Peterson Institute for International Economics Update Newsletter
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PIIE Update Newsletter
January 29, 2013

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Currency Wars

Joseph E. Gagnon
  Joseph E. Gagnon The rules of global trade forbid countries from artificially boosting exports and curbing imports by manipulating the exchange rates of their currencies. But for many reasons, policymakers have been wary of pressing cases against abuses. That reluctance may be coming to an end, however, as the global recession slouches on, and the shadow of chronic unemployment looms over industrialized economies.

>> Read full paper [pdf]

Trends: North Korea

Stephan Haggard and Marcus Noland
  Stephan HaggardMarcus Noland With new leadership in place and the economy facing new stresses, is this North Korea's reformist moment? Rumors of secret directives to the party outlining experimental reforms have been leaking out of the country for months now, given play by those hopeful that reform is imminent. And in light of the country's location in one of the most dynamic regions in the world, the upside potential is enormous. The economy could respond dramatically to even modest reforms, provided they were launched with conviction.

>> Read full paper [pdf]

Nine Reasons Why Stability in Russia May Be Elusive

Anders Åslund
  Anders Åslund Russia faces many risks this year, chief among them the dominance of a corrupt state and the dangerous reliance on a single person: Putin. Anti-corruption efforts have underscored the weakness of law and order, enraging the populace and risking destabilizing protests—which in turn are met with Putin's new reactionary radicalism and more repression. Russia risks deteriorating foreign relations, both with the United States due to continued anti-Americanism, and with its immediate neighbors over unresolved post-Soviet conflicts. And as the internal top struggle is clearly intensifying, a coup in the Kremlin cannot be excluded. A year ago, revitalizing economic and political reforms appeared likely, but that is no longer the case.

>> Read full op-ed
>> Listen to related interview: More Rough Weather in Russia?

Is India's Modi Miracle Overrated?

Arvind Subramanian
  Arvind Subramanian Taxation gives citizens an incentive to hold rulers accountable, and this in turn helps to ensure that the latter deliver value for money. The best-performing Indian states have high and stable, or high and rising, ratios of own tax revenue (OTR) to GDP. This is not the case in Gujarat. Under prime ministerial aspirant Narendra Modi's leadership, Gujarat has ranked among the poor performers in the level of tax collection, despite strong growth. Whether this reflects a conscious investor-friendly growth strategy or another side to Modi's Gujarat governance that might only become evident in the future, only time will tell. But this will likely not happen in time for voters to make informed choices in the election for India's next prime minister.

>> Read full op-ed

  Congressional Testimony
The Statutory Debt Limit

Simon Johnson
  Simon Johnson With a sovereign debt crisis unresolved in Europe and serious potential risks on the horizon in countries such as Japan, China, and Brazil, the continuing uncertainty around the US federal budget and the debt ceiling may prove destabilizing both at home and around the world. The United States must take action by creating enough jobs for all Americans who want to work, controlling healthcare costs as quickly as possible, and increasing tax revenues over the long term. To refuse to raise the debt ceiling in this environment would be courting financial catastrophe.

>> Read full testimony [pdf]

Peterson Perspectives Interviews

audio  More Rough Weather in Russia?
Anders Åslund assesses the dangers facing Russia's buoyant economy posed by growing state control and the crackdown on corruption.

Recent Blog Posts

RealTime Economic Issues Watch   China Economic Watch    North Korea:  Witness to Transformation
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The ECB: The Last Central Bank Standing?

Cameron Plays a Weak Hand, but Don't Bet on a Brexit

LNG Exports: An Opportunity for America

UN Sanctions Resolution: The Good News and the Bad News

Can the Euro Area Use Its New Stability to Continue Reforms?
  China Rebalancing Update—Q4 2012

A Shrinking Leviathan: State Employment in China Looms Smaller Than Expected

Book Review: The Great Rebalancing

Did China Really Lose $3.75 Trillion in Illicit Financial Flows?

Why Chinese Financial Markets Need Risk
  Reaction to the Reaction

Paradise Lost

John Kerry on North Korea

Photography: Jeremy Hunter at the Arirang Games

North-South Relations: So Much for Détente

PIIE Noted in the News and on the Web

NPR's Weekend Edition
Japan's Economic Plan May Be Bad News for Everyone Else
Japan is being criticized for infusing its economy with money to help spur consumption, but Jacob Funk Kirkegaard notes the global economic recovery would have been much worse had the US Federal Reserve and other central banks not flooded their own financial markets with money during the global recession.

Bloomberg TV
'Very Low' Chance of China Hard Landing, Lardy Says
Nicholas R. Lardy explains that while growth in China may be slightly higher this year, structural reforms may cause the structure of demand to look much different. Consumer sector industries may benefit while growth slows in the investment and property sectors.

Preview of Our Next Issue

Policy Brief
A Blueprint for Rebalancing: Creating a More Sustainable Chinese Economy
Nicholas Lardy and Nicholas Borst

In This Issue

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