Political Geography: United States of America

5401. U.S. Real Interest Rates and Default Risk in Emerging Economies

Author:: Nathan Foley-Fisher and Bernardo Guimaraes
Publication Date:: 08-2012
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: This paper empirically investigates the impact of changes in U.S. real interest rates on sovereign default risk in emerging economies using the method of identification through heteroskedasticity. Policy-induced increases in U.S. interest rates starkly raise default risk in emerging market economies. However, the overall correlation between U.S. real interest rates and the risk of default is negative, demonstrating that the effects of other variables dominate the anterior relationship.
Topic:: Economics, Interest Rates, Risk, and Fiscal Policy
Political Geography:: North America and United States of America

5402. Heterogeneous Workers, Optimal Job Seeking, and Aggregate Labor Market Dynamics

Author:: Brandan Epstein
Publication Date:: 08-2012
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: In the United States, the aggregate vacancy-unemployment (V/U) ratio is strongly procyclical, and a large fraction of its adjustment associated with changes in productivity is sluggish. The latter is entirely unexplained by the benchmark homogeneous-agent model of equilibrium unemployment theory. I show that endogenous search and worker-side horizontal heterogeneity in production capacity can be important in accounting for this propagation puzzle. Driven by differences in unemployed and on-the-job seekers' search incentives, the probability that any given firm with a job opening matches with a worker endowed with a comparative advantage in that job exhibits a stage of procyclical slow-moving adjustment. Consequently, so do the expected gains from posting vacancies and, hence, the V/U ratio. The model has channels through which the majority of both the V/U ratio's sluggish-adjustment properties and its elasticity with respect to output per worker can be accounted for.
Topic:: Labor Issues, Employment, Business, Unemployment, and Labor Market
Political Geography:: North America and United States of America

5403. The Return on U.S. Direct Investment at Home and Abroad

Author:: Stephanie E. Curcuru and Charles Thomas
Publication Date:: 10-2012
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: A longstanding puzzle is that the United States is a net borrower from the rest of the world, yet continues to receive income on its external position. A large difference between the yields on direct investment at home and abroad is responsible and this paper examines potential explanations for this differential. We find that most of the differential disappears after one adjusts for the U.S. taxes owed by the parent on foreign earnings, the sovereign risk and sunk costs associated with investing abroad, and the age of foreign direct investment in the U.S.. Taken together, our results suggest most of the difference in yields should remain as long as there is a difference in tax rates between the United States and the countries in which U.S. firms invest, and U.S. investments are perceived as relatively safe. This has implications for the long-run sustainability of the U.S. current account deficit which will depend, in part, on the long-run behavior of this income.
Topic:: Economics, International Cooperation, Foreign Direct Investment, Tax Systems, and Investment
Political Geography:: North America and United States of America

5404. Foreign Banks in the U.S.: A Primer

Author:: William Goulding and Daniel E. Nolle
Publication Date:: 11-2012
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: This paper describes the foreign banking landscape in the United States. It begins by establishing a vocabulary for discussion of the subject, and then identifies a number of important data-related issues. With that information in hand, the remainder of the paper focuses on identifying the most important underlying trends on both sides of the balance sheets of foreign-owned banks' U.S. operations. At each step, the investigation considers how foreign-owned banks compare to U.S.-owned domestic banks, and how two types of foreign banks operations in the U.S. -- branches and agencies of foreign banks (FBAs), and foreign-owned subsidiary banks (FSUBs) -- compare to each other. The banking sector in the U.S. experienced substantial swings in performance and stability over the decade surrounding the 2008-2009 financial crisis and changes in every major dimension of foreign-owned banks' assets and liabilities were even larger than for domestic banks. Changes were especially large at FBAs. For example, cash balances came to dominate the assets side of FBAs’ aggregate balance sheet, with the absolute level of cash balances larger than those of domestic U.S. banks beginning in 2011, despite the fact that total assets of domestic U.S. banks are five times the assets of FBAs. Further, the recent unprecedented build-up of cash balances by FBAs was almost entirely composed of excess reserves. Changes in FBAs' liabilities-side activities have also been large, with much funding coming from large wholesale deposits and net borrowing from their foreign parents and related offices abroad.
Topic:: Foreign Direct Investment, Fiscal Policy, Capital, Banking, and Funding
Political Geography:: North America and United States of America

5405. An action plan for US policy in the Americas

Author:: Robert F. Noriega and José R. Cárdenas
Publication Date:: 12-2012
Content Type:: Special Report
Institution:: American Enterprise Institute for Public Policy Research
Abstract:: As US policymakers struggle to overcome sluggish economic growth while confronting abiding security threats, there is a stronger argument than ever for fortifying US partnerships with countries in the Americas whose economies and security are intertwined with America’s own economy and security. While the United States has been preoccupied with other regions, most Latin American nations have continued to modernize their market economies; two nations in particular—Brazil and Mexico—are emerging as global players. Therefore, the time is right to restore a strong bipartisan consensus in the United States that promotes a constructive, free-market growth agenda in the Americas. Practical initiatives—not rhetoric—will encourage America and its neighbors to find common ground for their collective benefit.
Topic:: Security, Foreign Policy, Partnerships, Economy, and Economic Crisis
Political Geography:: Latin America and United States of America

5406. Diplomatic Engagement: The Path to Avoiding War and Resolving the Nuclear Crisis

Author:: Greg Thielmann and Benjamin Seel
Publication Date:: 01-2012
Content Type:: Policy Brief
Institution:: Arms Control Association
Abstract:: U.S.-Iranian relations are bad and getting worse. The New Year has opened with rising tensions between the United States and Iran and an increased prospect of war—either intentional or accidental. The Nov. 2011 report of the International Atomic Energy Agency details why the international community remains deeply concerned about Tehran’s nuclear ambitions. While sanctions and other measures have slowed down Iran’s movement toward acquiring a nuclear weapons option, Tehran continues to improve its nuclear capabilities and has so far refused to implement the confidence-building steps necessary to ensure it is not pursuing nuclear weapons. The latest round of U.S. unilateral sanctions has been met with Iranian threats of closing the Straits of Hormuz through which 35% of the world’s seaborne oil passes. Iran reinforced those threats with ten days of military exercises in nearby waters that included launches of anti-ship missiles. These and other developments highlight how relatively minor incidents could quickly escalate into a major military conflict. At the same time, Iran proposed on December 31 a new round of talks with the P5+1 group of nations, suggesting that that diplomatic options to resolve the nuclear concerns about its nuclear activities have not been exhausted. In the following Iran Nuclear Brief, ACA Senior Fellow Greg Thielmann argues that in order to avoid unintentional conflict with Iran, there is an urgent need to establish better lines of bilateral communication at all levels—between military forces in the region, between diplomats, and between senior officials. Thielmann also explains why pragmatic diplomatic engagement is essential to a successful strategy to prevent a nuclear-armed Iran.
Topic:: Arms Control and Proliferation, Diplomacy, Nuclear Weapons, Sanctions, and Engagement
Political Geography:: Iran, Middle East, North America, and United States of America

5407. Long-Range Ballistic Missile Development: A Tale of Two Tests

Author:: Greg Thielmann
Publication Date:: 05-2012
Content Type:: Policy Brief
Institution:: Arms Control Association
Abstract:: North Korea's failed attempt to launch a satellite from its Unha-3 space rocket on April 13 and India's successful flight test of the Agni-5 long-range missile on April 19 marked significant events in the ballistic missile development programs of the two countries. These two ballistic missile test events not only reveal technical information about system performance, but also invite reflection on U.S. policy responses. The demonstration of North Korean failure and Indian success is only the most readily accessible feature of the story. The broader implications for U.S. nonproliferation and security policies are more complicated and less obvious. Both cases imply U.S. failure to accurately assess threats and to adopt appropriate responses for mitigating those threats.
Topic:: Security, Arms Control and Proliferation, Nuclear Weapons, and Weapons
Political Geography:: India, North Korea, and United States of America

5408. Submarine Nuclear Reactors: A Worsening Proliferation Challenge

Author:: Greg Thielmann
Publication Date:: 07-2012
Content Type:: Policy Brief
Institution:: Arms Control Association
Abstract:: A long submerged flaw in the nuclear Non-Proliferation Treaty (NPT) surfaced conspicuously in June when Iran announced it intended to build a nuclear-powered submarine. The treaty does not ban a non-nuclear weapons state's production of weapons-grade uranium if it is to be used to power a naval reactor. What many now consider a proliferation loophole in the NPT was first seen as theoretical because only nuclear weapons states had nuclear-powered submarines when the treaty was negotiated. Now, as more and more countries initiate or announce intentions to initiate nuclear-powered submarine programs, this excuse for enriching uranium to levels beyond the needs of civilian power reactors intensifies the challenge of achieving U.S. nonproliferation goals. The United States should adjust its policy by: 1) choosing a reactor for the Ohio-class SSBN follow-on that does not require weapons-grade fuel and 2) pushing for multilateral action to close or at least narrow the NPT loophole that allows for non-nuclear weapons states to produce highly enriched uranium for naval reactors.
Topic:: Arms Control and Proliferation, Nuclear Weapons, Treaties and Agreements, Submarines, and Nonproliferation Treaty (NPT)
Political Geography:: Iran, Middle East, North America, and United States of America

