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62. Explaining Middle Eastern Authoritarianism
- Author:
- Marcus Noland
- Publication Date:
- 06-2005
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Arab political regimes are both unusually undemocratic and unusually stable. A series of nested statistical models are reported to parse competing explanations. The democratic deficit is comprehensible in terms of lack of modernization, British colonial history, neighborhood effects, reliance on taxes for government finance, and the Arab population share. Interpretation of the last variable is problematic: It could point to some antidemocratic aspect of Arab culture (though this appears not to be supported by survey evidence), or it could be a proxy for some unobservable such as investment in institutions of internal repression that may not be culturally determined and instead reflect elite preferences. Hypotheses that did not receive robust support include the presence of oil rents, the status of women, conflict with Israel or other neighbors, or Islam. The odds on liberalizing transitions occurring are low but rising. In this respect the distinction between the interpretation of the Arab ethnic share as an intrinsic cultural marker and as a proxy for some unobservable is important-if the former is correct, then one would expect the likelihood of regime change to rise only gradually over time, whereas if it is the latter, the probabilities may exhibit much greater temporal variability.
- Topic:
- Economics, Government, and Politics
- Political Geography:
- United Kingdom, Middle East, Israel, and Arabia
63. Global Economic Prospects: Slower But Still Solid Growth in 2005; Worries About Growth and Inflation for 2006
- Author:
- Michael Mussa
- Publication Date:
- 04-2005
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- After surging to the highest growth rate in a generation, world real GDP is set to slow from a rate of just over 5 percent for 2004 to about 4 percent for 2005 and a tad slower for 2006. The economic slowdowns in several important economies in the second half of last year, including much of continental Europe and Japan, already make it clear that year-over-year growth will slow for 2005. But the continued strong growth of domestic demand in other countries, most notably the United States and China, virtually assures that global growth this year will not fall below potential.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- United States, Japan, China, Europe, Israel, and East Asia
64. The Erez and Gaza Industrial Estates: Catalysts for Development
- Author:
- Aiman Mackie
- Publication Date:
- 05-2005
- Content Type:
- Working Paper
- Institution:
- EastWest Institute
- Abstract:
- The political and economic landscape in the Middle East is changing in ways that would have been hard to imagine months ago. With changes in governments, the near cessation of violence, the more active reengagement of the United States in the peace process, and various positive signals from both sides, including direct meetings between Israeli Prime Minister Ariel Sharon and Palestinian President Mahmoud Abbas, the longstanding conflict between Israelis and Palestinians is entering a period of relative optimism. Recent indications are that the Palestinian Authority is ready to work jointly with five parallel working groups being set up by the Government of Israel to address different aspects of the planned disengagement from Gaza, and the Quartet Principals have appointed out- going World Bank President James D. Wolfensohn as Special Envoy for Gaza Disengagement. The Special Envoy is charged with leading, overseeing and coordinating the international community's efforts in support of the disengagement initiative.
- Topic:
- Development, Economics, and Government
- Political Geography:
- United States, Middle East, Israel, Palestine, and Gaza
65. An Assessment of the Impact of Japanese Foreign Exchange Intervention: 1991-2004
- Author:
- Alain P. Chaboud and Owen Humpage
- Publication Date:
- 01-2005
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- We analyze the short-term price impact of Japanese foreign exchange intervention operations between 1991 and 2004, using official data from Japan's Ministry of Finance. Over the period as a whole, we find some evidence of a modest "against the wind" effect, but interventions do not have value as a forecast that the exchange rate will move in a direction consistent with the operations. Interventions conducted between 1995 and 2002, which were large and infrequent, met with a much higher degree of success. For the most recent episode of intervention, in 2003 and 2004, despite the record size and frequency of the overall episode, it is difficult to statistically distinguish the pattern of exchange rate movements on intervention days from that of all the days in that particular subperiod, showing little effectiveness. Still, while the evidence of Japanese intervention effectiveness is modest overall, it appears to be stronger than that found using similar techniques for U.S. intervention operations conducted in the 1980s and 1990s.
