Content Type: Policy Brief / Topic: Financial Crisis

101. In Search of Symmetry in the Eurozone

Author:: Paul De Grauwe
Publication Date:: 05-2012
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: One of the major problems of the eurozone is the divergence of the competitive positions that have built up since the early 2000s. This divergence has led to major imbalances in the eurozone where the countries that have seen their competitive positions deteriorate (mainly the so - called ' PIIGS ' – Portugal, Ireland, Italy, Greece and Spain ) have accumulated large current account deficits and thus external indebtedness, matched by current account surpluses of the countries that have improved their competitive positions (mainly Germany).
Topic:: Economics, Markets, Regional Cooperation, Global Recession, and Financial Crisis
Political Geography:: Europe, Greece, Germany, Spain, Italy, Portugal, and Ireland

102. Macroeconomic Imbalances in the Euro Area: Symptom or cause of the crisis?

Author:: Daniel Gros
Publication Date:: 04-2012
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Lax financial conditions can foster credit booms. The global credit boom of the last decade led to large capital flows across the world, including large movements of resources from the Northern countries of the euro area towards the Southern part. Since the start of the crisis and more markedly after 2009, these flows have suddenly stopped, creating severe adjustment pressures. This paper argues that, at this point, the common monetary policy can only try to mitigate the unavoidable adjustment by maintaining overall financial stability. The challenge is to strike a delicate balance between providing liquidity for solvent institutions while keeping the overall pressure on for a rapid correction of the imbalances.
Topic:: Economics, Markets, Monetary Policy, and Financial Crisis
Political Geography:: Europe

103. The Spanish Hangover

Author:: Daniel Gros and Cinzia Alcidi
Publication Date:: 04-2012
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Spain faces high unemployment and slow growth. This paper focuses on an important source of those problems, namely its housing market. While some adjustment has occurred since Spain's housing bubble burst in 2008, the authors find that house prices and construction need to decrease more to slow Spain's unsustainable accumulation of foreign debt.
Topic:: Debt, Economics, Markets, and Financial Crisis
Political Geography:: Europe and Spain

104. The Impact of the Global Financial Crisis on Education Services in Economies of the Former Soviet Union

Author:: Irina Sinitsina
Publication Date:: 02-2012
Content Type:: Policy Brief
Institution:: Center for Social and Economic Research - CASE
Abstract:: The global economic crisis has created new challenges for education systems all over the world. The Former Soviet Union countries were confronted with an urgent issue, not necessarily specifically related to the crisis: to formulate and introduce new educational curricula, standards, and delivery models in order to adjust to the challenges imposed by the transition to the post-industrial stage of development. Irina Sinitsina summarised her chapter in the CASE Network Report No. 100 "The Impact of the Global Financial Crisis on Education Services in Economies of the Former Soviet Union" in this E-brief. Using the available data, she comes to the conclusion that during the crisis, the education system of FSU countries were not dramatically affected by overall budget cuts.
Topic:: Education, Financial Crisis, Social Policy, Social Services, Labor Market, and Post-Soviet Space
Political Geography:: Central Asia, Caucasus, and Eastern Europe

105. Will Europe Fall into a Japanese-Style Stagnation Trap?

Author:: Peter Harrold
Publication Date:: 04-2012
Content Type:: Policy Brief
Institution:: Center for Social and Economic Research - CASE
Abstract:: Can Europe avoid falling in to a Japanese-style stagnation trap? In this type of trap, we see a repeated cycle of a financial crisis leading to a fiscal crisis, leading to a decline in consumer and investor confidence, and a resulting fall in demand. The decline in growth that inevitably follows simply causes the cycle to repeat itself. In theory, this should lead to improved competitiveness, but in Japan the forces of decline outweighed any boost in export demand. This E-brief is based on Peter Harrold’s presentation at the CASE 2011 International Conference on "Europe 2000: Exploring the Future of European Integration" held on November 18-19, 2011.
Topic:: Financial Crisis, Crisis Management, Economic Policy, Exports, Macroeconomics, and Strategic Competition
Political Geography:: Japan, Europe, and Asia

106. The Freedom Savings Credit: A Practical Step to Build Americans' Household Balance Sheets

Author:: Lisa Mensah, Raymond O'Mara III, Colby Farber, and Robert Weinberger
Publication Date:: 02-2012
Content Type:: Policy Brief
Institution:: Aspen Institute
Abstract:: The imbalance of too much debt and not enough assets fuels financial insecurity in many American households. Building Americans' household balance sheets should start with making savings and asset-building incentives more efficient and equitable. Although millions of working Americans currently receive little or no tax incentive to save, modest reforms to our tax code have the potential to dramatically improve their financial futures. The Aspen Institute Initiative on Financial Security (Aspen IFS) proposes the Freedom Savings Credit to create a more equitable and economically efficient savings system that will benefit millions of American households and the nation as a whole.
Topic:: Security, Debt, Economics, and Financial Crisis
Political Geography:: United States and America

107. On the road to a true Economic and Monetary Union? The challenges of fiscal federalism and democratic legitimacy

Author:: Teija Tiilikainen
Publication Date:: 05-2012
Content Type:: Policy Brief
Institution:: Finnish Institute of International Affairs
Abstract:: Lessons learned from the current economic and financial crisis pose great challenges for the EU concerning the future development of the EMU. Through the recent changes the limits of a mere coordination of economic policies have been reached and a debate about turning the system into a true Economic and Monetary Union must be launched. A further strengthening of the EU's power in economic and fiscal policies would require a clearer move in the direction of fiscal federalism, that is, a more balanced relationship between the Union's budget and those of the member states. It would also require the finalization of the Union's democratic system along the lines of a federal political order. The divided character of the currency union presents significant difficulties for its further deepening and democratization.
Topic:: Economics, Political Economy, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:: Europe

108. EIU: Global outlook summary

Publication Date:: 06-2012
Content Type:: Policy Brief
Institution:: Economist Intelligence Unit
Abstract:: The global economy remains in precarious shape. Europe's debt crisis rages on, and although the euro appears to have survived its most recent test in the form of the Greek election on June 17th, austerity and financial-market uncertainty are depressing economic activity in Europe and, by extension, in much of the rest of the world. The Economist Intelligence Unit continues to expect global GDP growth to slow in 2012, and while our forecasts for the G3 economies—the US, euro zone and China—are essentially unchanged this month, we have cut our projections for Brazil and India.
Topic:: Debt, Economics, International Trade and Finance, Markets, and Financial Crisis
Political Geography:: United States, China, Europe, India, and Brazil

109. Implementing Basel III in Europe: Diagnosis and avenues for improvement

Author:: Rym Ayadi, Emrah Arbak, and Willem Pieter De Groen
Publication Date:: 06-2012
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Adopted by the European Commission in July 2011, the proposed Capital Requirements Directive and Regulation (CRD IV-CRR) translate into EU law the Basel III standards adopted by the Basel Committee for Banking Supervision (BCBS). Among other things, the proposal increases the quality and quantity of the minimum capital; introduces new rules on liquidity, leverage ratios, counter-cyclical buffers and systemically important financial institutions; and amends the definitions of counterparty credit risk and rules for the banking book. The rules complement the earlier amendments that strengthened the capital and disclosure requirements for the trading book and resecuritization instruments as well as requirements to ensure that remuneration policies do not lead to excessive risk-taking.
Topic:: Debt, Economics, Markets, and Financial Crisis
Political Geography:: Europe

110. An Agenda for the European Council: Feasible steps to bring the eurozone back from the precipice

Author:: Stefano Micossi
Publication Date:: 06-2012
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Once again the European Council will meet in an emergency session at the end of June, with the eurozone economy in recession and actually plummeting in its Southern periphery. Further doubts are also growing on the sustainability of sovereign debts due to the vicious spiral of deteriorating bank balance sheets, ballooning potential liabilities from banking rescues and widening spreads on government borrowings. The sovereign debt crisis in the periphery has now turned into a fully fledged banking crisis that threatens to spread from Greece to Spain and tomorrow, who knows, to Italy, France and even Germany itself.
Topic:: Debt, Economics, Regional Cooperation, Financial Crisis, and Governance
Political Geography:: Europe, Greece, France, Germany, Spain, and Italy

111. 'Grexit': Who would pay for it?

Author:: Daniel Gros, Cinzia Alcidi, and Alessandro Giovannini
Publication Date:: 05-2012
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: What would be the cost if Greece were to exit from the eurozone? This much-debated question cannot be answered with a single number. The consequences of Greece's exit would depend decisively on the exact circumstances of events in the country itself as well as the general state of financial markets in the eurozone.
Topic:: Debt, Markets, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:: Europe and Greece

112. Europe's Recurrent Employment Problems

Author:: Daniel Gros
Publication Date:: 05-2012
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: As the euro crisis continues and unemployment climbs to new heights, the clamour calling for Europe to 'do something' is getting louder. But the real question is: can Europe, or rather the EU, do 'something' that would actually have a real impact on unemployment? In other words, does a European plan or employment strategy make sense?
Topic:: Economics, Markets, Labor Issues, and Financial Crisis
Political Geography:: Europe

113. Prospects for Global Growth in 2012

Author:: Onur Bayramoğlu
Publication Date:: 03-2012
Content Type:: Policy Brief
Institution:: Global Political Trends Center (GPoT)
Abstract:: The current concern among many is that what we are faced today is not a usual crisis that is part of the economic cycle, but an era of great stagnation with low growth and high unemployment, not witnessed since the Great Depression of the 1930's. One wonders which country will drive global growth while major actors such as the European Union are now financial casinos, the United States is continuously losing its dynamism, Japan is struggling under demographical problems, and the emerging markets are still too small and volatile. Once again, policy makers acknowledge that the problems of growth are global and systematic; such that if one faces an issue, all of them get contaminated. However, they still seek for solutions in mercantilist national policies.
Topic:: Economics, Globalization, International Trade and Finance, Markets, and Financial Crisis
Political Geography:: United States and Europe

