International Economics Update
Fall 2004
Copyright (C) 2004 The International Economics Network
http://www.internationaleconomics.net

Website Additions.

After a two-year hiatus, the newsletter is back online -- albeit now in a quarterly format -- with updates on major additions to the International Economics Network, as well as commentary on current events of international economic interest.

Although the newsletter has been inactive, the site has been very much alive. Updates continue to be made to the news section on an almost daily basis, and the research papers section has exploded with links to working papers and significant books. Updates have also been made to, inter alia, the section on research resources such as links to funding bodies and software, (http://www.internationaleconomics.net/research-resources.html), the list of international economists (http://www.internationaleconomics.net/economics5.html), and the collection of institution and think tank websites (http://www.internationaleconomics.net/economics4.html).

Some site honors: The site was also featured as an online educational resource in the Fall 2004 issue of the Journal of Economic Education (http://www.indiana.edu/~econed/issues/v35_4/toc.htm); also, entering "international economics" as a search term in Google now brings up the Network within the first couple of relevant hits.

Interesting Readings.

1. Toil Over Oil: Although oil prices seem to have cooled off in recent times, the spike over the past couple of months did lead to many commentators throwing in their views on reasons for the rise. Michelle Billig, writing in Foreign Affairs, makes the case for supply-side disruptions due to labor unrest in Venezuela (http://www.foreignaffairs.org/20040901facomment83501/michelle-billig/the-venezuelan-oil-crisis.html), while Robert Feldman (MSDW) believes that it is a combination of geology, statistics, and economics (http://www.morganstanley.com/GEFdata/digests/20040812-thu.html#anchor0; http://www.morganstanley.com/GEFdata/digests/20040813-fri.html#anchor3). C. Fred Bergsten, from the IIE, and Steve Roach, from MSDW, independently stress the role that high oil prices may pose to global economic growth (http://www.iie.com/publications/papers/bergsten0904.htm; http://www.morganstanley.com/GEFdata/digests/20040819-thu.html#anchor0).

2. Into My Fifties: The IMF hits 60. Some argue that it is due for a major revamp; others want it abolished altogether. The IMF, to its credit, has sought to reinvent itself and remain relevant, while trying to protect against mission creep. The September issue of Finance and Development covers the (self) assessment (http://www.imf.org/external/pubs/ft/fandd/2004/09/index.htm).

3. Dump Slump: The WTO has (finally) ruled on the (long overdue) loophole employed by the U.S. to protect its home industries (via the use of antidumping measures). The IHT reports (http://www.iht.com/articles/536764.html), and the WSJ (subscription required) (http://www.wsj.com/wsjgate?source=jopinaowsj&URI=/article/0,,SB109399447993406363,00.html%3Fmod%3Dopinion) and EU Director-General of Trade (http://europa.eu.int/comm/trade/issues/respectrules/dispute/pr010904_en.htm) offer differing takes on the matter.

4. Sleepless in Asia: Some economic developments in Asia portend potential trouble ahead. Asia Times reports (http://atimes01.atimes.com/atimes/China/FI21Ad07.html) that China's growth has not responded as much to monetary tightening as the People's Bank of China would like. William Pesek Jr., writing in Bloomberg (http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_pesek&sid=aJzZNNoT6.r0), takes a wider global perspective on China's continued boom. The question clearly is, when China slows, as it inevitably will (due to a combination of both capacity/resource limitations as well as contractionary policy), will there be other economies to take up the slack internationally?

5. Your Job, My Job: Yale's Rob Shiller provides a slightly different spin to the outsourcing debate by looking at survey data studying the domestic impact of international competition and job loss. He ends with some tentative speculation on the need for politics to adapt, but the article ends just where the question becomes potentially interesting ("Fear and Loathing in the First World", http://www.project-syndicate.org/commentaries/commentary_text.php4?id=1666&lang=1&m=series).

6. Steering the Bank: Sebastian Mallaby writes in the Washington Post about the next successor to Wolfensohn at the World Bank, and concludes that the best person for the job is... Wolfensohn himself. An insightful article that comes from a firsthand knowledge of the man ("The World Bank's Force of Nature", http://www.washingtonpost.com/wp-dyn/articles/A52802-2004Sep26.html). See also the fuller-length book, published by Penguin ("The World's Banker", http://www3.cfr.org/pub7367/sebastian_mallaby/the_worlds_banker.php); purchase it from Amazon.com (http://www.amazon.com/exec/obidos/ASIN/1594200238/jamusjeromelim/103-7490514-7322257).

7. Fall Fiesta: Speaking of the Bank, the IMF and the Bank are holding their annual meetings in D.C., no doubt to the usual circus of antiglobalization protesters. Information about the meetings, along with documents, programs, and the like, see: http://www.imf.org/external/am/2004/.

8. Chinese Magic: One of the greater dangers of climbing onto the Chinese bandwagon is that Chinese growth statistics are notoriously unreliable. In this article for Asia Times (Lies, damn lies and Chinese statistics", http://atimes01.atimes.com/atimes/China/FJ23Ad01.html), Florence Chan dissects the motivations for such actions, and hints at the implications for political developments in China.

9. Debate on the Deficit: Much has been said of the debate over the sustainability of the U.S. twin deficits. In two op-eds in the Financial Times (requires FT subscription), Richard Cooper (Harvard) and Maury Obstfeld (Berkeley) & Ken Rogoff (Harvard) square off on the issues ("US deficit: It is not only sustainable, it is logical", http://news.ft.com/cms/s/85799f90-2b70-11d9-92d4-00000e2511c8.html; "US deficit: The problem is a global concern", http://news.ft.com/cms/s/90a576cc-2b71-11d9-92d4-00000e2511c8.html).