- Topic:
- Development, Economics, and International Trade and Finance
- Political Geography:
- Japan and Israel
66. What Went Right in Japan
- Author:
- Adam S. Posen
- Publication Date:
- 09-2004
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Japan's recovery is strong. Real GDP growth will exceed 4 percent this year and likely be 3 percent or higher in 2005 and perhaps even 2006. The Japanese economy has been growing solidly for the last five quarters (average real 3.2 percent annualized rate), and the pace is sustainable, given Japan's underlying potential growth rate (which has risen to 2 to 2.5 percent per year) and the combination of catch-up growth closing the current output gap and some reforms that will raise the growth rate for quarters to come (though not permanently). Indicators of domestic demand beyond capital investment are increasingly positive, including housing starts bottoming out, inventories drawing down, and diminished deflation. Moreover, on the external side, while China was the main source of export growth in 2003, the composition of exports has become more balanced this year and is widening beyond that seen in other recoveries. Just as in the United States and other developed economies, a sharp slowdown in Chinese growth and a sustained further increase in energy prices represent the primary risks to the outlook.
- Topic:
- Development and Economics
- Political Geography:
- United States, Japan, China, Israel, East Asia, and Asia
67. Selective Intervention and Growth: The Case of Korea
- Author:
- Marcus Noland
- Publication Date:
- 08-2004
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- This paper attempts to determine whether conditions amenable to successful selective interventions to capture cross-industry externalities are likely to be fulfilled in practice. Three criteria are proposed for good candidates for industrial promotion: that they have strong interindustry links to the rest of the economy, that they lead the rest of the economy in a causal sense, and that they be characterized by a high s hare of industry-specific innovations in output growth. According to these criteria, likely candidates for successful intervention are identified in the Korean data. It is found that, with one exception, none of the sectors promoted by the heavy and chemical industry (HCI) policy fulfills all three criteria.
- Topic:
- Development and Economics
- Political Geography:
- Israel, East Asia, and Korea
68. Building Venture Capital Industries: Understanding the U.S. and Israeli Experience
- Author:
- Martin Kenney, Gil Avnimelech, and Morris Teubal
- Publication Date:
- 03-2004
- Content Type:
- Working Paper
- Institution:
- Berkeley Roundtable on the International Economy
- Abstract:
- During the growth phase of every venture capita (VC) business cycle, it seems as though both local and national governments in various countries initiate policies aimed at establishing VC industries as part of a high-technology economic development strategy. It is remarkable how each time there seems to be a proliferation of ill-advised policies that are usually reminiscent of the ones tried during the previous phase. Not surprisingly, in a distressingly large number of cases, the “new” policies to foster VC meet with minimal success or fail outright. While the causes of failure are undoubtedly multiple, there is ample room for believing that often the policies were based on a simplistic or incomplete understanding of the roots and dynamics that have led to the development of self-sustaining national VC industries. This paper uses historically informed case studies of Israel and the U.S. to develop an appreciative model of how the VC industries in these two nations came into being. Our model and understanding of this process is deliberately evolutionary and systemic. We believe that this perspective is the only one capable of providing both scholars and policy-makers with a grounded understanding of the emergence and development of the VC industries in these two nations.
- Topic:
- Economics, Government, Industrial Policy, and Science and Technology
- Political Geography:
- United States and Israel
69. The Politics of China's Shareholding System
- Author:
- Mary Comerford Cooper
- Publication Date:
- 06-2003
- Content Type:
- Working Paper
- Institution:
- Walter H. Shorenstein Asia-Pacific Research Center
- Abstract:
- This paper considers two questions. First, why did the Chinese government establish stock markets? Second, how have political interests shaped the key features of these markets? Based on both interviews and statistical analysis, the paper argues that China's top Party-State leaders attempted to create stock market institutions that allow the state to maintain control over listed companies, and over “the market” as a whole.
- Topic:
- Economics and Government
- Political Geography:
- China, Israel, East Asia, and Asia
70. The Challenge of Political Reform: Jordanian Democratisation and Regional Instability
- Publication Date:
- 10-2003
- Content Type:
- Working Paper
- Institution:
- International Crisis Group
- Abstract:
- Navigating the treacherous shoals of the Iraq conflict with a steady hand, Jordan appears to have emerged unscathed from the turbulent months just past. The Hashemite Kingdom adjusted its rhetoric to fit the public mood while backing U.S. policy in Iraq and in the Israeli-Palestinian struggle, managed to overcome its principal weaknesses and now faces the post-war world with renewed confidence and authority.
