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North Korea: Witness to Transformation Sources: Manyin and Nitikin on the Politics of Foreign Assistance to North Korea (Part I)
Stephan Haggard — April 16, 2014
For years, Mark Manyin and Mary Beth Nikitin have kept track of total US foreign assistance to North Korea in an excellent Congressional Research Service brief that is a standard reference on the topic. Recently, they updated it. Why update ...

RealTime Economic Issues Watch Putin Needs Victory
Anders Aslund — April 14, 2014
"All we need is victory regardless of the cost." So runs the refrain in a popular old Soviet film, "The Belarusian Railway Station," about World War II veterans. This line probably explains President Vladimir Putin's policy on Ukraine. The latest developments, including the seizure by Russian ...

Working Paper 14-1 Regime Change, Democracy, and Growth [pdf]
Caroline Freund and Mélise Jaud — April 11, 2014
Economic improvements generally accrue to countries that go through regime change, but not always when the change leads to democratization, according to a new study on the relationship between democracy and growth.

Peterson Perspectives Interview Storming the Opera House in Ukraine
Anders Aslund — April 11, 2014
Anders Åslund says Russia's ham-fisted tactics to destabilize Ukraine have backfired, and Moscow may now turn to tougher steps, including an invasion, to halt the country's progress.

RealTime Economic Issues Watch Time for the United States to Risk Its IMF Veto
Edwin M. Truman — April 11, 2014
Support in the United States for the International Monetary Fund (IMF) is at a new low. The reasons are many and varied, and the IMF is unpopular in many countries, not just among the women and men on the streets, most of whom have never heard of the IMF unless their countries are in crisis, b ...

Op-ed The IMF Should Move Ahead without the United States
C. Fred Bergsten and Edwin M. Truman — April 10, 2014
The International Monetary Fund (IMF), which has its annual spring meetings in Washington this week, is confronting a potentially existential crisis: withdrawal by the United States from active participation in, and leadership of, the world's most important economic institution.

Peterson Perspectives Interview The IMF's Existential Crisis
Edwin M. Truman — April 9, 2014
Edwin M. Truman, elaborating on his proposal jointly offered with C. Fred Bergsten, says the International Monetary Fund should walk away from the United States if Congress fails to support its governance and finance reforms.

News Release Peterson Institute Economists Forecast Modest Growth in Major Economies; Identify Ongoing Risks to Financial Stability Limiting Stimulus and Recovery
April 9, 2014
WASHINGTON—Economists at the Peterson Institute for International Economics are forecasting a generally favorable outlook for the economic prospects of the United States, Western Europe, Japan, China and some but not all other emerging ma ...

RealTime Economic Issues Watch Are Countries Better Off with Their Own Monetary Regimes?
Edwin M. Truman — April 7, 2014
The continuing economic and financial challenges facing members of the euro area, combined with more recent pressures on some emerging market and developing countries, raise a familiar question. What is the best monetary regime for countries facing such stresses? The answer is that no monetary re ...

China Economic Watch Flying Blind: Monitoring Shadow Banking in Emerging Markets
Nicholas Borst — April 4, 2014
In the wake of the global financial crisis, financial regulators worldwide have struggled to adequately address the risks inherent in shadow banking. In the advanced economies, post-crisis regulatory efforts have tamed some of the previous excesses and slowed the growth of shadow banking. Despite th ...

RealTime Economic Issues Watch What Were They Thinking? The Fed on the Brink of Zero
Joseph E. Gagnon — April 4, 2014
How farsighted was the leadership at the Federal Reserve as the world economy was heading toward a steep decline more than five years ago? Outside the Fed's marble halls, the answers to that question are only now becoming known, and the verdict is perhaps surprisingly positive. In Dec ...

Peterson Perspectives Interview China's Moderate Growth Slowdown
Nicholas R. Lardy — April 3, 2014
Nicholas R. Lardy says China is taking sensible steps to counter the moderate slowdown in growth, rejecting the route of expanding credit aggressively as it did in 2009.

News Release Three Global Leaders Join Peterson Institute for International Economics Board of Directors
April 2, 2014
WASHINGTON—The Peterson Institute is pleased to announce the addition of three new members to its Board of Directors: Charles D. Lake II, president of Aflac International Incorporated and chairman of Aflac Japan, Phillipa (Pip) McCrostie, ...

