Reducing High Public Debt Ratios: Lessons from UK Experience*

This paper examines contrasting experiences of the United Kingdom in addressing high public debt to GDP ratios following major wars. A clear message is that interest rate / growth rate differentials were more important than primary budget surpluses for the different outcomes. The debt to GDP ratio fell very rapidly under financial repression following the Second World War but remained stubbornly high despite large budget surpluses with price deflation after the First World War. Implications for policymakers today are that averting price deflation is a high priority and that supply‐side policies that raise growth could play an important part in debt reduction.     

Financial globalisation and the labour share in developing countries: The type of capital matters

In this paper, we investigate how de facto financial globalisation has influenced the labour share in developing countries. Our main argument is the need to distinguish between different types of capital in this context as they differ in their effect on the host countries' production process and vary concerning their bargaining power vis-à-vis labour. Our econometric analysis of the impact of foreign direct versus portfolio investment in a sample of about 40 developing and transition countries after 1992 supports this claim. Using different panel data techniques to address potential endogeneity problems, we find that foreign direct investment has a positive effect on the labour share in developing countries, while the impact of portfolio investment is significantly smaller and potentially negative. Our results also highlight that de facto foreign investment cannot explain the decline of the labour share in developing countries over the investigated period.     

South Korea’s outward direct investment and its dyadic determinants: Foreign aid,bilateral treaty and economic diplomacy

This study investigates the factors that affect South Korean outward foreign direct investment (FDI) in developing countries. Most previous studies focus on monadic factors and do not consider how and to what extent bilateral relationships between South Korea and the host countries affect the investment decisions of Korean firms. The current study finds that interstate factors such as South Korea's international investment treaties with and official development assistance to host countries have positive effects on FDI to these countries, while presidential visits have strong and statistically significant effects on FDI only in countries located in non-Asian regions, especially the African continent. The findings suggest that the effects of bilateral relations on South Korea's FDI vary depending on the geographic location of the host country.     

内蒙古对日贸易的现状与展望

投资、消费、出口的需要是经济发展重要的三个因素。其中,出口是经济发展不可忽视的重要环节。近些年,内蒙古经济发展迅速,年经济增长率保持在20%以上,位居全国前列,其中出口发挥着重要的作用。内蒙古自治区积极采取各种政策,加大对外开放力度,使得对外贸易发展增长迅速。日本是内蒙古最重要的贸易伙伴之一,所以与日本进出口贸易的详细调查很有意义。     

Revising the European Central Bank’s fiscal rules to support growth and employment

Abstract

The paper presents a reform proposal for the operations of the European Central Bank (ECB) whose purpose is to create a common set of risk-free assets for financial institutions operating in the euro area (EA), which is the necessary condition for having a single internal financial market. The proposal does not require the introduction of changes in the existing European Union treaties. The effects of this reform on the debt dynamic of EA member countries permit a revision of the existing fiscal rules. With the help of some simulations, it is shown that maintaining compliance with the European treaties, the reform of the ECB operations and revised fiscal rules would transform the current fiscal deflationary stance into a reflationary one. Some implications for aggregate demand and growth for the EA are briefly discussed.     

Guarantees,transparency and the interdependency between sovereign and bank default risk

Bank debt guarantees have traditionally been viewed as costless measures to prevent bank runs. However, as recent experiences in some European countries have demonstrated, guarantees may link the coordination problems of bank and sovereign creditors and induce a functional interdependence between the likelihoods of a government default and bank illiquidity. Employing a global-game approach, we model this link, showing the existence and uniqueness of the joint equilibrium and derive its comparative statics properties. In equilibrium, the guarantee reduces the probability of a bank run, while it increases the probability of a sovereign default. The latter erodes the guarantee’s credibility and thus its effectiveness ex ante. By setting the guarantee optimally, the government balances these two effects in order to minimize expected costs of crises. Our results show that the optimal guarantee has clear-cut welfare gains which are enhanced through policies that promote greater balance sheet transparency.     

Wilhelm Röpke and Richard C. Koo On Secondary Deflations and Balance Sheet Recessions

The concept of a ‘secondary deflation’ was developed in the 1930s by the German economist Wilhelm Röpke, who saw it as something different from a normal depression. While a primary deflation is a necessary reaction to the inflation from a boom period, a secondary deflation is independent and economically purposeless. Röpke argued that secondary depressions occurred in the US, Germany, France and Switzerland during the 1930s, but was vague on what made them follow primary depressions. Recently, the Taiwanese–American economist Richard C. Koo has claimed to have discovered the ‘Holy Grail of macroeconomics’, that is, what made the Great Depression so deep and long. During the Great Depression, the bursting of the asset price bubble resulted in private sectors having more debt than assets; as they shifted from maximising profits to minimising debt, the consequent debt deflation shrank the economy. According to Koo, Western economies today are suffering from a similar ‘balance sheet recession’. Strengthened by the notion of a balance sheet recession, Röpke's long‐lost insights might advance our understanding of the business cycle in general and the present crisis in the US and the Eurozone in particular.     

A decade of hybrid reporting and accountabilities of the Hanyeping Company (1909–1919)

Using a model of hybrid reporting and accountabilities, this article considers the reporting and accountability of the Hanyeping Company in the Beiyang era. The results of the study suggest that the Hanyeping Company attempted to provide comprehensive accounts of its activities to satisfy the needs of a plethora of domestic and foreign stakeholders through a combination of detailed Western and Chinese accounts. In keeping with Western and indigenous Chinese expectations of accounting, the Hanyeping Company prepared accounts that demonstrated characteristics of Auyeung’s demonstrated features of nineteenth-century Westernised reporting and the traditional reporting model. This suggests that the period between 1909 and 1919 experienced a decade of reporting hybridisation in direct contrast to the so-called period of accounting stagnation of the late Qing Dynasty.     

外军院校文化品牌建设路径及启示

文化品牌建设对组织发展具有重要意义。当前我军院校文化品牌建设存在发展意识薄弱、缺少战略规划和系统整合、缺乏特色个性和影响力不强等问题。外军院校经过长期发展，在院校文化品牌建设方面有很多做法值得借鉴。     

Effects of Eurobonds: A stochastic sovereign debt sustainability analysis for Portugal,Ireland and Greece

This paper assesses the impact of Eurobonds on sovereign debt dynamics for selected European member states (Greece, Ireland and Portugal). For each member state, we produce sovereign debt fan charts of (i) a baseline scenario (no Eurobonds) and (ii) a Full-Fledged Eurobond introduction. The key building blocks of our methodology are (i) a debt framework (which embeds the traditional recursive debt equation), (ii) a vector autoregressive model to take into account and parametrise macroeconomic uncertainty and (iii) a fiscal reaction function. Conditional on the absence of moral hazard, we find Eurobonds to be a good instrument to absorb macroeconomic shocks and to diminish uncertainty over future debt forecasts; for Ireland and Portugal, we find debt to be 20 percentage points lower than under our baseline scenario, by 2020.