114. Natural resources and conflict: a new security challenge for the European Union

Author:: Nicholas Garrett and Anna Piccinni
Publication Date:: 06-2012
Content Type:: Policy Brief
Institution:: Stockholm International Peace Research Institute
Abstract:: Conflict over natural resources is likely to pose significant threats to European security, and the European Union therefore needs to elaborate a comprehensive strategy to meet and overcome these threats. This strategy should combine existing instruments and approaches more effectively, while also finding new ways to balance the imperatives of access to natural resources, regulation of markets and conflict prevention, mitigation and resolution. Such an approach requires a better understanding of natural resource-related security and conflict challenges, as well as an analysis of how current policies affect these challenges. The strategy should therefore be based on comprehensive research into the connection between natural resources and conflict financing; the shifting nature of state effectiveness in the context of natural resource agreements; the link between resource conflict and climate change; and the impact of conflict over natural resources on the multipolar global economy.
Topic:: Conflict Prevention, Security, Climate Change, Energy Policy, Globalization, Natural Resources, and Financial Crisis
Political Geography:: Europe

115. The Euro Area Crisis and Turkey in the First Half of 2012

Author:: Evrydiki Fotopoulou and Erdal Tanas Karagöl
Publication Date:: 08-2012
Content Type:: Policy Brief
Institution:: SETA Foundation for Political, Economic and Social Research
Abstract:: It has been almost four years since the global financial crisis started in 2008 and it has become an inherently European affair. One after another, weaker European economies seeing their growth plummeting have become unable to recover on their own and are resorting to loans from the International Monetary Fund (IMF), European Central Bank (ECB) and the European Union (EU). Already, Ireland, Greece and Portugal have requested full bailouts with Southern Cyprus as the newcomer, still under negotiation, while Spain has requested only partial assistance not acknowledging it may soon need full support. Many experts predict that Italy will follow suit as it is quite possible that it will be the next which without any access to credit markets to finance its needs. This policy analysis sheds some light on the current status of these countries: how the crisis was brought about, what measures they took, how have they performed thus far and what are the prospects for them. The role of the European Union is also being discussed in reference to the hesitant way it has addressed the problem and the cracks that appeared in the European establishment due to lack of mutual understanding and cooperation. In contrast to the weaker European economies, neighboring Turkey has managed to recover fast and exhibit positive signs that the economy is moving towards more sustainable growth rates while dealing with domestic vulnerabilities. This comparison serves as a reminder to reconsider both the usefulness of the single currency as well as whether Turkey's economy would benefit from closer ties with it, given that Europe faces a continued slowdown at least until 2014.
Topic:: Markets, Global Recession, and Financial Crisis
Political Geography:: Europe and Turkey

116. Can Italy and Spain survive rates of 6-7%?

Author:: Daniel Gros
Publication Date:: 07-2012
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: The sentiment that the euro is now in real danger is based in large part on the widespread conviction that interest rates of 6-7% are simply unsustainable for both Italy and Spain., After taking a closer look at the fundamentals, however, Daniel Gros concludes in this new Policy Brief that both countries should be able to live with this level of interest rates for quite some time, but only if they mobilize domestic savings, which remain strong in both countries. For Spain, some debt/equity swaps are also needed.
Topic:: Debt, Economics, Markets, and Financial Crisis
Political Geography:: Europe, Spain, and Italy

117. Unholy compromise in the eurozone and how to right it

Author:: Stefano Micossi
Publication Date:: 07-2012
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Two years after the first Greek rescue in May 2010, crisis management in the eurozone has still failed to restore confidence. A vivid picture of the situation can be found in Figure 1: the constellation of spreads on ten-year sovereign debts over the Bund in the eurozone is wider than it was before monetary union, as though financial markets had already discounted its breakdown. Temporary respites, notably in the early part of 2012, have not interrupted the trend of increasing divergence that risks undermining the credibility of adjustment efforts under way.
Topic:: Debt, Economics, Markets, Monetary Policy, and Financial Crisis
Political Geography:: Europe

118. Central Banks in Times of Crisis: The FED vs. the ECB

Author:: Daniel Gros, Cinzia Alcidi, and Alessandro Giovannini
Publication Date:: 07-2012
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Different economic and financial structures require different crisis responses. Different crises also require different tools and resources. The first 'stage' of the financial crisis (2007-09) was similar on both sides of the Atlantic, and the response was also quite similar. The second stage of the crisis is unique to the euro area. Increasing financial disintegration within the region has forced the ECB to become the central counterparty for the entire cross-border banking market and to intervene in the sovereign bond market of some stressed countries. The actions undertaken by the European Central Bank (ECB), however, have not always represented the best response, in terms of effectiveness, consistency and transparency. This is especially true for the Securities Markets Programme (SMP): by de facto imposing its absolute seniority during the Greek PSI (private sector involvement), the ECB has probably killed its future effectiveness.
Topic:: Debt, Economics, International Trade and Finance, Markets, Monetary Policy, and Financial Crisis
Political Geography:: Europe

119. Money and power: EU budget negotiations in a time of austerity

Author:: Sara Hagemann
Publication Date:: 05-2012
Content Type:: Policy Brief
Institution:: Danish Institute for International Studies (DIIS)
Abstract:: The ongoing negotiation of the EU's multi-annual budget is heavily constrained by how the decision process takes place. Governments focus on narrowly defined national interests, rather than on securing a better budget for Europe. While the budget is small in size, it could be used as a powerful political tool for much needed economic growth policies on a larger scale.
Topic:: Debt, Economics, Government, and Financial Crisis
Political Geography:: Europe

120. Flexicurity in Italy – how far is Rome from Copenhagen?

Author:: Ilaria Maselli
Publication Date:: 09-2012
Content Type:: Policy Brief
Institution:: Danish Institute for International Studies (DIIS)
Abstract:: The recently approved labour market reform in italy is clearly inspired by the danish flexicurity model. However, despite the noble intention and some improvements, the reform is failing to bring the long- hoped-for change, especially regarding the dualisation of the labour market and the universalisation of welfare provision.
Topic:: Economics, International Trade and Finance, Markets, Regional Cooperation, and Financial Crisis
Political Geography:: Europe and Italy

121. Toxic Legacy: Hunger, Oppression, Migration, and Health in the Democratic People's Republic of Korea

Author:: Leonard S. Rubenstein
Publication Date:: 01-2011
Content Type:: Policy Brief
Institution:: United States Institute of Peace
Abstract:: During the 1990s, economic mismanagement, political oppression, natural disaster, and loss of external subsidies after the end of communism led to a calamitous decrease in food production in the Democratic People's Republic of Korea (DPRK). The public health infrastructure, including water and sanitation systems, drug distribution and supply chains, and local clinics and hospitals, also deteriorated. At least half a million people died of starvation and millions more suffered acute or chronic malnutrition. Malnutrition increased vulnerability to disease at a time when the health system was incapable of effective response. Fifeen years later, neither health nor the food systems have recovered as the economy persistently stagnates. Health continues to be a low priority for the government. The availability of food is insufficient to meet population needs, hospitals and clinics are significantly ill-equipped, the medical workforce lacks appropriate training, and corruption in drug distribution is pervasive. Malnutrition and anemia, as well as diseases associated with poor sanitation, remain widespread. Over the last few years, DPRK has begun to accept international assistance to address health system needs, most notably to vaccinate children. Although these initiatives address some infrastructure needs, the continued centralized control of health and the lack of open discussion about key issues renders the possibility of reforms sufficient to meet the health needs of the people of North Korea dim. During the economic crisis, tens of thousands of North Koreans migrated to China despite harsh measures imposed by both governments to restrict border crossing and a refusal by China to give legal status to the migrants. To a limited extent, migration ameliorated the health impact of the crisis by stimulating illicit cross-border trade and informal markets that increased some North Koreans' access to food. Even after a disastrous effort by the DPRK government to shut the markets down in 2009, they are re-emerging. China's encouragement of these markets, along with regularizing the status of migrants in China, could advance its own economic interests as well as contributing to improving the health of North Koreans.
Topic:: Communism, Economics, Health, Markets, and Financial Crisis
Political Geography:: China, Israel, and North Korea

122. Global Rebalancing: The Dangerous Obsession

Author:: Uri Dadush
Publication Date:: 02-2011
Content Type:: Policy Brief
Institution:: Carnegie Endowment for International Peace
Abstract:: The current emphasis on global rebalancing—which aims to reduce trade deficits and surpluses—is misguided. Trade deficits and surpluses narrowed significantly during the Great Recession, can be financed and eased over time, and are largely the result of domestic forces—making further global rebalancing unlikely. The obsession with global rebalancing stokes currency and protectionist tensions and diverts attention from what is really needed—reforms at home. Rather than focusing on global rebalancing, countries should concentrate more on fixing their domestic problems and expanding their domestic demand at the maximum sustainable rate.
Topic:: Debt, Globalization, International Trade and Finance, Global Recession, and Financial Crisis

123. Fannie, Freddie, and the Subprime Mortgage Market

Author:: Mark A. Calabria
Publication Date:: 03-2011
Content Type:: Policy Brief
Institution:: The Cato Institute
Abstract:: The recent financial crisis was characterized by losses in nearly every type of investment vehicle. Yet no product has attracted as much attention as the subprime mortgage.
Topic:: Economics, Government, Markets, and Financial Crisis
Political Geography:: United States

124. Opportunity through Education: Two Proposals

Author:: Grover J. "Russ" Whitehurst
Publication Date:: 03-2011
Content Type:: Policy Brief
Institution:: The Brookings Institution
Abstract:: The new normal for local, state and federal governments is fiscal austerity. Although President Obama supported education during his State of the Union address and in his budget proposal to Congress, cash-strapped localities and states—which foot most of the bill for educating America's children— may have to balance their budgets with cuts to schools and teachers. The recession exposed a long-developing structural imbalance between public expenditure versus raising the revenue for public services. Especially on education, reality has set in, with a vengeance.
Topic:: Education, Science and Technology, and Financial Crisis
Political Geography:: United States and America

125. External versus Domestic Debt in the Euro Crisis

Author:: Daniel Gros
Publication Date:: 05-2011
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: As EU leaders muddle through the eurozone crisis, the debate about its root causes continues. CEPS Director Daniel Gros argues in this Policy Brief that the debate is important if we are to understand how to prevent future crises. In his view, external debt is the key to the turmoil in European economies and that the focus on total public debt is therefore misleading.
Topic:: Debt, Economics, and Financial Crisis
Political Geography:: Europe