5409. What does a second Obama term mean for Bosnia and Herzegovina and the Balkan region?

Author:: Heidi Hullinger
Publication Date:: 11-2012
Content Type:: Policy Brief
Institution:: The Centre for Security Studies
Abstract:: The 2012 US presidential elections had Europe on its toes, hoping that US citizens chose a candidate that would surely win if the rest of the world had a vote. But Bosnians had little to go on, they’ve only known Obama to be the hands off sort, leaving the region to the expertise of Biden and Clinton and their deputies. It is hard for Bosnians to know what the election results would mean if Romney were elected. The European Union was largely absent from presidential discussions, so why would the Balkan region and enlargement countries be a topic of discussion? Regional policy has been an exercise in cooperation with the European Union, taking a backseat to the Accession process and contributing with aid and missions that focus on assisting Bosnia and Herzegovina in fulfilling NATO accession conditions. As a result, the US gets to play good cop, while the EU works, so far fruitlessly, to tackle corruption, constitutional reform and other hot button topics that cast the EU as bad cop. The appointment of the next US Secretary of State is the latest topic of conversation making headlines in the US. However, US-Bosnian relations and their engagement in the region is unlikely to see any major changes. Either way, the US may decide that it better serve Bosnians and its constituents at home by losing the good cop act and put tangible pressure on politicians.
Topic:: NATO, Elections, European Union, Barack Obama, and Regional Politics
Political Geography:: Balkans, United States of America, and Bosnia and Herzegovina

5410. 2012 US Peace Index

Author:: Institute for Economics and Peace (IEP)
Publication Date:: 04-2012
Content Type:: Special Report
Institution:: Institute for Economics & Peace (IEP)
Abstract:: The United States Peace Index (USPI), produced by the Institute for Economics and Peace (IEP), provides a comprehensive measure of U.S. peacefulness dating back to 1991. It also provides an analysis of the socio-economic measures that are associated with peace as well as estimates of the costs of violence and the economic benefits that would flow from increases in peace. This is the second edition of the U.S. Peace Index.
Topic:: Economics, Education, Health, Violence, Peace, Social Capital, and Socioeconomics
Political Geography:: North America and United States of America

5411. Violence Containment Spending in the United States

Author:: Institute for Economics and Peace (IEP)
Publication Date:: 09-2012
Content Type:: Special Report
Institution:: Institute for Economics & Peace (IEP)
Abstract:: It has been well established that violence has a marked effect on economic activity with many studies demonstrating the negative economic impacts of crime, incarceration, insurgencies and especially war. However, there have been no studies to systematically aggregate the economic costs of all forms of violence, including the costs of prevention and protection, to understand how much of an economy is captured by violence and violence containment. For the purposes of classification, this form of economic activity has been defined as the violence containment industry (VCI). Aggregated as an industry sector it would be the single largest in the United States. The Institute for Economics and Peace (IEP) has developed a new methodology to quantify the cost of violence and the economic gains associated with peace for the U.S. economy. All expenditure that is related to violence containment, whether performed by the military on the international stage or domestically through the provision of services to fight crime, has been classified together as the Violence Containment Industry or alternately, as violence containment spending. This provides a framework to classify and better understand a substantial part of the U.S. economy as well as providing a platform for future research. Given the sheer size of the U.S. economy that is dedicated to containing violence, quantifying the expenditure as a discrete industry creates a unique basis for further analysis and debate.
Topic:: Economy, Violence, Peace, Society, and Containment
Political Geography:: North America and United States of America

5412. Not Congruent but Quite Complementary: U.S. and Chinese Approaches to Nontraditional Security

Author:: Lyle J. Goldstein
Publication Date:: 07-2012
Content Type:: Special Report
Institution:: China Maritime Studies Institute, U.S. Naval War College
Abstract:: U.S.-China relations, difficult in the best of times, have lurched in a dangerous direction since 2009. Against the backdrop of a weakened global economy and sharpened ideological tensions, there has been a disturbing new atmosphere of crisis in East Asia over the last two years, with incidents occurring in greater frequency and sowing serious doubts about the sustainability of the "long peace" that this region has enjoyed for decades. Indeed, any one of the following incidents could have escalated into a serious regional crisis: the sinking of the South Korean frigate Cheonan; the collision between a Japanese coast guard cutter and a Chinese fishing trawler and the ensuing Chinese restrictions on the export of rare-earth minerals; and a string of confrontations between Chinese patrol ships and vessels from both Vietnam and the Philippines.
Topic:: Security, Foreign Policy, Bilateral Relations, and Navy
Political Geography:: China, Asia, North America, and United States of America

5413. Full Issue

Author:: Mojúbàolú Olufúnké Okome, Bertrade Ngo Ngijol-Banoum, Abdul Karim Bangura, Yínká Dánsàlámì, and Ramón Grosfoguel
Publication Date:: 01-2011
Content Type:: Journal Article
Journal:: Ìrìnkèrindò: A Journal of African Migration
Institution:: Ìrìnkèrindò: a Journal of African Migration
Abstract:: CONTENTS Editorial Dimensions of African Migration to the United States: Labor, Brain Drain, Identity Formation and Naturalization — Mojúbàolú Olúfúnké Okome and Bertrade Ngo Ngijol-Banoum ... 1 Articles African Immigration and Naturalization in the United States from 1960 to 2002: A Quantitative Determination of the Morris or the Takougang Hypothesis — Abdul Karim Bangura .. 27 The Pass to the United States of America — Yínká Dánsàlámì .................................................. 36 Puerto Rican Labor Migration To the United States: Modes of Incorporation, Coloniality, and Identities. — Ramón Grosfoguel .................................................................................... 43 Skill, Professionalism, Self-Esteem and Immigration: The Case of Nigerian Physical Therapists — Adétóyèje Oyěyemí..................................................................................................... 69 African Development and the Immigration of Its Intelligentsia: An Overview — E. Ike Udogu 94 Africans to America: The Unfolding of Identity — Mary Ann Watson .................................... 118
Topic:: Development, Migration, History, Labor Issues, Immigration, Brain Drain, Identity, and Skills
Political Geography:: Africa, United States of America, and Puerto Rico

5414. Full Issue

Author:: Sefi Atta, Kathleen Stassen Berger, Jacqueline Copeland Carson, Kinuthia Macharia, and Femi Ojo-Ade
Publication Date:: 01-2011
Content Type:: Journal Article
Journal:: Ìrìnkèrindò: A Journal of African Migration
Institution:: Ìrìnkèrindò: a Journal of African Migration
Abstract:: CONTENTS Articles Independence Day — Sefi Atta....................................................................................................... 1 Immigration, Psychosocial Development: Implications for Africa and the US — Kathleen Stassen Berger ................................................................................................................. 30 “Africa” in Minnesota: New Models of Translocal Culture — Jacqueline Copeland Carson . 60 Criminal Convictions That Can Cause Non-U.S. Citizen Removal From The United States — Oláyínká Dánsàlámì ........................................................................................................ 71 African Immigrants in the Washington DC Metropolitan Area: Immigration Waves and Community Building — Kinuthia Macharia ................................................................... 79 Living In Paradise?: Africans In America— Femi Ojo-Ade ...................................................... 111 Rotatory Credit Schemes: A Comparative Analysis of an African Traditional Economic Institution in Contemporary Africa and its Diaspora — Iheanyi N. Osondu ................ 138 Oromo African Immigrants’ Experiences with Child Care — Deborah Ceglowski, Jaesook Gilbert, Greg Wiggan, Tekla Johnson, and Rosemary Traore ...................................... 166 Return Migration to Asmara, Eritrea: Readjustment Challenges — Berhane Keleta Chirum .. 221 Book Reviews Creating Africa in America: Translocal Identity in an Emerging World City — Jacqueline Copeland-Carson............................................................................................................ 245 Embracing the Infidel: Stories of Muslim Immigrants on the Journey West — Terri Bennett . 254 Film Reviews J’y Crois - I Believe in it: The Road to Decentralization in Mali, 2004 — Ekerete Udoh ........ 256 In Rwanda We Say…The Family That Does Not Speak Dies, 2004 — Ekerete Udoh ............ 258 The Price of Aid, 2004 — Ekerete Udoh .................................................................................. 260
Topic:: Migration, Diaspora, Immigration, Film, Credit, Identity, and Child Care
Political Geography:: Africa, Rwanda, Eritrea, Mali, and United States of America

