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5601. Corporate Liquidity and Financial Fragility: The Role of Investment, Debt and Interest

Author:
Jan Toporowski
Publication Date:
03-2012
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
The paper addresses the issue of how debt deflation may arise in a capitalist economy with a sophisticated credit system. It argues that the standard argument of debt deflationists, that debt-financed investment causes a build-up of unsustainable investment, fails to recognise that debt is back by credit. A corollary of this is that the rate of interest is not a factor in investment decisions. Financial fragility is caused by heterogeneity of balance sheets, debt financed operations in financial markets and insufficient debt-financed investment, rather than too much such investment.
Topic:
Debt, Markets, Investment, and Credit
Political Geography:
Global Focus

5602. Lange and Keynes

Author:
Jan Toporowski
Publication Date:
03-2012
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
Lange engaged with Keynes in the matter of Keynes‟s macroeconomics, and over econometrics. Lange‟s interpretation of the Keynesian macroeconomic model laid the foundation for the neo-classical synthesis. But it was limited in its monetary economics. Lange also intervened in the Keynes-Tinbergen dispute over the scope and significance of econometrics. Lange collaborated in a paper that conceded Keynes‟s main point that empirical investigation could not determine theory, but insisted that theories could nevertheless be tested empirically. The paper was never publish and Keynes, unconvinced, planned to recruit Kalecki to his critique of econometrics.
Topic:
Socialism/Marxism, Economic Theory, Macroeconomics, and Keynes
Political Geography:
Global Focus

5603. Neologism as Theoretical Innovation in Economics: The case of 'Financialisation

Author:
Jan Toporowski
Publication Date:
03-2012
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
The term „financialisation‟ is a recognition that finance has come to play a key role on the modern capitalist economy. But users of the term do not agree on its meaning and recognition of the growing scale of finance has not brought about an increased understanding of financial processes. The paper examines the reasons for increased turnover in financial markets. The main themes in the literature on financialisation are examined and shown to lack a coherent account of financial processes that goes beyond the evidence of financial activity.
Topic:
Debt, Finance, Credit, and Financialisation
Political Geography:
Global Focus

5604. The Monetary Theory of Kalecki and Minsky

Author:
Jan Toporowski
Publication Date:
03-2012
Content Type:
Working Paper
Institution:
School of Oriental and African Studies - University of London
Abstract:
The monetary theory of Kalecki and Minsky is usually placed within the Post-Keynesian tradition, deriving from the monetary analysis of John Maynard Keynes. The paper argues that Kalecki and Minsky shared a common inheritance in Swedish and German monetary theory, rather than the Marshallian tradition. Thus the monetary analysis of Kalecki and Minsky emphasises the endogeneity of money through capitalist reproduction, rather than through the mechanisms connecting central bank money to credit creation in the banking system. This provides the link between the monetary theory of Kalecki and Minsky and modern circuit theory.
Topic:
Monetary Policy, Banks, Economic Theory, and Keynes
Political Geography:
Global Focus

5605. Twenty Mechanisms for Addressing Torture in Health Care

Author:
Jonathan Cohen and Tamar Ezer
Publication Date:
06-2012
Content Type:
Special Report
Institution:
Open Society Foundations
Abstract:
Health care settings should be places where human rights are realized. Yet, across the world, health systems often serve as venues of punishment, coercion, and violations of basic human rights, sometimes amounting to torture or cruel, inhuman, and degrading treatment. This abuse is especially prevalent in the care of socially marginalized groups—people living with HIV, ethnic minorities, sexual and gender minorities, people who use drugs, and people with intellectual disabilities or mental health problems. There are many national, regional, and international mechanisms designed to promote government accountability and prevent torture and cruel, inhuman, and degrading treatment, yet these mechanisms are rarely applied to health facilities. This manual describes 20 anti-torture mechanisms from the United Nations and African, European, and Inter-American human rights systems and provides illustrative examples on how to use these mechanisms to fight torture in health settings. For each mechanism, the manual explores mandate, procedure, possibilities for engagement, and prior work on torture in health care. The manual also includes a glossary of basic human rights terms. This manual is designed as a resource for organizations that advocate against abuse in health care—including international, regional, and national human rights organizations; groups focused on particular health care abuses; anti-torture groups; and the treaty bodies themselves.
Topic:
HIV/AIDS, Health, Torture, United Nations, Minorities, and Health Care Policy
Political Geography:
Africa, Europe, and Global Focus

5606. Tools for Change: Applying United Nations standards to secure women’s housing, land, and property rights in the context of HIV

Publication Date:
10-2012
Content Type:
Special Report
Institution:
Open Society Foundations
Abstract:
Developed by the United Nations Development Programme and Open Society Foundations, Tools for Change is an easy-to-use resource for advocates working on women’s housing, land, and property rights in the context of HIV. It brings together relevant international human rights documents and highlights core concepts, rights, and means of enforcement, providing examples of successful advocacy from around the world. Moreover, it draws on the voices of women worldwide to explain these rights and their uses in practical terms. This manual was originally conceived during a strategic meeting on property and inheritance rights as they relate to HIV, held during the 2009 United Nations Commission on the Status of Women, where organizations gathered from around the world. It emerged from the realization that through hard work, advocates have managed to get a number of UN instruments to include protection for women’s housing, land, and property rights, and member states have pledged to abide by them. However, many advocates at the national level do not even know of these international instruments, even though they might be helpful in their work, particularly as governments may not be meeting their international human rights obligations. Advocates need a better understanding of international human rights and government obligations in order to ensure government accountability and advance women’s housing, land, and property rights. This manual seeks to empower advocates working in the context of HIV by making the relevant United Nations standards and interpretations clear and accessible—to make them "tools for change."
Topic:
HIV/AIDS, United Nations, Women, Land, Housing, and Equality
Political Geography:
Global Focus

5607. Media – International Relations Interaction Model

Author:
Tsvetelina Yordanova
Publication Date:
12-2012
Content Type:
Special Report
Institution:
Institute for Security and International Studies (ISIS)
Abstract:
What role do media play in international relations is the major question that this article attempts to answer. It argues that media have quite limited impact on international affairs and foreign policy process and that the political discourse still prevails over the one of the media and the public in the contest of power in democratic societies. The contribution of the article is to conceptualize the highly scattered knowledge about media-international relations interaction and to present a model which places media on the complex terrain of world politics.
Topic:
International Relations, Communications, Media, and News Analysis
Political Geography:
Europe, Eastern Europe, and Global Focus

