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Economic Normalization with Cuba: A Roadmap for US PolicymakersThe United States and Cuba are ending decades of hostility and heading toward normalizing their relations. Gary Clyde Hufbauer and Barbara Kotschwar provide recommendations on how to proceed in their recent book Economic Normalization with Cuba: A Roadmap for US Policymakers.

Seven years after the start of the global financial crisis in 2007, the prospect of secular stagnation threatens to fracture the political and social fabric of the euro area. A PIIE Briefing of six essays by economists at the Peterson Institute for International Economics offers a roadmap for policymakers to guide Europe out of its current self-defeated policy mix. Book: The Great Rebirth: Lessons from the Victory of Capitalism over Communism

Anders Åslund
Simeon Djankov, eds.

Release Event | News Release

Kevin Stahler and Arvind Subramanian find that there has been a deterioration, not improvement, in competitiveness in the eurozone periphery countries, and the pattern of adjustment within the eurozone between 2007 and 2013 has been dramatically perverse, with Germany's competitiveness having improved by 9 percent and Greece's having deteriorated by 9 percent. Working Paper 14-10.

William R. Cline finds that all four of the major economies—China, the euro area, the United States, Japan—remain close to their fundamental equilibrium exchange rates (FEERs); however, a continued decline in the euro and the yen could push the US economy to an excessive deficit. Policy Brief 14-25.

Theodore H. Moran identifies the most important market failures and impediments that hinder the spread of supply chains in developing economies and examines how some host governments have been successful in overcoming these obstacles. Working Paper 14-12.

Avinash D. Persaud explains why bail-in securities are fool’s gold and do not make sense in the more common and intractable case where many banks get into trouble at roughly the same time as the assets they own go bad. Policy Brief 14-23.

In NAFTA 20 Years Later, part of a new series of publications called PIIE Briefings, Institute scholars and experts assess the record two decades after the approval of the North American Free Trade Agreement.

Roberto Alvarez and José De Gregorio analyze the resilience of Latin American countries to the global financial crisis and find that effective macroeconomic policies were key to good economic performance. Working Paper 14-11.

audio A Post-Electoral Test for Brazil's Economy
Barbara Kotschwar explains that President Dilma Roussef of Brazil, reelected in a close race, must now try to revive the economy while continuing policies to help the poor.

Bridging the Pacific: Toward Free Trade and Investment between China and the United StatesNew Book: Bridging the Pacific: Toward Free Trade and Investment between China and the United States

by C. Fred Bergsten, Gary Clyde Hufbauer, and Sean Miner, assisted by Tyler Moran

Release Event | News Release

Korea should seek to join the Trans-Pacific Partnership (TPP) as soon as possible if it can manage its bilateral trade issues with Japan in a pragmatic way, write Jeffrey J. Schott and Cathleen Cimino. Simon Johnson urges the inclusion of a currency clause in the TPP agreement.

Managing the Euro Area Debt CrisisNew Book: Markets over Mao: The Rise of Private Business in China

by Nicholas R. Lardy

Release Event | News Release

audio Breakthrough on Trade
Cathleen Cimino explains why a new technology agreement with China and a compromise over India’s food subsidies has revived the Obama administration’s trade agenda.

The recent breakthrough between China and the United States in negotiating the global Information Technology Agreement has improved the prospects for a bilateral investment treaty, writes Sean Miner.

China's property market is set for correction, not collapse , writes Kent Troutman. See also Policy Brief 14-21: Is China's Property Market Heading toward Collapse? by Li-Gang Liu.

If the current ceasefire in the east holds, Ukraine has a great opportunity to break out of its vicious circle of economic underperformance. The new government will have to act fast and hard on many fronts to succeed. Anders Åslund lays out the strategy in Policy Brief 14-24. Åslund also testifies before the Commission on Security and Cooperation in Europe on how Ukraine can combat corruption and presents five reasons the European Union needs to develop a Marshall Plan for Ukraine now. The coalition agreement signed on November 21 is an essential step toward the creation of a new government for Ukraine that could undertake the reforms that are so critically needed.

