuss the potential inflationary consequences of accession into monetary union for Eastern Europe.
Topic:
Economics and International Trade and Finance
Political Geography:
United States and Europe

328. Identifying the Effects of Monetary Policy Shocks on Exchange Rates Using High Frequency Data

Author:
John H. Rogers, Jonathan H. Wright, Jon Faust, and Eric Swanson
Publication Date:
10-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper proposes a new approach to identifying the effects of monetary policy shocks in an international vector autoregression. Using high-frequency data on the prices of Fed Funds futures contracts, we measure the impact of the surprise component of the FOMC-day Federal Reserve policy decision on financial variables, such as the exchange rate and the foreign interest rate. We show how this information can be used to achieve identification without having to make the usual strong assumption of a recursive ordering.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States

329. Exchange Rate Regimes and Financial Dollarization: Does Flexibility Reduce Bank Currency Mismatches?

Author:
Carlos Ó. Arteta
Publication Date:
09-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The dollarization of bank deposits and credit is widespread in developing countries, resulting in varying degrees of currency mismatches in domestic financial intermediation, which in turn might accentuate bank balance sheet fragility. It is widely argued that flexible exchange rate regimes encourage banks to match dollar-denominated liabilities with a corresponding amount of dollar-denominated assets, ameliorating currency mismatches. Does the behavior of dollar deposits and credit in financially dollarized economies support that presumption? A new database on deposit and credit dollarization in developing and transition countries is assembled and used to address this question. Empirical results suggest that, if anything, floating regimes seem to exacerbate, rather than ameliorate, currency mismatches in domestic financial intermediation, as those regimes seem to encourage deposit dollarization more strongly than they encourage matching via credit dollarization.
Topic:
International Relations, Economics, and International Trade and Finance
Political Geography:
United States

330. The Inflation Persistence of Staggered Contracts

Author:
Luca Guerrieri
Publication Date:
08-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
One of the criticisms routinely advanced against models of the business cycle with staggered contracts is their inability to generate inflation persistence. This paper finds that staggered contracts µa la Taylor are, in fact, capable of reproducing the inflation persistence implied by U.S. data. Following Fuhrer and Moore, I capture the moments that the contract specification needs to replicate by using the correlograms from a small vector autoregression (VAR) that includes inflation among the endogenous variables. A simple structural model substitutes the inflation equation from the VAR with the contract specification. I estimate the contract parameters in the structural model by maximum likelihood. The correlogram for the endogenous variables from the estimated structural model, including that for inflation, are very close to the correlograms from the VAR (and are contained within their 90% confidence intervals). By the same metric, where Taylor contracts do not fare well is in reproducing the cross-correlations between inflation and output.
Topic:
International Relations, Economics, and International Trade and Finance
Political Geography:
United States

331. Productivity Shocks, Habits, and the Current Account

Author:
Joseph W. Gruber
Publication Date:
08-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Empirical work regarding Intertemporal Current Account (ICA) models has centered around two distinct testing methodologies, present value tests and a productivity shock approach as formulated by Glick and Rogoff (1995). In previous work, Gruber (2001), I have tested and ICA model that allows for habits in aggregate consumption via the present value method. This paper applies the alternative Glick and Rogoff style approach to testing the model. The benefits of doing such are an ability to separate country-specific from worldwide output changes, a distinction of considerable importance, as well as to impose restrictions on the relationship between investment and output, neither of which are possible in the present value framework. The results of the test are supportive of the existence of habits and coincide with the results of Gruber (2001). The degree of habit persistence implied by the model is estimated for the G-7 countries. The paper also proposes habit formation as a possible solution to an empirical puzzle identified in the original Glick and Rogoff paper.
Topic:
International Relations, Economics, and International Trade and Finance
Political Geography:
United States

332. Testing the Null of Identification in GMM

Author:
Jonathan H. Wright
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper proposes a new test of the null hypothesis that a generalized method of moments model is identified. The test can detect local or global underidentification, and underidentification in some or all directions. The idea of the test is to compare the volume of two confidence sets -- one that is robust to lack of identification and one that is not. Under the null hypothesis the relative volume of these two sets is Op(1), but under the alternative, the robust confidence set has high probability of being unbounded.
Topic:
Economics and International Trade and Finance
Political Geography:
United States