Peterson Perspectives Interview French Cabinet Shakeup: Old Wine in New Bottles?
Nicolas Veron — April 2, 2014
Nicolas Véron analyzes President Hollande's Cabinet rearrangement following the electoral defeat of the Socialists, but the basic rightward thrust of his government is expected to continue.

Op-ed How to Reform Ukraine's Economy
Heidi Crebo-Rediker and Douglas A. Rediker — April 2, 2014
After weeks of urgent negotiations with Ukraine's interim government, the International Monetary Fund (IMF) last week agreed to provide up to $18 billion to prevent the country's default.

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Economic improvements generally accrue to countries that go through regime change, but not always when the change leads to democratization, according to a new study on the relationship between democracy and growth. Working Paper 14-1 by Caroline Freund and Mélise Jaud.

The failure in mid-January by the US Congress to approve IMF reform legislation halted progress on Fund governance and damaged the US reputation around the world. The administration and the Congress must make every effort to pass this legislation before the early-April meeting of the International Monetary and Financial Committee (IMFC). Policy Brief 14-9 by Edwin M. Truman.

Peterson Perspectives Interviews

The IMF's Existential Crisis

with Edwin M. Truman

Related Event: The IMF: What Is It Good For?

China's Moderate Growth Slowdown

with Nicholas R. Lardy

French Cabinet Shakeup: Old Wine in New Bottles?

with Nicolas Véron

Cathleen Cimino, Gary Clyde Hufbauer, and Jeffrey J. Schott analyze the impact of the widely used local content requirements (LCRs) and recommend a new World Trade Organization code to constrain their use, enhance transparency, expedite dispute resolution, and impose penalties for noncompliance. Policy Brief 14-6.

Caroline Freund finds that the emphasis on small and medium enterprises in the National Export Initiative, while attractive, was misguided and recommends a specific set of policies that the administration should concentrate on to boost exports. Policy Brief 14-7

With the economic recovery incomplete and inflation falling well short of target, the US Federal Reserve needs to be prepared to stop tapering as announced in December 2013 or even reverse course should the forecasted acceleration in real activity show signs of faltering, warns David J. Stockton. See also Five Challenges for Janet Yellen at the Federal Reserve by David J. Stockton.

The crucial international role the Fed played during US Federal Reserve Chairman Ben Bernanke's tenure—a time when domestic economic weakness translated into relatively ineffective American global leadership—should not be overlooked, writes Arvind Subramanian.

Joseph E. Gagnon and Brian Sack propose a new operating framework that will allow the Federal Reserve to conduct monetary policy while maintaining a substantially elevated balance sheet and abundant liquidity in the financial system. Policy Brief 14-4.

Dani Rodrik and Arvind Subramanian argue that emerging markets are not hapless victims of the US Federal Reserve (and other central banks) but merely reaping what they have chosen to sow. Subramanian testifies that the US Federal Reserve's monetary easing policies [pdf], including the bond purchasing program known as quantitative easing, have generally had a positive impact on emerging markets and the global economy.

Simon Johnson testifies that Volcker Rule will likely have a positive impact on job creators and on job creation, and that there are no signs of the dire consequences that large bank holding companies fear. Johnson also testifies that the GAO study on government support for bank holding companies [pdf] has several prominent limitations; perhaps most worrying, the GAO seems to weight all "expert" opinion equally, irrespective of whether the work in question was undertaken by people who work for big banks.

C. Fred Bergsten recommends addressing currency manipulation through trade agreements, starting with adding a currency chapter in the Trans-Pacific Partnership. Policy Brief 14-2.

Jacob Funk Kirkegaard predicts that Europe's relative tranquility in the past year will continue into 2014, but says the risks of complacency have not disappeared.

Arvind Subramanian and Devesh Kapur explain India's obsession with spending and subsidies, to the neglect of taxation and the potential detrimental consequences for democracy and accountability.

India's trade is paradoxically closed in terms of policy but open in terms of outcomes, writes Arvind Subramanian.

The latest estimates of fundamental equilibrium exchange rates (FEERs) shows that exchange rate misalignments have tended to narrow in the past six months despite earlier concerns that prospective tapering in US quantitative easing would wreak havoc in international capital and currency markets. Policy Brief 13-29 by William R. Cline.

New Book: Responding to Financial Crisis: Lessons from Asia Then, the United States and Europe Now
Changyong Rhee and Adam S. Posen, editors
See also: Release Event | News Release