贸易集团和货币联合体trade blocs and monetary unions-mauro f. guillén-沃顿商学院

1、 Trade Blocs and Monetary UnionsMauro F. GuillnMultilateralism: The GATT Rounds(General Agreement on Tariffs and Trade)NameStartDurationCountriesSubjects coveredAchievementsGenevaApr-477 mos.23TariffsSigning of GATT, 45,000 tariff concessions affecting $10 billion of tradeAnnecyApr-49513TariffsCount

2、ries exchanged some 5,000 tariff concessionsTorquaySep-50838TariffsCountries exchanged some 8,700 tariff concessions, cutting the 1948 tariff levels by 25%Geneva IIJan-56526Tariffs, admission of Japan$2.5 billion in tariff reductionsDillonSep-601126TariffsTariff concessions worth $4.9 billion of wor

3、ld tradeKennedyMay-643762Tariffs, Anti-dumpingTariff concessions worth $40 billion of world tradeTokyoSep-7374102Tariffs, non-tariff measures, framework agreementsTariff reductions worth more than $300 billion dollars achievedUruguay*Sep-8687123Tariffs, non-tariff measures, rules, services, intellec

4、tual property, dispute settlement, textiles, agriculture, creation of WTO, etcThe round led to the creation of WTO, and extended the range of trade negotiations, leading to major reductions in tariffs (about 40%) and agricultural subsidies, an agreement to allow full access for textiles and clothing

5、 from developing countries, and an extension of intellectual property rights.Doha*Nov-01?141Tariffs, non-tariff measures, agriculture, labor standards, environment, competition, investment, transparency, patents etcThe round is not yet concluded. * Ended with the creation of the WTO. * Started by th

6、e WTO.The WTODark green: founding members in 1995. (Today there are 153.)Types of BlocsA group of countries that agrees to one or more of the following:Reduce tariffs for certain goods preferential trade area.Remove internal trade barriers free trade area.Coordinate external trade barriers customs u

7、nion.Allow for the free movement of capitalAllow for the free movement of laborCoordinate indirect tax policyCoordinate regulatory & competition policiesCoordinate macroeconomic policies economic union.Introduce a common currency monetary union.Merge treasuries and fiscal policies fiscal union.Coord

8、inate foreign & defense policies political union.The European Union meets criteria 2-7 & 9 (8?).The NAFTA meets criteria 2 and 4.The Mercosur/Mercosul meets criteria 1-4. single mon market.Trade Blocs Tend to Include Countries:At similar levels of development.Geographically close or adjacent.With si

9、milar trade regimes.Sharing a desire to organize regionally.How Common are They?1834: Zollverein, first modern trade bloc.There are 2191990s: Trend towards continental-size blocs.Main Trade BlocsWhat are Trade Blocs, Really?People are very excited about trade blocs.Officially, an attempt to enhance

10、trade.In reality, trade blocs destroy, divert, and create trade in complex ways.They can be an attempt to privilege insiders relative to outsiders.NAFTAOnly large trade bloc that includes both rich & developing countries:Mexico is “so far away from God, and ”Very controversial (“social dumping”).Its

11、 a “free trade area” + free capital flows:Origin & content rules are necessary.Various unintended consequences/effects.External trade policies are not coordinated.Some product & environmental regulations.Trucking issue: first Mexican truck crossed the border in October 2011.Automobile Assembly in Me

12、xico(thousand units)TimelineNAFTAPeakNadirMost Recent1994200020042010Chrysler239408156257Ford22626571393GM161436141559Honda019215Nissan194313277506Renault00110VW256426225434Toyota00054Total107718689032260% exported64%82%Sources: Automotive News; Asociacin Mexicana de la Industria Automotriz.A maquil

13、a worker inserts electronic components at an assembly line for video turners, Tuesday, Nov. 18, 1998 at the Samsung Electromechanics plant in Tijuana, Mexico. Sprawled across a hillside on Tijuanas outskirts, Samsungs state-of-the-art manufacturing complex is a hive of activity, except for the caver

14、nous blue-and-beige building on the campus eastern edge. Built as part of a planned $400 million expansion, the empty building now serves only as a reminder of the long reach of the Asian financial crisis.(AP Photo/Damian Dovarganes)FTAs: Origin and Content RulesFor a good to be sold duty-free anywh

15、ere within the FTA, it must exceed a minimum level of “local content.”For instance, in the NAFTA, an automobile is deemed to be “North American” if the percentage of local (i.e. within bloc) value attributable to 69 key components (e.g., engines, transmissions, bumpers) exceeds 62.5% .A Sudden Deval

16、uationIn late 1995 and early 1996, over a period of 5 weeks, the Mexican peso lost 45% of its value relative to the dollar.What was the consequence of this change for companies wishing to comply with the 62.5% local content rule?How could they adapt to the new situation?Economic ControversiesCompeti

17、tive implications: Economies of scale.Improved terms of trade (through either bargaining power or specialization):Welfare implications: trade creation, diversion, and destruction, depending on the characteristics of the bloc (FTA vs. CU, level of external tariff(s), etc.).Source: Edward D. Mansfield