126. The EU's Response to the Financial Crisis: A mid-term review

Author:: Karel Lannoo
Publication Date:: 04-2011
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Two years after the London G-20, CEPS Chief Executive Karel Lannoo finds that the EU is well advanced in delivering on the commitments made for the 2013 target date. Important steps have been taken on the institutional side, and regulatory changes are moving ahead. On some issues, in fact, such as remuneration, the EU has made even greater headway than the US. But certain key sensitive matters remain, such as bank resolution or structural changes.
Topic:: Debt, Economics, Global Recession, Monetary Policy, and Financial Crisis
Political Geography:: United States, Europe, and London

127. Restoring financial stability in the euro area

Author:: Christian Kopf
Publication Date:: 03-2011
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: The pricing of sovereign credit risk is a necessary component of the financial architecture of the European Monetary Union. However, unnecessarily high and volatile risk premia on government bonds are currently preventing effective financial intermediation within the euro area, thereby inhibiting its economic recovery. Several proposals have been made on how these risk premia should be brought down, namely i) permanent pooling of funding through joint bond issuance, ii) temporary liquidity assistance through multilateral funds, iii) debt buybacks using multilateral funds, and iv) debt restructuring.
Topic:: Debt, Economics, Global Recession, Monetary Policy, and Financial Crisis
Political Geography:: Europe

128. On the Tasks of the European Stability Mechanism

Author:: Stefano Micossi, Fabrizia Peirce, and Jacopo Carmassi
Publication Date:: 03-2011
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: In recent weeks pressures on the euro and eurozone sovereign debtors have subsided. Buoyant growth in the global economy, increasingly benefiting also the European economy, has of course played an important role in calming financial markets. But even more important has been the perception that France and Germany are again working constructively for a strong economic Europe. More broadly, the acute turbulence in financial markets since the spring of 2010 may have finally convinced our political leaders, notably including the German political establishment, that the benefits of a stable currency far outweigh the costs that may have to be borne to make it work properly. The euro will only be trusted if the member states effectively coordinate their economic policies not only to ensure fiscal stability, but also to eliminate persistent divergences in productivity leading to unsustainable imbalances between national savings and investment (Schäuble, 2011).
Topic:: Security, Economics, Regional Cooperation, Monetary Policy, Financial Crisis, and Governance
Political Geography:: Europe, France, and Germany

129. Debt reduction without default?

Author:: Daniel Gros and Thomas Mayer
Publication Date:: 02-2011
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: This paper proposes a two-step, market-based approach to debt reduction: · Step 1.The European Financial Stability Facility (EFSF) would offer holders of debt of the countries with an EFSF programme (probably Greece, Ireland and Portugal = GIP) an exchange into EFSF paper at the market price prior to their entry into an EFSF-funded programme. The offer would be valid for 90 days. Banks would be forced in the context of the ongoing stress tests to write down even their banking book and thus would have an incentive to accept the offer. · Step 2. Once the EFSF had acquired most of the GIP debt, it would assess debt sustainability country by country. a) If the market price discount at which it acquired the bonds is enough to ensure sustainability, the EFSF will write down the nominal value of its claims to this amount, provided the country agrees to additional adjustment efforts (and, in some cases, asset sales). b) If under a central scenario this discount is not enough to ensure sustainability, the EFSF might agree on a lower interest rate, but with GDP warrants to participate in the upside.
Topic:: Debt, Monetary Policy, and Financial Crisis
Political Geography:: Europe

130. Growing Business or Development Priority? Multilateral Development Banks' Direct Support to Private Firms

Author:: Guillermo Perry
Publication Date:: 04-2011
Content Type:: Policy Brief
Institution:: Center for Global Development
Abstract:: Direct support to private firms in developing countries constitutes a large and growing share of multilateral development banks' financial activities. This trend contrasts with the advice MDBs gave developing countries until a decade ago to privatize or liquidate the development banks supporting private firms, or to transform them into nonbanking development agencies. Opinion has changed since then, especially after development banks successfully intervened in the recent financial crisis. In this brief, Guillermo Perry assesses whether arguments in favor of such MDB direct support are valid and whether MDBs are living up to priorities coherent with such arguments. He finds that they do so only partially. His recommendations include deepening MDB support to small and medium enterprises, reducing the procyclicality of MDB lending, increasing the share of MDB loans and guarantees to private firms that are made in domestic currencies, and paying more attention to firms in infrastructure and social sectors and to those introducing new products, exports, or technologies.
Topic:: Development, Foreign Aid, Foreign Direct Investment, and Financial Crisis

131. Lessons from the East European Financial Crisis, 2008-10

Author:: Anders Åslund
Publication Date:: 06-2011
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: In the fall of 2008, Central and Eastern Europe became a flashpoint in the global financial crisis. The ten new eastern members of the European Union were in a state of severe overheating in all regards. Inflation surged everywhere and to double digits in Bulgaria, Estonia, Latvia, and Lithuania. Wages and real estate prices skyrocketed, rendering these countries ever less competitive, which further undermined their current account balance. Output plunged and unemployment soared.
Topic:: Economics, Global Recession, and Financial Crisis
Political Geography:: Europe, Lithuania, Estonia, Bulgaria, and Latvia

132. The Outlook for International Monetary System Reform in 2011: A Preliminary Report Card

Author:: Edwin M. Truman
Publication Date:: 05-2011
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: Reform of the international monetary system was placed on the agenda of the Group of 20 (G-20) a year ago at the initiative of the incoming French leadership of the G-20. On November 4, 2011 in Cannes, France, the G-20 leaders will announce their conclusions and agreements after a year and half of intense dialogue and debate. This policy brief summarizes my preliminary rating of the expected results based on the evidence to date: a barely passing grade on substance but an A for effort. Neither final grade is locked in stone, however.
Topic:: Economics, International Cooperation, International Trade and Finance, International Monetary Fund, Monetary Policy, and Financial Crisis
Political Geography:: France

133. Corporate Tax Reform for a New Century

Author:: Gary Clyde Hufbauer and Woan Foong Wong
Publication Date:: 04-2011
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: In his State of the Union address, President Barack Obama stressed four ingredients of American prosperity: faster innovation, better education, less deficit, and more jobs. As the president recognized in his address, the US free enterprise system drives the private sector to innovate, invest, and create jobs. This policy brief concentrates on how reforming the corporate tax system can strengthen the private sector, thereby spurring both innovation and job.
Topic:: Economics, Globalization, International Trade and Finance, Monetary Policy, and Financial Crisis
Political Geography:: United States

134. Are the advanced economies facing a lost decade?

Publication Date:: 07-2011
Content Type:: Policy Brief
Institution:: Oxford Economics
Abstract:: Recent weeks have seen a slew of weaker-than-expected data releases from the major economies, raising doubts about whether the expansion in the developed nations is sustainable. One reason for the apparent loss of momentum has been the moderation of growth in the emerging markets, as central banks have tightened monetary policy in response to rising inflation. The weakening trend in growth indicators can also be linked to temporary adverse factors, including supply chain disruptions form the Japanese earthquake and tsunami, as well as the sharp rise in oil prices earlier this year.
Topic:: Economics, Globalization, International Trade and Finance, and Financial Crisis
Political Geography:: Japan

135. TARGET2 Unlimited: Monetary Policy Implications of Asymmetric Liquidity Management within the Euro Area

Author:: José M. Abad, Axel Löffler, and Holger Zemanek
Publication Date:: 07-2011
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: This paper analyses the implications of a continued divergence of TARGET2 balances for monetary policy in the euro area. The accumulation of TARGET2 claims (liabilities) would make the ECB's liquidity management asymmetric once the TARGET2 claims in core countries have crowded out central bank credit in those regions. Then while providing scarce liquidity to banks in countries with TARGET2 liabilities, the ECB will need to absorb excess liquidity in countries with TARGET2 claims. We discuss three alternatives and their implications for absorbing excess liquidity in core regions: 1) using market-based measures might accelerate the capital flight from periphery to core countries and would add to the accumulation of risky assets by the EC B; 2) conducting non-mark et based measures, such as imposing differential (unremunerated) reserve requirements, would distort banking markets and would support the development of shadow banking; and 3) staying passive would lead to decreasing interest rates in core Europe entailing inflationary pressure and overinvestment in those regions and possibly future instability of the banking system.
Topic:: Economics, Monetary Policy, and Financial Crisis
Political Geography:: Europe

136. An evaluation of the French proposal for a restructuring of Greek debt

Author:: Christian Kopf
Publication Date:: 06-2011
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: French commercial banks are proposing a swap of €85.5 billion in Greek government bonds maturing between 2011 and 2014 into a combination of new long-term Greek bonds with principal guarantee and cash payments. If this initiative were implemented under the proposed parameters, private creditors would only suffer a minimal haircut and official lenders would be provided with cash-flow relief of around €20 billion over the next three years, but the solvency of the Hellenic Republic would worsen significantly.
Topic:: Debt, Economics, and Financial Crisis
Political Geography:: Europe

137. FDI stocks are a biased measure of foreign affiliate activity

Author:: Sjoerd Beugelsdijk, Jean-François Hennart, Arjen Slangen, and Roger Smeets
Publication Date:: 08-2011
Content Type:: Policy Brief
Institution:: Columbia Center on Sustainable Investment
Abstract:: Researchers often call the value added (VA) in a host country by firms based in another country foreign direct investment (FDI) and use FDI stocks and flows from a country's balance of payments to measure it. What FDI stocks and flows actually measure, however, is narrower, since they record long term financial transactions by which domestic firms exert control over foreign firms. French FDI stocks in Australia, for example, measure the value of shares and reinvested earnings of Australian firms owned by French firms and the net indebtedness of these Australian firms to their French parents.
Topic:: Economics, Markets, Foreign Direct Investment, and Financial Crisis
Political Geography:: France and Australia

