The Role of Policy in Achieving Shared, Sustainable Economic Prosperity

The currency manipulation game is afoot – but that’s better than a trade war. Jeffrey Frankel, August 13, 2019, Opinion, “The trade war between the United States and China is heating up again, with U.S. President Donald Trump abruptly announcing plans to impose a 10-per-cent tariff on the US$300-billion worth of imports from China that he had so far left untouched. The Chinese authorities then allowed their currency, the renminbi, to fall below the symbolic threshold of seven yuan for every U.S. dollar. The Trump administration promptly responded by naming China a “currency manipulator” – the first time the U.S. had done that to any country in 25 years. Pundits declared a currency war, and investors immediately sent global stock markets lower.” Link

The Currency Manipulation Game. Jeffrey Frankel, August 9, 2019, Opinion, “The United States government’s assertion that the recent depreciation of the renminbi amounts to currency manipulation is not true. It would be more correct to say that the Chinese authorities gave in to market pressure – the immediate source of which was US President Donald Trump’s announcement of new tariffs on Chinese goods.” Link

Varieties of Outward Chinese Capital: Domestic Politics Status and Globalization of Chinese Firms. Meg Rithmire, , Paper, “A great deal of scholarly and popular attention has been devoted the “specter of global China” (Lee 2017). Contemporary China has been interacting with and shaping processes of globalization since it opened its door in 1978, but the more recent spate of attention has focused specifically on Chinese outward investment, which has soared since the early 2000s and especially since the global financial crisis in 2008. Scholars and journalists have sought to understand the extent to which China is “buying the world,” what it means for both the developing world (presumed to be the target) and developed world (presumed to be the competition), and what patterns of investment can illuminate about whether China is “playing our game” (harmonizing with western political and economic institutions) or pursuing a revised world order (Nolan 2013; Steinfeld 2010; Toh 2017).” Link

The Case for a World Carbon Bank. Kenneth Rogoff, July 8, 2019, Opinion, “To the dismay of many energy experts, the World Bank recently rather capriciously decided to stop funding virtually all new fossil-fuel plants. But phasing out readily available coal is a move that most major developing countries simply cannot afford without adequate incentives.” Link

Jeffrey Frankel on Taxes, Trade, Tariffs, and the Possibility of the Next Recession June 2019. GrowthPolicy’s Devjani Roy interviewed Jeffrey Frankel, James W. Harpel Professor of Capital Formation and Growth at Harvard Kennedy School, on the current tax policy, international trade, tariffs, and the possibility of the next recession. | Click here for more interviews […]

Can Global Rules Prevent National Self-Harm? Dani Rodrik, June 11, 2019, Opinion, “Most policy mishaps in the world economy today – as in the case of US President Donald Trump’s tariffs – occur as a result of failures at the national level, not because of a lack of international cooperation. And, with the exception of two types of cases, countries should be allowed to make their own mistakes.” Link

Globalization’s Wrong Turn, And How It Hurt America. Dani Rodrik, July/August 2019, Opinion, “Globalization is in trouble. A populist backlash, personified by U.S. President Donald Trump, is in full swing. A simmering trade war between China and the United States could easily boil over. Countries across Europe are shutting their borders to immigrants. Even globalization’s biggest boosters now concede that it has produced lopsided benefits and that something will have to change.” Link

For International Cap-and-Trade in Carbon Permits, Price Stabilization Introduces Secondary Free-Rider-Type Problems. Martin Weitzman, June 7, 2019, Paper, “In this brief note (Without holding them responsible for errors, omissions, or interpretations, I am grateful for constructive comments on an earlier version of this note by Joseph Aldy, Severin Borenstein, Maureen Cropper, Carolyn Fischer, Meredith Fowlie, Lawrence Goulder, Geoffrey Heal, N. Gregory Mankiw, Michael Mehling, Gilbert Metcalf, Adele Morris, Ian Parry, William Pizer, Simon Quemin, Andrew Schein, Richard Schmalensee, E. Somanathan, Robert Stavins, David Victor, and Gernot Wagner.), I take the initial allocation of carbon emissions as a prototype international public goods problem. Overcoming the free-rider problem in carbon emissions is central to a successful comprehensive international climate-change agreement. Volunteerism alone may go part way, but is unlikely to fully adequately overcome this free-rider problem. (The numerical values of the pledged “Nationally Determined Contributions” under the Paris Agreement are voluntary, although the Paris Agreement itself may help constructively by laying a legal foundation for participation, reporting, verification, transparency, and trust.)” Link

Mailbag Episode: Questions from Listeners. Youngme Moon, Felix Oberholzer-Gee, Mihir Desai, June 6, 2019, Audio, “Youngme Moon, Felix Oberholzer-Gee, and Mihir Desai answer questions from listeners and end up discussing everything from the U.S.-China trade dispute to Disney, CVS Health, short-termism, and how to express an opinion persuasively.” Link

Tariff Passthrough at the Border and at the Store: Evidence from US Trade Policy. Alberto Cavallo, Gita Gopinath, May 2019, Paper, “We use data collected at the border and at retailers to characterize the impact of recent changes in US trade policy on importers, consumers, and exporters. We start by studying the tariffs on imports of steel and Chinese goods that were imposed during 2018. We find little difference in the “at-the-dock” ex-tariff price levels and stickiness for otherwise equivalent goods that were affected and not affected. This nearly complete passthrough of tariffs to the total price paid by importers suggests the tariff incidence has fallen largely on the US. We simultaneously estimate exchange rate passthrough and find the response to be far more muted. Next, in-progress analyses of retail prices preliminarily show more heterogeneity, with the higher cost of imports passed through to consumers for some goods, such as washing machines, but absorbed by lower retailer profit margins for others, such as many from China. Finally, in contrast to imports, US exports subjected to retaliatory tariffs exhibited declines in their ex-tariff prices relative to equivalent but non-targeted goods.” Link