Returns to Regionalism: An Analysis of Nontraditional Gains from Regional Trade Agreements

The past decade has witnessed a renewed interest in regionaltrade agreements, with many policymakers and academics seemingto believe that these provide more than the traditional gainsfrom trade. This article examines several possible benefitsthat regional trade agreements may confer on their partners,including credibility, signaling, bargaining power, insurance,and coordination. It assesses the necessary conditions for eachpossible channel to work, gives stylized examples of specifictypes of policy where the benefit might be applicable, examinescases where the explanation might be relevant, and discussestheir overall plausibility. It concludes by examining the NorthAmerican Free Trade Agreement and the Europe Agreements.     

The supply of consumption goods in centrally planned economies

Estimates are given, based on annual time series from the mid-1950s to 1975, of planner's supply functions for consumption goods in Czechoslovakia, the GDR, Hungary, and Poland. The supply function is specified in the form of a behavioral rule describing the planners' short-run adjustment of consumption away from its long-run trend. The fits are good, and the estimates support the a priori specification and the maintained hypothesis of stable resource-allocation behavior. These supply functions, together with household demand functions estimated in a separate paper, will provide a starting point for disequilibrium estimation of the consumption-goods market for these economies.     

Settling Defaults in the Era of Bond Finance

Comparisons of the debt crises of the 1930s and 1980s emphasizethe greater incidence of default and the greater ease of restructuringhalf a century ago. The difficulty developing-country debtorshave had in putting the current crisis behind them, it is argued,is due to the more systematic involvement of creditor-countrygovernments and intergovernment agencies. This article reviewsthe negotiating strategies of the debtors and creditors of the1930s, the terms of settlement, and the realized rates of returnon U.S. and U.K. foreign bonds. It shows that rather than beingsharp and complete, default in the 1930s was often partial andintermittent. Uncertainty about debt, trade, and export creditslingered on. Often many years passed before final settlementswere achieved. Creditor-country governments were intimatelyinvolved in the settlement process, although their influencewas not always to the benefit of the bondholders.     

The Euro and International Equity Flows

We use a new panel data set on bilateral gross cross-border equity flows between 14 countries. We fit a “gravity model” to these data and a strictly comparable set of data for manufactures trade between these countries. The results are strikingly similar, although the coefficient on the distance variable is lower for equity than for trade flows (but still highly significant). We use the results to throw some light on the likely consequences of unifying the European equity markets.J. Japan. Int. Econ.December 1998,12(4), pp. 406–423. London Business School and CEPR, Sussex Place, Regent's Park, London NW1 4SA, United Kingdom and London School of Economics, London WC2 2AE, United Kingdom.Copyright 1998 Academic Press.Journal of Economic LiteratureClassification Numbers F21, F3.     

第一贷款人(Lender of First Resort, LFR)

利率(国家间的利差)如果上升,债务就会依据经济基本面的情况,自发产生滚雪球效应.这是市场的一个不完美之处,因为我们不能确保市场自身会远离"差的"均衡而达到"好的"均衡.我们提出了一个政策干预机制来解决国际间资本流动的结构性弱点.这个政策干预机制的基础是一个简单的分类,它把危机的根源分为三种信心(利差和货币危机)、基本面(实际增长率)和经济政策(初始赤字).然后,从理论上提出了"第一贷款人"(lender of first resort,以下简称LFR)适用的一些环境.本文提出的政策机制希望通过IMF的一些支持来增强事前激励,从而化解避免危机.本文还介绍了"集体行动条款"(collective action clauses---CACs)在减少自我实现性债务危机(self-fullfilling debt crises,文中有时也翻译为自发性债务危机)中的潜在作用.     

Optimal currency shares in international reserves: The impact of the euro and the prospects for the dollar

Foreign exchange reserve accumulation has risen dramatically in recent years. The introduction of the euro, greater liquidity in other major currencies, and the rising current account deficits and external debt of the United States have increased the pressure on central banks to diversify away from the US dollar. A major portfolio shift would significantly affect exchange rates and the status of the dollar as the dominant international currency. We develop a dynamic mean-variance optimization framework with portfolio rebalancing costs to estimate optimal portfolio weights among the main international currencies. Making various assumptions on expected currency returns and the variance–covariance structure, we assess how the euro has changed this allocation. We then perform simulations for the optimal currency allocations of four large emerging market countries (Brazil, Russia, India and China), adding constraints that reflect a central bank's desire to hold a sizable portion of its portfolio in the currencies of its peg, its foreign debt and its international trade. Our main results are: (i) The optimizer can match the large share of the US dollar in reserves, when the dollar is the reference (risk-free) currency. (ii) The optimum portfolios show a much lower weight for the euro than is observed. This suggests that the euro may already enjoy an enhanced role as an international reserve currency (“punching above its weight”). (iii) Growth in issuance of euro-denominated securities, a rise in euro zone trade with key emerging markets, and increased use of the euro as a currency peg, would all work towards raising the optimal euro shares, with the last factor being quantitatively the most important. J. Japanese Int. Economies 20 (4) (2006) 508–547.     

The costs and benefits of eastern enlargement: the impact on the EU and central Europe

Eastern enlargement of the EU is a central pillar in Europe's post-Cold War architecture. Keeping the eastern countries out seriously endangers their economic transition, and economic failure in the east could threaten peace and prosperity in western Europe. The perceived economic costs and benefits will dictate the enlargement's timing. There are four parts to the calculus – the costs and the benefits in the east and in the west. Here we break new ground in estimating the economic benefits of enlargement for east and west using simulations in a global applied general equilibrium model. Our analysis includes a scenario in which joining the EU significantly reduces the risk premium on investment in the east – with resulting huge benefits to the new entrants. We also review the existing literature on the EU budget costs and arrive at a surprisingly well-determined 'consensus' estimate, which we support with a new political economy analysis of the budget. The bottom line is unambiguous and strongly positive: enlargement is a very good deal for both the EU incumbents and the new members.