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Approval of the Trans-Pacific Partnership faces a major hurdle in the form of bipartisan demand in Congress that it address the manipulation of exchange rates; there is a way to resolve this dilemma, but it will require new initiatives by the Obama administration, Congress, and TPP partner countries, writes C. Fred Bergsten.

Chinese leaders have outlined an ambitious agenda for service sector reform, but myriad vested interests could slow or block their plans. Failure to reform and open up the service sector could seriously impair China’s growth prospects. Policy Brief 15-2 by Ryan Rutkowski.

Although the US unemployment rate has fallen, there is much unfinished business in restoring the health of the labor market, says Justin Wolfers in testimony before the US Senate Committee on Finance.

The Swiss National Bank's surprise move to end its exchange-rate controls riled markets. Edwin M. Truman explains why the control measures were a bad idea in the first place and applauds the SNB for not telegraphing its intentions to the markets.

audio A Dramatic Opening with Cuba
Barbara Kotschwar, who was in Havana when normalization with Cuba was announced, assesses the impact and the prospects for renewed economic ties.
See also:
Speeding the Winds of Change in Cuba-US Economic Relations

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.

audio Economic Crisis in Russia
Anders Åslund analyzes Russia's economic woes and says the only way out is to get sanctions lifted by reversing course on Ukraine.

Putin’s leadership approach seems fundamentally incompatible with any solution to Russia’s current economic woes, writes Anders Åslund.

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.

Jacob Funk Kirkegaard reviews seven ways a country can reduce its public sector debt and warns that Portugal should not pursue a unilateral public debt restructuring without the full consent and cooperation of the rest of the euro area.

Most forecasts for emerging and developing economies reflect excessive optimism that is both statistically significant and economically relevant, according to a study of forecasts for horizons of up to 20 years in more than 100 countries. Policy Brief 14-26 by Giang Ho and Paolo Mauro.

http://bookstore.piie.com/book-store/6970.htmlNew Book: The Great Rebirth: Lessons from the Victory of Capitalism over Communism

Anders Åslund
Simeon Djankov, eds.

Release Event | News Release

A new PIIE Briefing, released on the heels of Prime Minister Abe’s election victory in December, calls on Japan to be flexible in the negotiations for a Trans-Pacific Partnership trade deal and to take steps to achieve fiscal sustainability over the medium and long term.

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.


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.

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.

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Alejandro Werner

Latin America: Falling on Hard Times

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Min Zhu

Unlocking Global Growth

The IMF's Min Zhu discusses ongoing structural changes in the world economy and policies to boost growth around the globe.

Pierre Moscovici

A Page Turned: Working for Investment and Growth in the New European Union

Pierre Moscovici, the new European Commissioner for Economic and Financial Affairs, Taxation and Customs, speaks at the Institute.

Fabrizio Saccomanni

Restoring Sustainable Growth and Job Creation in Europe

Fabrizio Saccomanni, Italy's former minister of economy and finance, delivers the keynote address at an event held to discuss solving the persistent economic stagnation in Europe.

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.

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