- Topic:
- Democratization, Demographics, Development, Economics, and Politics
- Political Geography:
- United States, Iraq, Israel, Palestine, Arabia, and Jordan
71. Iran: Discontent and Disarray
- Publication Date:
- 10-2003
- Content Type:
- Working Paper
- Institution:
- International Crisis Group
- Abstract:
- The decision to award the Nobel Peace Prize to Shirin Ebadi, a courageous human rights lawyer, has focused renewed attention on the deep divisions and tensions within Iran. How these work out, and how Iran defines its role in the world, will have a critical impact on a range of wider security issues, from Iraq and Afghanistan to the Arab-Israeli conflict and the future of nuclear non-proliferation.
- Topic:
- Security, Demographics, Development, Economics, Politics, and Poverty
- Political Geography:
- Afghanistan, Iran, Israel, and Arabia
72. The Difficulties of Discerning What's Too Tight: Taylor Rules and Japanese Monetary Policy
- Author:
- Adam S. Posen and Kenneth N. Kuttner
- Publication Date:
- 12-2003
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Observers have relied increasingly on simple reaction functions, such as the Taylor rule, to assess the conduct of monetary policy. Applying this approach to deflationary or near-zero inflation environments is problematic, however, and this paper examines two shortcomings of particular relevance to the Japanese case of the last decade. One is the unusually high degree of uncertainty associated with potential output in an environment of prolonged stagnation and deflation. Consequently, reaction function-based assessments of Japanese monetary policy are so sensitive to the chosen gauge of potential output as to be unreliable. The second shortcoming is the neglect of policy expectations, which become critically important as nominal interest rates approach zero. Using long-term bond yields, we identify five episodes since 1996 characterized by abrupt declines in Japanese inflation expectations. Policies undertaken by the Bank of Japan during this period did little to stabilize expectations, and the August 2000 interest rate increase appears to have intensified deflationary concerns.
- Topic:
- Climate Change, Economics, and International Trade and Finance
- Political Geography:
- Japan, Israel, East Asia, and Asia
73. Revitalizing the Economies of Japan and the United States
- Author:
- C. Fred Bergsten
- Publication Date:
- 06-2003
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- The United States and Japan are the two largest national economies in the world. Since the early 1990s, they have been moving in opposite directions. The United States enjoyed an expansion of record duration from the end of the Gulf War in 1991 until early 2001, growing much faster than any other G-7 country and much faster than it had at any time since the Second World War. Japan's economy, by contrast, has been virtually stagnant since its financial bubble burst in the early 1990s and has clearly experienced its worst performance since its recovery from the ravages of the Pacific War.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- United States, Japan, Israel, and East Asia
74. The Stabilization Efforts in the Balkan -Seven Theses -
- Author:
- Bernd Papenkort
- Publication Date:
- 02-2003
- Content Type:
- Working Paper
- Institution:
- Austrian National Defence Academy
- Abstract:
- In the Balkans, the international community has made numerous costly efforts with the intention of laying the foundations for political stability and economic prosperity as well as giving the local population social perspectives. In view of recent developments in international politics (e.g. the fight against terrorism, the developments in Afghanistan) and political focal points such as the conflict between Israel and Palestine, we should, however, critically take stock of what has been achieved so far and consider measures of adjustment, where necessary. The following theses are food for thought, and I hope they will trigger a lively discussion.
- Topic:
- Economics, International Cooperation, International Organization, Non-Governmental Organization, and Terrorism
- Political Geography:
- Afghanistan, Israel, Eastern Europe, Palestine, and Balkans
75. Innovation and Social Capital in Silicon Valley
- Author:
- Martin Kenney and Donald Patton
- Publication Date:
- 07-2003
- Content Type:
- Working Paper
- Institution:
- Berkeley Roundtable on the International Economy
- Abstract:
- The high cost regions of Europe, North America, and Japan recognize that the key to their economic vitality is innovation. Increasingly, many also accept that the primary units of competition based on high quality, innovative products are not nations, but firms within regions, some of which occasionally bridge national boundaries. This has resulted in a significant increase in interest in the nature and functioning of such regional economies, variously known as clusters or industrial districts.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- United States, Europe, Israel, East Asia, and North America
76. Loans to Japanese Borrowers
- Author:
- David C. Smith
- Publication Date:
- 07-2003
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- This paper examines the characteristics of loans to Japanese borrowers using a relatively unexplored, contract-specific data set. I find that Japanese banks charge less on loans to Japanese borrowers than do foreign banks, holding constant many of the risk characteristics of the borrower. Moreover, Japanese banks vary pricing less across these risks than do foreign banks, suggesting that Japanese banks tend not to distinguish good risks from bad. Taken together, the results suggest that problems at Japanese banks stem from the behavior of the banks themselves, not simply from poor economic conditions. I also document a significant shortening in the maturity structure of Japanese loans in the late 1990s.
