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57561. The Use of Cyclical Indicators in Estimating the Output Gap in Japan

Author:
Jane Haltmaier
Publication Date:
04-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The paper uses capital and labor utilization rates to derive estimates of the Japanese output gap and potential output. Two techniques are used. The first uses the cyclical indicators to adjust potential output estimates derived from a Hodrick-Prescott filter over the most recent period when such estimates are generally considered to be unreliable. The second estimates equilibrium levels of the cyclical indicators and uses an Okun's Law-type relationship to derive output gaps and potential output. The second method is also applied to the components of potential output to derive a third estimate. These methods suggest that the current Japanese output gap is considerably larger than a simple Hodrick-Prescott filter would suggest.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States and Japan

57562. Home Bias and High Turnover Reconsidered

Author:
Francis E. Warnock
Publication Date:
04-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The Tesar and Werner (1995) finding of very high turnover rates on foreign equity portfolios is based on an underestimation of cross-border equity positions. Foreign turnover rates calculated using information from comprehensive benchmark surveys on cross-border holdings are much lower than previously reported and comparable to domestic turnover rates. However, the basic intuition from the Tesar-Werner study, that transaction costs do not help explain the observed home bias, is confirmed using data on transaction costs in 41 markets.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States

57563. A Retrospective on J. Denis Sargan and His Contributions to Econometrics

Author:
Neil R. Ericsson, Esfandiar Maasoumi, and Grayham E. Mizon
Publication Date:
03-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This retrospective provides a biographical history of Denis Sargan's career and reviews his contributions to econometrics, emphasizing the breadth of his work in both theoretical and applied econometrics. We include a complete bibliography for Denis and a list of PhD theses that he supervised--students were a substantive facet of his professional life. Finally, two of Denis's previously unpublished manuscripts on model building now appear in print.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States

57564. Border Effects within the NAFTA Countries

Author:
John H. Rogers and Hayden P. Smith
Publication Date:
03-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
Using consumer price indexes from cities in the U.S., Canada and Mexico, we estimate the "border effect" on U.S.-Mexican relative prices and find that it is nearly an order of magnitude larger than for U.S.-Canadian prices. However, during a very stable sub-period in Mexico (May 1988 to November 1994), the "width" of the U.S.-Mexican border falls dramatically and becomes approximately equal to the U.S.-Canadian border. We then show that when consideration is limited to cities lying geographically very close to the U.S.-Mexican border--San Diego, Los Angeles, Houston, Dallas, Tijuana, Mexicali, Juarez, and Matamoros--the border width falls compared to that estimated with the full sample of U.S. and Mexican cities, but falls only very slightly. We also present evidence that the border effect in U.S.-Mexican prices is not primarily due to the border effect in U.S.-Mexican wages. Finally, using the prices of 276 highly dis-aggregated goods and services, we estimate the variability of relative prices of different items within Mexican cities. This measure of relative price variability declines during the stable peso sub-period, but by less than the decline in nominal and real (i.e., CPI-based) exchange rate variability. Our results are strong evidence of a "nominal border effect" in relative prices within NAFTA, but also indicate that real side influences are important.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
United States, Canada, North America, and Mexico

57565. Price Level Convergence, Relative Prices, and Inflation in Europe

Author:
John H. Rogers
Publication Date:
03-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
If price levels are initially different across the euro area, convergence to a common level of prices would imply that inflation will be higher in countries where prices are initially low. Price level convergence thus provides a potential explanation for recent cross-country differences in European inflation, a worrisome development under the ECBs "one-size-fits-all" monetary policy. I present direct evidence on price level convergence in Europe, using a unique data set, and then investigate how much of the recent divergence of national inflation rates can be explained by price level convergence. I show that between 1990 and 1999 prices did become less dispersed in the euro area. Convergence is especially evident for traded goods, and more in the first half of the 1990s than the second half. By some measures, traded goods price dispersion across the euro area is now close to that across U.S. cities. Despite an on-going process of convergence, deviations from the law of one price are large. Finally, I find a statistically-significant and robust negative relationship between the 1999 price level and 2000 inflation rate in Europe, and that the contribution of price level convergence to explaining inflation differentials is often quite important economically. Still, factors other than price convergence explain most of the cross-country inflation differences.
Topic:
Economics, Emerging Markets, and International Trade and Finance
Political Geography:
Europe

