'None of the above' is no longer an option for the Eurozone

Covid-19 has reignited concerns about the future of the Eurozone. Mark Copelovitch explains that there is no sound economic reason why the Eurozone and its member states should find themselves in such a dire position. The problem is entirely political and can be solved only if European leaders finally step up and address the core problems threatening the Eurozone's long-term survival

Partisan technocrats: how leaders matter in international organizations

International organizations make policy decisions that affect the lives of people around the world. We argue that these decisions depend, in part, on the political ideology of the organization's chief executive. In this study, we investigate the influence of the leader of one of the most powerful international organizations: the Managing Director of the International Monetary Fund (IMF). We find that when the Managing Director is politically left of center, the IMF requires less labor market liberalization from borrowing countries in exchange for a loan. We also find evidence suggesting that the Managing Director's influence on labor-related loan conditions is independent of the Fund's most powerful members, including the United States. While Managing Directors rarely engage in overtly political behavior, they appear to act as “partisan technocrats” whose ideology influences international financial rescues and specifically the conditions attached to countries’ loans, which shape the distributive consequences of IMF lending

Financial regulatory transparency: new data and implications for EU policy. Bruegel Policy Brief 2015/20, December 2015

International financial institutions have promoted financial regulatory transparency, or the publication by supervisors of financial industry data. Financial regulatory transparency enhances market stability and increases democratic legitimacy. • We introduce a new index of financial regulatory data transparency: the FRT Index. It measures how countries report to international financial institutions basic macroprudential data about their financial systems.The Index covers 68 high-income and emerging-market economies over 22 years (1990-2011). • We find a number of striking trends over this period. European Union members are generally more opaque than other high-income countries.This finding is especially relevant given efforts to create an EU capital markets union. • Globally, financial regulatory data transparency has increased. However, there is considerable variation. Some countries have become significantlymore transparent, while others have become much more opaque. Reporting tends to decline during financial crises. • We propose that the EU institutions take on a greater role in coordinating and possibly enforcing reporting of bank and non-bank institution data. Similar to the United States, a reporting requirement should be part of any EU general deposit insurance scheme

Four lessons from the Eurozone crisis – and why the future of the euro remains uncertain

The fallout from the Eurozone crisis continues to have an impact on European economies, over six years after the crisis first peaked in 2010. Drawing on insights from recent research, Mark Copelovitch, Jeffry Frieden and Stefanie Walter discuss four lessons from the crisis. They state that the crisis has been largely predictable, that monetary union has raised the political stakes in crisis management, that the institutional problems that have plagued European Monetary Union from the start persist, and finally, that unless there are significant reforms, the future of the euro remains uncertain

Currency Wars by Other Means? Exchange Rates and WTO Dispute Initiation

Streaming video requires Flash Player, RealPlayer, or Windows Media Player to view.Recent controversies over "currency wars" in the global economy highlight the inextricable link between exchange rates and international trade. Yet while scholars and policy makers are well aware of the impact of exchange rates on the terms of trade, the existing literature on the political economy of the WTO has overlooked their importance as a determinant of trade disputes. In this paper, we argue that both exchange rate levels and regime choices are key determinants of WTO dispute initiation. Using a dyadic dataset of all WTO members from 1995 to 2006, we find that countries with more appreciated and overvalued exchange rates compared to their trading partners are more likely to initiate WTO disputes. We also find that flexible exchange rates are associated with WTO dispute initiation: within dyads, countries with more flexible exchange rate regimes are less likely to initiate disputes and less likely to be targeted by their trading partners. These results strongly suggest that exchange rates play a key role in determining the frequency of trade disputes between countries within the WTO. More broadly, our findings speak to the importance of more carefully exploring the complex relationship between trade and exchange rate policies in the contemporary global economy.Ohio State University. Mershon Center for International Security StudiesEvent Web page, streaming video, event photo

The Political Economy of the Euro Crisis

Governmen

The effect of banking supervision on central bank preferences: Evidence from panel data

YesWe examine the effects of banking supervisory architecture on central bank preferences, quantified through a recently proposed measure of central bank conservatism. Using a dynamic panel data specification we document that central banks serving both monetary policy and banking supervision functions are less inflation conservative than those with only a price stability mandate

Financial Data Transparency, International Institutions, and Sovereign Borrowing Costs

Recent events in international finance illustrate the close connection between the viability of a country's major private financial institutions and the sustainability of its sovereign debt. We explore the precise nature of this connection and the ways in which it shapes investors’ expectations of sovereign creditworthiness. We consider how investors use the overall level of information available about the private financial sector—and the potential risks it poses to government finances—when making decisions about investing in sovereign debt. We expect that governments providing more information about the private financial sector will have lower, and less volatile, borrowing costs. In order to test this argument, we create a new Financial Data Transparency (FDT) Index measuring governments’ willingness to release credible financial system data. Using the FDT and a sample of high-income OECD countries, we find that such transparency reduces sovereign borrowing costs. The effects are conditional on the level of public indebtedness. Transparent countries with low debt enjoy lower and less volatile borrowing costs

Echinostoma revolutum Infection in Children, Pursat Province, Cambodia

To determine the prevalence of helminthic infections in Pursat Province, Cambodia, we tested fecal specimens from 471 children, 10–14 years of age, in June 2007. The prevalence of infection with echinostome flukes ranged from 7.5% to 22.4% in 4 schools surveyed. Adult worms were identified as Echinostoma revolutum

Austerity versus stimulus? Understanding fiscal policy change at the International Monetary Fund since the Great Recession

This repository item contains a working paper from the Boston University Global Economic Governance Initiative. The Global Economic Governance Initiative (GEGI) is a research program of the Center for Finance, Law & Policy, the Frederick S. Pardee Center for the Study of the Longer-Range Future, and the Frederick S. Pardee School of Global Studies. It was founded in 2008 to advance policy-relevant knowledge about governance for financial stability, human development, and the environment.Since 2008 the IMF has become more open to the use of discretionary fiscal stimulus packages to deal with recessions, while changing its doctrine on the timing and content of fiscal consolidation. Rather than constitute a paradigm shift, these changes amounted only to a careful recalibration of its pre-crisis fiscal orthodoxy. The paper traces this evolution of the Fund’s doctrine to staff politics, more diverse thinking in mainstream economics and a careful framing of the message through the use of mainstream macroeconomic models. The findings contribute to the emerging debate on the internal sources of intellectual and policy change in international economic organizations