The Role of Policy in Achieving Shared, Sustainable Economic Prosperity

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

There’s a ‘contradiction’ in the US stance on the Chinese yuan. Jeffrey Frankel, May 27, 2019, Video, “Jeffrey Frankel of Harvard University says the U.S. government is making “lots and lots of demands” from the Chinese and “not offering a whole lot in return.”” Link

The Real Cost of Trump’s Tariffs. Jeffrey Frankel, May 23, 2019, Opinion, “Whereas winners tend to outnumber losers when trade is liberalized, raising tariffs normally has the opposite result. US President Donald Trump appears to have engineered a spectacular example of this: his trade war with China has hurt almost every segment of the US economy, and created very few winners.” Link

China Is Vulnerable But Deal Unlikely. Robert Lawrence, May 17, 2019, Audio, “Robert Lawrence, Professor of International Trade and Investment at Harvard Kennedy School and former economic advisor to President Clinton, on why a China trade deal is looking unlikely in the near future. Martin Stephan, the Deputy CEO of Carbios, a French recycling biotech company, on their technology that aims for zero plastic waste. Alex Webb, Bloomberg Opinion technology columnist, discusses his column: “Amazon-Deliveroo Alliance Would Eat Uber For Dinner.” Will Rhind, CEO of GraniteShares, with his mid-year outlook on gold and oil. Hosted by Lisa Abramowicz and Paul Sweeney.” Link

There’s a revealing puzzle in the China tariffs. Lawrence Summers, May 14, 2019, Opinion, “On Monday, China announced new tariffs on $60 billion of U.S. exports, and the United States threatened new tariffs on up to $300 billion of Chinese goods. These actions were cited as the principal reason for a decline of more than 600 points in the Dow Jones industrial average, or about 2.4 percent in broader measures of the stock market. With the total value of U.S. stocks around $30 trillion, this decline represents more than $700 billion in lost wealth. This was not an isolated event. Again and again in the past year, markets have gyrated in response to the state of trade negotiations between the United States and China.” Link