The International Dollar Standard and the Sustainability of the U.S. Current Account Deficit

macroeconomics, International Dollar Standard, Dollar Standard, Sustainability, U.S. Current Account Deficit

Japan's deflationary hangover: Wage stagnation and the syndrome of the ever-weaker yen

Japan still suffers a deflationary hangover from the great episodic yen appreciations of the 1980s into the mid-1990s. Money wages are still declining, and short-term interest rates remain trapped near zero. After Japan's 'lost decade' from 1992 to 2002, however, output has begun to grow modestly-but through export expansion and associated investment rather than domestic consumption. This export-led growth has been helped by a passive real depreciation of the yen: prices and wages in Europe and the United States have grown, and are growing, faster than in Japan. As the yen becomes weaker in real terms, American and European industrialists and politicians are again complaining that the yen is too weak (Japan bashing II?)-although the pressure on Japan to appreciate is not yet as great as it now is on the People's Republic of China (PRC). But Japan is trapped. If it does appreciate the yen, its fragile economy will be driven back into outright deflation. The only solution is to stabilize the nominal dollar value of the yen over the long term, but this step won't necessarily be immediately effective in placating foreign mercantilists. Under foreign pressure to appreciate the renminbi, the PRC, with its booming economy, is now in a similar position to Japan's of more than 20 years ago. Policy makers in the PRC should resist pressure to go down the same deflationary road as Japan

Modern Currency Wars: The United States Versus Japan

In the currency wars of the 1920s and 1930s, various nations fell off the gold standard and in so doing experienced deep devaluations. But under the postwar dollar standard, the central position of the US was key to maintaining the peace, until the Bretton Woods system of fixed dollar exchange parities fell apart after the so-called "Nixon Shock" of 1971. Now, without much fear of retaliation, the US can initiate more limited currency warfare - as with American "Japan bashing" from the late 1970s to mid-1990s to appreciate the yen, or "China bashing" since 2002 to appreciate the renminbi. Japan succumbed to this bashing, and the yen appreciated too much in 1985, with the result that Japan fell into a zero-interest liquidity trap and economic stagnation for almost two decades. However, in 2013, through massive quantitative easing by the Bank of Japan (BOJ), the yen depreciated about 25% against the dollar, stoking fears of a return to Japan bashing by the US. However, this sharp depreciation simply restored the purchasing power parity of the yen with the dollar so it should even out in the long run. In the short run, we show that yen depreciation could adversely affect the smaller East Asian economies. Since 2008, quantitative easing by the BOJ has been similar to that carried out by the US Federal Reserve, the Bank of England, and the European Central Bank. So the BOJ can only be faulted as a currency belligerent if there is a further significant yen depreciation. Led by the US, now all mature industrial countries are addicted to near-zero interest liquidity traps in both the short and long terms. These ultra low interest rates are causing lasting damage to the countries' financial systems, and to those of emerging markets, which naturally have higher interest rates. But exiting from the trap creates a risk of chaos in long-term bond markets and is proving surprisingly difficult

The processes of financialisation and economic performance

The paper considers the relationships between financialisation and economic performance. Financialisation is a persistent feature of industrialised capitalism, the nature of which differs over time and space. The present era of financialisation (since circa 1980) has been a world-wide phenomenon proceeding from different starting points and developing at different speeds, and can be viewed through the lens of variegated financialisation. The major features of the present era of financialisation are outlined. The increased scale of the financial sector leads to the issue of the relationship between financialisation and economic performance, and whether the additional resources used in the financial sector have been socially beneficial. The paper is completed by some brief remarks on the possibilities of de-financialisation

Genetic variation in the endocannabinoid system and response to cognitive behavioural therapy for child anxiety disorders

Extinction learning is an important mechanism in the successful psychological treatment of anxiety. Individual differences in response and relapse following Cognitive Behavior Therapy may in part be explained by variability in the ease with which fears are extinguished or the vulnerability of these fears to re-emerge. Given the role of the endocannabinoid system in fear extinction, this study investigates whether genetic variation in the endocannabinoid system explains individual differences in response to CBT. Children (N = 1,309) with a primary anxiety disorder diagnosis were recruited. We investigated the relationship between variation in the CNR1, CNR2, and FAAH genes and change in primary anxiety disorder severity between pre- and post-treatment and during the follow-up period in the full sample and a subset with fear-based anxiety disorder diagnoses. Change in symptom severity during active treatment was nominally associated (P < 0.05) with two SNPs. During the follow-up period, five SNPs were nominally associated with a poorer treatment response (rs806365 [CNR1]; rs2501431 [CNR2]; rs2070956 [CNR2]; rs7769940 [CNR1]; rs2209172 [FAAH]) and one with a more favorable response (rs6928813 [CNR1]). Within the fear-based subset, the effect of rs806365 survived multiple testing corrections (P < 0.0016). We found very limited evidence for an association between variants in endocannabinoid system genes and treatment response once multiple testing corrections were applied. Larger, more homogenous cohorts are needed to allow the identification of variants of small but statistically significant effect and to estimate effect sizes for these variants with greater precision in order to determine their potential clinical utility