333. Factor Endowments and Industrial Structurev

Author:
Trevor A. Reeve
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
What determines industrial structure? Do sector-specific characteristics such as unionization, regulation, and trade policy dominate production patterns? One is inclined to believe so based on countless industry-level studies and the many political battles that are continually fought over trade and industrial policy. In contrast, standard neoclassical trade theory suggests that industrial structure is primarily driven by relative factor supplies. This paper demonstrates that aggregate factor endowments explain much of the structure of production—independent of industry idiosyncrasies—and quantifies the extent to which shifts in industrial structure in a cross section of countries are driven by the broad forces of factor accumulation. This result has important implications for policy. In particular, investment in physical capital and education may have as great an impact on the pattern of production as sector-specific trade and industrial policies. Thus, general equilibrium effects should not be ignored in efforts either to understand industrial structure or to form policies that attempt to alter it. These conclusions are reached through an empirical application of the factor proportions model of production.
Topic:
Economics, Industrial Policy, and International Trade and Finance
Political Geography:
United States

334. Recent U.S. Macroeconomic Stability: Good Policies, Good Practices, or Good Luck?

Author:
Beth Anne Wilson, Shaghil Ahmed, and Andrew Levin
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The volatility of U.S. real GDP growth since 1984 has been markedly lower than that over the previous quarter-century. In this paper, we utilize frequency-domain and VAR methods to distinguish among several competing explanations for this phenomenon: improvements in monetary policy, better business practices, and a fortuitous reduction in exogenous disturbances. We find that reduced innovation variances account for much of the decline in aggregate output volatility. Our results support the “good-luck” hypothesis as the leading explanation for the decline in aggregate output volatility, although “good-practices” and “good-policy” are also contributing factors. Applying the same methods to consumer price inflation, we find that the post-1984 decline in inflation volatility can be attributed largely to improvements in monetary policy.
Topic:
Economics, Industrial Policy, and International Trade and Finance
Political Geography:
United States

335. Optimal Monetary Policy with Durable and Non-Durable Goods

Author:
Christopher J. Erceg and Andrew T. Levin
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The durable goods sector is much more interest sensitive than the non-durables sector, and these sectoral differences have important implications for monetary policy. In this paper, we perform VAR analysis of quarterly US data and find that a monetary policy innovation has a peak impact on durable expenditures that is roughly five times as large as its impact on non-durable expenditures. We then proceed to formulate and calibrate a two-sector dynamic general equilibrium model that roughly matches the impluse response functions of the data. While the social welfare function involves sector-specific output gaps and inflation rates, we find that performance of the optimal policy rule can be closely approximated by a very simple rule that targets a weighted average of aggregate wage and price inflation rates. In contrast, some commonly-prescribed policy rules (such as strict price inflation targeting and Taylor's rule) perform very poorly in terms of social welfare.
Topic:
Economics, Human Welfare, and International Trade and Finance
Political Geography:
United States

336. A Theory of the Currency Denomination of International Trade

Author:
Philippe Bacchetta and Eric van Wincoop
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Nominal rigidities due to menu costs have become a standard element in closed economy macroeconomic modeling. The "New Open Economy Macroeconomics" literature has investigated the implications of nominal rigidities in an open economy context and found that the currency in which prices are set has significant macroeconomic and policy implications. In this paper we solve for the optimal invoicing choice by integrating this microeconomic decision at the firm level into a general equilibrium open economy model. Strategic interactions between firms play a critical role in the analysis. We find that the less competition firms face in foreign markets, as reflected in market share and product differentiation, the more likely they will price in their own currency. We also show that when a set of countries forms a monetary union, the new currency is likely to be used more extensively in trade than the sum of the currencies it replaces.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States