The Russian economic situation has long looked stable but has taken a turn for the worse this year; if policies do not change radically, a serious downturn may occur in the second half of 2015, warns Anders Åslund.

David G. Blanchflower explains why the United Kingdom won't have real pay growth until 2016 at the earliest. Chancellor Osborne hasn't explained why it is necessary to balance the UK budget at all and certainly not why by some randomly chosen nearby date.

Managing the Euro Area Debt CrisisNew Book: Managing the Euro Area Debt Crisis

by William R. Cline

Release Event | News Release

A New Era for Europe's Banks?

audio Were European Bank Stress Tests a Whitewash?
In a video interview, Morris Goldstein lists many shortcomings of the comprehensive assessment of banks in Europe, which he says would have found major banks lacking capital if more rigorous standards had been applied. See also: The 2014 EU-Wide Bank Stress Test Lacks Credibility

Jacob Funk Kirkegaard walks through five major conclusions of the ECB's comprehensive assessment, arguing that although the report itself instilled confidence in the banks, the information provided could stir doubts about future crises. Nicolas Véron lauds the test as an encouraging start for the most transformative policy initiative that has emerged from Europe's crisis so far. Véron however notes this banking union comes five years too late, and its comprehensiveness is certainly up for debate.

To avoid further increases in the ratio of public debt to GDP over the next decade, average annual primary deficits will need to be reduced by about 0.75 percent of GDP in the United States and by about 3 percent of GDP in Japan from their mid-2014 baselines, calculates William R. Cline. Working Paper 14-9.

Marcus Noland and Kevin Stahler estimate that at its peak in the 1970s and 1980s, the East German doping program was responsible for 17 percent of the total medals awarded to women, equivalent to the total medal hauls of the US and Soviet women's teams in 1972, the last Summer Olympic Games not marred by widespread doping. Working Paper 14-7.

Tamim Bayoumi, Joseph E. Gagnon, and Christian Saborowski analyze the effect of net official flows (chiefly foreign exchange intervention) on current accounts, finding that such flows have a large but plausible effect on current account balances. Working Paper 14-8.

Labor and Unemployment

Labor Market Slack: Assessing and Addressing in Real Time
September 24, 2014
Keynote Speaker: Charles Evans, Federal Reserve Bank of Chicago

Wages and Labor Market Slack: Making the Dual Mandate Operational
David G. Blanchflower and Adam S. Posen assess the impact of changes in the US labor force participation rate and show that nonparticipants exert additional downward pressure on wages over and above the impact of the unemployment rate itself.

audio Why Wage Rates are Stagnating Despite Falling Unemployment
David G. Blanchflower discusses his research with Adam S. Posen demonstrating that lower jobless rates are masking the problem of people outside the official labor force who are still looking for work.

audio Is Unemployment Worse than It Appears?
William R. Cline says the decline in labor participation, which some say has occurred because workers are discouraged from seeking jobs, is largely due to the retirement of the "baby boom" generation.
See also: Demographic versus Cyclical Influences on US Labor Force Participation

Labor Market Slack in the United Kingdom
David N. F. Bell and David G. Blanchflower examine the amount of slack in the UK labor market and find the downward adjustments made by the Monetary Policy Committee (MPC) to both unemployment and underemployment invalid.


Peterson Institute for International Economics Announces New Funding Disclosure Steps [pdf]

A newly posted document gives our Statement of Principles, Facts about Our Funding, and charts and lists indicating funding sources and amounts in 2013, 2012, 2011, and 2010.



Sir Paul Tucker

Reforming the International Monetary and Financial System: What Role for National Democracies?

Sir Paul Tucker, Harvard Kennedy School, discusses international regulation and democratic legitimacy.

Peter Praet

Monetary Policy Issues in the Euro Area

Peter Praet, ECB, discusses monetary policy issues currently confronting the euro area.

Anders Åslund

The Great Rebirth: Lessons from the Victory of Capitalism over Communism

Coeditors Anders Åslund and Simeon Djankov presented the findings of their new book, with Leszek Balcerowicz leading a panel discussion.


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