5415. Full Issue

Author:: Mojúbàolú Olufúnké Okome
Publication Date:: 12-2011
Content Type:: Journal Article
Journal:: Ìrìnkèrindò: A Journal of African Migration
Institution:: Ìrìnkèrindò: a Journal of African Migration
Abstract:: CONTENTS Articles Omolúàbí: The Way of Human Being: An African Philosophy’s Impact on Nigerian Voluntary Immigrants’ Educational and Other Life Aspirations — Dolapo Adeniji-Neill................. 1 Liberian Immigrants in Rhode Island: The Trauma, the Bliss, and the Dilemma — P. Khalil Saucier, Ph.D.................................................................................................................... 29 Why Maine? Secondary Migration Decisions of Somali Refugees — Kimberly A. Huisman..... 55 “'Yo, Jose Dupard, pardo libre natural y vecino de esta ciudad': Masculinity, Race and Respectability in Spanish New Orleans — Megan Kareithi ............................................ 99 Economic Impact of Immigration on African Americans — Stacey-Ann Wilson, Ph.D............ 128 The African Immigrant Family in the United States of America: Challenges and Opportunities — Sulayman S. Nyang ......................................................................................................... 150 Art Papers Afrikea (2009) — Adejoke Tugbiyele ......................................................................................... 172 Altar and the Throne: The Last Fuck and the Sweet Taste of Victory (2010) — Adejoke Tugbiyele ........................................................................................................................ 176 Gèlèdé Tupperware Party — Adejoke Tugbiyele........................................................................ 179 Opinions Blacklisting of Nigeria as the New Den of Terrorists? The Perspective of a Nigerian Student in the U.K. — Olugu Ukpai ................................................................................................ 184 Poetry Lamentations to Oluorogbo — Ademola Araoye........................................................................ 213
Topic:: Economics, Education, Migration, Race, Terrorism, Immigration, Refugees, Philosophy, Family, Masculinity, and Poetry
Political Geography:: Africa, Liberia, Nigeria, Somalia, and United States of America

5416. TACIT AMENDMENTS

Author:: Oona A. Hathaway, Haley Nix, Saurrabh Sanghvi, and Sara Solow
Publication Date:: 11-2011
Content Type:: Working Paper
Institution:: Center for Global Legal Challenges, Yale Law School
Abstract:: As a general rule, the President is “‘without authority, except by and with the advice and consent of the Senate, to modify a treaty provision.’”2 Thus, in amending a treaty, parties effectively sign and ratify a new treaty, to which the standard treaty processes apply. However, numerous treaties have established procedures for modifications to the regime that do not rise to the level of formal amendments to the treaty. This report focuses on such “unratified treaty amendments”—which include what are called “tacit amendments.” Unratified amendments are amendments to treaties that are made without formal Senate ratification.3 They have proven a useful tool in creating robust treaty regimes in a changing world. Just as the use of executive agreements in general has expanded rapidly in the past century,4 treaty regimes increasingly have adopted amendment processes that do not require a full ratification process. And just as executive agreements have raised questions about Senate prerogatives, so too have unratified amendments. There are two primary ways that the U.S. government modifies underlying treaties through an unratified amendment5 —first, through the use of executive agreements; and, second, through the use of tacit amendments. Part I describes how each process works. It argues that both pass constitutional muster so long as the Senate has provided its clear advice and consent to the use of such processes (although not necessarily to the substance of the modifications) in the first instance. Part II outlines and evaluates the various ways in which the Senate has responded to attempts to modify treaties by executive agreement or by tacit amendment in the past. It concludes that the Senate’s requirements of prior notice and its focus on technical provisions, while not always easy to achieve in practice, are sensible ways to maintain Senate prerogatives. Part III concludes.
Topic:: Foreign Policy, Treaties and Agreements, Domestic Politics, and Federalism
Political Geography:: North America and United States of America

5417. Lessons from the Past for Foreign Sovereign Immunity After Samantar v. Yousuf

Author:: Saurrabh Sanghvi
Publication Date:: 11-2011
Content Type:: Working Paper
Institution:: Center for Global Legal Challenges, Yale Law School
Abstract:: In Samantar v. Yousuf,2 the Supreme Court held that an individual sued personally for acts taken as a foreign official did not enjoy any immunity under the Foreign Sovereign Immunities Act of 1976 (FSIA), a statute governing when courts should provide foreign states with sovereign immunity.3 After Samantar, immunity in any individual official suit will likely be determined through reference to the pre-FSIA federal common law. This report outlines the pre-FSIA practices4 of the U.S. Department of State (“State Department”) and the courts to provide insight into how individual official suits may be handled in the wake of Samantar.5 If courts follow historical practice, they will likely rely heavily on State Department “suggestions of immunity” in determining whether immunity will be granted to individuals for actions taken as foreign officials. Moreover, when the Department is silent, the courts will likely interpret State Department policy to determine whether immunity is appropriate.
Topic:: Foreign Policy, Law, Legal Theory, and Immunity
Political Geography:: North America and United States of America

5418. Stuck in the Middle? U.S.-China Relations and the Korean Peninsula

Author:: EAI Security Net
Publication Date:: 02-2011
Content Type:: Working Paper
Institution:: East Asia Institute (EAI)
Abstract:: Not since the visit of Deng Xiapoing in 1979 has a Chinese state visit attracted so much attention as President Hu Jintao’s visit to the United States on January 19, 2011. After a rocky year in U.S.-China relations following President Barack Obama’s visit to Beijing in November 2009, attention naturally focused on the future direction of the relationship between the two countries. Further attention imbued with curiosity also centered on how a relatively declining United States and a rapidly rising China would shape the world order in the long-run. Also following North Korea’s provocations in 2010, the world carefully looked for any strong emphasis on the issue of the Korean Peninsula as a regional challenge. There have been two different interpretations in regards to the results of the U.S.-China summit: an optimistic outlook that the two countries will become cooperative partners and move forward as underscored in the Joint Statement, and pessimistic views that the two powers will merely continue the repeated pattern of conflict and check that they have been doing since November 2009. A similar mix of opinions prevails in regards to the Korean Peninsula. Some expect immediate improvement in inter-Korean relations and the resumption of the Six-Party Talks, while others criticize the U.S.-China summit for barely papering over the cracks. However, neither hasty optimism nor gloomy pessimism is appropriate at this time. There is a need to utilize a comprehensive response strategy, which goes beyond narrow political understandings, based on a precise analysis of the results of the summit.
Topic:: Diplomacy, International Cooperation, Regional Cooperation, Hegemony, and Summit
Political Geography:: China, Asia, South Korea, North Korea, North America, and United States of America

5419. Lost in Translation? The Clash of Core Interests and the Future of U.S.-China Relations

Author:: Yang Gyu Kim
Publication Date:: 07-2011
Content Type:: Working Paper
Institution:: East Asia Institute (EAI)
Abstract:: In studying the dynamics of U.S.-China relations, one of the most important questions is what data should be used. A review of all classified documents from the two countries may be the ideal way to secure reliable data, but it is not viable. Interviews with key officials in the two governments could be the next best choice but it is still extremely hard to know whether that person is telling the truth or not. In this regard, the official statements of the two countries are the only reliable and authoritative source for research. Of course in official statements, propaganda may be included and they cannot always be taken at face value. However, as information is ubiquitous in this era of globalization, a government would pay a tremendous cost if it expresses contradictory policies in its own official statements. We can therefore assume that official statements provide information on the general direction of the two country’s policies. Which documents can be accepted as official statements? The United States, of course, makes its policies well known throughout the world and has shown high levels of consistency across different departments of the government over its foreign policy. The official statements of the United States are therefore easily accessible through various official government websites including the State Department. On the other hand, China maintains a rather closed socialist system and there are not many documents that could be identified as official statements except for the regular press conferences of the Foreign Ministry. Even with these press conferences, the spokesperson usually responds to selected questions raised by the media. This brings a considerable limitation in collecting official statements from China. In order to address this difficulty, U.S.-China Relations (UCR) Statement Factsheets include editorials of the news outlets run by the Chinese Communist Party (CCP) as official statements. Data collection began from November 2010. This period is important because first, it marks one year since the U.S.-China summit in November 2009 and second, it coincides with the G20 Seoul Summit held in November. Particularly the G20 summit was meaningful as it “clearly demonstrated that we are in a period of transition where the United States is no longer the world’s hegemon, yet no new power emerges.” (Sohn and Cho 2010, 1) Third, Xi Jinping was appointed as vice chairman of the Central Military Commission on 18 October, 2010 and is expected to be the next leader of China. This appointment then signals a new period where the next generation of leaders in the CCP will begin to assert their influence and views. For both the statements from the United States and China, English texts are used presented by either the official government department or a CCP-affiliated media outlet. The reason for not using Chinese language sources is that official statements in Chinese tend to be directed at a domestic audience, and the focus here is on the international messages that are being conveyed. The data is collected everyday and published as a monthly report, UCR Statement Factsheet. The UCR Briefing will analyze the UCR Statement Factsheets and summarize what has happened during the period in narrative form. The UCR Briefing will also focus on critical factors and issues in understanding the present and future of U.S.-China relations. This UCR Briefing No. 1 covers official statements of the United States and China from November 2010 to February 2011.
Topic:: Foreign Policy, International Cooperation, Regional Cooperation, and Economic Cooperation
Political Geography:: China, Asia, North America, and United States of America