337. Regional Inflation in a Currency Union: Fiscal Policy vs. Fundamentals

Author:
Margarida Duarte and Alexandar L. Wolman
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We develop a general equilibrium model of a two-region currency union. There are two types of goods: non-trade goods, and traded goods for which markets are segmented. Monetary policy is set by a central monetary authority and is non-neutral due to nominal price rigidities. Fiscal policy is determined at the regional level by each region's government. We find that productivity shocks alone generate significant variation in inflation across the two countries. Government spending shocks, in contrast, do not account for a significant portion of inflation variation. Varying relative country size, we find that smaller countries experience higher variability of their inflation differential in response to shocks to productivity growth. Moreover, we show that regional governments can suppress incipient inflation differentials associated with shocks to productivity growth by letting the income tax rate respond negatively to inflation differentials.
Topic:
Development, Economics, and International Trade and Finance
Political Geography:
United States

338. Inflation Dynamics and International Linkages: A Model of the United States, the Euro Area, and Japan

Author:
Gunter Coenen and Volker Wieland
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In this paper we estimate a small macroeconometric model of the United States, the euro area and Japan with rational expectations and nominal rigidities due to staggered contracts. Comparing three popular contracting specifications we find that euro area and Japanese inflation dynamics are best explained by Taylor-style contracts, while Buiter-Jewitt/Fuhrer- Moore contracts perform somewhat better in fitting U.S. inflation dynamics. We are unable to fit Calvo-style contracts to inflation dynamics in any of the three economies without allowing either for ad-hoc persistence in unobservables or a significant backward-looking element. The completed model matches inflation and output dynamics in the United States, the euro area and Japan quite well. We then use it to evaluate the role of the exchange rate for monetary policy. Preliminary results, which are similar across the three economies, indicate little gain from a direct policy response to the exchange rate.
Topic:
Economics and International Trade and Finance
Political Geography:
United States, Japan, and Israel

339. Macroeconomics of International Price Discrimination

Author:
Giancarlo Corsetti and Luca Dedola
Publication Date:
07-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper builds a baseline two-country model of real and monetary transmission under optimal international price discrimination. Distributing traded goods to consumers requires nontradables; because of distributive trade, the price elasticity of export demand depends on the exchange rate. Profit-maximizing monopolistic firms drive a wedge between wholesale and retail prices across countries. This entails possibly large deviations from the law of one price and incomplete pass-through on import prices. Yet, consistent with expenditure-switching effects, a nominal depreciation generally worsens the terms of trade. Moreover, the exchange rate and the terms of trade can be more volatile than fundamentals. For plausible ranges of the distribution margin, there can be multiple steady states, whereas large differences in nominal and real exchange rates across equilibria translate into small differences in consumption, employment and the price level. Finally, we show that with competitive goods markets international policy cooperation is redundant even under financial autarky.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States

340. Finding Numerical Results to Large Scale Economic Models Using Path-Following Algorithms: A Vintage Capital Example

Author:
Brett Berger
Publication Date:
06-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper describes the numerical optimization methods used in Berger (2001) to find the complete time paths of key economic variables in neoclassical vintage capital models. An interior and a non-interior point method are discussed. Both of the methods are part of the general class of “path-following” algorithms. These algorithms can be efficiently applied to convex programming problems; and due to the standard shape of production and utility functions, many economic problems can be written as convex programming problems. Vintage capital models add scale and complexity to standard growth models because one must now handle the dynamics of multiple capital stocks. This increase in complexity will often prevent the discovery (or existence) of closed form solutions, making numerical solutions of the type found in Berger (2001) necessary.
Topic:
Economics, Industrial Policy, and International Trade and Finance
Political Geography:
United States

341. International Comparisons of Productivity Growth: The Role of Information Technology and Regulatory Practices

Author:
Christopher Gust and Jaime Marquez
Publication Date:
05-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
While information technologies (IT) are credited with the recent acceleration in productivity in the United States, many other industrial countries have not experienced a pickup in productivity growth. To explain this productivity divergence, we use panel data from 1992 to 1999 for 13 industrial countries and find that this divergence is driven in part by differences in both the production and adoption of information technologies. Based on this finding, we proceed to investigate what factors might play a role in explaining differences in IT adoption. Our results support the view that burdensome regulatory environments and in particular regulations affecting labor market practices have impeded the adoption of information technologies and slowed productivity growth in a number of industrial countries. We then develop a theoretical model with vintage capital and labor to evaluate the effect of more stringent labor market regulations on a firm's decision to adopt new technologies. We establish conditions under which a tax on firing workers delays the adoption of IT technology. These conditions occur when technological change is skill-biased and a firm must upgrade the quality of its workforce through labor turnover. The resulting delay in adopting IT technology then has negative implications for economy-wide productivity and is largely consistent with our empirical results.
Topic:
Economics, International Trade and Finance, and Science and Technology
Political Geography:
United States