5608. Women Count: Security Council Resolution 1325: Civil Society Monitoring Report 2012

Publication Date:
10-2012
Content Type:
Special Report
Institution:
Global Network of Women Peacebuilders (GNWP)
Abstract:
The Global Network of Women Peacebuilders (GNWP) brings together 67 women’s organisations and networks and aims to bridge the gap between policy discussions and implementation and action on the ground on women, peace and security issues. GNWP’s work focuses on the following objectives: ▶ Enhance women’s capacities to use legal mechanisms available at the international, regional and national levels in order to protect their rights and ensure their participation in decision-making, peace building, conflict prevention and reconstruction; ▶ Enhance capacity amongst civil society, especially women’s civil society, to conduct effective monitoring, mobilize and advocate for effective policy implementation; ▶ Bring visibility to women’s issues and concerns on peace and security and amplify their voices at the national, regional and global levels; ▶ Support effective implementation of UNSCR 1325, 1820 and the supporting Women, Peace and Security resolutions particularly at the national level; ▶ Bolster Member State (MS) accountability in a range of ways and fora, which go beyond UNSCR 1325 anniversaries every October.
Topic:
Conflict Prevention, Gender Issues, United Nations, Peacekeeping, Women, Peace, and WPS
Political Geography:
Global Focus

5609. From Poverty to Power, 2nd Edition: How active citizens and effective states can change the world

Author:
Duncan Green
Publication Date:
10-2012
Content Type:
Book
Institution:
Oxfam Publishing
Abstract:
Seismic events have convulsed global markets since 2008, when From Poverty to Power was first published. World news has been full of stories reflecting a profound sense of uncertainty about global futures. In response, this new edition of From Poverty to Power has been fully revised and now includes an in-depth analysis of the human impact of the global financial and food crises. From Poverty to Power, 2nd Edition argues that a radical redistribution of power, opportunities, and assets, rather than traditional models of charitable or government aid, is required to break the cycle of poverty and inequality. Active citizens and effective states are driving this transformation. Why active citizens? Because people living in poverty must have a voice in deciding their own destiny and holding the state and the private sector to account. Why effective states? Because history shows that no country has prospered without a state structure that can actively manage the development process. There is now an added urgency: climate change. We need to build a secure, fair, and sustainable world within the limits set by scarce resources and ecological realities. The book is accompanied by a list of blog resources. The From Poverty to Power blog played a key role in shaping the second edition of the book. Selected posts have now been indexed thematically to create an effective list of background material that can be read alongside the book.
Topic:
Civil Society, Climate Change, Globalization, Political Economy, and Poverty
Political Geography:
Global Focus

5610. Explaining the Pentagon’s Defense Strategy

Author:
Julie Zelnick and Mieke Eoyang
Publication Date:
05-2012
Content Type:
Working Paper
Institution:
Third Way
Abstract:
The purpose of this paper is to translate the long and technical national security strategic directive the Obama Administration laid out on January 5, 2012 into plain language and provide policymakers with guidance on how to make the case for the President’s plan. The directive has four over-arching goals, which are reflected in the budget
Topic:
Security, Defense Policy, Imperialism, and Military Strategy
Political Geography:
United States, North America, and Global Focus

5611. The Insistence of the Material: Theorizing Materiality and Biopolitics in the Era of Globalization

Author:
Christopher Breu
Publication Date:
08-2012
Content Type:
Working Paper
Institution:
Institute on Globalization and the Human Condition, McMaster University
Abstract:
In what follows, then, I will first provide a brief account of the value and limits of the cultural turn. I will then map out some of the trajectories of the recent material turn, putting it in dialogue with older materialist approaches and suggesting the ways in which we can draw on both older and newer approaches to the question of materiality in order to theorize the bodies, objects, biopolitics, political ecology, and political economy in our globalizing present.
Topic:
Politics, Culture, and Material Culture
Political Geography:
Global Focus

5612. An Interdisciplinary Forum on Time and Globalization

Author:
Christopher Breu
Publication Date:
09-2012
Content Type:
Working Paper
Institution:
Institute on Globalization and the Human Condition, McMaster University
Abstract:
How do globalization and temporality relate to one another? This was the question addressed by a 2011 workshop sponsored by Institute on Globalization and the Human Condition (IGHC) at McMaster University. In the past, globalization and temporality have both been characterized as moving forward independently of human volition, carrying all of us along in their flow. Now there are large literatures challenging this view, and showing how globalization and time are constructed and modified by humans. However, with some important exceptions (Harvey 1990, Sassen 2000, Appadurai 2005, Bauman 2000), the literatures on globalization and on temporality have developed separately from one another. It is important to bring these literatures into closer dialogue, because a great many urgent issues in contemporary human affairs involve interactions between temporality and globalization. These range from individual-level questions, such as managing the accelerated pace of everyday life, to large epochal problems, such as climate change, that may not always be readily apprehended, but are no less significant. The workshop participants, drawing on their backgrounds in a variety of academic disciplines, addressed the relationship between temporality and globalization in a variety of settings. Six of the papers presented at this workshop are gathered in this IGHC Working Paper. The assembled papers, individually and jointly, identify a number of themes of particular relevance to any comprehensive discussion of globalization and time. By way of introduction, it is useful to briefly consider how the most prominent of these themes are addressed by the contributors.
Topic:
Globalization, Human Development, and Time
Political Geography:
Global Focus

5613. Mission Revolution: The U.S. Military and Stability Operations

Author:
Jennifer Morrison Taw
Publication Date:
09-2012
Content Type:
Book
Institution:
Columbia University Press
Abstract:
Defined as operations other than war, stability operations were, for the entire history of the United States military, considered a dangerous distraction if not an outright drain on combat resources. Nonetheless, American troops are now deployed far more often for stability operations than for conventional war. In 2005, the U.S. Department of Defense reversed its traditional stance on stability operations, elevating them to a primary mission alongside more conventional offense and defense goals. Jennifer Morrison Taw argues that this action represented a revolutionary change with significant implications on U.S. foreign policy. Through a detailed examination of the accompanying adjustments to U.S. military doctrine and adaptations in force preparation, Taw connects the elevation of stability operations to the far-reaching, overly ambitious American preoccupation with managing international stability. She also shows how the DOD's decision reinforced and exacerbated domestic politics that already had reduced civilian agencies' capabilities while fostering an unhealthy overreliance on the military.
Topic:
Military Strategy, Military Affairs, and Political stability
Political Geography:
United States and Global Focus
Publication Identifier:
9780231526821
Publication Identifier Type:
ISBN