5420. Foreign Policy Perceptions in Turkey

Author:: Aybars Görgülü, Enis Erdem Aydın, Mensur Akgün, and Sabiha Senyücel Gündoğar
Publication Date:: 06-2011
Content Type:: Special Report
Institution:: Turkish Economic and Social Studies Foundation (TESEV)
Abstract:: This report contains the results of a survey conducted on 6-14th December 2010 by KA Research that has been evaluated by TESEV Foreign Policy Programme. Based on a sample size of 1,000, the survey aims to understand the perception of foreign policy in Turkey. A first of its kind for TESEV, the survey includes striking findings that may be of interest to decision-makers in Turkey and those following Turkey around the world. This report finds many results for the opinion on the foreign policy vision of Turkey concerning the Turkish government, the US government, the EU and the Middle East.
Topic:: International Relations, Foreign Policy, and Geopolitics
Political Geography:: Turkey, Middle East, Cyprus, United States of America, and European Union

5421. A US Perspective on Turkey in the Middle East

Author:: David Barchard and Matthew Duss
Publication Date:: 05-2011
Content Type:: Special Report
Institution:: Turkish Economic and Social Studies Foundation (TESEV)
Abstract:: In this article, Matthew Duss analyses the evolution of the US-Turkey relations since the Justice and Development Party (the AK Party) has come to the power in Turkish politics (in past 10 years) with regards to the perceptions of the American people and the American government. It is stated that the relationship has been developed better during the Obama Administration comparing with the Bush era. There are different opinions on the importance of Turkey in American National Policy. Among foreign policy analysts, however, the significance of Turkey’s foreign policy evolution is more clearly understood, though there is some disagreement over whether this evolution is a good or bad thing for U.S. interests. However, there is considerable agreement that the relationship will continue to be a very consequential one for the United States, and thus that U.S. policy should reflect this.
Topic:: International Relations, Foreign Policy, and Bilateral Relations
Political Geography:: Turkey, Middle East, and United States of America

5422. Korea-U.S. Free Trade Agreement: Analysis of Public Opinion Surveys on Ratification

Author:: Wonchil Chung
Publication Date:: 10-2011
Content Type:: Working Paper
Institution:: East Asia Institute (EAI)
Abstract:: There was a lot at stake for the Korean Congress in August 2011, and one of them was the Korea-U.S. Free Trade Agreement (KORUS FTA). Regarding this bill, the two main parties have been pitted against one another. The Grand National Party (GNP) asserts that the FTA bill has at least to be submitted to the Standing Committee; while the Democratic Party (DP) suggests the 10+2 renegotiation proposal (see Appendix 1) for the KORUS FTA that impose restrictions on the arrangement. If the DP's proposal is agreed upon by the National Congress, ratification becomes impossible, since the proposal will allow the negotiation of the FTA, in progress for more than four years (2006 to February 2011), to be taken back to square one. It is true that the KORUS FTA has a lot to offer when it comes to economic aspects, as the Ministry of Strategy and Finance (MOSF) pointed out in its analysis (see Appendix 2). With that in mind, the GNP risks its political position, as public opinion displays distrust and dissatisfaction over the imbalance between Korea and the United States shown during the progress of the negotiation (see Appendix 3).
Topic:: International Cooperation, International Trade and Finance, and Economic Cooperation
Political Geography:: Asia, South Korea, North America, and United States of America

5423. 9/11: Ten Years Later

Author:: Gateway House
Publication Date:: 09-2011
Content Type:: Special Report
Institution:: Gateway House: Indian Council on Global Relations
Abstract:: On September 12, 2001, a day after 9/11, the Times of India published a story titled, ―India hopes U.S. will now pressurise Pak.‖ At the time, this relayed a common national sentiment – India may finally get the United States to become a close ally against Pakistan-sponsored terrorism, and help India in eradicating terrorism. Ten years hence, neither has the U.S. taken a position against Pakistan, nor has India prepared itself better to fight terrorism and insurgency on its home ground. A massive explosion at the Delhi High Court this week left at least 14 dead and some 60 injured. It served as a horrific reminder that India continues to be at the receiving end of terrorism. This is the third major terrorist attack in Delhi since 9/11, following the one on Parliament on December 2001 and another at the Sarojini Nagar Market in October 2005. Mumbai has seen similar attacks with the serial blasts in March 1993, train bombings in July 2006, the 26/11 attacks of November 2008 and coordinate attacks of July 2011. Many more such incidents have taken place across the country in smaller cities like Jaipur and Pune. Yet, rather than designing and executing ways to secure our borders, we remain enamored with the effects of 9/11 and anniversaries of attacks in London, Madrid, and elsewhere. The government‘s response is the same – they had some intelligence, law enforcement was in a state of alert, but there was no actionable intelligence, and of course, somewhere along the chain of command between the Home Minister and the constable on the street, our counter-terrorism strategy was never converted into skills or systems that would prove useful. The usually communicative, media-friendly politicians have no comment to give, reflecting only their incapability or worse, indifference. The media gives it due importance for 24 hours, then in the absence of any new information from the government or the public, moves on to other news-worthy items.
Topic:: Security, Terrorism, Counter-terrorism, and 9/11
Political Geography:: Pakistan, South Asia, India, and United States of America

5424. 9/11: Ten Years Later

Author:: Gateway House
Publication Date:: 09-2011
Content Type:: Special Report
Institution:: Gateway House: Indian Council on Global Relations
Abstract:: On September 12, 2001, a day after 9/11, the Times of India published a story titled, ―India hopes U.S. will now pressurise Pak.‖ At the time, this relayed a common national sentiment – India may finally get the United States to become a close ally against Pakistan-sponsored terrorism, and help India in eradicating terrorism. Ten years hence, neither has the U.S. taken a position against Pakistan, nor has India prepared itself better to fight terrorism and insurgency on its home ground. A massive explosion at the Delhi High Court this week left at least 14 dead and some 60 injured. It served as a horrific reminder that India continues to be at the receiving end of terrorism. This is the third major terrorist attack in Delhi since 9/11, following the one on Parliament on December 2001 and another at the Sarojini Nagar Market in October 2005. Mumbai has seen similar attacks with the serial blasts in March 1993, train bombings in July 2006, the 26/11 attacks of November 2008 and coordinate attacks of July 2011. Many more such incidents have taken place across the country in smaller cities like Jaipur and Pune. Yet, rather than designing and executing ways to secure our borders, we remain enamored with the effects of 9/11 and anniversaries of attacks in London, Madrid, and elsewhere. The government‘s response is the same – they had some intelligence, law enforcement was in a state of alert, but there was no actionable intelligence, and of course, somewhere along the chain of command between the Home Minister and the constable on the street, our counter-terrorism strategy was never converted into skills or systems that would prove useful. The usually communicative, media-friendly politicians have no comment to give, reflecting only their incapability or worse, indifference. The media gives it due importance for 24 hours, then in the absence of any new information from the government or the public, moves on to other news-worthy items.
Topic:: Security, Foreign Policy, Terrorism, Borders, and 9/11
Political Geography:: Pakistan, South Asia, India, and United States of America

5425. Scaling Japan’s Defense Needs: Airpower in Asia and the FX Program

Author:: Dan Blumenthal
Publication Date:: 11-2011
Content Type:: Policy Brief
Institution:: Project 2049 Institute
Abstract:: The widespread modernization of Asian air forces is changing the strategic landscape in the Asia-Pacific. The United States, South Korea, Taiwan, Australia, Singapore, and India are all engaged in upgrading their military’s fighter fleets as security competition in the region is on the rise. Among Asia’s burgeoning air force modernization programs, the most important to U.S. security (apart from America’s own) is that of the Japan Air Self-Defense Force (JASDF) — Tokyo is the United States’ closest Asian ally and U.S.-Japan alliance is the lynchpin of America’s alliance structure in the region.
Topic:: Security, Defense Policy, Armed Forces, Modernization, and Air Force
Political Geography:: Japan, India, Taiwan, Asia, South Korea, Australia, Singapore, and United States of America

5426. Strengthening Fragile Partnerships: An Agenda for the Future of U.S.-Central Asia Relations

Author:: Evan A. Feigenbaum
Publication Date:: 02-2011
Content Type:: Working Paper
Institution:: Project 2049 Institute
Abstract:: A comprehensive new report from the Central Asia Study Group and the Project 2049 Institute calls on American and Central Asian leaders to rise to the challenges and opportunities in the region. The report proposes an action agenda on economics, energy, governance, security, social development, and regional cooperation, and places particular emphasis on the importance of reconnecting Central Asian countries to the global economy. The United States needs to reassess its strategies and policies and reaffirm its commitment to remain engaged with the nations of Central Asia even as the U.S. draws down forces from Afghanistan.
Topic:: International Relations, Security, Development, Partnerships, Economy, and Energy
Political Geography:: Central Asia, North America, and United States of America

