The Effect of Exchange Rate Changes on Trade in East Asia

This paper considers how exchange rates affect East Asian trade. The evidence indicates that exports produced within regional production networks depend on exchange rates throughout the region while labor-intensive exports depend on exchange rates in the exporting country. These results make sense since the majority of the value-added of processed exports come from imported parts and components while most of the value-added of labor-intensive exports comes from the domestic economy. Recent findings also indicate that imbalances between the People’s Republic of China (PRC) and the United States are a major outlier and that an appreciation of the PRC yuan (CNY) is necessary to reduce these imbalances.global imbalances exchange rate elasticities prc; exchange rate changes east asia

The Evolution of the Development Doctrine, 1950-2005

The evolution of the development doctrine over the last six decades is analysed in some detail in this paper. The development doctrine is defined as the body of knowledge consisting of four interrelated components: (1) the prevailing development objectives; (2) the conceptual state of the art relating to development theories, models, techniques and applications; (3) the underlying data system; and (4) the resulting development strategy. The main contributions and changes in these four components are traced through, decade by decade, starting with the 1950s.development, doctrine, evolution

"Further Evidence on the Distributional Effects of Disinflationary Monetary Policy"

The performance of the U.S. economy between 1994 and 1998 was so good that some pundits began to call for the Federal Reserve to increase interest rates to depress economic activity and reduce asset prices. However, slowing the economy to stabilize asset prices would have adverse distributional effects. Impulse-response functions from identified vector autoregression (VAR) indicate that unexpected increases in the federal funds rate increase unemployment among blacks and Hispanics by 50 to 90 percent more than among whites. A narrative approach applied to two disinflationary periods shows that higher interest rates in the 1974 disinflation decimated the housing industry and that two interest-rate-sensitive sectors-construction and durable goods-showed the largest declines in 1980 and 1981 (periods following the 1979 tightening). Utilizing the Romer and Romer examination of the minutes of Federal Open Market Committee meetings to determine dates on which the Fed attempted to create a recession to reduce inflation, antiinflationary policy shocks can be estimated to increase unemployment among nonwhites more than twice as much as they do among whites. A social accounting matrix (SAM) indicates that in the sectors that were hardest hit by recession following the 1974-1975 and 1979-1982 disinflations (construction and durable goods), blue-collar workers were harmed more than other workers in terms of lost income and urban households were hurt much more than rural households. Minorities bear the brunt of disinflationary policy and do not share proportionately in the benefits of keeping the stock market stable, a factor that the Fed should take into account when contemplating actions aimed at stabilizing asset markets.

"Inflation Targeting and the Natural Rate of Unemployment"

Inflation targeting has become an increasingly popular strategy for setting monetary policy during the last decade. While no countries had formal inflation targets before 1990, currently 22 countries use inflation targeting. One notable exception is the United States, where the Federal Reserve has a dual mandate to pursue both price stability and full employment. Some economists advocate inflation targeting for the United States, partly because they fear that otherwise the Fed will try to push unemployment below its "natural rate" - its lowest sustainable level - and trigger accelerating inflation. However, the natural rate theory has proven to be a poor guide for policy making over the last 10 years. Unemployment in 2000 fell 2 percentage points below estimates of the natural rate without spurring inflation. Since inflation targeting derives its justification largely from the theory of the natural rate, it is questionable whether the United States should switch to an inflation-targeting regime. These doubts are reinforced by the manifest success of monetary policy under the dual mandate.

Conceptual and Measurement Issues in Poverty Analysis

poverty, vulnerability, inequality, measuring human well-being

A Quest for Pro-Poor Globalization

pro-poor globalization, inequality, poverty

Linking Globalization to Poverty

While the economic opportunities offered by globalization can be large, a question is often raised as to whether the actual distribution of gains is fair, in particular, whether the poor benefit less than proportionately from globalization and could under some circumstances be hurt by it. This Policy Brief summarizes and examines the various channels and transmission mechanisms, such as greater openness to trade and foreign investment, economic growth, effects on income distribution, technology transfer and labour migration, through which the process of globalization affects different dimensions of poverty in the developing world.globalization, growth, inequality, poverty, pro-poor, distribution, labour mobility, capital, technology, vulnerability,