5614. Maritime Security East of Suez Sustaining the U.S. Role as the Key Policeman in Times of Change

Author:
Geoffrey Kemp
Publication Date:
01-2012
Content Type:
Special Report
Abstract:
At the height of America’s postwar power, in the 1960s and 1970s, the U.S. Seventh Fleet was able to sustain an unchallenged presence “East of Suez” to embrace the Persian Gulf, the Indian Ocean, the Indonesian Straits, and the South and East China Seas as well as the Western Pacific. Today the U.S. remains the dominant maritime power in this vast area, especially in the region to the west of the Straits of Malacca. However, in the region closer to China, the growing power projection and sea denial capabilities of China’s military raises questions about the future ability of the United States to operate with immunity in an area China increasingly believes is part of its own patrimony. Although the United States has many allies in the region, especially Singapore, Australia, Japan, South Korea, the Philippines, and increasingly Vietnam, the trends in military spending and force deployments suggest the U.S. will have to increasingly rely on cooperation with allies if there is to be a balance against China’s maritime aspirations. The downside of this is that the U.S. must avoid being drawn into the many bilateral disputes between China and its neighbors and must try to play a conciliatory role rather than taking sides. This will inevitably mean that the U.S. will have to play a different role from the one it became accustomed to during its days as the undisputed hegemon. The U.S. will still remain the key policeman in the Indian Ocean and Gulf regions, but will have to adapt to a different role in parts of the Western Pacific and southeast Asian waters.
Topic:
International Security and International Affairs
Political Geography:
Global Focus

5615. Extended Deterrence and Security in East Asia.

Author:
Paul Saunders
Publication Date:
01-2012
Content Type:
Special Report
Abstract:
Following the North Korean sinking of the South Korean frigate Cheonan, and North Korea’s subsequent shelling of Yeonpyeong Island, the Center for the National Interest proposed a U.S.-Japan-South Korea dialogue on extended deterrence in East Asia to assess whether and how the three countries could work together to strengthen stability in a region of vital importance to America’s security and prosperity—and, of course, to the security and prosperity of its close allies. Shortly before the project began, the collision of a Chinese fishing vessel with a Japanese coast guard ship near the Senkaku Islands led to a significant political confrontation between Tokyo and Beijing
Topic:
International Security and International Affairs
Political Geography:
Global Focus

5616. Bonded Labor: Tackling the System of Slavery in South Asia

Author:
Siddharth Kara
Publication Date:
09-2012
Content Type:
Book
Institution:
Columbia University Press
Abstract:
Siddharth Kara's Sex Trafficking has become a critical resource for its revelations into an unconscionable business, and its detailed analysis of the trade's immense economic benefits and human cost. This volume is Kara's second, explosive study of slavery, this time focusing on the deeply entrenched and wholly unjust system of bonded labor. Drawing on eleven years of research in India, Nepal, Bangladesh, and Pakistan, Kara delves into an ancient and ever-evolving mode of slavery that ensnares roughly six out of every ten slaves in the world and generates profits that exceeded $17.6 billion in 2011. In addition to providing a thorough economic, historical, and legal overview of bonded labor, Kara travels to the far reaches of South Asia, from cyclone-wracked southwestern Bangladesh to the Thar desert on the India-Pakistan border, to uncover the brutish realities of such industries as hand-woven-carpet making, tea and rice farming, construction, brick manufacture, and frozen-shrimp production. He describes the violent enslavement of millions of impoverished men, women, and children who toil in the production of numerous products at minimal cost to the global market. He also follows supply chains directly to Western consumers, vividly connecting regional bonded labor practices to the appetites of the world. Kara's pioneering analysis encompasses human trafficking, child labor, and global security, and he concludes with specific initiatives to eliminate the system of bonded labor from South Asia once and for all.
Topic:
Labor Issues, Sex Trafficking, and Slavery
Political Geography:
Pakistan, Bangladesh, South Asia, India, Nepal, and Global Focus
Publication Identifier:
9780231528016
Publication Identifier Type:
ISBN

5617. Transitional Justice and Peace building on the ground: Victims and ex-combatants,

Author:
Chandra Lekha Sriram
Publication Date:
01-2012
Content Type:
Policy Brief
Institution:
Centre on Human Rights in Conflict
Abstract:
In the wake of violent conflict and mass atrocity, there are many contending demands, including those for peace and stability, and those for accountability and punishment. Much ink has been spilled in debating “justice versus peace”. Two key trends in peacebuilding and transitional justice may clash with one another in particular: the prevalence of disarmament, demobilization, and reintegration (DDR) programs and the increased emphasis on victim-centred approaches to peacebuilding
Topic:
Peace Studies and International Affairs
Political Geography:
Global Focus

5618. Edges of Radicalization: Ideas, Individuals and Networks in Violent Extremism

Author:
Scott Helfstein
Publication Date:
02-2012
Content Type:
Special Report
Institution:
The Combating Terrorism Center at West Point
Abstract:
The Combating Terrorism Center (CTC) at West Point is pleased to announce the release of a new report entitled “Edges of Radicalization: Ideas, Individuals and Networks in Violent Extremism,” by Scott Helfstein. This paper examines radicalization as a social phenomenon through the behavior of individuals and networks. Violent extremists, individuals pursuing political change through violence, remain committed to striking the U.S. homeland and its interests abroad. It is important to understand how radical ideas spread to counter or contain this immediate and persistent threat. This study argues that the spread of violent extremism cannot be fully understood as an ideological or social phenomenon, but must be viewed as a process that integrates the two forces in a coevolutionary manner. The same forces that make an ideology appealing to some aggrieved group of people are not necessarily the same factors that promote its transfer through social networks of self-interested human beings. This means that there is value in differentiating why radical ideologies resonate among individuals, and how individuals come to adopt and advocate those ideas. This report helps contextualize the current terrorist threat, the role of technology in radicalization, and next steps in decoding radicalization.
Topic:
Terrorism, Violent Extremism, Radicalization, and Networks
Political Geography:
Global Focus