5427. China’s Electronic Intelligence (ELINT) Satellite Developments: Implications for U.S. Air and Naval Operations

Author:: Ian Easton and Mark Stokes
Publication Date:: 02-2011
Content Type:: Working Paper
Institution:: Project 2049 Institute
Abstract:: A review of authoritative Chinese writings indicate that the People’s Republic of China is researching, developing, testing, and deploying a number of electronic intelligence (ELINT) satellites for the tracking and targeting of mobile air defense systems and ships at sea. This program has potentially serious and immediate implications U.S. and allied air and naval operations in the Asia-Pacific region.
Topic:: Defense Policy, Intelligence, Armed Forces, and Satellite
Political Geography:: China, Asia, Asia-Pacific, and United States of America

5428. Nonlinearities in the Oil Price-Output Relationship

Author:: Lutz Kilian and Robert J. Vigfusson
Publication Date:: 01-2011
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: It is customary to suggest that the asymmetry in the transmission of oil price shocks to real output is well established. Much of the empirical work cited as being in support of asymmetries, however, has not directly tested the hypothesis of an asymmetric transmission of oil price innovations. Moreover, many of the papers quantifying these asymmetric responses are based on censored oil price VAR models which recently have been shown to be invalid. Other studies are based on dynamic correlations in the data that do not shed light on the central question of whether the structural responses of real output triggered by positive and negative oil price innovations are asymmetric. Recently, a number of new methodologies have been introduced and applied to the problem of testing and quantifying asymmetric responses of U.S. real economic activity to positive and negative oil price innovations. Our objective is to put this literature in perspective, to contrast it with more traditional approaches, to highlight directions for further research, and to reconcile some seemingly conflicting results reported in the literature.
Topic:: Economics, Energy Policy, International Trade and Finance, Oil, and Natural Resources
Political Geography:: North America and United States of America

5429. International Capital Flows and the Returns to Safe Assets in the United States, 2003-2007

Author:: Ben S. Bernanke, Carol C. Bertaut, Laurie Pounder DeMarco, and Steve Kamin
Publication Date:: 02-2011
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: A broad array of domestic institutional factors--including problems with the originate-to-distribute model for mortgage loans, deteriorating lending standards, deficiencies in risk management, conflicting incentives for the GSEs, and shortcomings of supervision and regulation--were the primary sources of the U.S. housing boom and bust and the associated financial crisis. In addition, the extended rise in U.S. house prices was likely also supported by long-term interest rates (including mortgage rates) that were surprisingly low, given the level of short-term rates and other macro fundamentals--a development that Greenspan (2005) dubbed a "conundrum." The "global saving glut" (GSG) hypothesis (Bernanke, 2005 and 2007) argues that increased capital inflows to the United States from countries in which desired saving greatly exceeded desired investment--including Asian emerging markets and commodity exporters--were an important reason that U.S. longer-term interest rates during this period were lower than expected. This essay investigates further the effects of capital inflows to the United States on U.S. longer-term interest rates; however, we look beyond the overall size of the inflows emphasized by the GSG hypothesis to examine the implications for U.S. yields of the portfolio preferences of foreign creditors. We present evidence that, in the spirit of Caballero and Krishnamurthy (2009), foreign investors during this period tended to prefer U.S. assets perceived to be safe. In particular, foreign investors--especially the GSG countries--acquired a substantial share of the new issues of U.S. Treasuries, Agency debt, and Agency-sponsored mortgage-backed securities. The downward pressure on yields exerted by inflows from the GSG countries was reinforced by the portfolio preferences of other foreign investors. We focus particularly on the case of Europe: Although Europe did not run a large current account surplus as did the GSG countries, we show that it leveraged up its international balance sheet, issuing external liabilities to finance substantial purchases of apparently safe U.S. "private-label" mortgage-backed securities and other fixed-income products. The strong demand for apparently safe assets by both domestic and foreign investors not only served to reduce yields on these assets but also provided additional incentives for the U.S. financial services industry to develop structured investment products that "transformed" risky loans into highly-rated securities. Our findings do not challenge the view that domestic factors, including those listed above, were the primary sources of the housing boom and bust in the United States. However, examining how changes in the pattern of international capital flows affected yields on U.S. assets helps provide a deeper understanding of the origins and dynamics of the crisis.
Topic:: Finance, Capital Flows, Securities, and Capital
Political Geography:: North America and United States of America

5430. U.S. International Equity Investment and Past Prospective Returns

Author:: Stephanie E. Curcuru, Charles Thomas, Francis E. Warnock, and Jon Wongswan
Publication Date:: 02-2011
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: Counter to extant stylized facts, using newly available data on country allocations in U.S. investors' foreign equity portfolios we find that (i) U.S. investors do not exhibit returns-chasing behavior, but, consistent with partial portfolio rebalancing, tend to sell past winners; and (ii) U.S. investors increase portfolio weights on a country's equity market just prior to its strong performance, behavior inconsistent with an informational disadvantage. Over the past two decades, U.S. investors' foreign equity portfolios outperformed a value-weighted foreign benchmark by 160 basis points per year.
Topic:: Economics, Finance, Investment, Stock Markets, and Equity
Political Geography:: North America and United States of America

5431. Where are Global and U.S. Trade Heading in the Aftermath of the Trade Collapse: Issues and Alternative Scenarios

Author:: Joseph W. Gruber, Flippo di Mauro, Bernd Schnatz, and Nico Zorell
Publication Date:: 03-2011
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: Global and U.S. trade declined dramatically in the wake of the global financial crisis in late 2008 and early 2009. The subsequent recovery in trade, while vigorous at first, gradually lost momentum in 2010. Against this backdrop, this paper explores the prospects for global and U.S. trade in the medium term. We develop a unified empirical framework – an error correction model – that exploits the cointegrating relationship between trade and economic activity. The model allows us to juxtapose several scenarios with different assumptions about the strength of GDP growth going forward and the relationship between trade and economic activity. Our analysis suggests that during the crisis both world trade and U.S. exports declined significantly more than would have been expected on the basis of historical relationships with economic activity. Moreover, this gap between actual and equilibrium trade is closing only slowly and could persist for some time to come.
Topic:: Economics, International Cooperation, International Trade and Finance, and Financial Crisis
Political Geography:: North America and United States of America

5432. Forecasting the Price of Oil

Author:: Ron Alquist, Lutz Kilian, and Robert J. Vigfusson
Publication Date:: 07-2011
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: We address some of the key questions that arise in forecasting the price of crude oil. What do applied forecasters need to know about the choice of sample period and about the tradeoffs between alternative oil price series and model specifications? Are real or nominal oil prices predictable based on macroeconomic aggregates? Does this predictability translate into gains in out-of-sample forecast accuracy compared with conventional no-change forecasts? How useful are oil futures markets in forecasting the price of oil? How useful are survey forecasts? How does one evaluate the sensitivity of a baseline oil price forecast to alternative assumptions about future demand and supply conditions? How does one quantify risks associated with oil price forecasts? Can joint forecasts of the price of oil and of U.S. real GDP growth be improved upon by allowing for asymmetries?
Topic:: Energy Policy, International Trade and Finance, Oil, and Natural Resources
Political Geography:: North America and United States of America

5433. U.S. Domestic and International Financial Reform Policy: Are G20 Commitments and the Dodd-Frank Act in Sync?

Author:: Daniel E. Nolle
Publication Date:: 07-2011
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: The Dodd-Frank Act of 2010 is the keystone policy response directed at reforming U.S. financial system activities and oversight in the wake of the 2007-2009 financial crisis. The United States also has financial system reform policy commitments in the international arena, including in particular by virtue of its membership in the G20. This analysis considers U.S. policy initiatives related to a core dimension of financial system reform: risks posed by systemically important financial institutions ("SIFIs"). It provides a comparison of SIFI policy initiatives and timetables under both the Dodd-Frank Act and the G20 agenda, as reflected in the ongoing work plan of the Financial Stability Board (FSB), and poses the question "Are U.S. domestic and international financial system reform commitments in sync?" While finding that, fundamentally, the answer is "yes," the detailed comparison yields two caveats with potential policy implications. First, the two agendas differ in their relative emphasis on the coverage of both banks and nonbanks. The G20/FSB focus, at least over the near-term, is bank-centric compared with the Dodd-Frank Act, which consistently addresses both bank and nonbank financial firms. Second, implementation of Dodd-Frank Act provisions is subject to long-established U.S. law mandating that there be sufficient opportunity for public input into the rulemaking process, whereas the G20/FSB process has been less systematic and transparent on public consultation and feedback. The lesser emphasis on transparency and public input characterizing the G20/FSB policy development process may be attributable in part to the somewhat more rapid pace of the G20/FSB agenda relative to corresponding Dodd-Frank Act timelines. These observations may be relevant to the current debate over the speed and scope of Dodd-Frank Act implementation measures, and to the discussion about the future international competitiveness of U.S. banks and nonbank financial firms.
Topic:: Economics, Financial Crisis, Reform, and Finance
Political Geography:: North America and United States of America