138. The world economic crisis as a changed circumstance

Author:: Hermann Ferré and Kabir Duggal
Publication Date:: 08-2011
Content Type:: Policy Brief
Institution:: Columbia Center on Sustainable Investment
Abstract:: In September 2008, the bankruptcy of Lehman Brothers sent financial markets in the United States into a spin. Credit markets froze as banks began to mistrust counterparties, not knowing the extent of toxic assets in loan portfolios that could lead to another major bank collapse. The crisis quickly spread around the world. Governments were urged to take drastic measures. Experts discussed the possible nationalization of portions of the U.S. banking industry and other sectors. Other countries also considered measures to save key industries.
Topic:: Economics, International Trade and Finance, Markets, and Financial Crisis
Political Geography:: United States

139. Europe on the Brink

Author:: Simon Johnson and Peter Boone
Publication Date:: 07-2011
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: Attempts to resolve the problems in Europe are failing, and the crisis is spreading from Greece, Ireland, and Portugal to larger nations. Europe's financial system relies on moral hazard, i.e., a “no defaults” policy, to attract the funding needed to roll over large amounts of short–term bank and sovereign debt. Now that politicians in creditor nations are calling for private sector burden sharing, investors are demanding higher interest rates to hold these debts. But higher rates may tip banks and nations toward bankruptcy. Europe's banks and financial system are highly integrated across countries. Rising expectations of default in some countries could lead to large-scale capital flight into “safe” countries. This shift will raise concerns regarding solvency and liquidity of many financial institutions. The payments system of the euro area is serving as an opaque bailout mechanism that is currently preventing the euro area from falling apart at this time. If the number of nations in trouble spreads beyond Greece, Ireland, and Portugal, this bailout system will be stressed because of the potential size of accumulated funding. The European Central Bank (ECB) could soon see a vocal debate between inflationist and hawkish (anti–inflation) members. Inflationists will call for large–scale interventions, including bond buybacks and emergency loans, while the hawks will attempt to close loopholes in the payments system that effectively permit each troubled nation to create money needed to finance capital flight and budget deficits. At this stage in the debate, we see little chance that Europe can avoid ending the “moral hazard” regime, in which case it needs to plan for widespread sovereign and bank debt restructurings.
Topic:: Debt, Economics, Regional Cooperation, and Financial Crisis
Political Geography:: Europe, Greece, and Ireland

140. Turkey's 2000/1 Banking Crisis: A Case Study for the Transformation of the Greek Finance?

Author:: Onur Bayramoğlu
Publication Date:: 08-2011
Content Type:: Policy Brief
Institution:: Global Political Trends Center (GPoT)
Abstract:: On April 2010, recently after the eruption of the Greek crisis, an unexpected hand from Turkey reached to Greece. Proud with his country's last decade growth figures, Turkey's then Vice Prime Minister, Ali Babacan, paid a visit to Greece in order to share his country's reform period after its 2000/1 crisis, arguing that it could also be a case study for Greece. In this brief, I analyzed Greek and Turkish financial crises. Although it is a mere fact that the structural problems in Greek economy complicate the reform period in Greece, there are certain lessons that Greeks can learn from the Turkish experience. As Turks did after 2001, they should see the crisis as an opportunity to overcome the long time problems . In this regard, Greeks first and foremost should establish consensus among themselves, signaling to the markets that they are ready to face the burdens of the reform period.
Topic:: Debt, Economics, International Political Economy, and Financial Crisis
Political Geography:: Europe, Central Asia, Turkey, and Greece

141. The Eurozone Debt Crisis: From its origins to a way forward

Author:: Diego Valiante
Publication Date:: 08-2011
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: The Eurozone debt crisis has now reached a turning point. This paper argues for a more organised intervention by the ECB to stop contagion through the creation of a quantitative easing programme, coupled with a political agreement among member states on a more federalist budget for the Eurozone.
Topic:: Debt, Economics, Regional Cooperation, and Financial Crisis
Political Geography:: Europe

142. Only a more active ECB can solve the euro crisis

Author:: Paul De Grauwe
Publication Date:: 08-2011
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: The biggest threat for the eurozone is the contagion of the Greek sovereign debt crisis to the rest of the system. If the Greek crisis could be isolated, it would barely matter for the eurozone as a whole. After countless crisis meetings of the European Council, however, it has to be admitted that the European leaders have failed to isolate the Greek crisis and to stop the forces of contagion. The latest meeting of the heads of state or government of the euro area on July 21st is no exception.
Topic:: Debt, Markets, Regional Cooperation, and Financial Crisis
Political Geography:: Europe

143. Getting on the Right Track: The EU Eastern Partnership

Publication Date:: 07-2011
Content Type:: Policy Brief
Institution:: Danish Institute for International Studies (DIIS)
Abstract:: The EU's Eastern Partnership with the Ukraine, Moldova, Georgia, Armenia, Belarus and Azerbaijan has now been in place for two years. But the EU is not looking eastwards much these days – it is looking inwards to tackle the aftermath of the financial crisis, and south to the Arab Spring. At the same time, the enthusiasm of the Eastern partners seems to be fading. The EU Commission's recent review of the European Neighborhood Policy points in the right direction but if the partnership is to make any sense, it is necessary to make it more attractive.
Topic:: Financial Crisis
Political Geography:: Europe, Caucasus, and Arabia

144. International Monetary Fund (ABCs of the IFIs Brief)

Author:: Jenny Ottenhoff
Publication Date:: 09-2011
Content Type:: Policy Brief
Institution:: Center for Global Development
Abstract:: The primary role of the International Monetary Fund (IMF) is to promote stability of the international monetary system, the system of exchange rates and international payments that enables countries to transact with one another. To do so, the IMF provides financial assistance in the form of loans to help member countries address balance-of-payments problems, stabilize their economies, and restore sustainable economic growth. The IMF also carries out technical assistance and surveillance activities that help strengthen underlying economic fundamentals of member countries and the global financial systems at large.
Topic:: Development, Economics, International Monetary Fund, Foreign Aid, and Financial Crisis

145. The ABCs of the General Capital Increase (ABCs of IFIs Brief)

Author:: Todd Moss, Sarah Jane Staats, and Julia Barmeier
Publication Date:: 09-2011
Content Type:: Policy Brief
Institution:: Center for Global Development
Abstract:: The international financial institutions dramatically increased their lending in 2008–09 to help developing countries cope with the global financial crisis and support economic recovery. Today, these organizations are seeking billions of dollars in new funding. The IMF, which only a few years ago was losing clients and shedding staff, expanded by $750 billion in 2009. The World Bank and the four regional development banks for Africa, Asia, Europe, and Latin America have asked to increase their capital base by 30 to 200 percent. A general capital increase (GCI) for these development banks is an unusual request. A simultaneous GCI request is a oncein- a-generation occurrence.
Topic:: Development, Foreign Aid, and Financial Crisis
Political Geography:: Africa, Asia, Latin America, and Ethiopia

146. Beyond treasuries: A foreign direct investment program for U.S. infrastructure

Author:: Geraldine McAllister and Joel H. Moser
Publication Date:: 09-2011
Content Type:: Policy Brief
Institution:: Columbia Center on Sustainable Investment
Abstract:: In his jobs address to a joint session of Congress last week, President Obama returned to a familiar theme: a call for nontraditional infrastructure investment as a generator of economic growth and, ultimately, jobs. The President's frequent references to “private investment” and “fully paid” infrastructure are encouraging, yet there is no assurance that domestic private capital investment alone is sufficient to reverse the degradation of the nation's infrastructure. As host to the largest flows of inward foreign direct investment (FDI), it is time that the United States employs this critical source of capital in tackling the nation's infrastructure deficit.
Topic:: Economics, Labor Issues, Infrastructure, Foreign Direct Investment, and Financial Crisis
Political Geography:: United States

147. US Tax Discrimination Against Large Corporations Should Be Discarded

Author:: Gary Clyde Hufbauer and Martin Vieiro
Publication Date:: 10-2011
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: The United States holds contradictory views about large corporations. When Americans speak of breakthroughs in research and engineering, they are justly proud of large firms that pioneered railroads and steam engines in the 19th century, automobiles, electric power, and oil exploration in the 20th century, and computers, software, and biotechnology in the 21st century. Yet when talk turns to paying taxes, public opinion holds that large corporations should pay a higher statutory tax rate than other business firms, and enjoy fewer deductions in computing their taxable income. Despite common sense and the teachings of economics, tax discrimination is alive and well.
Topic:: Economics, Globalization, International Trade and Finance, Markets, and Financial Crisis
Political Geography:: United States and America

148. Sustainability of Greek Public Debt

Author:: William R. Cline
Publication Date:: 10-2011
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: On July 21, 2011, the heads of government of the euro area announced a new plan to address the Greek debt crisis. This policy brief presents a simulation exercise that examines whether the new arrangements are likely to provide a sustainable solution. The analysis focuses on four key measures: gross debt relative to GDP; net debt relative to GDP; net interest payments relative to GDP; and amortization of medium-and long-term debt coming due during the year in question, relative to GDP. The new Greek package shows prospective future progress on all four measures, and Greek debt looks much more sustainable after the package than before. Debt also appears considerably more manageable if the criterion is net debt or interest burden rather than gross debt ratio, although even for gross debt the ratio is down substantially by 2020. It also becomes clear that the major contribution of the private-sector involvement (PSI) part of the package is in the form of sharply cutting amortization due, although by avoiding large new borrowing at crisis-level interest rates it also alleviates the interest burden that would otherwise occur.
Topic:: Debt, Economics, Regional Cooperation, and Financial Crisis
Political Geography:: Europe and Greece

149. Eurozone finally agrees a deal but uncertainties remain unresolved

Publication Date:: 11-2011
Content Type:: Policy Brief
Institution:: Oxford Economics
Abstract:: After protracted negotiations, Eurozone leaders finally agreed on a new package of measures last week. The outline deal has a three-pronged approach aimed at tackling the main aspects of the crisis: reducing Greece's debt burden, avoiding a credit crunch by recapitalising European banks, and preventing contagion to other countries via a boost to the EFSF.
Topic:: Debt, Economics, Markets, Regional Cooperation, and Financial Crisis
Political Geography:: Europe and Greece