5619. Forcing Democracy: Is Military Intervention for Regime Change Permissible?

Author:
Müge Kınacıoğlu
Publication Date:
01-2012
Content Type:
Journal Article
Journal:
All Azimuth: A Journal of Foreign Policy and Peace
Institution:
Center for Foreign Policy and Peace Research
Abstract:
This article intends to go beyond the consequentialist utilitarian ap- proaches to forcible regime change by addressing the question of forcing democracy-building from an angle of appropriateness. It aims to analyze the admissibility of pro-democratic military interventions in international society by focusing on the UN and state practice. Is military intervention to remove a tyrannical regime permissible in international law? To what extend does international society condone an outside force to impose a democratic regime? Does the practice of the UN Security Council in promotion of democracy by force point to an emerging norm with regards to expansive concept of humanitarian intervention? To analyze such questions, this article first provides for a discussion of the concept of intervention. Second, it overviews the normative framework of the use of force in international relations. It continues with the analysis of unilateral and multilateral pro-democratic military interventions, and the UN Security Council practice of condemning, authorizing or consequently endorsing democratic regime change in the target states. In the conclusion part, the article assesses the legality and legitimacy issue regarding the pro-democratic intervention and regime change in light of main norms enshrined in the UN Charter and in general international law.
Topic:
United Nations, Regime Change, Democracy, Military Intervention, UN Security Council, and Intervention
Political Geography:
Global Focus

5620. Beyond the Global Financial Crisis: Structural Continuities as Impediments to a Sustainable Recovery

Author:
Ziya Önis and Mustafa Kutlay
Publication Date:
01-2012
Content Type:
Journal Article
Journal:
All Azimuth: A Journal of Foreign Policy and Peace
Institution:
Center for Foreign Policy and Peace Research
Abstract:
There has scarcely been a day in the last three years when we have not read depressing headlines in the newspapers about the global economic crisis. The current turmoil, which many experts concur in seeing as the worst jolt to the world economy since the Great Depression, is pushing the parameters of the established system to its limits. One could say that we see, in the short-term measures taken against the crisis at the time, an effective anti-crisis strategy. But ironically, the promptness with which these short-term measures were enacted prevented adequate questioning of the dominant paradigm which had caused the crisis. As a result, the structural problems leading to the crisis were not reduced. Despite the occurrence of the deepest economic crisis to be experienced since the Great Depression, the present economic emergency did not shake the neoclassical economic paradigm as strongly as was needed. A puzzle that this study aims to solve arises here: Why and how has the conventional wisdom survived and reproduced its intellectual hegemony even after the “most devastating economic crisis” since the Great Depression?
Topic:
Economics, Economic structure, Global Financial Crisis, Recovery, Lobbying, and Regulatory Capture
Political Geography:
Global Focus

5621. Collective Self-Action

Author:
Ananth Padmanabhan and Michael Shih
Publication Date:
12-2012
Content Type:
Working Paper
Institution:
Center for Global Legal Challenges, Yale Law School
Abstract:
Collective self-defense is an express exception to the U.N. Charter’s prohibition on the use of force by states. It permits a member state to intervene in the defense of another member state when that state has been subject to an unlawful armed attack. Here we consider (1) the obligations that international law places on an intervening state and (2) the best practices for an intervening state that may be derived from past state practice.
Topic:
United Nations, Military Strategy, Legal Theory, Military Intervention, and Collective Defense
Political Geography:
Global Focus

5622. The Meaning of "Assist, Encourage, or Induce" in the Weapons Ban Context

Author:
Christina Koningisor
Publication Date:
12-2012
Content Type:
Working Paper
Institution:
Center for Global Legal Challenges, Yale Law School
Abstract:
More than half of all multilateral disarmament treaties currently in force prohibit member states from “assist[ing], encourag[ing], or induc[ing]” another party in its pursuit or use of the prohibited weapon. This report examines this provision across five major disarmament treaties and arrives at three key findings
Topic:
Arms Control and Proliferation, Treaties and Agreements, Military Strategy, and Multilateralism
Political Geography:
Global Focus

5623. Optimal Deterrence: An Evaluation of the Leaks-Regulating Regime

Author:
Ananth Padmanabhan, Tina Thomas, and Jacob Victor
Publication Date:
12-2012
Content Type:
Working Paper
Institution:
Center for Global Legal Challenges, Yale Law School
Abstract:
Recent high-profile leaks have led to renewed calls, especially from some members of Congress, for a more rigorous leaks-prosecuting regime. In response, others, most visibly the press and certain watchdog groups, have strongly resisted the claim that a more forceful response to unauthorized disclosures benefits the American public. This report evaluates the existing leaks-regulating regime and considers which of the current reform proposals are most likely to provide optimal deterrence. First, this report outlines the myriad and sometimes contradictory interests at stake implicated by unauthorized disclosure of classified information: protecting national security, safeguarding First Amendment rights, ensuring government accountability and transparency, promoting consistency in prosecution, and furthering efficient government functioning. Second, this report examines why it has proven difficult for the government to successfully prosecute leaks. It identifies four leading reasons. First, it can be difficult to identify a leaker, given the vast proliferation of the classification system and the expansion of national security bureaucracy. Second, the government faces significant legal burdens at trial— prosecutors often have to rely on circumstantial evidence; in the case of intangible information disclosure, the government may also have to deal with a heightened scienter requirements. Third, a trial may attract unwanted attention to an issue the government prefers to keep secret and defendants sometimes try to capitalize on this by using “graymail” defenses. Finally, the recipients of unauthorized disclosures—usually members of the press—enjoy robust constitutional protections that can restrict evidence gathering.
Topic:
Governance, Legal Theory, Deterrence, Classification, and Leaks
Political Geography:
Global Focus

5624. The War on Drugs and HIV/AIDS: How the Criminalization of Drug Use Fuels the Global Pandemic

Author:
Global Commission On Drug Policy
Publication Date:
06-2012
Content Type:
Special Report
Institution:
Global Commission On Drug Policy
Abstract:
The global “war on drugs” is driving the HIV/AIDS pandemic among people who use drugs, although research has shown that repressive law enforcement forces users away from public health services and into hidden environments where HIV risk becomes markedly elevated. An assessments of the impacts concluded that many nations and international organizations tasked with reducing the drug problem have actually contributed to a worsening of community health and safety. The time for leadership is now.
Topic:
HIV/AIDS, Health, War on Drugs, and Drugs
Political Geography:
Global Focus