5434. The Revealed Competitiveness of U.S. Exports

Author:: Massimo Del Gatto, Flippo de Mauro, Joseph W. Gruber, and Benjamin R. Mandel
Publication Date:: 08-2011
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: The U.S. share of world merchandise exports has declined sharply over the last decade. Using data at the level of detailed industries, this paper analyzes the decline in U.S. share against the backdrop of alternative measures of the competitiveness of the U.S. economy. We document the following facts: (i) only a few industries contributed to the decline in any meaningful way, (ii) a large part of the drop was driven by the changing size of U.S. export industries and not the size of U.S. sales within those industries, (iii) in a gravity framework, the majority of the decline in the U.S. export share within industries was due to the declining U.S. share of world income, and (iv) in a computed structural measure of firm productivity, average U.S. export productivity has generally maintained its high level versus other countries over time. Overall, our analysis suggests that the dismal performance of the U.S. market share is not a sufficient statistic for competitiveness.
Topic:: Economics, International Trade and Finance, Hegemony, Finance, and Exports
Political Geography:: North America and United States of America

5435. Housing Wealth and Consumption

Author:: Matteo Iacoviello
Publication Date:: 08-2011
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: Housing wealth is about one half of household net worth, and consumption is a considerable fraction (about two thirds) of Gross Domestic Product in the United States. Empirically, movements in housing wealth are associated with movements in consumption in the same direction. This observation has led many economists, commentators and policy makers to study how housing wealth and consumption are linked together. A sizeable portion of the comovement between housing wealth and consumption reflects common factors driving both variables, rather than the "wealth effect" of the former on the latter; however, a growing body of evidence suggests that the comovement is larger in developed financial markets and in the presence of liquidity constraints.
Topic:: Economics, Markets, Infrastructure, and Housing
Political Geography:: North America and United States of America

5436. ABS Inflows to the United States and the Global Financial Crisis

Author:: Carol C. Bertaut, Laurie Pounder DeMarco, Steve Kamin, and Ralph Tryon
Publication Date:: 08-2011
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: The "global saving glut" (GSG) hypothesis argues that the surge in capital inflows from emerging market economies to the United States led to significant declines in long-term interest rates in the United States and other industrial economies. In turn, these lower interest rates, when combined with both innovations and deficiencies of the U.S. credit market, are believed to have contributed to the U.S. housing bubble and to the buildup in financial vulnerabilities that led to the financial crisis. Because the GSG countries for the most part restricted their U.S. purchases to Treasuries and Agency debt, their provision of savings to ultimately risky subprime mortgage borrowers was necessarily indirect, pushing down yields on safe assets and increasing the appetite for alternative investments on the part of other investors. We present a more complete picture of how capital flows contributed to the crisis, drawing attention to the sizable inflows from European investors into U.S. private-label asset-backed securities (ABS), including mortgage-backed securities and other structured investment products. By adding to domestic demand for private-label ABS, substantial foreign acquisitions of these securities contributed to the decline in their spreads over Treasury yields. Through a combination of empirical estimation and model simulation, we verify that both GSG inflows into Treasuries and Agencies, as well as European acquisitions of ABS, played a role in contributing to downward pressures on U.S. interest rates.
Topic:: Finance, Interest Rates, Housing, Securities, and Capital
Political Geography:: North America and United States of America

5437. Oil Efficiency, Demand, and Prices: A Tale of Ups and Downs

Author:: Martin Bodenstein and Luca Guerrieri
Publication Date:: 10-2011
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: The macroeconomic implications of oil price fluctuations vary according to their sources. Our estimated two-country DSGE model distinguishes between country-specific oil supply shocks, various domestic and foreign activity shocks, and oil efficiency shocks. Changes in foreign oil efficiency, modeled as factor-augmenting technology, were the key driver of fluctuations in oil prices between 1984 and 2008, but have modest effects on U.S. activity. A pickup in foreign activity played an important role in the 2003-2008 oil price runup. Beyond quantifying the responses of oil prices and economic activity, our model informs about the propagation mechanisms. We find evidence that nonoil trade linkages are an important transmission channel for shocks that affect oil prices. Conversely, nominal rigidities and monetary policy are not.
Topic:: Energy Policy, International Trade and Finance, Oil, and Natural Resources
Political Geography:: North America and United States of America

5438. Housing and Debt Over the Life Cycle and Over the Business Cycle

Author:: Matteo Iacoviello
Publication Date:: 10-2011
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: We study housing and debt in a quantitative general equilibrium model. In the cross-section, the model matches the wealth distribution, the age pro.les of homeownership and mortgage debt, and the frequency of housing adjustment. In the time-series, the model matches the procyclicality and volatility of housing investment, and the procyclicality of mortgage debt. We use the model to conduct two experiments. First, we investigate the consequences of higher individual income risk and lower downpayments, and .nd that these two changes can explain, in the model and in the data, the reduced volatility of housing investment, the reduced procyclicality of mortgage debt, and a small fraction of the reduced volatility of GDP. Second, we use the model to look at the behavior of housing investment and mortgage debt in an experiment that mimics the Great Recession: we find that countercyclical financial conditions can account for large drops in housing activity and mortgage debt when the economy is hit by large negative shocks.
Topic:: Debt, Financial Crisis, Business, Investment, and Housing
Political Geography:: North America and United States of America

5439. The Variance Risk Premium Around the World

Author:: Juan M. Londono
Publication Date:: 11-2011
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: This paper investigates the variance risk premium in an international setting. First, I provide new evidence on the basic stylized facts traditionally documented for the US. I show that while the variance premiums in several other countries are, on average, positive and display significant time variation, they do not predict local equity returns. Then, I extend the domestic model in Bollerslev, Tauchen and Zhou (2009) to an international setting. In light of the qualitative implications of my model, I provide empirical evidence that the US variance premium outperforms that of all other countries in predicting local and foreign equity returns.
Topic:: Economics, Risk, Fiscal Policy, and Equity
Political Geography:: North America and United States of America

5440. Exports Versus Multinational Production Under Nominal Uncertainty

Author:: Logan T. Lewis
Publication Date:: 12-2011
Content Type:: Working Paper
Institution:: Board of Governors of the Federal Reserve System
Abstract:: This paper examines how nominal uncertainty affects the choice firms face to serve a foreign market through exports or to produce abroad as a multinational. I develop a two-country, stochastic general equilibrium model in which firms make production and pricing decisions in advance, and I consider its implications on this relative choice. For foreign firms, both exports and multinational production are priced in the destination currency, and this uncertainty has no effect on the relative decision. In the data, U.S. firms set nearly all of their export prices in dollars. Therefore, home firms price exports in their own currency in the model. Home exporters gain an advantage over home multinationals: during a foreign contraction, the foreign exchange rate appreciates, causing exported goods from the home country to be relatively cheaper. This pricing advantage affects exporters non-linearly through demand, which translates to convex profits. As foreign volatility rises, the model implies that the home country should serve the foreign country relatively more through exports. I take this implication to bilateral U.S. data, using inflation volatility as a proxy for nominal volatility. Using sectoral data on sales by majority-owned foreign affiliates matched with U.S. exports, I find that higher inflation volatility is associated with a significantly lower ratio of multinational production to total foreign sales.
Topic:: International Cooperation, Multinational Corporations, Exchange Rate Policy, and Exports
Political Geography:: North America and United States of America

5441. Strategic Missile Defense: A Threat to Future Nuclear Arms Reductions?

Author:: Greg Thielmann
Publication Date:: 01-2011
Content Type:: Policy Brief
Institution:: Arms Control Association
Abstract:: With Russia’s ratification of the New Strategic Arms Reduction Treaty (New START), the stage is now set for new discussions between Washington and Moscow on further steps toward reducing the two states’ enormous nuclear arsenals that together comprise more than 90 percent of total nuclear weapons worldwide. Based on statements in Russia’s ratification documents and the statements of Russian President Dmitry Medvedev, continued U.S.-Russian disagreements on missile defenses threaten to undermine those future talks. U.S. policymakers need to consider ways to prevent strategic missile defense system development and deployment from becoming an obstacle to progress in enhancing stability and reducing nuclear dangers. In his latest Threat Assessment Brief, ACA’s senior fellow Greg Thielmann analyzes the nature of the U.S.-Russian missile defense challenge.
Topic:: Arms Control and Proliferation, Nuclear Weapons, Treaties and Agreements, and Missile Defense
Political Geography:: Russia, North America, and United States of America