342. A Guide to Choosing Absolute Bank Capital Requirements

Author:
Mark Carey
Publication Date:
05-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Resampling implementation of a stress-scenario approach to estimating portfolio default loss distributions is proposed as the basis for estimates of the appropriate absolute level of economic capital allocations for portfolio credit risk. Estimates are presented for stress scenarios of varying severity. Implications of use of different analysis time horizons are analyzed. Results for a numeraire portfolio are quite sensitive to such variations. Although the analysis is framed in terms of recent proposals to revise regulatory capital requirements for banks, the arguments and results are also relevant for bankers making capital structure decisions.
Topic:
Economics and International Trade and Finance
Political Geography:
United States

343. To What Extent Will the Banking Industry be Globalized? A Study of Bank Nationality and Reach in 20 European Nations

Author:
David C. Smith, Allen N. Berger, Qinglei Dai, and Steven Ongena
Publication Date:
05-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We model two dimensions of bank globalization – bank nationality (a bank from the firm's host nation, its home nation, or a third nation) and bank reach (a global, regional, or local bank) using a two-stage nested multinomial logit model. Our data set includes over 2,000 foreign affiliates of multinational corporations operating in 20 European nations. We find that these firms frequently use host nation banks for cash management services, and that bank reach may be strongly influenced by this choice of bank nationality. Our results suggest limits to the degree of future bank globalization.
Topic:
Economics, Globalization, and International Trade and Finance
Political Geography:
United States

344. Equity Prices, Household Wealth, and Consumption Growth in Foreign Industrial Countries: Wealth Effects in the 1990s

Author:
Carol C. Bertaut
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Although most recent empirical research regarding the size and significance of the impact of changes in wealth on consumption has looked for such effects in the United States, equity prices in the 1990s rose considerably in most other industrial countries as well. This paper investigates the strength of the wealth effect across countries. Using a variety of methods, I find evidence of significant wealth effects in the United Kingdom and Canada of a size comparable to that in the United States, reflecting the importance of equities in aggregate household wealth in these countries. A significant wealth effect is also evident in Japan, but because household wealth has changed little on balance in Japan in recent years, this channel has been less important in explaining Japanese consumption growth in the second half of the 1990s. Despite a rapid appreciation in equity prices and an increase in equity ownership in the major continental European countries since 1995, equities remain a less important form of household wealth in most of these countries, and the consumption response to changes in wealth remains limited. However, in some smaller European countries where equity issuance is more common, the emerging evidence suggests that wealth effects may be more important.
Topic:
International Relations, Economics, Globalization, and International Trade and Finance
Political Geography:
United States, United Kingdom, Europe, and Canada

345. Financial Centers and the Geography of Capital Flows

Author:
Francis E. Warnock and Chad Cleaver
Publication Date:
04-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We examine an assumption common in empirical work on bilateral portfolio capital flows that the countries the flows are attributed to are also the countries of the security's issuer, seller, or ultimate buyer. We do this by estimating U.S. investors' holdings of debt and equities in over 40 countries and, for the same countries, foreign investors' holdings of U.S. debt and equities. A comparison of our estimates with data from benchmark surveys provides insight into U.S. data on international debt and equity transactions. We find that, contrary to the common assumption, the data do not track the location of U.S. investment or the location of investors in U.S. assets very well. Because the U.S. portfolio flow data collection system was designed to measure cross-border transactions with foreign counterparties who are often intermediaries, the majority of the flows are attributed to financial centers. By aggregating our country-level estimates, we find that U.S. data accurately portray net inflows into U.S. equities and net outflows into foreign bonds. However, the data substantially overcount net inflows into U.S. bonds and may undercount net outflows into foreign equities. We conclude with a discussion of the implications of our findings for research on capital flows.
Topic:
International Relations, Economics, and International Trade and Finance
Political Geography:
United States

