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242. Reforming Global Banking Rules: Back to the Future?
- Author:
- Ranjit Lall
- Publication Date:
- 06-2010
- Content Type:
- Working Paper
- Institution:
- Danish Institute for International Studies (DIIS)
- Abstract:
- One of the most significant casualties of the recent financial crisis has been the Basel II Accord, a set of proposals to regulate the international banking system drawn up by a committee of G10 banking supervisors between 1999 and 2004. Whether or not they view Basel II as a direct contributor to the crisis, policymakers agree that the fundamental tenets of the accord have been decisively discredited by recent events. In this paper, I ask why Basel II's creators fell so short of their aim of improving the safety of the international banking system – that is, why Basel II failed. Drawing on recent work on global regulatory capture, I present a theoretical framework which emphasizes the importance of timing and sequencing in determining the outcome of rule-making in international finance. This framework helps to explain not only why Basel II failed, but also why the latest set of proposals to regulate the international banking system – the so-called 'Basel III' Accord – is likely to meet a similar fate.
- Topic:
- Financial Crisis
243. Inside the World Bank's Black Box Allocation System: How Well Does IDA Allocate Resources to the Neediest and Most Vulnerable Countries?
- Author:
- Benjamin Leo
- Publication Date:
- 06-2010
- Content Type:
- Working Paper
- Institution:
- Center for Global Development
- Abstract:
- During the last few International Development Association (IDA) replenishment negotiations, several large donors have pressed for reforms to further increase the share of IDA resources provided to the neediest and most vulnerable countries. While the proposed reforms take different forms, the philosophical Thrust is the same—push IDA's focus further down the development chain. Against this backdrop, this paper explores just how well IDA's existing performance-based allocation (PBA) system actually addresses these issues. To achieve this, I examine how IDA allocations are distributed at each successive stage of the PBA methodology based upon a number of need and vulnerability measures. Next, I apply two simple measures to gauge IDA's performance: (1) whether per-capita allocations to the neediest and most vulnerable countries are equal to or greater than those for the best off countries and (2) whether allocations to the neediest and most vulnerable countries increase between the baseline and final allocation scenarios. Based on these criteria, IDA has a mixed track record. IDA's performance is very modest with respect to the relative share allocated to the neediest or most vulnerable countries. Of the eight measures examined, only two illustrate parity between final allocations to the bottom and top quartile of countries. However, the litany of PBA exceptions clearly helps to redistribute resources in absolute terms. Per-capita allocations to the neediest and most vulnerable countries more than doubles between the baseline and final PBA scenarios for every need and vulnerability indicator examined. Clearly, the existing system has several built-in biases to redistribute resources to these countries. However, these exceptions fall short from ensuring full parity that some IDA donors may wish to achieve. As such, the philosophical debate among key IDA donors likely will continue for the foreseeable future.
- Topic:
- Development, Economics, Foreign Aid, and Financial Crisis
244. The Inefficiency of Clearing Mandates
- Author:
- Craig Pirrong
- Publication Date:
- 07-2010
- Content Type:
- Working Paper
- Institution:
- The Cato Institute
- Abstract:
- In the aftermath of the financial crisis, attention has turned to reducing systemic risk in the derivatives markets. Much of this attention has focused on counterparty risk in the over-the counter market, where trades are bilaterally executed between dealers and derivative purchasers. One proposal for addressing such counterparty risk is to mandate the trading of derivatives over a centralized clearinghouse. This paper lays out the advantages and risks to a mandated clearing requirement, showing how, in some instances, such a mandate can actually increase systemic risk and result in more financial bailouts.
- Topic:
- Economics, International Trade and Finance, Markets, and Financial Crisis
245. Product Market Reforms in EU Countries: Are the methodology and evidence sufficiently robust?
- Author:
- Jacques Pelkmans
- Publication Date:
- 07-2010
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- In the EU of today, economic policies, competition policy and regulation are expected to be 'evidence-based'. The purpose of the present paper is to discuss critically the most prominent empirical approach to the measurement of regulation: the OECD product market regulation (PMR) indicators. The paper sets out what exactly product market reforms are and the empirical regulatory indicators that have been developed by the OECD, the World Bank and others.
