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5802. EU Accession and the Euro: Close Together or Far Apart?
- Author:
- Peter B. Kenen and Ellen E. Meade
- Publication Date:
- 10-2003
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- In May 2004, ten countries are due to join the European Union. They are therefore obliged to join the European Monetary Union (EMU) and adopt the euro as their national currency. Most of them, moreover, have been eager to do that. None of them sought an opt-out of the sort that Britain and Denmark obtained in 1991, when the Maastricht Treaty was drafted. Membership in EMU is not automatic, however, because the accession countries must first satisfy the preconditions contained in the Maastricht Treaty. Although those preconditions are rigorous, and some of the accession countries are still far from meeting them, most of those countries have indicated that they want to enter EMU at the earliest possible date.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- Britain, Europe, and Denmark
5803. More Pain, More Gain: Politics and Economics of Eliminating Tariffs
- Author:
- Gary Hufbauer and Ben Goodrich
- Publication Date:
- 06-2003
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- A good proposal to eliminate tariffs must take into account both the pain and gain that developing countries are likely to experience. The authors take the measure of these costs and benefits and urge rich countries to maximize the benefits to developing countries while giving them ample time to accept, and adjust to, the changes that trade liberalization will require. But trade liberalization should not stop with tariff proposals. The United States and other industrial countries should generously reduce subsidies to farmers and eliminate nontariff barriers on agricultural imports. The United States should offer more concessions on services trade, particularly in its allowances for temporary foreign workers. Unless rich countries put more on the table, a WTO agreement to eliminate tariff barriers may be postponed for years.
- Topic:
- Economics, International Trade and Finance, Political Economy, and Third World
- Political Geography:
- United States
5804. Rules Against Earnings Stripping: Wrong Answer to Corporate Inversions
- Author:
- Gary Hufbauer and Ariel Assa
- Publication Date:
- 05-2003
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- The tax-driven expatriation of US corporations is a troubling phenomenon. In a “corporate inversion,” a new foreign corporation, typically located in a low-tax or no-tax country, replaces the existing US parent corporation of a multinational enterprise (MNE). The US corporation then becomes a subsidiary of the new foreign parent. Since the US tax treatment of an MNE operating in the United States is significantly less favorable when the top-tier parent corporation is a domestic rather than a foreign corporation, the inversion transaction averts a substantial amount of US tax. Inversions have attracted adverse attention from tax specialists, media, the US Treasury Department, and Congress. In the wake of September 11, it seemed downright unpatriotic for US firms to invert as a way of skimping on their tax payments.
- Topic:
- Economics, Government, and International Trade and Finance
- Political Geography:
- United States
5805. The Impact of Economic Sanctions on US Trade: Andrew Rose's Gravity Model
- Author:
- Gary Clyde Hufbauer and Barbara Oegg
- Publication Date:
- 04-2003
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- With the end of the Cold War, the focus of US foreign policy changed—and so did that of economic sanctions. Partly because of increased cooperation within the UN framework, economic sanctions were imposed so routinely in the early 1990s that scholars called that period the sanctions decade. This proliferation sparked intense debate about the effectiveness of sanctions as a policy tool and moved US sanctions policy to the center of public discourse.
- Topic:
- Economics, International Trade and Finance, and Political Economy
- Political Geography:
- United States
5806. Economic Leverage and the North Korean Nuclear Crisis
- Author:
- Kimberly Ann Elliott
- Publication Date:
- 04-2003
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Almost a decade ago, as the last nuclear crisis with North Korea was reaching a peak, I concluded the following about the potential utility of economic sanctions: The debate over US policy toward North Korea boils down to one deceptively simple question: what does Kim Il-sung want? No one can be sure of the answer and different interpretations have quite different policy implications. If the Great Leader views a nuclear weapons option as important to the survival of his regime, economic sanctions are unlikely to force him to give it up. But if he views the threat of developing nuclear weapons as a bargaining chip, some combination of carrots and sticks may induce him to trade it away.
- Topic:
- Diplomacy, Economics, and International Trade and Finance
- Political Geography:
- Israel, East Asia, and North Korea
5807. 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
5808. Empirical Investigations of Inflation Targeting
- Author:
- Yifan Hu
- Publication Date:
- 07-2003
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- A growing number of countries have anchored their monetary policy to an explicit numerical rate or range of inflation since such an inflation targeting framework was first adopted by New Zealand in 1989. This paper empirically investigates issues associated with inflation targeting using a dataset of 66 countries for the 1980–2000 period.
- Topic:
- Development, Economics, Emerging Markets, and International Trade and Finance
- Political Geography:
- New Zealand
5809. 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
5810. NAFTA Dispute Settlement Systems
- Author:
- Gary Hufbauer and Jeffrey J. Schott
- Publication Date:
- 06-2003
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics
- Abstract:
- Drawing on the 1989 Canada-US Free Trade Agreement (CUSFTA), the North American Free Trade Agreement (NAFTA) extended dispute settlement provisions to cover more ground. In fact, within NAFTA there are six dispute settlement systems. NAFTA Chapter 11 is designed to resolve investor-state disputes over property rights; Chapter 14 creates special provisions for handling disputes in the financial sector via the Chapter 20 dispute settlement process (DSP); Chapter 19 establishes a review mechanism to determine whether final antidumping (AD) and countervailing duty (CVD) decisions made in domestic tribunals are consistent with national laws; and Chapter 20 provides government-to-government consultation, at the ministerial level, to resolve high-level disputes. In addition, the NAFTA partners created interstate dispute mechanisms regarding domestic environmental and labor laws under the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAAL C), respectively. This chapter examines the first four dispute settlement systems; the NAAEC and NAALC systems are evaluated elsewhere in this book.
- Topic:
- Economics and International Trade and Finance
- Political Geography:
- United States, Latin America, and North America