- Topic:
- Economics, Emerging Markets, and International Trade and Finance
- Political Geography:
- Japan and Israel
77. The Benefits and Costs of Group Affiliation: Evidence from East Asia
- Author:
- Stijn Claessens, Joseph P.H. Fan, and Larry H.P. Lang
- Publication Date:
- 05-2002
- Content Type:
- Working Paper
- Institution:
- United Nations University
- Abstract:
- This paper investigates the benefits and associated agency costs of using internal capital markets through affiliating with groups using data of two thousand firms from nine East Asian economies between 1994-6. We find that mature and slow-growing firms with ownership structures more likely to create agency problems gain more from group affiliation, while young and high-growth firms more likely lose. Agency problems are important explanatory factors of firm value in economies outside Japan, but less so in Japan. Consistent with the literature, financially constrained firms benefit from group affiliation. Our results are robust to different time periods and estimation techniques.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- Israel and East Asia
78. Foreign Penetration of Japan's Investment-Banking Market: Will Japan Experience the "Wimbledon Effect"?
- Author:
- Nicole Pole
- Publication Date:
- 07-2002
- Content Type:
- Working Paper
- Institution:
- Walter H. Shorenstein Asia-Pacific Research Center
- Abstract:
- Foreign banks have long faced difficulties in attempting to enter certain Japanese financial markets. This is due partly to regulatory practices and partly to specific Japanese socioeconomic conditions, for instance the system of relationship banking. While retail banking is still a sector in which almost no foreigners have been able to succeed, some foreign financial institutions have been able to gain market share in investment and wholesale banking.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- Japan, Israel, East Asia, and Asia
79. Passive Savers and Fiscal Policy Effectiveness in Japan
- Author:
- Adam S. Posen and Kenneth N. Kuttner
- Publication Date:
- 04-2002
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- The efficacy of fiscal policy in Japan in the last decade has been a subject of considerable dispute, and the coincidence of mounting deficits and continued stagnation has led some to conclude that fiscal policy was ineffective. This paper finds ample support for the opposite conclusion: exogenous fiscal policy shocks (as derived from a structural vector-autoregression model) had pronounced real effects in Japan. Expansionary fiscal policy was expansionary, and contractionary policy contractionary, consistent with the implications of conventional macroeconomic theory. A historical decomposition shows that Japan's burgeoning public debt stems almost entirely from the recession-caused slowdown in revenue growth, and that fiscal policy was at times procyclical rather than consistently expansionary. Direct examination of the long-run relationship between private saving, taxes, and spending confirms that any Ricardian effects of future public liabilities on saving were insufficient to offset the direct first-order effects of taxes and public expenditures. The passivity of Japanese savers therefore seems to have contributed to the efficacy of fiscal policy; otherwise, some combination of increased saving, capital outflow, and higher interest rates would have diminished its impact.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- Japan, Israel, and East Asia
80. Inflation Dynamics and International Linkages: A Model of the United States, the Euro Area, and Japan
- Author:
- Gunter Coenen and Volker Wieland
- Publication Date:
- 07-2002
- Content Type:
- Working Paper
- Institution:
- Board of Governors of the Federal Reserve System
- Abstract:
- In this paper we estimate a small macroeconometric model of the United States, the euro area and Japan with rational expectations and nominal rigidities due to staggered contracts. Comparing three popular contracting specifications we find that euro area and Japanese inflation dynamics are best explained by Taylor-style contracts, while Buiter-Jewitt/Fuhrer- Moore contracts perform somewhat better in fitting U.S. inflation dynamics. We are unable to fit Calvo-style contracts to inflation dynamics in any of the three economies without allowing either for ad-hoc persistence in unobservables or a significant backward-looking element. The completed model matches inflation and output dynamics in the United States, the euro area and Japan quite well. We then use it to evaluate the role of the exchange rate for monetary policy. Preliminary results, which are similar across the three economies, indicate little gain from a direct policy response to the exchange rate.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- United States, Japan, and Israel