5625. Organic Agriculture as an Opportunity for Sustainable Agricultural Development

Author:
Verena Seufert
Publication Date:
01-2012
Content Type:
Policy Brief
Institution:
Institute for the Study of International Development, McGill University (ISID)
Abstract:
We need drastic changes in the global food system in order to achieve a more sustainable agriculture that feeds people adequately, contributes to rural development and provides livelihoods to farmers without destroying the natural resource basis. Organic agriculture has been proposed as an important means for achieving these goals. Organic agriculture currently covers only a small area in developing countries but its extent is continuously growing as demand for organic products is increasing. Should organic agriculture thus become a priority in development policy and be put on the agenda of international assistance as a means of achieving sustainable agricultural development? Can organic agriculture contribute to sustainable food security in developing countries? In order to answer these questions this policy brief tries to assess the economic, social and environmental sustainability of organic agriculture and to identify its problems and benefits in developing countries. Organic agriculture shows several benefits, as it reduces many of the environmental impacts of conventional agriculture, it can increase productivity in small farmers’ fields, it reduces reliance on costly external inputs, and guarantees price premiums for organic products. Organic farmers also benefit from organizing in farmer cooperatives and the building of social networks, which provide them with better access to training, credit and health services. Organic agriculture generally reduces the vulnerability of farmers as the higher organic prices act as buffer against the low prices and price volatility of conventional markets, as organic systems are often more resilient against extreme weather events, and as the often diverse organic crop-livestock systems provide a diverse set of outputs. On the other hand, organic farmers in developing countries need to access international markets, they require often costly certification and have increased demand for labour. Overall, organic agriculture thus provides promises for sustainable agricultural development, but its shortcomings need to also be considered. This policy brief therefore concludes with a set of specific recommendations on what policy options could best address the current problems of organic agriculture and ensure the success of an organic agriculture development strategy.
Topic:
Agriculture, Development, Food, and Sustainability
Political Geography:
Global Focus

5626. State-Sponsored Homophobia (2012)

Author:
Lucas Paoli Itaborahy
Publication Date:
05-2012
Content Type:
Special Report
Institution:
ILGA World (International Lesbian, Gay, Bisexual, Trans and Intersex Association)
Abstract:
Every year, ILGA World publishes its State-Sponsored Homophobia report, a world survey of sexual orientation laws. Since its first edition, back in 2006, ILGA World’s State-Sponsored Homophobia has been a fundamental resource for those interested in accessing the core information on legislation affecting people on the basis of their sexual orientation. Not only human rights defenders, but also civil society organisations, governmental and United Nations agencies, allies and media worldwide value the publication as one of the main sources of information on the issue. The publication is accompanied by a series of maps and charts illustrating where criminalisation, protection and recognition laws exist.
Topic:
Human Rights, Law, LGBT+, and Homophobia
Political Geography:
Global Focus

5627. 2011-2012 Guide to Women Leaders in International Affairs

Author:
Women's Foreign Policy Group (WFPG)
Publication Date:
08-2012
Content Type:
Special Report
Institution:
Women's Foreign Policy Group (WFPG)
Abstract:
WFPG's Guide to Women Leaders in International Affairs highlights women shaping foreign policy around the world and the role that they play as leaders, diplomats, and policymakers. The Guide provides an index of prominent women from across the international community, including heads of state and government, government ministers and diplomats, and leaders of international organizations and corporations.
Topic:
Foreign Policy, Government, United Nations, Women, Leadership, and NGOs
Political Geography:
Global Focus

5628. A crisis in the human rights concept in the begining of the 21st century

Author:
Yevgeniy Zhovtis
Publication Date:
10-2012
Content Type:
Special Report
Institution:
Center for the Opening and Development of Latin America (CADAL)
Abstract:
Essential human rights principles say that for citizens ‘everything which is not forbidden is allowed’ while for the government ‘everything which is not allowed is forbidden’. But authoritarian states manage to turn these principles upside down both in law and it practice.
Topic:
Human Rights, Law, Authoritarianism, and Citizenship
Political Geography:
Global Focus

5629. Peace Agreement Drafter's Handbook

Author:
Public International Law Policy Group
Publication Date:
01-2012
Content Type:
Commentary and Analysis
Institution:
Public International Law Policy Group
Abstract:
The Public International Law & Policy Group’s (PILPG) Peace Agreement Drafter’s Handbook is a comprehensive guide on how to draft a peace agreement based upon comparative analysis of more than 60 peace agreements over a period of more than 30 years. This Handbook is intended to assist drafters, mediators, negotiators, and anyone else interested in the substantive and practical contents contained in peace agreements. PILPG designed this Handbook to facilitate drafting peace agreements quickly, efficiently, and effectively. The Handbook does not proffer advice on how to negotiate or otherwise reach an agreement. Rather, the Handbook is designed to facilitate the ability of parties and other actors to translate political agreements into legally-binding treaty language. Emphasis is placed on crafting provisions in such a way as to enhance their full and effective implementation, as well as the durability of the agreement itself. The Handbook sets out the essential components and core elements found in most peace agreements because approximately 60–70 percent of all peace agreements draw on similar components and language. However, every conflict is unique and drafters may have to adjust certain elements to enhance an agreement’s relevancy and applicability to a particular conflict situation or post-conflict environment. Therefore, each chapter should be considered as ad hoc, and reshaping the new agreement to address the nuances of each party’s needs will be necessary. Similarly, the comparative provisions and sample language provided in the Handbook are by no means exclusive, recommended, or mandatory. The purpose of the Handbook is to assist a drafter prepare a well-crafted agreement and enhance the durability of future agreements by drawing upon the best practices from prior agreements. The Handbook consists of several chapters, all of which follow the same basic format. Each chapter focuses on a particular section commonly found in peace agreements, such as ceasefires, economic restructuring, and property restitution. Each chapter first identifies the basic elements in that section of a peace agreement. For instance, in ceasefires, the basic elements include the identification and definition of prohibited acts, separation of forces, and verification, supervision, and monitoring. The primary notes found in each chapter provide a brief overview of a specific element. These elements are then addressed through comparative analysis. The analysis provides for the drafter language found in other peace agreements from which the most relevant to the drafter’s conflict can be selected. Each section then concludes with sample language.
Topic:
Diplomacy, International Cooperation, Treaties and Agreements, and Peace
Political Geography:
Global Focus