150. Herbert Hoover: Father of the New Deal

Author:: Steven Horwitz
Publication Date:: 09-2011
Content Type:: Policy Brief
Institution:: The Cato Institute
Abstract:: Politicians and pundits portray Herbert Hoover as a defender of laissez faire governance whose dogmatic commitment to small government led him to stand by and do nothing while the economy collapsed in the wake of the stock market crash in 1929. In fact, Hoover had long been a critic of laissez faire. As president, he doubled federal spending in real terms in four years. He also used government to prop up wages, restricted immigration, signed the Smoot-Hawley tariff, raised taxes, and created the Reconstruction Finance Corporation-all interventionist measures and not laissez faire. Unlike many Democrats today, President Franklin D. Roosevelt's advisers knew that Hoover had started the New Deal. One of them wrote, "When we all burst into Washington ... we found every essential idea [of the New Deal] enacted in the 100-day Congress in the Hoover administration itself."
Topic:: Economics, Markets, Political Economy, Financial Crisis, and Governance
Political Geography:: United States and Washington

151. Speculative Attacks within or outside a Monetary Union: Default versus Inflation (what to do today)

Author:: Daniel Gros
Publication Date:: 11-2011
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Is a high level of public debt inherently more dangerous within a monetary union? During the 1990s it was often argued that only by entering the EMU could Italy (or Spain) protect itself from the high interest rates it had to pay on its large public debt. The argument was that by joining the single currency, Italy could convince financial markets that it would not inflate away the value of its debt and hence benefit from lower risk premia.
Topic:: Debt, Economics, and Financial Crisis
Political Geography:: Europe, Spain, and Italy

152. Austerity ahead: How will a conservative victory change Spanish politics?

Author:: Teemu Sinkkonen
Publication Date:: 11-2011
Content Type:: Policy Brief
Institution:: Finnish Institute of International Affairs
Abstract:: The electoral defeat suffered by the ruling Socialist Party (Partido Socialista Obrero Español, PSOE) in the municipal elections and the prolonged financial crisis has forced Prime Minister Zapatero to call an early general election on 20 November. The Conservative People's Party (Partido Popular, PP) is ahead in the polls by a clear margin and is likely to gain an absolute majority in the parliament. The economic outlook for Spain looks bleak, which means that the new government will have to create new jobs quickly and push through harsh and unpopular reforms, particularly regarding the fiscal and administrative structures. The Indignados protest movement is gaining support, and looks set to challenge the legitimacy of the system and force the future government to produce speedy results. Spain is expected to enhance its role in international politics through pragmatic bilateral relations. In particular, relations with the US seem to be warming up, while Spain can turn to the UK and Poland in the EU for companionship
Topic:: Debt, Democratization, Economics, and Financial Crisis
Political Geography:: United States, United Kingdom, Europe, and Spain

153. Return to War in Sudan's Nuba Mountains

Author:: Julie Flint
Publication Date:: 11-2011
Content Type:: Policy Brief
Institution:: United States Institute of Peace
Abstract:: The response to the renewed war in Sudan's Nuba Mountains has been driven largely by a human rights and humanitarian crisis. The crisis will continue indefinitely without a political agreement that acknowledges the Nuba rebellion is self-sustaining and reflects a wider malaise within the new Republic of Sudan. With Sudan facing financial collapse, economic normalization must be part of negotiations with Khartoum to end the war in the Nuba Mountains and promote democratization throughout Sudan.
Topic:: Conflict Resolution, Democratization, Development, Human Rights, War, Insurgency, and Financial Crisis
Political Geography:: Africa and Sudan

154. Greek FDI in the Balkans: How is it affected by the crisis in Greece?

Author:: Persephone Economou and Margo Thomas
Publication Date:: 11-2011
Content Type:: Policy Brief
Institution:: Columbia Center on Sustainable Investment
Abstract:: The current Greek crisis raises the question of its impact on foreign direct investment (FDI) by Greece on its neighbors in the Balkans. Greek multinational enterprises (MNEs) first began to establish a presence there in the 1990s, following the breakup of the former Yugoslavia. This trend accelerated during the past decade. As of 2009, Greece's outward FDI stock in the Balkans stood at US$ 10.5 billion or 26.5% of Greece's outward FDI stock worldwide.
Topic:: Foreign Policy, Global Recession, Foreign Direct Investment, and Financial Crisis
Political Geography:: Europe, Greece, Yugoslavia, and Balkans

155. US Lessons for the Eurozone: Restoring Confidence through Transparency

Author:: Julie Chon
Publication Date:: 12-2011
Content Type:: Policy Brief
Institution:: Atlantic Council
Abstract:: When it comes to resolving financial crises, size matters, but so does transparency. In both the US and European crises, the drive for size—firing off enough public funds to plug the hole in the financial system—has proven to be self-defeating as markets raise ever higher, unrealistic, and inappropriate expectations for government policy. This strategy addresses some of the economics and none of the politics of crisis management. The race to meet the size test distracts policymakers from addressing the real impediment to restoring investor and public confidence: the inherent uncertainty and lack of transparency associated with extraordinary government actions in times of crisis. The absence of transparent decision-making inflicts a costly blow to the credibility of policymakers because markets and citizens cannot see or believe what leaders are doing to stabilize the financial system.
Topic:: Debt, Economics, International Trade and Finance, and Financial Crisis
Political Geography:: United States and Europe

156. Between Revolution and Stagnation: Perspectives for Belarus

Author:: Anna Maria Dyner
Publication Date:: 08-2011
Content Type:: Policy Brief
Institution:: The Polish Institute of International Affairs
Abstract:: Belarus faces a serious economic and financial crisis, which may have a significant impact on the political transformation of that country. Because of increases in living costs, which are part of the aftermath of the devaluation of the Belarusian ruble and rapidly rising inflation, an explosion of mass public protests is forecast for the autumn. However, it is not expected that the protests will bring about a rapid (pro-European) turn in the political situation in Belarus. Moreover, the weakness of the opposition, which after the presidential election of 2010 became even more divided than before and still has no charismatic leader, is not propitious to radical, pro-European changes.
Topic:: Economics, Social Stratification, and Financial Crisis
Political Geography:: Europe and Asia

157. Oil Exporters to the Euro's Rescue?

Author:: Philip K. Verleger
Publication Date:: 12-2011
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: When a boat springs a leak far from shore, it is customary for all hands to man the pumps—be they friends or enemies, passengers or crew. Every individual's survival depends on the actions of his or her compatriots. So it is with the global economy today.
Topic:: Debt, Markets, Oil, International Monetary Fund, and Financial Crisis
Political Geography:: Europe

158. EU Federalism in Crisis

Author:: Karel Lannoo
Publication Date:: 12-2011
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: One positive effect of the euro crisis is that it has provoked Europe to engage in a profound debate on the form and degree of federalism it needs. Even if, until recently, many would have argued that Europe is not a federal state, the EU already has many elements of such a governance model in place, of which European citizens are hardly aware. Many competences are uniquely attributed to the EU. Legislation in several fields of EU competence can be adopted with a qualified majority of member states. Only in a few areas, such as taxation, is unanimity still required, even after the new Lisbon Treaty has come into effect. The same applies for changes to the EU Treaty itself.
Topic:: Economics, Regional Cooperation, Monetary Policy, Financial Crisis, and Governance
Political Geography:: Europe

159. Agreement needed on liquidity provision to restore confidence in the eurozone

Author:: Stefano Micossi
Publication Date:: 11-2011
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Some eighteen months after the first Greek rescue (May 2010), there is little doubt that the multiple attempts at crisis management in the eurozone have failed to restore confidence. Indeed, following each round of emergency measures agreed by the eurozone summits, matters have turned for the worse (see Figure 1 for the widening spreads, over the German Bund, for sovereign borrowing in the eurozone). At the time of writing, contagion has spread beyond Spain and Italy to the core sovereigns, with France close to losing its triple A rating and even Germany experiencing partial failure in a Bund auction on November 23rd. Spreads are also opening up for Austria, Belgium, Finland and even the virtuous Netherlands. Meanwhile, the banking system Europe- wide is under increasing strain, with term funding all but closed for any bank with significant exposure to distressed sovereign debtors and the interbank market close to seizing up. Deposit withdrawals have surfaced in a number of large banks from the periphery. The euro has started to weaken in foreign exchange markets, narrowing the room for a distinction between eurozone debt crisis and euro-currency crisis from which some observers were until recently drawing comfort.
Topic:: Economics, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:: Europe and Germany

160. The response to the global crisis and investment protection: evidence

Author:: Kathryn Gordon and Joachim Pohl
Publication Date:: 06-2010
Content Type:: Policy Brief
Institution:: Columbia Center on Sustainable Investment
Abstract:: In March 2009, Columbia FDI Perspectives carried an early analysis of investment policies in response to the financial crisis that began in early 2008. At that time, the authors, Anne van Aaken and Jürgen Kuntz, found “clear evidence of widespread discrimination directed at foreign actors” in the emergency response to the crisis.
Topic:: Economics, Global Recession, Monetary Policy, Foreign Direct Investment, and Financial Crisis
Political Geography:: Colombia

161. Foreign direct investment and U.S. national security: CFIUS under the Obama Administration

Author:: Mark E. Plotkin and David N. Fagan
Publication Date:: 06-2010
Content Type:: Policy Brief
Institution:: Columbia Center on Sustainable Investment
Abstract:: There was considerable public scrutiny of the Obama Administration's performance in its inaugural year, but comparatively little focus on one of the Administration's key processes governing the flow of investment into the United States — namely, the Committee on Foreign Investment in the United States (CFIUS). Yet, this is a frequent question we receive from foreign investors -- has the change in the administration affected CFIUS?
Topic:: Economics, International Trade and Finance, Monetary Policy, Foreign Direct Investment, and Financial Crisis
Political Geography:: United States

162. Short Sales Bans: Shooting the Messenger?

Author:: Laurence Copeland
Publication Date:: 09-2010
Content Type:: Policy Brief
Institution:: The Cato Institute
Abstract:: In response to the recent financial crisis, many governments chose to ban or restrict short sales, hoping to mitigate the impact of the stock market downturn. Stock markets function as a continuous election, held to determine the allocation of resources with buyers voting for and sellers voting against investment in particular stocks. Banning short selling is akin to disenfranchising the "no" voter, thereby creating a distortion in the resource allocation process. Ban-induced price distortions damage the integrity of stock prices among investors and potentially cause stocks to expand beyond what is optimal for the firms and the economy.
Topic:: Economics, Markets, Global Recession, and Financial Crisis
Political Geography:: Washington

