Old wine in new bottles

Trade restrictions are being justified by arguments for harmonisation of minimum labour or environmental standards. But diverse standards are one of the sources of the gains from trade. Protectionism can be concealed '…under a cloak of concern for workers in developing countries or for the global environment.'     

The future of cooperation between the EU and ACP countries

Something over 20 years after the first Lomé Agreement came into force, most of the ACP countries are still among the poorest in the world. Why have these countries' situations not improved despite the Agreements? Why has their share of total EC imports from developing countries fallen in spite of the tariff preferences they are granted? What conclusions ought to be drawn for future cooperation between the EC and ACP countries?     

Credit risk transfer and financial sector stability

In this paper, we study credit risk transfer (CRT) in an economy with endogenous financing (by both banks and non-bank institutions). Our analysis suggests that the incentive of banks to transfer credit risk is aligned with the regulatory objective of improving stability, and so the recent development of credit derivative instruments is to be welcomed. Moreover, we find the transfer of credit risk from banks to non-banks to be more beneficial than CRT within the banking sector. Intuitively, this is because it allows for the shedding of aggregate risk which must otherwise remain within the relatively more fragile banking sector. Therefore, regulators should act to maximize the benefits from CRT by encouraging the development of instruments favorable to the cross-sectoral transfer of aggregate credit risk (including basket credit derivatives such as collateralized debt obligations). Finally, we derive the optimal regulatory stance for banks relative to non-bank financial institutions. We show that a level playing field approach is sub-optimal. Regulatory stances should be set to actively encourage cross-sector CRT, first because of the higher fragility of the banking sector and second to induce banks to incur the costs of CRT which otherwise lead them to undertake an insufficient amount of CRT.     

The EU on the 50th Anniversary of the Treaty of Rome

March 25, 2007 marks the 50th anniversary of the Treaty of Rome, the signing of which is considered to be the birth of the European Union. On this occasion the following articles discuss past and present developments in a number of important European policy fields. *Member of the Panel of Experts of the Committee on Economic and Monetary Affairs of the European Parliament to which the article was first presented as a Briefing Paper for the Monetary Dialogue with the President of the European Central Bank in December 2006.     

Services Grids in Industry – On-Demand Provisioning and Allocation of Grid-Based Business Services

Over the last few years Grid computing has attracted considerable attention from the industry, because it offers opportunities for new on-demand business services for enterprises. In this article, we depict the current trend of enterprises to source Grid services offered by third-party utility providers on a use-on-demand, pay-per-use basis, thus leading to faster IT response to changing business needs. We outline the emerging expansion of Grid computing in industry and discuss the significant challenges still needing to be solved to further promote the adoption of Grid technology in the business domain. This article is also available in German in print and via : Vykoukal J, Wolf M, Beck R (2008) Service-Grids in der Industrie – On-Demand-Bereitstellung und Nutzung von Grid-basierten Services in Unternehmen. WIRTSCHAFTSINFORMATIK. doi: . Accepted after two revisions by Prof. Dr. Buhl.     

Scylla and Charybdis. Explaining Europe’s exit from gold, January 1928–December 1936

The paper examines the timing of exit from the interwar gold-exchange standard for a panel of European countries, based on monthly data over the period January 1928–December 1936. I show that exit from gold can be understood in terms of a trade-off between a limited set of factors commonly suggested in the theoretical literature on currency crises. A simple and parsimonious econometric framework that nests various hypotheses allows me to predict the month of exit in the 1930s, except for France. I consider the separate cases of France and Poland to show my results shed light on country-specific debates.     

Can Futures and Options Markets Hold the Milk Price Safety Net? Policy Conflicts and Market Failures in Dairy Hedging

U.S. Department of Agriculture's Dairy Options Pilot Program promoted hedging by producers, and was a test case for similar programs in other agricultural industries. Rapidly shifting milk pricing policies impeded quantitative hedging evaluations while the program was active. Hedging appears capable of reducing price variance by 50–60% in most regions, and favors large, sophisticated producers in heavy cheese manufacturing regions. Forward contracting or price insurance products may offer lower transaction costs and attract more small-scale producers. Ballooning milk deficiency payments and milk's prominent role in trade-distorting payments suggest an ongoing need to promote private price risk management tools.     

COMMENTS ON ‘THE GLOBAL IMBALANCES: WHAT IS THE PROBLEM?’, THE 2007 WINCOTT LECTURE,GIVEN BY MAX CORDEN

The view that the United States will be able to run significant deficits for a long time is convincing. However, the proposition that it makes sense for foreigners to invest in the USA because of the high returns is questionable. The value of their US assets is at risk from dollar depreciation, inflation and government sequestration. Accordingly, there is a danger that foreign investors will cut and run, causing a brutal and swift adjustment.