57566. Growing Global Migration and Its Implications for the United States

Publication Date:
03-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
During the next 15 years, globalization, demographic imbalances between OECD and developing countries, and interstate and civil conflicts will fuel increasing international migration, much of it illegal. Migration will have positive and negative consequences for sending and receiving countries alike. Other countries' responses to migration issues will affect migration pressures on the United States and a broad range of US economic and security interests.
Topic:
Security, Demographics, and Migration
Political Geography:
United States

57567. Protecting the Homeland: Report of the Defense Science Board Task Force on Defensive Information Operations 2000 Summer Study Volume II

Publication Date:
03-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In its 1996 report, the Defense Science Board (DSB) recommended that the Pentagon invest an additional $3 billion to strengthen defenses of its information networks. This report was viewed by some as unrealistic and prophetic by others, but in all cases it faced a readership with a very uneven appreciation of the effects of disruptive technology and dicontinuous change. The defense establishment has increased its intellectual capital on the subject of Defensive Information Systems (DIO) considerably since 1996. However, it has yet to fully accomodate the realities of an information intensive future in its architecture, processes, and investments. Technology has continued to evolve and the problems have become much more difficult and complex. DoD must now accomplish more than anyone could have imagined in 1996. Perhaps more important is the dawning realization that incremental modifications to our existing institutions and processes will not produce the adaptation we need.
Topic:
Defense Policy, Economics, and Science and Technology
Political Geography:
United States

57568. Report on Allied Contributions to the Common Defense 2001

Publication Date:
03-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The United States and its allies face a diverse set of challenges to collective security. These include regional or state-centered threats (such as regional aggressors); transnational threats (including terrorism, international crime, drug trafficking, and illicit arms trafficking); the proliferation of weapons of mass destruction and their means of delivery; and the spread of dangerous technologies (including non-safeguarded, dual-use technologies). Additional challenges include threats to the environment and public health (e.g., new infectious diseases), and from foreign intelligence collection, failed states, and other states that tolerate or actively engage in human rights abuses, ethnic cleansing, or acts of genocide that can endanger regional stability by sparking civil wars and refugee crises.
Topic:
Security, Defense Policy, and NATO
Political Geography:
United States and Australia/Pacific

57569. Forecast Uncertainty in Economic Modeling

Author:
Neil R. Ericsson
Publication Date:
02-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This paper provides an introduction to forecast uncertainty in empirical economic modeling. Forecast uncertainty is defined, various measures of forecast uncertainty are examined, and some sources and consequences of forecast uncertainty are analyzed. Empirical illustrations with the U.S. trade balance, U.K. inflation and real national income, and the U.S./U.K. exchange rate help clarify the issues involved.
Topic:
Economics and International Trade and Finance
Political Geography:
United States and United Kingdom

57570. Patience, Persistence, and Welfare Costs of Incomplete Markets in Open Economies

Author:
Jinill Kim, Andrew Levin, and Sunghyun Henry Kim
Publication Date:
02-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In this paper, we investigate the welfare implications of alternative financial market structures in a two-country endowment economy model. In particular, we obtain an analytic expression for the expected lifetime utility of the representative household when sovereign bonds are the only internationally traded asset, and we compare this welfare level with that obtained under complete asset markets. The welfare cost of incomplete markets is negligible if agents are very patient and shocks are not very persistent, but this cost is dramatically larger if agents are relatively impatient and shocks are highly persistent. For realistic cases in which agents are very patient and shocks are highly persistent (that is, the discount factor and the first-order autocorrelation are both near unity), the welfare cost of incomplete markets is highly sensitive to the specific values of these parameters. Finally, using a non-linear solution algorithm, we confirm that a two-country production economy with endogenous labor supply has qualitatively similar welfare properties.
Topic:
Economics, Human Welfare, and International Trade and Finance
Political Geography:
United States