5630. Post-Conflict Constitution Drafter's Handbook

Author:
Public International Law Policy Group
Publication Date:
12-2012
Content Type:
Commentary and Analysis
Institution:
Public International Law Policy Group
Abstract:
The Public International Law & Policy Group’s (PILPG) Post-Conflict Constitution Drafter’s Handbook is intended to assist drafters of constitutions in post-conflict situations. The Handbook draws from PILPG’s experience in facilitating post-conflict constitution drafting processes, as well as comparative state practice, and is based upon analysis of over 150 constitutions from post- conflict and stable states. The Handbook is divided into sixteen chapters, each of which covers a core section in post-conflict constitutions. The chapters include: the Preamble, State Structure and Devolution of Powers, the Executive, the Legislature, the Judiciary, International Legal Obligations, the Electoral System, Financial Matters and the Central Bank, Human Rights, Minority Rights, Women’s Rights, Defense and Security, the Role of Religion, Customary Law, Natural Resources, and Extraordinary Measures. Within each chapter, the Handbook describes core provisions and provides sample language that may be used as a basis for constitutional provisions. In some instances, the Handbook provides several options that the drafter may choose from. The sample language is identified as “Option One” and “Option Two.” In others, the Handbook provides optional language that drafters may include. In those instances the sample language is identified as “Optional.” The intent of this handbook is to provide the drafter with options in structuring constitutional provisions. Since every post-conflict situation is unique, the drafter may change certain elements to enhance the constitution’s relevance and applicability to a particular context. The purpose of the sample language is merely to provide options from ratified constitutions to assist the drafter. The Handbook also contains two annexes. Annex I provides a list all of the constitutions cited in the footnotes and a link to their location on the World Wide Web. Annex II provides a compilation of all the sample language. PILPG is committed to supporting constitution drafters in fulfilling their roles, and, upon request, can provide additional assistance in considering particular provisions and language.
Topic:
Diplomacy, Peacekeeping, Conflict, Negotiation, and Peace
Political Geography:
Global Focus

5631. Exports and Olympic Games: Is there a Signal Effect?

Author:
Wolfgang Maennig and Felix J. Richter
Publication Date:
01-2012
Content Type:
Working Paper
Institution:
Chair for Economic Policy, University of Hamburg
Abstract:
Rose & Spiegel (2011) find that Olympic Games host countries experience significant positive, lasting effects on exports. They interpret their results as an indication that countries use the hosting of such events to signal openness and competitiveness. We challenge these empirical findings on the grounds that a comparison of structurally different and non-matching groups of countries might suffer from a selection bias. We demonstrate that with an appropriate matching and treatment methodology, the significant Olympic effect disappears.
Topic:
Economics, International Trade and Finance, Olympics, and Exports
Political Geography:
Global Focus

5632. Reasons for Russia’s War on Ukraine and its foreseeable consequences on Latin America

Author:
Fernando Petrella
Publication Date:
06-2012
Content Type:
Commentary and Analysis
Institution:
Argentine Council for International Relations (CARI)
Abstract:
1. Is the rise of emerging powers the rise of the "rest" (as Fareed Zakaria has put it) or, the somewhat more intriguing possibility, the rise of the "different"? 2. Is there a chance to build a partnership between the traditional powers - the "western constellation", mainly the G7 countries - and the emerging countries, (the "rest"; the "different"), or can we only hope for a mere "coexistence", as we seem to have today?
Topic:
International Relations, G7, and Emerging Powers
Political Geography:
Latin America and Global Focus

5633. Missing Import Price Changes and Low Exchange Rate Pass-Through

Author:
Etienne Gagnon, Benjamin R. Mandel, and Robert J. Vigfusson
Publication Date:
01-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
A large body of empirical work has found that exchange rate movements have only modest effects on inflation. However, the response of an import price index to exchange rate movements may be underestimated because some import price changes are missed when constructing the index. We investigate downward biases that arise when items experiencing a price change are especially likely to exit or to enter the index. We show that, in theoretical pricing models, entry and exit have different implications for the timing and size of these biases. Using Bureau of Labor Statistics (BLS) microdata, we derive empirical bounds on the magnitude of these biases and construct alternative price indexes that are less subject to selection effects. Our analysis suggests that the biases induced by selective exits and entries are modest over typical forecast horizons. As such, the empirical evidence continues to support the conclusion that exchange rate pass-through to U.S. import prices is low.
Topic:
International Trade and Finance, Exchange Rate Policy, Imports, and Price
Political Geography:
Global Focus

5634. Monetary Policy in Emerging Market Economies: What Lessons From the Global Financial Crisis?

Author:
Brahima Coulibaly
Publication Date:
02-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
During the 2008-2009 global financial crisis, emerging market economies (EMEs) loosened monetary policy considerably to cushion the shock. In previous crises episodes, by contrast, EMEs generally had to tighten monetary policy to defend the value of their currencies, to contain capital flight, and to bolster policy credibility. Our study aims to understand the factors that enabled this remarkable shift in monetary policy, and also to assess whether this marks a new era in which EMEs can now conduct countercyclical policy, more in line with advanced economies. The results indicate statistically significant linkages between some characteristics of the economies and their ability to conduct countercyclical monetary policy. We find that macroeconomic fundamentals and lower vulnerabilities, openness to trade, and international capital flows, financial reforms, and the adoption of inflation targeting all facilitated the conduct of countercyclical policy. Of these factors, the most important have been the financial reforms achieved over the past decades and the adoption of inflation targeting. As long as EMEs maintain these strong economic fundamentals, continue to reform their financial sector, and adopt credible and transparent monetary policy frameworks such as inflation targeting, the conduct of countercyclical monetary policy will likely be sustainable.
Topic:
Economics, Emerging Markets, Monetary Policy, and Global Financial Crisis
Political Geography:
Global Focus

5635. Fiscal Consolidation in an Open Economy

Author:
Christopher J. Erceg and Jesper Linde
Publication Date:
04-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper uses a New Keynesian DSGE model of a small open economy to compare how the e¤ects of fiscal consolidation di¤er depending on whether monetary policy is constrained by currency union membership or by the zero lower bound on policy rates. We show that there are important di¤erences in the impact of fiscal shocks across these monetary regimes that depend both on the duration of the zero lower bound and on features that determine the responsiveness of inflation.
Topic:
Economics, Economic Theory, Fiscal Policy, and Consolidation
Political Geography:
Global Focus

5636. The Timing of Sovereign Defaults Over Electoral Terms

Author:
Nathan Foley-Fisher
Publication Date:
05-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
I construct a database that maps the timing of sovereign default decisions into elected politicians' terms of office, that provides an empirical means of investigating political economy theories of sovereign default. I find no robust patterns in the timing of default decisions over terms of office. I also find no evidence in support of the political reputation theory of sovereign debt repayment. Finally, there is some tentative evidence that elected leaders who default are also those more likely to be re-elected. Motivated by anecdotal evidence, I use a stylised model of political leaders with career concerns to demonstrate how this can occur when politicians care about re-election.
Topic:
Sovereignty, Elections, Leadership, Economic Theory, and Fiscal Policy
Political Geography:
Global Focus