- Topic:
- Markets and Financial Crisis
- Political Geography:
- Europe
246. The G20 Framework for Strong, Sustainable And Balanced Growth: A Study in Credible Cooperation
- Author:
- Daniel Schwanen
- Publication Date:
- 06-2010
- Content Type:
- Working Paper
- Institution:
- Centre for International Governance Innovation
- Abstract:
- The G20 has launched far-ranging reforms of economic governance institutions and the manner in which key economies should cooperate in the future. Its ambitious aim is not only to stabilize the world economy following the economic crisis of 2007-09, but also to anticipate and, as far as possible, prevent future crises and foster sustainable growth going forward. A central element of the promised reform is the “Framework for Strong, Sustainable and Balanced Growth,” introduced at the 2009 summit in Pittsburgh, in which the G20 agreed to accept joint and individual responsibility for the health of the global economy. By specifying the key elements of growth, agreeing to assess their policies mutually with the help of the International Monetary Fund (IMF) and other institutions and agreeing to discuss actions required in light of these assessments, the G20 leaders have launched a potentially effective vehicle for delivering on their promises.
- Topic:
- Economics, International Cooperation, International Organization, Monetary Policy, and Financial Crisis
247. The Realities and Relevance of Japan's Great Recession: Neither Ran nor Rashomon
- Author:
- Adam S. Posen
- Publication Date:
- 06-2010
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Japan's Great Recession was the result of a series of macroeconomic and financial policy mistakes. Thus, it was largely avoidable once the initial shock from the bubble bursting had passed. The aberration in Japan's recession was not the behaviour of growth, which is best seen as a series of recoveries aborted by policy errors. Rather, the surprise was the persistent steadiness of limited deflation, even after recovery took place. This is a more fundamental challenge to our basic macroeconomic understanding than is commonly recognized. The UK and US economies are at low risk of having recurrent recessions through macroeconomic policy mistakes—but deflation itself cannot be ruled out. The United Kingdom worryingly combines a couple of financial parallels to Japan with far less room for fiscal action to compensate for them than Japan had. Also, Japan did not face poor prospects for external demand and the need to reallocate productive resources across export sectors during its Great Recession. Many economies do now face this challenge simultaneously, which may limit the pace of, and their share in, the global recovery.
- Topic:
- Economics, Markets, Monetary Policy, and Financial Crisis
- Political Geography:
- United States, Japan, and United Kingdom
248. Excessive Volatility in Capital Flows: A Pigouvian Taxation Approach
- Author:
- Olivier Jeanne and Anton Korinek
- Publication Date:
- 05-2010
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- This paper analyzes prudential controls on capital flows to emerging markets from the perspective of a Pigouvian tax that addresses externalities associated with the deleveraging cycle. It presents a model in which restricting capital inflows during boom times reduces the potential outflows during busts. This mitigates the feedback effects of deleveraging episodes, when tightening financial constraints on borrowers and collapsing prices for collateral assets have mutually reinforcing effects. In our model, capital controls reduce macroeconomic volatility and increase standard measures of consumer welfare.
- Topic:
- Economics, Emerging Markets, International Trade and Finance, Foreign Direct Investment, and Financial Crisis
249. The evolving post-crisis world
- Author:
- Stephen Grenville
- Publication Date:
- 04-2010
- Content Type:
- Working Paper
- Institution:
- Lowy Institute for International Policy
- Abstract:
- The worst of the global financial crisis (GFC) is over, but it has left scars, principally in the form of fiscallydriven debt increases, balance sheets that still need repair and high unemployment in the principal crisis countries. There is also unfinished business from the precrisis period, in the form of external imbalances. More positively, the crisis offers lessons about economic policymaking that may improve the way things are done. Of course the main lessons are for the developed countries that were at the centre of the crisis. But the countries of the region had to cope with the backwash, and in doing so lessons were learned. In addition, the lessons in the crisis countries, learned in an environment of extreme stress, may have relevance for the emerging market economies of this region.
- Topic:
- Development, Emerging Markets, and Financial Crisis
- Political Geography:
- China, India, and Asia
250. The Impact of the Global Financial Crisis on the Budgets of Low-Income Countries
- Author:
- Katerina Kyrili and Matthew Martin
- Publication Date:
- 07-2010
- Content Type:
- Working Paper
- Institution:
- Oxfam Publishing
- Abstract:
- The financial crisis has hit developing countries hard, driving millions more people into poverty and reversing several years of rapid progress towards the Millennium Development Goals (MDGs). For most of the poorest people, the impact will depend on what governments do with their budgets–how much they spend to fight against the crisis, protect the poorest, and revive progress towards the MDGs. This report examines what 56 low-income countries have done in 2009 and are planning to do in 2010. It is unique in drawing on budget documents issued in June–December 2009, and therefore in being able to describe what is happening in detail, in order to look ahead to 2010 and beyond. This study is particularly timely as the deadline for countries to reach the MDGs is now only five years away.