346. Regional Influences on U.S. Monetary Policy: Some Implications for Europe

Author:
Ellen E. Meade and D. Nathan Sheets
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper looks at the monetary policy decisions of the U.S. Federal Reserve and asks whether those decisions have been influenced solely by national concerns, or whether regional factors have played a role. All of the Federal Reserve's policymakers have some regional identity, i.e., either their positions explicitly carry some regional affiliation or their region of origin is a factor that must be considered in the selection process. This research is relevant for the Fed, and it may also be relevant for Europe's fledgling central bank in Frankfurt. Critics have asserted that ECB policymakers have an incentive to base policy on national developments and respond to national political pressures. We find that Fed policymakers do take into account developments in regional unemployment when deciding monetary policy, and that these regional developments are more important for central bankers at the hub than in the spokes. These findings are robust to a variety of different specifications of the voting equation.
Topic:
Economics and International Trade and Finance
Political Geography:
United States and Europe

347. Identifying VARs Based on High Frequency Futures Data

Author:
Jonathan H. Wright, Jon Faust, and Eric Swanson
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Using the prices of federal funds futures contracts, we measure the impact of the surprise component of Federal Reserve policy decisions on the expected future trajectory of interest rates. We show how this information can be used to identify the effects of a monetary policy shock in a standard monetary policy VAR. This constitutes an alternative approach to identification that is quite different, and, we would argue, more plausible, than the conventional short-run restrictions. We find that the usual recursive identification of the model is rejected, but we nevertheless agree with the literature's conclusion that only a small fraction of the variance of output can be attributed to monetary policy shocks.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States

348. Inflation Targeting and Nominal Income Growth Targeting: When and Why Are They Suboptimal?

Author:
Dale W. Henderson and Jinill Kim
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We derive optimal monetary stabilization rules and compare them to simple rules under both full and partial information. The nominal interest rate is the instrument of monetary policy. Special attention is devoted to inflation targeting and nominal-income-growth targeting. We use an optimizing-agent model of a closed economy which features monopolistic competition in both product and labor markets. A stabilization problem exists because there are one-period nominal contracts, either for wages alone or for both wages and prices, and three shocks that are unknown when contracts are signed. In order to highlight basic theoretical results, we deliberately keep our model simple enough that we can obtain exact solutions. Optimal rules maximize the expected utility of the representative agent subject to the information set of the policymaker. A key result, possibly surprising at first, is that even with monopolistic competition, the optimal full information policy makes the economy mimic the hypothetical equilibrium with flexible prices and wages. We explain why strict versions of inflation targeting, nominal income growth targeting, and other such simple rules are suboptimal under both full and partial information and derive flexible versions that are optimal under certain partial information assumptions. Nominal income growth targeting dominates inflation targeting for plausible parameter values.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States

349. On the Sequencing of Projects, Reputation Building, and Relationship Finance

Author:
David C. Smith, Steven Ongena, and Dominik Egli
Publication Date:
02-2002
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We study the decision an entrepreneur faces in financing multiple projects and show that relationship financing will arise endogenously in an environment where strategic defaults are likely, even when firms have access to arm's-length financing. Relationship financing allows an entrepreneur to build a private reputation for repayment that reduces the cost of financing. However, in an environment where the risk of strategic default is low, the benefits from reputation building are outweighed by holdup rents extractable by the incumbent lender. Entrepreneurs then choose to finance projects from single or multiple arm's-length lenders.
Topic:
International Relations, Economics, and International Trade and Finance
Political Geography:
United States

350. China's Trade Opening: Implications for Regional Stability

Author:
Howard M. Krawitz
Publication Date:
08-2002
Content Type:
Working Paper
Abstract:
In late 2001, China entered the World Trade Organization (WTO), a dramatic step that marks not only the end of a 15-year odyssey for Beijing but also the beginning of a new phase in the country's internal development and its relations with the outside world. It may sound odd to suggest that joining the WTO—an organization focused on rules of conduct for trade and commerce—will influence not only China's economy but also its political, military, and social development, as well as its interaction with the United States. Yet China's efforts to play by WTO rules could affect its internal development far more extensively than has been the case with many new member nations.
Topic:
Security and International Trade and Finance
Political Geography:
United States, China, and Asia