163. What reforms for the credit rating industry? A European perspective

Author:: Karel Lannoo
Publication Date:: 10-2010
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Credit rating agencies (CRAs) continue to find themselves in the eye of the storm. Despite having singled out the industry early on in the financial crisis as needing more regulation, policy-makers seem not to be reassured by the measures that have been adopted in the meantime, and want to go further. Faced with a rapid downgrading in ratings in the context of the sovereign debt crisis, European Commissioner Michel Barnier raised the possibility last May of creating a new EU-level rating agency that would specialise in sovereign debt.
Topic:: Global Recession, Monetary Policy, and Financial Crisis
Political Geography:: Europe

164. Fiscal Policy Coordination and Competitiveness Surveillance: What solutions to what problems?

Author:: Daniel Gros and Cinzia Alcidi
Publication Date:: 09-2010
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: In June 2010, both the European Commission and the European Central Bank published documents containing ideas for enhancing European economic governance. Both proposals stress the need for stronger surveillance on a country-by-country basis and the effective enforcement of surveillance through incentives and a wider spectrum of sanctions.
Topic:: Economics, Monetary Policy, and Financial Crisis
Political Geography:: Europe

165. Will It Be Brussels, Berlin, or Financial Markets that Check Moral Hazard in Europe's Bailout Union? Most Likely the Latter!

Author:: Jacob Funk Kirkegaard
Publication Date:: 10-2010
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: So far so good for the European Union in preventing the Greek sovereign debt crisis from spiraling out of control in the short term. But with Greece in May 2010 requiring an unprecedented bailout from the European Union/IMF to avoid immediate default and 25 of the European Union's 27 member states currently subject to an “excessive deficit procedure” (European Commission 2010i), it remains evident that the European Union's existing fiscal surveillance framework patently failed both before and during the Great Recession and that Europe's leaders must head back to the drawing board for a required long term reform of the EU fiscal policy and surveillance framework.
Topic:: Debt, Economics, and Financial Crisis
Political Geography:: Europe and Greece

166. The Central Banker's Case for Doing More

Author:: Adam S. Posen
Publication Date:: 10-2010
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: In this policy brief I present my view on the role of monetary policy in our recovery and whether the major central banks in the United Kingdom and beyond should be doing more in the coming months. Of course, every central bank's policysetting committee has to make its own assessment of the right policy measures for its economy, based on its own forecastand the mandate legally set for it. Thus, I am not presuming to offer a “one size fits all” prescription for central bankers beyond the United Kingdom. I would like, however, to try to give some general assessment of the common challenges we face, and what I believe to be the appropriate monetary policy response, barring special circumstances. Not that there will be any doubt about it, but for the record, these are solely my own personal views.
Topic:: Economics, Globalization, Global Recession, Monetary Policy, and Financial Crisis
Political Geography:: United Kingdom

167. The Transformational Impact of EMU and the Global Financial Crisis

Author:: Francesco Paolo Mongelli
Publication Date:: 12-2010
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: The headwinds facing the euro area are many and substantial: there is no pretence of denial. While most attention is correctly devoted to the size of rescue packages for some countries and the terms of crisis management and resolution mechanisms, we argue that these challenges must also be met from within the euro area. We are aided by a simple framework illustrating how the benefits the euro can generate depend on the degree of openness, flexibility and income correlation among euro area countries. Sharing the euro has steadily transformed euro area economies that are now deeply interconnected. This is generating largely benign effects that represent the intrinsic value of the euro area: it is a shared asset. Yet, such integration has provided the ground for the transmission of the sovereign crisis: through financial exposure, trade linkages and cross-country asset ownership.
Topic:: Economics, Global Recession, Monetary Policy, and Financial Crisis
Political Geography:: Europe

168. The European Council Summit and the Political Economics of the EMU Crisis

Author:: Christian Fahrholz and Cezary Wójcik
Publication Date:: 11-2010
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Roger Ailes, a former advisor to Ronald Reagan, recalls in his book an intriguing practice of the ancient Romans: when they finished building a bridge or an arch, they enforced accountability by placing the engineer in charge beneath the construction when the scaffolding was removed. If the edifice did not hold, he was the first to know. We do not follow such drastic practices these days in Europe, but with some European economies shaking and the Greek sovereign debt crisis still not over, the architecture of the euro area has been certainly come under severe stress. Unfortunately, the 28-29 October 2010 European Council Summit has not made this architecture much safer.
Topic:: Economics, Regional Cooperation, Monetary Policy, and Financial Crisis
Political Geography:: Europe

169. Five Surprises of the Great Recession

Author:: Uri Dadush and Vera Eidelman
Publication Date:: 11-2010
Content Type:: Policy Brief
Institution:: Carnegie Endowment for International Peace
Abstract:: The Great Recession included five major surprises: (1) the severity of the global trade and output collapse, (2) the United States suffered a milder than expected recession, (3) Europe saw the onset of a severe sovereign debt crisis, (4) China grew at an extraordinary rate even though it's greatly dependent on exports, and (5) Latin America showed remarkable resilience.
Topic:: Economics, Globalization, Global Recession, and Financial Crisis
Political Geography:: United States, China, Europe, and Latin America

170. Why Didn't the Global Economic and Financial Crisis Have More of an Impact on International Migration?

Author:: Khalid Koser
Publication Date:: 09-2010
Content Type:: Policy Brief
Institution:: The Geneva Centre for Security Policy
Abstract:: Economic and financial crises have always impacted on international migration patterns, processes, and policies. The Great Depression (1929- 33) resulted in massive repatriations of Latin Americans from the United States and the introduction of highly restrictive immigration policies in a number of industrialized countries, including France and Canada. The Oil Crisis (1973) resulted in severe restrictions on labour migration, a concomitant growth in asylum applications and irregular migration in Europe, and the emergence of new flows of labour migration to emerging industrial centres in Asia and Latin America. As a result of the Asian financial crisis (1997-99) several South-East Asian countries introduced policies of national preference and sought to expel migrant workers. The Russian financial crisis (1998) accelerated rates of emigration from Russia, in particular of Russian Jews and the highly-skilled. The gravity of the Latin American financial crisis (1998- 2002) also resulted in a significant exodus, in particular from Argentina.
Topic:: Economics, Migration, Global Recession, and Financial Crisis
Political Geography:: Russia, Asia, and Latin America

171. Russia's Strategic Choice

Author:: Graeme P. Herd
Publication Date:: 05-2010
Content Type:: Policy Brief
Institution:: The Geneva Centre for Security Policy
Abstract:: In the wake of the global financial crisis, a debate over necessary policy responses morphed into something much more profound and fundamental – the sustainability of Russia's current governance model and its preferred longer-term modernization paradigm. On 10 September 2009 President Medvedev published a remarkably frank article entitled 'Russia, Forward!' This article noted that Russia's governance model appeared to be failing, proving vulnerable in the face of the global financial crisis. President Medvedev himself criticized Russia's 'humiliating' dependence on raw materials, as well as its 'inefficient economy, a semi-Soviet social sphere, an immature democracy, negative demographic trends, unstable Caucasus.' In his 12 November 2009 Message to the Federal Assembly, Medvedev elaborated further on this theme: Russia could either modernize or deteriorate; modernization would provide a touchstone for 'how we can overcome our chronic backwardness, dependence on raw materials exports, and corruption'. On 3 February 2010, the Institute for Contemporary Development (INSOR) published a report that received widespread coverage entitled 21st Century Russia: The Image of Tomorrow We Want. As President Medvedev had created INSOR in 2008 to give him independent advice on economic and foreign policy and sat as a trustee on its board, this report received widespread publicity. Such publicity was magnified as the report touched just about every exposed nerve by advocating that Russia should join NATO, end censorship, abolish the state security service, and adopt a Western-style democracy, entailing the separation of the courts from the state, of the legislative branch from the executive, horizontal modernization (characterized as the debureaucratization of the vertical top-down corrupt, over-regulated economic process)3. Without change, Russia faced a strategic cul de sac that leads to slow and steady strategic marginalization: 'In a few years, when it turns out that Russia has nothing to boast about except export supplies of raw materials at prices that are dictated to us, we will be exporting people. And, not only the cleverest like now, but any workers, who are in demand in Europe, as is happening today in Latvia, for example. I frankly do not know what Russia should do in this situation. This problem will be one of the main ones for the president who is elected in 2012
Topic:: Democratization, Global Recession, and Financial Crisis
Political Geography:: Russia, Europe, and Latvia

172. An Update on EU Financial Reforms

Author:: Nicolas Véron
Publication Date:: 12-2010
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: In the context of a transatlantic comparison, the first thing to be mentioned is the difference between the time sequence of financial reforms in the European Union and its equivalent in the United States. The financial crisis started simultaneously on both sides of the Atlantic, with the initial disruption of some financial market segments in August 2007 and the major panic episode of September through October 2008. But they are not at the same stage of policy reaction and especially regulatory reform now. At least four reasons can be identified for this difference.
Topic:: Economics, Global Recession, Monetary Policy, and Financial Crisis
Political Geography:: United States and Europe

173. Strengthening IMF Surveillance: A Comprehensive Proposal

Author:: Edwin M. Truman
Publication Date:: 12-2010
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: The central challenge facing the global economy and financial system today is the failure of countries to limit the negative effects of their policies on other countries and on global economic and financial stability. The most prominent manifestations of this challenge are the balance-of-payments adjustment process and the notorious asymmetry therein, spillovers from other countries' financial-sector policies such as those involved in the crisis of 2007–10, and the prospect of sustained unbalanced growth in the global economy with some countries overheating and others facing substantial excess capacity. Against this background, I propose an approach to strengthened IMF surveillance over the economic and financial policies of its member countries.
Topic:: Economics, Globalization, International Monetary Fund, Monetary Policy, and Financial Crisis