5637. How Do Laffer Curves Differ Across Countries?

Author:
Mathias Trabandt and Harald Uhlig
Publication Date:
05-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We seek to understand how Laffer curves differ across countries in the US and the EU-14, thereby providing insights into fiscal limits for government spending and the service of sovereign debt. As an application, we analyze the consequences for the permanent sustainability of current debt levels, when interest rates are permanently increased e.g. due to default fears. We build on the analysis in Trabandt and Uhlig (2011) and extend it in several ways. To obtain a better fit to the data, we allow for monopolistic competition as well as partial taxation of pure profit income. We update the sample to 2010, thereby including recent increases in government spending and their fiscal consequences. We provide new tax rate data. We conduct an analysis for the pessimistic case that the recent fiscal shifts are permanent. We include a cross-country analysis on consumption taxes as well as a more detailed investigation of the inclusion of human capital considerations for labor taxation.
Topic:
Economics, Economic Theory, Human Capital, and Fiscal Policy
Political Geography:
Global Focus

5638. Exchange Rate Policy and Sovereign Bond Spreads in Developing Countries

Author:
Samir Jahjah, Bin Wei, and Vivian Zhanwei Yue
Publication Date:
06-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper empirically analyzes how exchange rate policy affects the issuance and pricing of international bonds for developing countries. We find that countries with less flexible exchange rate regimes pay higher sovereign bond spreads and are less likely to issue bonds. Quantitatively, changing a free-floating regime to a fixed regime decreases the likelihood of bond issuance by 4.6% and increases the bond spread by 1.3% on average. Furthermore, countries with real exchange rate overvaluation have higher bond spreads and higher bond issuance probabilities. Moreover, such positive effects of real exchange rate overvaluation tend to be magnified for countries with fixed exchange rate regimes. Our results suggest that choosing a less flexible exchange rate regime in general leads to higher borrowing costs for developing countries, especially when their currencies are overvalued.
Topic:
Development, Exchange Rate Policy, Fiscal Policy, and Bonds
Political Geography:
Global Focus

5639. Individual Price Adjustment Along the Extensive Margin

Author:
Etienne Gagnon, David López-Salido, and Nicholas Vincent
Publication Date:
08-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Firms employ a rich variety of pricing strategies whose implications for aggregate price dynamics often diverge. This situation poses a challenge for macroeconomists interested in bridging micro and macro price stickiness. In responding to this challenge, we note that differences in macro price stickiness across pricing mechanisms can often be traced back to price changes that are either triggered or cancelled by shocks. We exploit observed micro price behavior to quantify the importance of this margin of adjustment for the response of inflation to shocks. Across a range of empirical exercises, we find strong evidence that changes in the timing of price adjustments contribute significantly to the flexibility of the aggregate price level.
Topic:
Economics, Monetary Policy, Inflation, and Price
Political Geography:
Global Focus

5640. Individual Price Adjustment Along the Extensive Margin

Author:
Etienne Gagnon, David López-Salido, and Nicholas Vincent
Publication Date:
08-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Firms employ a rich variety of pricing strategies whose implications for aggregate price dynamics often diverge. This situation poses a challenge for macroeconomists interested in bridging micro and macro price stickiness. In responding to this challenge, we note that differences in macro price stickiness across pricing mechanisms can often be traced back to price changes that are either triggered or cancelled by shocks. We exploit observed micro price behavior to quantify the importance of this margin of adjustment for the response of inflation to shocks. Across a range of empirical exercises, we find strong evidence that changes in the timing of price adjustments contribute significantly to the flexibility of the aggregate price level.
Topic:
Economics, Business, Inflation, Macroeconomics, and Price
Political Geography:
Global Focus

5641. Commodity Price Movements in a General Equilibrium Model of Storage

Author:
David M. Arseneau and Sylvain Leduc
Publication Date:
08-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We embed the canonical rational expectations competitive storage model into a general equilibrium framework thereby allowing the non-linear commodity price dynamics implied by the competitive storage model to interact with the broader macroeconomy. Our main result is that the endogenous movement in interest rates implied under general equilibrium enhances the effects of competitive storage on commodity prices. Compared to a model in which the real interest rate is fixed, we find that storage in general equilibrium leads to more persistence in commodity prices and somewhat lower volatility. Moreover, the frequency of stockouts is lower in general equilibrium. A key mechanism driving this result is a link between the ability of the household to smooth consumption over time and the level of storage in the stochasic equilibrium. Finally, the model is used to examine the macroeconomic effects of both biofuel subsidies for ethanol producers and, separately, subsidies designed to insulate households from high food prices.
Topic:
Economics, Food, Commodities, Economic Theory, and Price
Political Geography:
Global Focus

5642. International Relative Price Levels: A Look Under the Hood

Author:
Jaime Marquez, Charles Thomas, and Corinne Land
Publication Date:
08-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper examines the structure of international relative price levels using purchasing power parities (PPP) at the product-level from the 2005 World Bank’s International Comparison Program (ICP). Our examination is motivated by questions arising from two applications using economy-wide PPPs: the measurement of real effective exchange rates (REERs) and the correlation between prices and development. Specifically, how would our view on competitiveness be affected if one were to use PPP measures that exclude non-tradable categories? Is it the case that an increase in per-capita income raises the prices of non-tradable categories? These questions are not new. What is new here is the use of relative price levels (as opposed to indexes) at the product level for 144 countries that differ greatly in their level of development.
Topic:
Development, International Trade and Finance, Exchange Rate Policy, Strategic Competition, and Price
Political Geography:
Global Focus

5643. Evaluating a Global Vector Autoregression for Forecasting

Author:
Neil R. Ericsson and Erica L. Reisman
Publication Date:
10-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Global vector autoregressions (GVARs) have several attractive features: multiple potential channels for the international transmission of macroeconomic and financial shocks, a standardized economically appealing choice of variables for each country or region examined, systematic treatment of long-run properties through cointegration analysis, and flexible dynamic specification through vector error correction modeling. Pesaran, Schuermann, and Smith (2009) generate and evaluate forecasts from a paradigm GVAR with 26 countries, based on Dées, di Mauro, Pesaran, and Smith (2007). The current paper empirically assesses the GVAR in Dées, di Mauro, Pesaran, and Smith (2007) with impulse indicator saturation (IIS)—a new generic procedure for evaluating parameter constancy, which is a central element in model-based forecasting. The empirical results indicate substantial room for an improved, more robust specification of that GVAR. Some tests are suggestive of how to achieve such improvements.
Topic:
Economics, Economic Theory, Macroeconomics, and Fiscal Policy
Political Geography:
Global Focus