10. Globalization Gobble(degook?): Philip Gordon, of Brookings, explains why the European Union is a key part of Europe's slow (but definite) integration into the world economy - with environmentalists, welfare states, and labor rights all in tow ("Globalization: Europe's Wary Embrace", http://www.brookings.edu/views/articles/gordon/20041101.htm).

11. Dollar Debacle: The U.S. dollar is finally showing serious signs of a more long term decline. While much has been written, perhaps the most pertinent views are the articles that explore the impact of the dollar's fall against the other big two currencies ("China, Asia Currency Policies Unnerve Europe", http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_pesek&sid=azGaif8Wef6Y; "The Strong Dollar Heads South Again", http://news.ft.com/cms/s/8b5878b0-3907-11d9-bc76-00000e2511c8.html), the domestic implications of the fall ("As the Dollar Declines", http://www.nytimes.com/2004/11/13/opinion/13sat1.html; "The Dangerous Dollar", http://www.washingtonpost.com/wp-dyn/articles/A55692-2004Nov16.html), and the impact on emerging Asia ("Currencies: A Reversal of the Asian Currency Crisis", http://www.morganstanley.com/GEFdata/digests/20041115-mon.html#anchor1; "Can Asia Dump Bretton Woods II as Dollar Falls?", http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_mukherjee&sid=aAwTOe4JIHIo), especially China's RMB peg ("RMB: Inching Toward a Crawling Band", http://www.morganstanley.com/GEFdata/digests/20041115-mon.html#anchor2). The team at Morgan Stanley Dean Witter has also recently conducted a roundtable on the issue ("Debating the dollar", http://www.morganstanley.com/GEFdata/digests/20041210-fri.html#anchor8, http://www.morganstanley.com/GEFdata/digests/20041210-fri.html#anchor7).

12. Rate Date: The Washington Post has a facinating series of articles on the role of credit agencies in the international monetary system ("Borrowers Find System Open to Conflicts, Manipulation", http://www.washingtonpost.com/wp-dyn/articles/A2858-2004Nov21.html; "Credit Raters Exert International Influence", http://www.washingtonpost.com/wp-dyn/articles/A5572-2004Nov22.html; "Credit Raters' Power Leads to Abuses, Some Borrowers Say", http://www.washingtonpost.com/wp-dyn/articles/A8032-2004Nov23.html).

13. Institution, Schinstitutions: Raghuram Rajan, chief economist of the Fund, speaks on the nebulous ways that economists have addressed the idea of "institutions" by assuming the complete markets model that we know and love, and stresses the need to recognize potential market failures in the real world. In particular, he stresses the need to relax allow for deviations that recognize asymmetric information and agency. All this, so that we can make more sensible policy advice. Development economics meets mainstream economics ("The View From the IMF: Assume Anarchy?", http://www.theglobalist.com/DBWeb/StoryId.aspx?StoryId=4270).

14. (Re)Balancing Act: Morgan Stanley's Stephen Roach has been one of the loudest voices in the need for global rebalancing, especially between the U.S. and East Asia. In one of his most lucid and comprehensive articles to date, he summarizes much of his earlier arguments and underscores the inevitable ("Global: The World's Biggest Excess", http://www.morganstanley.com/GEFdata/digests/20041129-mon.html#anchor0).

15. Liberalization Surprises (Or Not): Keith Bradsher reports in the IHT about the facinating, and perhaps counterintuitive, impact of the removal of textile quotas in Bangladesh. Contrary to the predictions of a neoclassical standard model (and the view of economic analysts), plant productivity differences in (seemingly) homogenous goods does make a difference. Another interesting side effect: The effect of the globalization of the Bangladeshi textile industry has led to increased labor force participation, and in particular, the female workforce---globalization as emancipation. On a similar vein, the big liberalization news is the removal of textile quotas in January 2005 ("A New World Order", http://www.nytimes.com/2004/12/17/opinion/17fri1.html).

16. How to Fix the World: Morgan Stanley's team of economists tell us how ("Looking to 2005: How to Fix the World", http://www.morganstanley.com/GEFdata/digests/20041217-fri.html).

17. A Naked Hegemon: Andre Gunder Frank, writing in the Asia Times, critiques the current status of the U.S. as the *core* core economy ("Why the emperor has no clothes", http://atimes01.atimes.com/atimes/Global_Economy/GA06Dj01.html; "The center of the doughnut", http://atimes01.atimes.com/atimes/Global_Economy/GA07Dj01.html).

Endnotes.

This update is sent by request to subscribers. If you wish to join the mailing list, please click on:

http://www.internationaleconomics.net/contact.html

And enter your email address on the form there.

You will receive a verification message confirming your subscription to the International Economics Update mailing list. Please feel free to forward this mailing on to colleagues and friends who might be interested in the subject matter. The usual disclaimers apply.

This mail is not spam. You have received this mailing only because you are on the International Economics Update mailing list, for which it is believed that you have voluntarily subscribed to. If you believe that this message was sent in error, or if you wish to remove yourself from the mailing list, please send an e-mail to:

webmaster@internationaleconomics.net

and you will be removed promptly. Alternatively, you may click on the link below.