174. How Europe Can Muddle Through Its Crisis

Author:: Jacob Funk Kirkegaard
Publication Date:: 12-2010
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: As Europe's financial market contagion spreads to systemically important eurozone members, the region is echoing with "end-game scenarios" (Johnson and Boone 2010) and demands for major new steps by European policymakers (Financial Times 2010). Among these would be a European "fiscal transfer union," a new common eurozone bond, action by the European Central Bank (ECB) to monetize sovereign debts, and finally a eurozone breakup itself.
Topic:: Debt, Economics, Monetary Policy, and Financial Crisis
Political Geography:: Europe

175. U.S. BITs and financial stability

Author:: Kevin P. Gallagher
Publication Date:: 02-2010
Content Type:: Policy Brief
Institution:: Columbia Center on Sustainable Investment
Abstract:: Almost immediately after taking office, the Obama administration charged the U.S. Department of State's Advisory Committee on International Economic Policy with reviewing the U.S. Model bilateral investment treaty (BIT). The group established a sub-committee of business groups, labor and environmental organizations, and a handful of academic experts and tasked it to make official recommendations for reforming U.S. investment treaties. When completed, the Obama Administration hopes to proceed with official negotiations with China, India, Vietnam, and possibly Brazil.
Topic:: Economics, Globalization, and Financial Crisis
Political Geography:: United States, China, India, Brazil, and Vietnam

176. President Obama's International Tax Proposals Could Go Further

Author:: Reuven S. Avi-Yonah
Publication Date:: 02-2010
Content Type:: Policy Brief
Institution:: Columbia Center on Sustainable Investment
Abstract:: The Obama Administration's 2011 budget proposals include revenues of $122 billion over ten years from “international tax reform.” This set of proposals is similar to but narrower than the ones advanced by the Administration in May 2009, which would have raised $210 billion.
Topic:: Economics, International Trade and Finance, and Financial Crisis
Political Geography:: United States

177. Rescuing Education for All: How reform of the Fast Track Initiative should lead to a Global Fund for Education

Author:: Katie Malouf Bous
Publication Date:: 01-2010
Content Type:: Policy Brief
Institution:: Oxfam Publishing
Abstract:: The first decade of our new millennium was poised to go down in history as a hopeful turning point for the world's children. Remarkable progress was being forged across the developing world, spurred by a new global commitment to the Education For All (EFA) goals. These goals were answered by substantial increases in aid during the first half of the decade, extensive debt relief, and a growing political commitment to education in developing countries. The EFA Fast Track Initiative was also establ ished in 2002 as a global partnership to support national efforts to reach universal primary education.
Topic:: Development, Education, Globalization, and Financial Crisis

178. Towards a Euro(pean) Monetary Fund

Author:: Daniel Gros and Thomas Mayer
Publication Date:: 02-2010
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Despite cobbling together an impressive $1 trillion rescue package for countries with potential funding problems, the threat of a disorderly default still looms over the eurozone, creating systemic financial instability at the EU and possibly global level. Against this background, Daniel Gros and Thomas Mayer renew their call for the creation of a European Monetary Fund (EMF) in an update to their Policy Brief issued in February.
Topic:: Economics, Monetary Policy, and Financial Crisis
Political Geography:: Europe and Greece

179. The Taxation of Multinational Enterprises in the European Union

Author:: Stefano Micossi and Paola Parascandolo
Publication Date:: 02-2010
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: As a rule, multinational enterprises (MNEs) are taxed separately by the countries in which they operate on the basis of the income produced in each jurisdiction ('source' taxation). To this end, they must keep separate accounts for business units in each country (“separate accounting”, SA) ascribing each item of expenditure and income to each business unit on the basis – by universally accepted convention – of 'arm's-length' pricing (ALP), that is, of comparable or estimated prices for similar market transactions between unrelated companies.
Topic:: Economics, Globalization, International Trade and Finance, Monetary Policy, and Financial Crisis
Political Geography:: Europe

180. The Impact of the Crisis on the Real Economy

Author:: Daniel Gros and Cinzia Alcidi
Publication Date:: 01-2010
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: This crisis was caused by a combination of asset price bubbles, mainly in the real estate sector, and a credit bubble that led to excessive leverage. This is wellknown. What is less well-known is that on both accounts the euro area was affected by both 'bubble' symptoms as much as the US.
Topic:: Economics, Markets, and Financial Crisis
Political Geography:: United States and Europe

181. Comparing EU and US Responses to the Financial Crisis

Author:: Karel Lannoo
Publication Date:: 01-2010
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Since 2003, the EU and the US have conducted a vibrant regulatory dialogue on financial regulation, but domestic priorities seem to have taken precedence in response to the financial crisis. This paper compares the institutional and regulatory changes occurring on both sides of the Atlantic. On the institutional side, it compares macro- and micro-prudential reforms. On the regulatory side, it compares four key areas: bank capital requirements, reform of the OTC derivative markets, and the regulation of credit ratings agencies and hedge funds. It concludes by highlighting certain implications for the regulatory dialogue.
Topic:: Economics, Monetary Policy, and Financial Crisis
Political Geography:: United States and Europe

182. Capital flows, the carry trade and 'sand in the wheels'

Author:: Stephen Grenville
Publication Date:: 02-2010
Content Type:: Policy Brief
Institution:: Lowy Institute for International Policy
Abstract:: The 'carry trade', in which capital shifts from countries with low interest rates to countries with significantly higher rates, has become an important element of international capital flows over the past decade. With low interest rates in the United States, Japan, the UK and much of the rest of Europe expected to persist for some time, these flows seem likely to become larger in the aftermath of the Global Financial Crisis. Particularly for the emerging countries with shallow financial markets, interest-sensitive inflows have the potential to be disruptive. Exchange rates will tend to be overvalued for sustained periods, punctuated by sharp depreciations. These distorted and varying price signals will be unhelpful for good policy-making and steady economic growth.
Topic:: Emerging Markets, Globalization, International Trade and Finance, Foreign Direct Investment, and Financial Crisis
Political Geography:: United States, Japan, United Kingdom, and Europe

183. Confronting Asset Bubbles, Too Big to Fail, and Beggar-thy- Neighbor Exchange Rate Policies

Author:: Morris Goldstein
Publication Date:: 02-2010
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: When pondering desirable reforms, I prefer to think about both the international financial system and the international monetary system because as this global crisis demonstrates so vividly, the root causes can come from both the financial and the monetary spheres and they can interact in a variety of ways. On the financial side, I want to emphasize two problems: pricking asset price bubbles before they get too large, and confronting “too big to fail.” On the monetary side, I want to concentrate on what can be done to discourage “beggar-thyneighbor” exchange rate policies.
Topic:: Economics, Monetary Policy, and Financial Crisis

184. The Sustainability of China's Recovery from the Global Recession

Author:: Nicholas R. Lardy
Publication Date:: 03-2010
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: China's policy response to the global financial and economic crisis was early, large, and well-designed. Although Chinese financial institutions had little exposure to the toxic financial assets that brought down many large Western investment banks and other financial firms, China's leadership recognized that its dependence on exports meant that it was acutely vulnerable to a global recession. Thus they did not subscribe to the view sometimes described as “decoupling,” the idea that Asian countries could passively weather the financial storm that originated in the United States and other advanced industrial economies. They understood that absent a vigorous policy response China inevitably would suffer from the backwash of a sharp economic slowdown in its largest export markets—the United States and Europe.
Topic:: Economics and Financial Crisis
Political Geography:: United States, China, Europe, and Asia

185. Developing Countries – even China – Cannot Rescue the World Economy

Author:: Manmohan Agarwal
Publication Date:: 01-2010
Content Type:: Policy Brief
Institution:: Centre for International Governance Innovation
Abstract:: Many analysts believe that developed countries will recover very slowly from the global economic crisis. Consequently, they have looked to the emerging economies of the developing world to help stabilize the world economy and generate a stronger recovery. Indeed, when the financial crisis first engulfed the rich countries in 2008 and early 2009, growth in developing economies was not affected as their banks and financial systems faced neither credit problems nor a more serious meltdown. It is true that some foreign investors, particularly institutional investors, withdrew their money from developing countries with large stock exchanges, setting off stock price declines and some currency devaluations. But this did not affect the “real” economy of production and employment. There was a wide belief that many developing economies were “decoupled” from the rich economies and could continue to grow and this growth would buoy the world economy. Even when output declined dramatically in the developed economies, reducing the demand for developing countries' exports, it was expected that growth in the larger emerging economies would not be significantly affected. This has been borne out by subsequent events. Growth in China has been 8-9 percent and in India about 6 percent in the first three quarters of 2009.
Topic:: Development, Economics, Emerging Markets, International Trade and Finance, and Financial Crisis
Political Geography:: China and India

186. The Case for Auditing the Fed Is Obvious

Author:: Arnold Kling
Publication Date:: 04-2010
Content Type:: Policy Brief
Institution:: The Cato Institute
Abstract:: Recently, the Federal Reserve has significantly altered the procedures and goals that it had followed for decades. It has more than doubled its balance sheet, paid interest to banks on reserves held as deposits with the Fed, made decisions about which institutions to prop up and which should be allowed to fail, invested in assets that expose taxpayers to large losses, and raised questions about how it will avoid inflation despite an unprecedented increase in the monetary base.
Topic:: Economics, Government, Political Economy, Politics, and Financial Crisis
Political Geography:: United States

187. The Global Financial Crisis and Africa's "Immiserizing Wealth"

Author:: Luc Soete and Alexis Habiyaremye
Publication Date:: 01-2010
Content Type:: Policy Brief
Institution:: United Nations University
Abstract:: Before the current global recession, many resource-rich African countries were recording unprecedented levels of growth due to a raw material price boom. However, the collapse in raw material prices and the ensuing severe economic difficulties have again exposed the vulnerability of these countries' natural resource export-focussed economic structures. In this research brief, we describe how Africa's abundance of natural resources attracted disruptive and predatory foreign forces that have hindered innovation-based growth and economic diversification by delaying the accumulation of sufficient stocks of human capital. We suggest that for their long-term prosperity, resource-rich African countries shift their strategic emphasis from natural to human resources and technological capabilities needed to transform those natural resources into valuable goods and services to compete in the global market.
Topic:: Economics, Emerging Markets, Industrial Policy, Global Recession, Natural Resources, and Financial Crisis
Political Geography:: Africa, China, and India