5442. Assessing Iran's Nuclear Program Without Exaggeration or Complacency

Author:: Greg Thielmann
Publication Date:: 10-2011
Content Type:: Policy Brief
Institution:: Arms Control Association
Abstract:: Shortly after the early September release of the International Atomic Energy Agency’s report on Iran’s nuclear program, the Arms Control Association assembled a panel of top experts to assess the status of Iran’s nuclear effort and examine strategies to address it. The September 19 briefing for Congressional staffers was part of an ongoing series of briefings organized by ACA and its partners on “Solving the Iranian Nuclear Puzzle.” Along with nuclear terrorism, the potential acquisition of nuclear weapons by states not yet in possession of them is at the forefront of U.S. national security concerns. Iran dominates the field. The following Iran Nuclear Brief by Mark Fitzpatrick, Director of the Nonproliferation and Disarmament Program at the International Institute for Strategic Studies (IISS) in London, is based on his presentation at the September 19 briefing. It provides a status report on Iran’s nuclear and missile programs and an evaluation of their potential as a nuclear weapons threat.
Topic:: Arms Control and Proliferation, National Security, Nuclear Weapons, Terrorism, and International Atomic Energy Agency (IAEA)
Political Geography:: Iran, Middle East, North America, and United States of America

5443. The IAEA’s November Report on Iran: More Confirmation than Revelation

Author:: Greg Thielmann and Benjamin Loehrke
Publication Date:: 12-2011
Content Type:: Policy Brief
Institution:: Arms Control Association
Abstract:: The release of the International Atomic Energy Agency’s latest report on Iran’s nuclear program in early November attracted intense media interest and stimulated strong political reactions in the United States and around the world. The IAEA report and its 14-page annex represented a milestone for the Vienna-based agency in terms of its willingness to present detailed information to the public on activities of concern in Iran’s nuclear program. The Arms Control Association provided an in-depth assessment of the IAEA report on November 8, 2011. Yet much of the subsequent press coverage has been inaccurate in its comparison of the IAEA’s latest report with past characterizations of Iran’s nuclear activities – most notably, the public summary of the 2007 U.S. National Intelligence Estimate. The following Iran Nuclear Brief elucidates the similarities and differences in those two documents, incorporating an earlier article by ACA’s senior fellow, Greg Thielmann, and Benjamin Loehrke, senior policy analyst for the Ploughshares Fund, which was published in the Bulletin of Atomic Scientists on November 23, 2011.
Topic:: Arms Control and Proliferation, Nuclear Weapons, and International Atomic Energy Agency (IAEA)
Political Geography:: Iran, Middle East, North America, and United States of America

5444. Technology Diffusion and Postwar Growth

Author:: Diego Comin and Bart Hobijn
Publication Date:: 06-2010
Content Type:: Working Paper
Institution:: Weatherhead Center for International Affairs, Harvard University
Abstract:: In the aftermath of World War II, the worldís economies exhibited very di§erent rates of economic recovery. We provide evidence that those countries that caught up the most with the U.S. in the postwar period are those that also saw an acceleration in the speed of adoption of new technologies. This acceleration is correlated with the incidence of U.S. economic aid and technical assistance in the same period. We interpret this as supportive of the interpretation that technology transfers from the U.S. to Western European countries and Japan were an important factor in driving growth in these recipient countries during the postwar decades.
Topic:: Science and Technology, War, Economic Growth, and World War II
Political Geography:: Japan, Europe, and United States of America

5445. Coping with the North Korean Survival Game: The Cheonan Incident and Its Aftermath

Author:: Seong-Ho Sheen
Publication Date:: 07-2010
Content Type:: Working Paper
Institution:: East Asia Institute (EAI)
Abstract:: While on a routine patrol along the Northern Limit Line (NLL), a South Korean Navy corvette, Cheonan was hit by an external explosion and rapidly sunk at 9:22pm on March 26, 2010. Of the one hundred and four South Korean crew members on board, forty six were found dead or remain missing (Cha 2010). After weeks of a scientific investigation supported by an international team of twenty four American, British, Australian, and Swedish experts, the South Korean government announced on May 20, that the ship was sunk by a torpedo launched from a North Korean midget submarine. The South Korean government and the public are now weighing the various measures in how to respond to this major North Korean provocation. Experts, on the other hand, are trying to understand what might have been the cause of such a bold aggression by the North Korean regime. While some have suggested a combination of various reasons for the alleged attack, a prominent North Korean insider has argued that the Cheonan incident may have to do with the North Korean leadership succession issue. Cho Myung-chul, a former professor at Kim Il-sung University, has suggested that the Cheonan incident was the work of the emerging leadership surrounding the young and unknown Kim Jong-eun, the son of Kim Jong-il and possible future successor. The motivation then would be for Kim Jong-eun and his supporters to prove themselves to Kim Jong-il and North Korean people. Leadership succession in a dictatorship tends to create a lot of uncertainty, anxiety, and confusion for its governance and the state apparatus. There will be competition and rivalry among different groups and factions for survival and to take a lead in the power transition. In that process, hard liners tend to command a stronger voice. Given the mounting pressures of a deteriorating economic situation and diplomatic isolation since the famine of 1995-98, sinking a South Korean warship could score an important political victory domestically, inducing the North Korean people to be proud of its regime and new leadership. At the same time, it could teach a lesson to the Lee Myung-bak government which has insisted on linking the nuclear issue with North-South exchanges. Indeed, North Korea issued a series of warnings to South Korea after criticizing the Lee administration for refusing to restart the Mount Kumkang Tours that had been canceled after a South Korean tourist had been shot by a North Korean guard on July 11, 2008. Pyongyang was further upset by alleged contingency planning for a sudden collapse of the regime and the hosting of military exercises with the United States. In particular, just a couple of weeks before the Cheonan incident, the Korean People’s Army issued a statement that it would no longer remain bound by the Korean War Armistice or the 1992 North-South Non-Aggression Agreement, therefore it “will legitimately exercise their force for self defense, unhindered, just as they had determined to do.” The worry now is that such provocations may eventually be aimed at the Obama administration which has hardened its position toward North Korea since the second nuclear test on May 25, 2009. While not completely excluding the possibility for bilateral dialogue, the United States has insisted that Pyongyang must return to the multilateral Six-Party Talks by implementing its obligations under previous agreements. North Korean demands for nuclear arms control and a peace treaty in exchange for denuclearization has only strengthened Washington’s deep mistrust of Pyongyang’s true intentions. Considering that the Obama administration has adopted a policy of wait and see, or what it calls “strategic patience,” the North Korean leadership might have concluded that there is not much to gain from making a deal with Washington for now. Furthermore, President Obama’s designation of North Korea along with Iran as an outlier in his drive for a “World Without Nuclear Weapons” and a possible target of U.S. nuclear weapons in the recently published 2010 Nuclear Posture Review can only have made Pyongyang’s conviction even more pessimistic. The problem is that the sinking of the Cheonan may not be an isolated incident. North Korea may become more desperate and brazen as they face increasingly harsher measures from South Korea and the international community, particularly the United States. The race for completing succession by 2012 may further strengthen the voice of hardliners who wish to heighten tensions with South Korea and the United States. More importantly, the Cheonan incident could be a sign of increasing instability in North Korea. The regime there faces the critical question of Kim Jong-il’s health and the issue of succession amidst a deepening economic crisis and international isolation. The Cheonan incident not only presents the immediate challenge of crisis management but also poses a medium to long-term question about the regime’s future.
Topic:: Diplomacy, Nuclear Weapons, Military Strategy, Conflict, Missile Defense, and Denuclearization
Political Geography:: Asia, South Korea, North Korea, North America, and United States of America

5446. Post-2012 U.S. Leadership and U.S. Policy toward East Asia

Author:: Young Kwon Sohn
Publication Date:: 11-2010
Content Type:: Working Paper
Institution:: East Asia Institute (EAI)
Abstract:: 2012 the United States will hold another presidential election, and it will surely be a referendum on the first term of the Obama presidency. As usual, the election will attract the attention of the public and the pundits alike, both at home and abroad, particularly at a time when an increasing number of people will be interested in how the election’s outcome will affect U.S. foreign policy and, related to it, the Sino-American bipolar configuration in East Asia. Since the Cheonan incident in the West Sea in the spring of 2009, particularly, the evolution and interaction of the Sino-American relationship in East Asia has become the focus of speculation among policy analysts and practitioners. That said, the outcome of the 2012 U.S. presidential election raises several questions. Will the 2012 presidential election bring a new leadership team to the White House? And will the outcome, new leaders or not, affect the overall tone of U.S. strategy in East Asia? If not, what other factors should be considered in forecasting the future of East Asia? Although a definitive answer to these questions cannot be had when we are still two years away from the 2012 presidential election, addressing them, nevertheless, is an intriguing mental exercise. We can say immediately that it is unlikely that the outcome of the 2012 election will be the dominant factor determining the United States’ strategy in East Asia as of 2013. Because of the rising power of China and the ever-hardening bipolarized structure of power in the region, significant changes in post-2012 East Asia are more likely to be triggered by changes from within East Asia itself, rather than from the United States. An ambitious China, taking a more aggressive posture toward both its neighbors and the United States, could be a potentially destabilizing factor in the region. Internal changes in North Korea could also be regionally destabilizing. The United States’ East Asian policy would thus be somewhat reactive in its general tone, although not passive. The U.S. stance could be firm and even assertive, however, depending on the situation, just as it was recently in dealing with China’s bid for expansion toward the South China Sea.
Topic:: Foreign Policy, International Cooperation, Military Strategy, and Leadership
Political Geography:: East Asia, Asia, North America, and United States of America