57571. North Korea's Engagement—Perspectives, Outlook, and Implications

Author:
Mitchell B. Reiss
Publication Date:
02-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The National Intelligence Council (NIC) held a conference on 23 February 2001 in cooperation with the Federal Research Division of the Library of Congress on "North Korea's Engagement—Perspectives, Outlook and Implications." The conference featured discussion of seven commissioned papers that are published in this report. Sixty government and nongovernment specialists participated in the conference. Following is a brief summary of the views of the specialists.
Topic:
International Relations and Nuclear Weapons
Political Geography:
United States, Asia, and North Korea

57572. Report of the Defense Science Board Task Force on Options for Acquisition of the Advanced Targeting Pod and Advanced Targeting FLIR Pod

Publication Date:
02-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The Under Secretary of Defense (AT) requested that the DSB form a brief study of ongoing Navy and Air Force programs aimed at developing advanced laser guided weapon targeting pods for their tactical aircraft. This request for a DSB Task Force was occasioned by Congressional interest in the possibilities of a Joint development and production program for these pods.
Topic:
Defense Policy, Development, and Science and Technology
Political Geography:
United States

57573. Protecting the Homeland: Report of the Defense Science Board Task Force on Defensive Information Operations 2000 Summer Study Volume I

Publication Date:
02-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The task forces see a spectrum of threats to the homeland emerging. The 2000 summer study begins a series of studies byt he Defense Science Board aimed at assisting the Department of Defense and the Intelligence Community in defining their roles in protecting the nation from unconventional attacks on the United States. Other studies now planned as part of this series of studies include Defense Against Chemical Warfare Attack: Countering the Strategic Nuclear Threat in the 21st century; a follow-up study on Intelligence on Threats to the Homeland; and a second study on the issues associated with Defense Against Biological Warfare Attack. The focus of all these DSB studies is on identifying the technology and operational capability needed to protect the homeland. It is not on the assignment of roles and missions for employing said capabilities. Significant recommendations are made in these reports including suggestions for implementation.
Topic:
Defense Policy, Development, and Science and Technology
Political Geography:
United States

57574. Report of the Defense Science Board Task Force on Improving Fuel Efficiency of Weapons Platforms

Publication Date:
01-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
The Under Secretary of Defense (Acquisition, Technology and Logistics), recognizing the crucial importance of weapons platform fuel usage to U.S. military capability, requested that the Defense Science Board form a task force on Improving Fuel Efficiency of Weapons Platforms. Asked to consider existing or emerging technologies that could significantly improve platform efficiency, the task force also examined institutional barriers that exist and must be overcome to understand and capture the full advantages of more efficient military systems.
Topic:
Defense Policy, Environment, and Science and Technology
Political Geography:
United States

57575. Report of the Defense Science Board Task Force on Training Superiority Training Surprise

Author:
Ralph Chatham and Joe Braddock
Publication Date:
01-2001
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
In late 1998 the Undersecretary of Defense (Personnel Readiness), the Director, Defense Research and Engineering, and the Joint Chiefs of Staff requested the Defense Science Board to create a task force on training and education. Drs. Joe Braddock and Ralph Chatham were appointed co-chairmen. The task force met periodically throughout 1999 and early 2000. This document is the report of our deliberations.
Topic:
Defense Policy, Development, and Science and Technology
Political Geography:
United States

57576. The Third Yugoslavia, 1992 - 2001

Author:
Sabrina P. Ramet
Publication Date:
06-2001
Content Type:
Working Paper
Institution:
The Wilson Center
Abstract:
The Milosevic regime was a classic example of what has been called a “democradura,” i.e., a system which combined some of the mechanisms of democracy (with the result that Milosevic's Socialists were, at one point, forced to enter into a coalition with Seselj's Radicals, in order to form a government) with many overtly authoritarian features (among which one might mention the constriction of press freedom, the use of the police against the political opposition, and systematic violations of human rights). It was also a regime which drew its energy from the manipulation of Serbian nationalism, even if, as has been argued, Milosevic himself was not an ideological nationalist. To the extent that xenophobia lay at the heart of Serbian nationalism, the regime found itself relying on an ideology which consisted of an explicit repudiation of such values as tolerance, equality of peoples, respect for the harm principle, and individual rights.
Topic:
International Relations, Democratization, and Politics
Political Geography:
Europe and Yugoslavia