188. Billions More for International Institutions? The ABCs of the General Capital Increases (GCI)

Author:: Todd Moss, Sarah Jane Staats, and Julia Barmeier
Publication Date:: 06-2010
Content Type:: Policy Brief
Institution:: Center for Global Development
Abstract:: The international financial institutions dramatically increased their lending in 2008–09 to help developing countries cope with the global financial crisis and support economic recovery. Today, these organizations are seeking billions of dollars in new funding. The IMF, which only a few years ago was losing clients and shedding staff, expanded by $750 billion last year. The World Bank and the four regional development banks for Africa, Asia, Europe, and Latin America are asking to increase their capital base by 30 to 200 percent. A general capital increase (GCI) for these development banks is an unusual request. A simultaneous GCI request is a once-in-a-generation occurrence.
Topic:: International Relations, International Monetary Fund, Financial Crisis, and World Bank
Political Geography:: Africa, Europe, Asia, and Latin America

189. Economic Growth and Institutional Innovation: Outlines of a Reform Agenda

Author:: William A. Galston
Publication Date:: 06-2010
Content Type:: Policy Brief
Institution:: The Brookings Institution
Abstract:: When experts and pundits are asked what the president and Congress should do to promote economic growth, they typically respond with a list of policies, often mixed with stylistic and political suggestions. Few focus on institutional change, which is too easy to conflate with yawn-inducing “governmental reorganization.”
Topic:: Economics and Financial Crisis
Political Geography:: United States

190. The Future of Small Business Entrepreneurship: Jobs Generator for the U.S. Economy

Author:: Martin Neil Baily, Karen Dynan, and Douglas J. Elliott
Publication Date:: 06-2010
Content Type:: Policy Brief
Institution:: The Brookings Institution
Abstract:: As the nation strives to recover from the “Great Recession,” job creation remains one of the biggest challenges to renewed prosperity. Small businesses have been among the most powerful generators of new jobs historically, suggesting the value of a stronger focus on supporting small businesses— especially high-growth firms—and encouraging entrepreneurship. Choosing the right policies will require public and private decision-makers to establish clear goals, such as increasing employment, raising the overall return on investment, and generating innovations with broader benefits for society. Good mechanisms will also be needed for gauging their progress and ultimate success. This brief examines policy recommendations to strengthen the small business sector and provide a platform for effective programs. These recommendations draw heavily from ideas discussed at a conference held at the Brookings Institution with academic experts, successful private-sector entrepreneurs, and government policymakers, including leaders from the Small Business Administration. The gathering was intended to spur the development of creative solutions in the private and public sectors to foster lasting economic growth.
Topic:: Economics and Financial Crisis
Political Geography:: United States

191. Reforming Global Banking Rules-how the G20 Can Save the Global Economy

Author:: Jakob Vestergaard, Ranjit Lall, and Martin Hojland
Publication Date:: 06-2010
Content Type:: Policy Brief
Institution:: Danish Institute for International Studies (DIIS)
Abstract:: At the September 2009 Pittsburgh Summit the leaders of the G20 set out a series of far reaching regulatory reforms to “tackle the root causes of the crisis and transform the system for global financial regulation”. The centrepiece of the reform effort was Basel III, a new set of capital adequacy rules to be drawn up by the Basel Committee on Banking Supervision (BCBS), a group of international banking regulators, by the end of 2010. As the G20 convenes in Toronto almost one year later, Basel III is entering a critical phase in the reform process – a phase which will determine whether we see fundamental reform of the international banking system or merely a return to 'business as usual'. Drawing on the experience of the previous attempt to overhaul global capital standards, Basel II, this DIIS policy brief proposes a set of institutional and structural reforms to the BCBS to ensure that it succeeds in realizing the G20's vision for a sounder and more resilient financial system.
Topic:: Financial Crisis
Political Geography:: Canada

192. Europe 2020 and the Financial System: Smaller is beautiful

Author:: Karel Lannoo
Publication Date:: 07-2010
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Meeting Europe's 2020 objectives of smart, sustainable and inclusive growth is even more of a challenge for the financial sector than for the EU as a whole. Smart, sustainable and inclusive growth is just the opposite of what the financial sector stood for, and how it continues to be perceived by the public. The huge regulatory agenda that is on the table should tame the financial sector, but whether it will help it to meet the Europe 2020 objectives is an open question (see European Commission, 2010a).
Topic:: International Trade and Finance, Markets, Regional Cooperation, and Financial Crisis
Political Geography:: Europe

193. From National to European Regulation: Towards European Financial Supervisory Authorities

Author:: H. Onno Ruding
Publication Date:: 05-2010
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: Financial reform is needed now in the EU not only to reduce the likelihood of another financial crisis in the coming years but also to reinforce the internal market. A primary financial as well as political goal should be to create a truly single market in Europe for financial services and institutions. The current state of affairs is, however, still too far removed from this goal.
Topic:: Economics, Markets, and Financial Crisis
Political Geography:: Europe

194. Towards a Euro(pean) Monetary Fund

Author:: Daniel Gros and Thomas Mayer
Publication Date:: 05-2010
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: The case of Greece has ushered in the second phase of the financial crisis, namely that of sovereign default. Members of the euro area were supposed to be shielded from a financial market meltdown. But, after excess spending during the period of easy credit, several euro area members are now grappling with the implosion of credit-financed construction and consumption booms. Greece is the weakest of the weak links, given its high public debt (around 120% of GDP), compounded by a government budget deficit of almost 13% of GDP, a huge external deficit of 11% of GDP and the loss of credibility from its repeated cheating on budget reports.
Topic:: Economics, Monetary Policy, and Financial Crisis
Political Geography:: Europe

195. Regulatory Challenges for the EU Asset Management Industry

Author:: Karel Lannoo
Publication Date:: 04-2010
Content Type:: Policy Brief
Institution:: Centre for European Policy Studies (CEPS)
Abstract:: The European asset management industry is feeling squeezed from all sides, as a result of growing prudential, product and conduct regulation. A new Directive, UCITS IV, has only just been enacted, and already new challenges are emerging in the regulation of hedge and venture capital funds, the review of the regulatory regime for depositaries (or financial custodians) and amendments to the MiFID Directive.2 In addition, a new European supervisory framework is in the making, which implies much stricter controls on enforcement. These changes are taking place in the context of one of the largest declines suffered by the industry in the last two decades, from which many fund managers have not yet recovered. The era of light regulation is thus definitely over.
Topic:: Markets, Monetary Policy, and Financial Crisis
Political Geography:: Europe

196. In Defense of Europe's Grand Bargain

Author:: Jacob Funk Kirkegaard
Publication Date:: 06-2010
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: Nothing is easier than pointing fingers at policymakers woring feverishly at 2 a.m. to contain a rapidly spreading financial crisis. Rarely has this been truer for the European Union than during the current crisis's amateurish policy management. Yet, what really matters is the final result, which is far more postive for Europe than the ugly sausage-making process.
Topic:: Economics, International Trade and Finance, and Financial Crisis
Political Geography:: Europe

197. Protection by Stealth: Using the Tax Law to Discriminate against Foreign Insurance Companies

Author:: Gary Clyde Hufbauer
Publication Date:: 04-2010
Content Type:: Policy Brief
Institution:: Peterson Institute for International Economics
Abstract:: These are difficult times. Not only are 10 percent of Americans unemployed but the federal budget is out of whack thanks to the specter of rising entitlement outlays. A natural impulse in difficult times is to protect domestic products and domestic producers. The tone of political economy during the global recession of 2007–09 is no different from that in past recessions—but louder because the economic damage is more severe. Emblematic of this spirit is a proposal to discriminate against foreign-owned insurance companies, using the tax code.
Topic:: Economics, Labor Issues, and Financial Crisis
Political Geography:: United States

198. Strengthening Corporate Governance to Combat Corruption

Publication Date:: 03-2009
Content Type:: Policy Brief
Institution:: Transparency International
Abstract:: The collapse of global financial markets in September 2008 has ignited a debate on what caused their quick undoing. As captured in the comments of the OECD Secretary-General, there is a growing sentiment that poor corporate governance is one of the forces to blame. It allowed the transparency, accountability and integrity of companies to be compromised and for abuses to go unchecked, particularly on matters of corruption.
Topic:: Corruption, Genocide, Markets, and Financial Crisis

199. The global economic crisis and FDI flows to emerging markets: for the first time ever, emerging markets are this year set to attract more than half of global FDI flows

Author:: Laza Kekic
Publication Date:: 10-2009
Content Type:: Policy Brief
Institution:: Columbia Center on Sustainable Investment
Abstract:: The global economic and financial crisis has had a major impact on foreign direct investment (FDI) flows. After declining in 2008 by 17% to US$1.73trn from US$2.09trn in 2007—the high point of a four- year long boom in cross-border mergers and acquisitions (M) and FDI—global FDI inflows are forecast to plunge by 44% to less than US$1trn in 2009. The big drop in 2009 is occurring despite the improvements in the global economy in recent months. A notable feature of trends in 2009 is that, for the first time ever, emerging markets are set to attract more FDI inflows than the developed world.
Topic:: Development, Economics, Foreign Direct Investment, and Financial Crisis
Political Geography:: United States

200. Indian FDI falls in global economic crisis: Indian multinationals tread cautiously

Author:: Jaya Prakash Pradhan
Publication Date:: 08-2009
Content Type:: Policy Brief
Institution:: Columbia Center on Sustainable Investment
Abstract:: Just over a year ago, outward foreign direct investment (OFDI) from India seemed to be on a path of rapid and sustained growth. Its annual average growth of 98% during 2004–07 had been unprecedented , much ahead of OFDI growth from other emerging markets like China (74%), Malaysia (70%), Russia (53%), and the Republic of Korea (51%), although from a much lower base. Much of this recent growth had been fuelled by large-scale overseas acquisitions, however, and it faltered when the global financial crisis that started in late 2007 made financing acquisitions harder.
Topic:: Development, Economics, Foreign Direct Investment, and Financial Crisis
Political Geography:: Russia, China, Malaysia, India, and Korea

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