- Topic:
- Development, Poverty, Third World, Global Recession, and Financial Crisis
- Political Geography:
- Africa
251. Central Asia: Migrants and the Economic Crisis
- Publication Date:
- 01-2010
- Content Type:
- Working Paper
- Institution:
- International Crisis Group
- Abstract:
- The economic crisis has caused millions of migrant labourers from Tajikistan, Kyrgyzstan and Uzbekistan to lose their jobs in the boom economies of Russia and Kazakhstan. Remittances that kept their relatives afloat have plummeted and many migrants have returned home to certain destitution, putting weak Central Asian governments under severe strain. In Tajikistan half the labour force is without work, while Kyrgyzstan suffers from massive rural unemployment. Before the crisis hit, up to five million people from these countries left home for Russia and Kazakhstan to take on poorly paid and unskilled jobs, often the unpleasant tasks that local people no longer wished to do. Yet at home they were viewed with respect: the most daring members of their society, who were willing to take a jump into the unknown to pull themselves and their families out of poverty. Remittances also boosted their home countries' economic data, allowing governments with little ability or interest in creating jobs to claim a modest degree of success. By 2008 remittances were providing the equivalent of half Tajikistan's gross domestic product (GDP), a quarter of Kyrgyzstan's GDP, and an eighth of Uzbekistan's.
- Topic:
- Economics, Migration, Labor Issues, and Financial Crisis
- Political Geography:
- Russia, Central Asia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan
252. Libel Tourism: Silencing the Press Through Transnational Legal Threats
- Author:
- Drew Sullivan
- Publication Date:
- 01-2010
- Content Type:
- Working Paper
- Institution:
- National Endowment for Democracy
- Abstract:
- The face of media around the world is changing. Traditional media in the United States are shrinking as the industry confronts both an extended recession and the long-term erosion of its economic model. In the developing world, the newly independent media of a decade ago maintain their vitality while attempting to find financial sustainability. The Internet has globalized the evolving media marketplace, and at the interstices of the media and internet businesses, new and exciting media organizations are springing up worldwide to fill needs in such areas as investigative reporting.
- Topic:
- Globalization, Markets, Third World, Mass Media, Financial Crisis, and Tourism
- Political Geography:
- United States
253. State of the Union Address, 2010
- Author:
- Barack Obama
- Publication Date:
- 01-2010
- Content Type:
- Working Paper
- Institution:
- Council on Foreign Relations
- Abstract:
- THE PRESIDENT: Madam Speaker, Vice President Biden, members of Congress, distinguished guests, and fellow Americans: Our Constitution declares that from time to time, the President shall give to Congress information about the state of our union. For 220 years, our leaders have fulfilled this duty. They've done so during periods of prosperity and tranquility. And they've done so in the midst of war and depression; at moments of great strife and great struggle.
- Topic:
- Foreign Policy, Diplomacy, Government, War, Labor Issues, and Financial Crisis
- Political Geography:
- United States
254. Sustaining Social Safety Nets: Critical for Economic Recovery
- Author:
- Alejandro Foxley
- Publication Date:
- 03-2010
- Content Type:
- Working Paper
- Institution:
- Carnegie Endowment for International Peace
- Abstract:
- The current global financial shock will be followed by a long period of abnormally high unemployment, and by severe pressure to reduce government expenditures, once the fiscal stimulus runs its course. As a consequence, the coverage and quality of basic social services—from unemployment insurance to health care and social security—may suffer. At the same time, the recession is reducing household income, and thus many households that cannot afford privately provided services will face increasing difficulties in accessing underfunded public services. Significant segments of the middle class might slide back into poverty.
- Topic:
- Economics, Human Welfare, Labor Issues, and Financial Crisis
255. Toward Institutional Innovation in US Labor Market Policy: Learning from Europe?
- Author:
- Tobias Schulze-Cleven and Henry Farrell
- Publication Date:
- 07-2010
- Content Type:
- Working Paper
- Institution:
- Berkeley Roundtable on the International Economy
- Abstract:
- What keeps US labor market institutions from more effectively helping the nation cope with the current economic crisis and secure its future prosperity? What is the scope for politically feasible innovation in US labor market policy? These are crucial policy questions. As a result of the global financial crisis, the US unemployment rate climbed into double digits and has remained higher than in many European countries. The US is experiencing the highest level of unemployment for a generation and the highest rate of long-term unemployment for more than half a century. American families are suffering from financial hardship without any fault of their own, and many of the currently unemployed will find it hard to re-enter the workforce during the recovery. Nor is the government easily able to use current programs to help those seeking work. Even though policymakers have launched new initiatives during the past year, the US remains almost uniquely weak among advanced industrialized democracies in its lack of policy programs to support the populace in successfully engaging with the labor market.