The impact of treatment delivery format on response to Cognitive Behaviour Therapy for pre-adolescent children with anxiety disorders

Background. Several delivery formats of Cognitive Behaviour Therapy (CBT) for child anxiety have been proposed, however there is little consensus on the optimal delivery format. The primary goal of this study was to investigate the impact of the child’s primary anxiety diagnosis on changes in clinical severity (of the primary problem) during individual CBT, group CBT, and guided parent-led CBT. The secondary goal was to investigate the impact of the child’s primary anxiety diagnosis on rates of remission for the three treatment formats. Methods. A sample of 1253 children (5 – 12 years; Mage = 9.3, SD = 1.7) was pooled from CBT trials carried out at 10 sites. Children had a primary diagnosis of Generalised Anxiety Disorder (GAD), Social Anxiety Disorder (SoAD), Specific Phobia (SP) or Separation Anxiety Disorder (SAD). Children and parents completed a semi-structured clinical interview to assess the presence and severity of DSM-IV psychiatric disorders at pre intervention, post intervention and follow-up. Linear mixture modelling was used to evaluate the primary research question and logistic modelling was used to investigate the secondary research question. Results. Children with a primary diagnosis of GAD, SoAD and SAD demonstrated comparable improvements in clinical severity to all three CBT treatment formats. However, children with primary SP showed significantly larger reductions in clinical severity following individual CBT compared to group CBT and guided parent-led CBT. The results were mirrored in the analysis of remission responses with the exception that individual CBT was no longer superior to group CBT for children with a primary SP. Furthermore, the difference between individual and group was not significant when the follow-up data was examined separately. Conclusions. The data show that there may be greater clinical benefit by allocating children with a primary SP to individual CBT, although future research on cost-effectiveness is needed to determine whether the additional clinical benefits justify the additional resources required

Clinical predictors of response to cognitive-behavioral therapy in pediatric anxiety disorders: the genes for treatment (GxT) study.

OBJECTIVE The Genes for Treatment study is an international, multisite collaboration exploring the role of genetic, demographic, and clinical predictors in response to cognitive-behavioral therapy (CBT) in pediatric anxiety disorders. The current article, the first from the study, examined demographic and clinical predictors of response to CBT. We hypothesized that the child's gender, type of anxiety disorder, initial severity and comorbidity, and parents' psychopathology would significantly predict outcome. METHOD A sample of 1,519 children 5 to 18 years of age with a primary anxiety diagnosis received CBT across 11 sites. Outcome was defined as response (change in diagnostic severity) and remission (absence of the primary diagnosis) at each time point (posttreatment, 3-, 6-, and/or 12-month follow-up) and analyzed using linear and logistic mixed models. Separate analyses were conducted using data from posttreatment and follow-up assessments to explore the relative importance of predictors at these time points. RESULTS Individuals with social anxiety disorder (SoAD) had significantly poorer outcomes (poorer response and lower rates of remission) than those with generalized anxiety disorder (GAD). Although individuals with specific phobia (SP) also had poorer outcomes than those with GAD at posttreatment, these differences were not maintained at follow-up. Both comorbid mood and externalizing disorders significantly predicted poorer outcomes at posttreatment and follow-up, whereas self-reported parental psychopathology had little effect on posttreatment outcomes but significantly predicted response (although not remission) at follow-up. CONCLUSION SoAD, nonanxiety comorbidity, and parental psychopathology were associated with poorer outcomes after CBT. The results highlight the need for enhanced treatments for children at risk for poorer outcomes

Globalisation, adjustment and the structural transformation of African economies?: the role of international financial institutions

Under the auspices of the World Bank and IMF, for almost two decades, sub-Saharan African countries have implemented structural adjustment, an orthodox package of economic reform measures. During this period there has been an unprecedented proliferation of technology investment and trade in the world economy. However sub-Saharan Africa has performed poorly under adjustment and has been largely marginalized from the international economy. The paper investigates the problems with the theoretical model underlying structural adjustment policies to explain why the model is not conducive to either African development or Africa’s increasing participation in the global economy. An example is used to illustrate the existence of an alternative set of policies that may be better suited for Africa