5447. Economic Interdependence, Alliance Cooperation, and Sino-U.S. Complex Interdependence

Author:: Scott Snyder
Publication Date:: 12-2010
Content Type:: Working Paper
Institution:: East Asia Institute (EAI)
Abstract:: China’s rising economic strength has highlighted a need to understand in greater detail the impact of complex economic interdependence on prospects for alliance cohesion, especially when an ally comes to depend on a potential adversary as its leading trading partner and engine for economic growth. This is an issue that did not come into play to any significant degree in analyzing alliance dynamics during the cold war era precisely because the development of security and economic relationships during that period were aligned with and served to reinforce each other, and the level of economic ties among potential cold-war adversaries was minimal. Analysis of trade relationships among security allies from that period shows a clear correlation of preferences for trading relationships with security partners versus adversaries, but it is not clear based on that data alone that there was necessarily causality between economic trade patterns and security alliances. In fact, structural differences between market economies (that tended to be allied with each other) and non-market economies were a significant deterrent to the development of economic relations with non-security partners during the cold war. In the post-cold war era, economically interdependent trade and investment relationships have been relatively unconstrained by political and security considerations, resulting in a situation where non-security partners such as China, a potential challenger to U.S. power, have become actively integrated in global supply chains as a leading manufacturer of goods for the global market. In considering this question, Dong Sun Lee and Sung Eun Kim have attempted to provide an empirical analysis of the influence of bilateral economic relations as a factor in shaping America’s Asian alliances, concluding that “economic ties do not markedly reinforce the security alliances of East Asia, because they have an asymmetrical structure”(Lee and Kim 2010, 4). But in making the argument that asymmetry matters, Lee and Kim assume that the economic consequences of interdependence are negative for dynamics within the alliance and that these negative consequences may cancel out positive effects of economic interdependence, even though the main argument of that the paper proves is that economic ties do not necessarily reinforce security alliances. The authors’ assertions regarding asymmetrical economic relations as having an impact on alliance dynamics are unproven and not dealt with to any significant degree by the evidence presented in the paper.
Topic:: Diplomacy, International Cooperation, Alliance, and Economic Cooperation
Political Geography:: China, Asia, North America, and United States of America

5448. A Complex Strategy to Overcome the Yeonpyeong Incident

Author:: Young-Sun Ha
Publication Date:: 12-2010
Content Type:: Working Paper
Institution:: East Asia Institute (EAI)
Abstract:: Since North Korea’s deadly artillery barrage on Yeonpyeong Island, South Korea has been stepping up efforts in its defense posture and international cooperation. In preparing against any further provocation from the North, Seoul has been reinforcing forces on the island, strengthening defense and deterrence capabilities, and drastically increasing its defense budget. Somewhat belatedly, it has also been taking up actions to reexamine the strategies of the ROK-U.S. military alliance, demanding cooperation from China and Russia while maintaining the traditional trilateral cooperation with the United States and Japan. Of course, analyzing the causes of the weak response to the shelling and preparing to prevent further provocations are undoubtedly important. However, reading the bigger picture and formulating key strategies for the future is a far more critical task. The Kim Jong-il/Kim Jong-un leadership in November 2010 conducted two consecutive moves—revealing its uranium enrichment facilities and launching an artillery strike on Yeonpyeong Island. Understanding the situation of the whole East Asian region, while at the same time anticipating Pyongyang’s strategies and taking preemptive actions will be the main challenges ahead for Seoul. Firstly, it is important to understand the range of North Korea’s strategic options from aggressive diplomacy to peaceful diplomacy. The Korean Peninsula went through the Korean War in 1950 and following of the ceasefire, both Koreas were stuck between ‘hot war’ and ‘cold war.’ Since the collapse of the Soviet Union, the world has passed the stage of ‘cold peace’ and moved towards a ‘hot peace.’ In spite of this global shift, North Korea has been frequently using combinations of ‘cold war,’ ‘hot war,’ ‘cold peace,’ and ‘hot peace’ on the international strategic chessboard. For example, during the Cold War period North Korea provoked the South in a number of cases: Rangoon bombing (1983), bombing of Korean Air Flight 858 (1987), attempted Blue House raid (1968), North Korean infiltration in the Uljin and Samcheok areas (1968). Even in the post-Cold War period, nuclear tests, naval battles in the Yellow Sea, the sinking of Cheonan naval ship and the shelling on Yeonpyeong Island ensued. At the same time, Pyongyang has been aggressively demanding for a peace agreement to this day. The possibility for limited warfare on the Korean Peninsula came dangerously close with the recent Yeonpyeong shelling, more so than the last North Korean provocation, the sinking of the Cheonan. As the pendulum of war and peace on the Korean Peninsula swung from the ‘cold war’ to ‘hot war,’ greater chaos arise. It is expected that the Kim Jong-il/Kim Jong-un regime will try to maximize the use of this pendulum of peace and war in order to strengthen Kim Jong-un’s weak power base. In spite of the dangers, merely worrying about the possibility of war is not going to help. Rather, we have to understand precisely why the North has raised the bar of aggression from acts of terrorism to that of a direct artillery attack on South Korean territory. It is likely that the North would pursue a ‘cold peace’ offensive to utilize the amplitude of the pendulum. A complex picture emerges when looking back on the recent comments made by top officials from North Korea, the United States, and China. Seoul and Washington have called for Pyongyang to engage in measures for active denuclearization and reengagement in inter-Korean relations as preconditions for resuming the Six-Party Talks. North Korea on the other hand has taken precisely the opposite measures. To read what the North Korean regime has in mind we have to think of the situation not as a motionless snapshot but as a moving footage. Furthermore, South Korea must do more than just respond to North Korea’s actions. Instead it should focus on making strategically preemptive moves. For this, it is necessary to examine why the North Korean regime expanded the pendulum’s amplitude and find measures to make the leadership pursue a survival strategy that does not include huddling around nuclear weapons.
Topic:: Defense Policy, Diplomacy, Military Strategy, Alliance, and Conflict
Political Geography:: China, Asia, South Korea, North Korea, North America, and United States of America

5449. After the 2010 NPT Review Conference: Advancing the Non-Proliferation Pillar

Author:: David Albright and Andrea Stricker
Publication Date:: 07-2010
Content Type:: Special Report
Institution:: Institute for Science and International Security
Abstract:: Adoption of a consensus final document action plan at the 2010 Nuclear Non-Proliferation Treaty (NPT) Review Conference on May 28 was a significant achievement for the parties to the NPT. It is a particular achievement for the United States, which fought hard for consensus against great odds. Success was even more important because the last review conference in 2005 ended in acrimony and without a final document. The document demonstrates and reinforces international commitment to the global nonproliferation and disarmament agenda. The parties to the NPT have agreed to implement a set of specific actions that cover a wide variety of areas in support of the three pillars of the NPT: nonproliferation, disarmament, and the peaceful uses of nuclear energy. These actions are measurable and will provide accountability at the next review conference. The unfortunate news is that the document does not substantially strengthen the nonproliferation pillar of the Treaty, the more urgent priority with regard to the three pillars in preventing the proliferation of nuclear weapons. The conference was unsuccessful in significantly advancing support for universal application of the Model Additional Protocol, dealing with noncompliant states such as Iran, addressing withdrawal while a state is noncompliant, and preventing illicit nuclear trade in the wherewithal to make nuclear weapons.
Topic:: Nuclear Weapons, Treaties and Agreements, and Nonproliferation
Political Geography:: Global Focus and United States of America

5450. Turkey's Maturing Foreign Policy: A View from the USA

Author:: Jessica Sims
Publication Date:: 12-2010
Content Type:: Working Paper
Institution:: BILGESAM (Wise Men Center for Strategic Studies)
Abstract:: In 2009, both the US and Turkey witnessed significant changes to both their domestic and foreign policies. After an examination of how key figures’ ideas have impacted the trajectory of the US and Turkey’s domestic policies, the article looks beyond the domestic context at how each country is pursuing its foreign policy. Within each country’s foreign policy schemes the most important emerging issues affecting both nations and the USTurkey relationship are discussed. Considering leaders’ statements and influential academics’ and journalists’ views, the article looks at whether US and Turkish policies converge or diverge on individual issues.
Topic:: Foreign Policy, Diplomacy, Bilateral Relations, and Geopolitics
Political Geography:: Turkey, Middle East, and United States of America

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COLUMBIA UNIVERSITY PRESS