- Topic:
- Economics, Markets, Labor Issues, and Financial Crisis
- Political Geography:
- United States and Europe
256. A Crisis Multiplied: How the global economic crisis, coming on top of other shocks, is worsening poverty in Burkina Faso
- Author:
- Elizabeth Stuart
- Publication Date:
- 07-2010
- Content Type:
- Working Paper
- Institution:
- Oxfam Publishing
- Abstract:
- It is a stable democracy, with an efficient and increasingly transparent government. The entire budget is published online. Strong education and health plans are in place, and the government promotes the use of generic medicines. In recent years growth has been consistently robust, at around 6 percent. The country hosts a world-renowned film festival. It has consistently sought to reform and modernize, just as the IMF and World Bank have prescribed. And, in turn, donors love to fund it. It was, for instance, one of the first countries to qualify for debt relief under the Heavily Indebted Poor Countries (HIPC) programme. So confident is the international community that its money will be in safe hands that it readily gives budget support – which is very positive, as this form of aid allows the government to fund recurrent expenditures such as teachers' and doctors' salaries, though from a donor's perspective it is more difficult to trace, in large amounts.
- Topic:
- Economics, Markets, Poverty, Third World, Global Recession, and Financial Crisis
257. Financial Reform: Going Global? Global overhaul, but not global approach
- Author:
- Steven Leslie and Jason Karaian
- Publication Date:
- 07-2010
- Content Type:
- Working Paper
- Institution:
- Economist Intelligence Unit
- Abstract:
- Sweeping overhaul is now law However, many years will be needed to create agencies, conduct studies and write rules Phase-in provisions for many measure.
- Topic:
- Government, International Trade and Finance, Markets, Global Recession, and Financial Crisis
258. The Transatlantic Economy 2010: Annual Survey of Jobs, Trade and Investment between the United States and Europe
- Author:
- Daniel S. Hamilton and Joseph P. Quinlan
- Publication Date:
- 01-2010
- Content Type:
- Working Paper
- Institution:
- Center for Transatlantic Relations
- Abstract:
- Despite the recession, the United States and Europe remain each other's most important foreign commercial markets. No other commercial artery in the world is as integrated and fused as the transatlantic economy. We estimate that the transatlantic economy continues to generate close to $4.28 trillion in total commercial sales a year and employs up to 14 million workers in mutually “onshored” jobs on both sides of the Atlantic.
- Topic:
- Economics, Globalization, International Trade and Finance, Global Recession, and Financial Crisis
- Political Geography:
- United States and Europe
259. Has the financial crisis spurred demand for stronger state regulation?
- Author:
- Felix Roth
- Publication Date:
- 09-2010
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- This paper analyses whether the financial crisis has affected citizens' confidence in the free market economy and whether it has triggered citizens' demand for a free market economy with stronger state regulations. Using panel data, the paper confirms that citizens' confidence levels in the free market economy have decreased in most of the largest economies and demand for a free market economy with stronger state regulation has increased on both sides of the Atlantic. After analysing the determinants for citizens' confidence in the free market economy and demand for a free market economy with stronger state regulation before and after the financial crisis, the author concludes that citizens' net confidence loss in the free market economy seems to have been driven by rising unemployment rates, and citizens' demand for stronger state regulation seems to have been driven by the real economic downturn in GDP growth.
- Topic:
- Regional Cooperation, Monetary Policy, Financial Crisis, and Governance
- Political Geography:
- Europe
260. Does intangible capital affect economic growth?
- Author:
- Felix Roth and Anna-Elisabeth Thum
- Publication Date:
- 09-2010
- Content Type:
- Working Paper
- Institution:
- Centre for European Policy Studies (CEPS)
- Abstract:
- Using new international comparable data on intangible capital investment by business within a panel analysis from 1995-2005 in an EU-15 country sample, we detect a positive and significant relationship between intangible capital investment by business and labour productivity growth. This relationship is cross-sectional in nature and proves to be robust to a range of alterations. Our empirical analysis confirms previous findings that the inclusion of business intangible capital investment into the asset boundary of the national accounting framework increases the rate of change of output per worker more rapidly. In addition, intangible capital is able to explain a significant portion of the unexplained international variance in labour productivity growth and when incorporating business intangibles, capital deepening becomes an even more significant source of growth. The relationship is slightly stronger in the time period 1995-2000 and seems to be driven by the coordinated countries within the EU-15.
- Topic:
- Economics, International Trade and Finance, Regional Cooperation, Monetary Policy, and Financial Crisis
- Political Geography:
- Europe