57577. The Poles and Their Past: Society, Historiography and the Legislation Process

Author:
Andrzej Paczkowski
Publication Date:
05-2001
Content Type:
Working Paper
Institution:
The Wilson Center
Abstract:
The Polish nation had experienced both Nazism and communism. These were not equal experiences, and social memory about them differs to a considerable degree. In order to perform such an operation, it would be necessary to halt history in June 1941. Since it is impossible to stop history in order to examine the period from mid-September 1939 to June 1941, it is helpful to study Polish recollections of their experiences so as to understand their continued impact on national history and memory.
Topic:
Civil Society, Human Welfare, and Politics
Political Geography:
Europe

57578. Violence Against Women in Post-communist Societies: Benefits and Changes

Author:
Vesna Nikolic-Ristanovic
Publication Date:
05-2001
Content Type:
Working Paper
Institution:
The Wilson Center
Abstract:
Social changes, which recently occurred in post-communist countries, brought new opportunities for positive developments and offered the possibility of choice. In most countries, the social transition brought an opening of borders, enabling an influx of positive as well as negative influences. However, even the general positive impact of social changes is typically followed by more negative consequences in the everyday life of the people. The most dramatic consequences of social transition, manifested in a significant rise of unemployment and the loss of many social benefits. These developments are directly related to the replacement of planned, centralized economies by the market and the privatization of state property. Most people lost their previous social security benefits and, despite the fact that the general character of communism was “equality in poverty,” the social transition was a source of serious stress and numerous existential problems. This was further intensified by the fact that, at the same time, the growing import of both material goods and the American way of thinking, i.e. consumerism spirit of the West, urged people to achieve their “American dreams” at any cost.
Topic:
Conflict Prevention, Civil Society, Human Welfare, and Privatization
Political Geography:
America and Europe

57579. Decentralization and Regionalization after Communism: Lessons from Administrative and Territorial Reform in Poland and the Czech Republic

Author:
Jennifer Yoder
Publication Date:
04-2001
Content Type:
Working Paper
Institution:
The Wilson Center
Abstract:
While the regional level of authority has gained much attention in recent years in Western Europe, Eastern Europe is still emerging from decades of centralization and homogenization under communism. Several post-communist countries, however, have taken steps toward administrative decentralization and territorial regionalization. This article explores possible reasons for taking these steps and traces the progress of administrative and territorial reform in two post-communist cases: Poland and the Czech Republic. The conclusion considers several implications of these reforms for domestic politics and foreign relations.
Topic:
International Relations, Government, and Politics
Political Geography:
Europe

57580. The Limits of Conditionality: Nuclear Reactor Safety in Central and Eastern Europe, 1991 - 2001

Author:
John Van Oudenaren
Publication Date:
03-2001
Content Type:
Working Paper
Institution:
The Wilson Center
Abstract:
Conditionality has become an increasingly prominent feature of international politics in recent years.1 Once mainly associated with the macroeconomic stabilization programs of the IMF, since the collapse of communism it has been used by the EU, NATO, the OECD, and the Council of Europe to promote a variety of political, economic, and social objectives – everything from abolishing the death penalty to privatizing national monopolies. With increased use has come increased controversy. Critics of conditionality argue that it is often applied in ways that ride roughshod over national sovereignty, ignore local circumstances, and impose economic hardship. Others note the frequent inability of recipients of conditional aid to fulfill commitments to international donors. Even when measured by its own narrow objectives, they argue, conditionality often fails.
Topic:
International Relations, Security, and Politics
Political Geography:
Europe