5644. A State-Dependent Model for Inflation Forecasting

Author:
Andrea Stella and James H. Stock
Publication Date:
11-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We develop a parsimonious bivariate model of inflation and unemployment that allows for persistent variation in trend inflation and in the non-accelerating inflation rate of unemployment. The model, which consists of five unobserved components including the trends) with stochastic volatility, implies a time-varying vector autoregression model for changes in the rates of inflation and unemployment. The implied backwards-looking Phillips curve has a time-varying slope that is steeper in the 1970s than in the 1990s. Pseudo out-of-sample forecasting experiments indicate improvements upon univariate benchmarks. Since 2008, the implied Phillips curve has become steeper and the the non-accelerating inflation rate of unemployment has increased.
Topic:
Development, Labor Issues, Inflation, State Building, and Unemployment
Political Geography:
Global Focus

5645. Fiscal Consolidation in a Currency Union: Spending Cuts vs. Tax Hikes

Author:
Christopher J. Erceg and Jesper Linde
Publication Date:
11-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper uses a two country DSGE model to examine the effects of tax-based versus expenditure-based fiscal consolidation in a currency union. We find three key results. First, given limited scope for monetary accommodation, tax-based consolidation tends to have smaller adverse effects on output than expenditure-based consolidation in the near-term, though is more costly in the longer-run. Second, a large expenditure-based consolidation may be counterproductive in the near-term if the zero lower bound is binding, reflecting that output losses rise at the margin. Third, a "mixed strategy" that combines a sharp but temporary rise in taxes with gradual spending cuts may be desirable in minimizing the output costs of fiscal consolidation.
Topic:
Economics, Monetary Policy, Tax Systems, Macroeconomics, Fiscal Policy, Public Spending, and Liquidity
Political Geography:
Global Focus

5646. Interest Rates and the Volatility and Correlation of Commodity Prices

Author:
Joseph W. Gruber and Robert J. Vigfusson
Publication Date:
11-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We propose a novel explanation for the observed increase in the correlation of commodity prices over the past decade. In contrast to theories that rely on the increased influence of financial speculators, we show that price correlation can increase as a result of a decline in interest rates. More generally, we examine the effect of interest rates on the volatility and correlation of commodity prices, theoretically through the framework of Deaton and Laroque (1992) and empirically via a panel GARCH model. In theory, we show that lower interest rates decrease the volatility of prices, as lower inventory costs promote the smoothing of transient shocks, and can increase price correlation if common shocks are more persistent than idiosyncratic shocks. Empirically, as predicted by theory, we find that price volatility attributable to transitory shocks declines with interest rates, while, particularly for metals prices, price correlation increases as interest rates decline.
Topic:
Economics, Commodities, Interest Rates, and Price
Political Geography:
Global Focus

5647. Do Recessions Affect Potential Output?

Author:
Jane T. Haltmaier
Publication Date:
12-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
A number of previous studies have looked at the effect of financial crises on actual output several years beyond the crisis. The purpose of this paper is to examine whether the growth of potential output also is affected by recessions, whether or not they include financial crises. Trend per capita output growth is calculated using HP filters, and average growth is compared for the two years preceding a recession, the two years immediately following a recession peak, and the two years after that. Panel regressions are run to determine whether characteristics of recessions, including depth, length, extent to which they are synchronized across countries, and whether or not they include a financial crisis, can explain the cumulative four-year loss in the level of potential output following an output peak preceding a recession. The main result is that the depth of a recession has a significant effect on the loss of potential for advanced countries, while the length is important for emerging markets. These results imply that the Great Recession might have resulted in declines in trend output growth averaging about 3 percent for the advanced economies, but appear to have had little effect on emerging market trend growth.
Topic:
Economics, Global Recession, Global Markets, and Economic Growth
Political Geography:
Global Focus

5648. Banks, Sovereign Debt and the International Transmission of Business Cycles

Author:
Luca Guerrieri, Matteo Iacoviello, and Raoul Minetti
Publication Date:
12-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper studies the international propagation of sovereign debt default. We posit a two-country economy where capital constrained banks grant loans to firms and invest in bonds issued by the domestic and the foreign government. The model economy is calibrated to data from Europe, with the two countries representing the Periphery (Greece, Italy, Portugal and Spain) and the Core, respectively. Large contractionary shocks in the Periphery trigger sovereign default. We find sizable spillover effects of default from Periphery to the Core through a drop in the volume of credit extended by the banking sector.
Topic:
Debt, Sovereignty, Business, Banks, and Capital
Political Geography:
Global Focus

5649. Variance Risk Premiums and the Forward Premium Puzzle

Author:
Juan M. Londono and Hao Zhou
Publication Date:
12-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper presents evidence that the foreign exchange appreciation is predictable by the currency variance risk premium at a medium 6-month horizon and by the stock variance risk premium at a short 1-month horizon. Although currency variance risk premiums are highly correlated with each other over longer horizons, their correlations with stock variance risk premiums are quite low. Interestingly the currency variance risk premium has no predictive power for stock returns. We rationalize these findings in a consumption-based asset pricing model with orthogonal local and global economic uncertainties. In our model the market is incomplete in the sense that the global uncertainty is not priced by local stock markets and is therefore a forex-specific phenomenon—the currency uncertainty’s effects on the expected stock return are off-setting between the cash flow channel and the volatility channel.
Topic:
Economics, Risk, Currency, and Stock Markets
Political Geography:
Global Focus

5650. Sovereign Credit Risk, Banks' Government Support, and Bank Stock Returns Around the World

Author:
Ricardo Correa, Kuan-Hui Lee, Horacio Sapriza, and Gustavo Suarez
Publication Date:
12-2012
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
We explore the joint effect of expected government support to banks and changes in sovereign credit ratings on bank stock returns using data for banks in 37 countries between 1995 and 2011. We find that sovereign credit rating downgrades have a large negative effect on bank stock returns for those banks that are expected to receive stronger support from their governments. This result is stronger for banks in advanced economies where governments are better-positioned to provide that support. Our results suggest that stock market investors perceive sovereigns and domestic banks as markedly interconnected, partly through government guarantees.
Topic:
Sovereignty, Governance, Risk, Credit, Bonds, and Stock Markets
Political Geography:
Global Focus