18、 and Helen V. Milner, “The New Wave of Regionalism.” International Organization 53(3) (Summer 1999):589-627.p is price, q is quantity.X is exports, M is imports.c is the current period.0 is the base period.i is the product.Political ControversiesDomestic:Who is in favor, and who is against? Exporter

19、s (L vs. K-intensive), import-competitors, consumers, investors, etc.Justification for unpopular adjustment policies.International:Pressures towards democratization (e.g. Spain, Portugal, Paraguay, etc.).Enhanced power in multilateral trade negotiations.Improved global governance.Extension of influe

20、nce over weaker states.Sources: Edward D. Mansfield and Helen V. Milner, “The New Wave of Regionalism.” International Organization 53(3) (Summer 1999):589-627; Andrew G. Brown, and Robert M. Stern, “Free Trade Agreements and the Governance of the Global Trading System.” The World Economy (2011):331-

21、354.Local Content Formula Problem Set #2Please work individually.Due in one week from today.The Euro Cliffhanger:An Avalanche of ThrillsNational Currencies: The Post Bretton Woods WorldSource: Reuven Glick and Andrew K. Rose,“Contagion and Trade. Why are Currency Crises Regional?”Journal of Internat

22、ional Money and Finance 18 (1999):603-617.Monetary UnionsMonetary Unions# MembersGDP 2007 $bnEconomic and Monetary Union (Eurozone)1712,225Economic and Monetary Community of Central Africa659West African Economic and Monetary Union858Overseas Issuing Institute (French Polynesia, New Caledonia, Walli

23、s and Fotuna)314Organisation of Eastern Caribbean States64Source: Roel Beetsma and Massimo Giuliodori, “The Macroeconomic Costs and Benefits of EMU and Other Monetary Unions.” Journal of Economic Literature 48 (September 2010):603-641.The Governing Council makes decisions by majority vote.Consequenc

24、es of Monetary UnionsMember countries cannot print money to inflate their debt away.They cannot devalue the currency to regain competitiveness.In order for a monetary union to work:Labor needs to be able & willing to move around in search of opportunities.Fiscal union is advisable. Because members u

25、sually retain sovereignty, they usually do not get transfers to make up for revenue shortfalls or increased social spending during a crisis.Nota bene: Robert Mundell won the Nobel Prize for his work on optimal currency areas.The Way it Was Supposed to BeThe architects of the euro believed that a Gre

26、ece-like problem would not occur because financial markets would have punished countries with excessive debt by raising the cost of borrowing. They didnt until the global financial crisis started.The European Central Bank (ECB):Prohibits loaning money to service national debts.Its no-bail-out clause

27、 discourages overspending. It did not.The Stability and Growth Pact should have prevented the situation from worsening:Deficit/GDP 3% and Gross debt/GDP 60%.It was not enforced, and in 2005 the rules were relaxed at the request of France and Germany.Source: Lorenzo Bini Smaghi, “The Future of the Eu

28、ro.” Foreign Affairs (2010).CountryGDP Growth (%)Consumer Prices (%)Budget balance (% GDP)Debt stock (% GDP)Current account balance (% GDP)Unemployment (%)USA+1.6+3.9-9.162.3-3.39.1China+9.1+6.1-1.818.9+4.06.1Japan-1.1+0.2-8.3197.5+2.44.3UK+0.6+5.2-8.876.1-2.08.1Eurozone+1.6+3.0-4.2-0.510.0Austria+3

29、.5+3.8-3.671.0+2.93.7Belgium+2.3+3.6-3.8100.9+1.16.8France+1.7+2.2-5.882.4-2.59.9Germany+2.8+2.6-1.783.2+5.16.9Greece-7.3+3.1-9.1142.8-9.616.5Ireland+2.3+2.6-10.196.7+0.614.3Italy+0.8+3.1-3.7119.1-3.77.9Holland+1.6+2.7-3.862.6+7.45.6Portugal-0.9+3.6-6.793.0-8.412.1Spain+0.7+3.1-6.560.1-4.421.2Labor

30、Protections in the OECDEurozone:199020002008Other OECD:199020002008Austria 3Australia0.941.191.15Belgium 8Canada0.750.750.75Finland 2.332.091.96Hungary1.271.271.65France 2.982.983.05Japan1.841.431.43Germany 3.172.342.12South Korea2.742.031.90Greece 3.503.502.73Mexico

31、3Ireland 0.931.111.11Poland1.401.401.90Italy 3.572.511.89Sweden3.492.241.87Netherlands 2.732.121.95Switzerland4Portugal 4.103.673.15Turkey3.763.723.72Slovakia 1.801.44UK0.600.680.75Spain 3.822.932.98USA1OECD average.2.001.94Other countries:Brazil.2.75Indonesia.3.68Chile.2.65Isr

32、ael.1.37China.2.65Russia.1.92India.2.77South Africa.1.25Note: The index is based on protections against dismissal for permanent employees, regulation of temporary employment, and requirements for collective dismissal. Source: OECD Employment Protection Legislation database.Source: Adrian Blundell-Wi

33、gnall and Patrick Slovik, “The EU Stress Test and Sovereign Debt Exposures.” (OECD, August 2010). EU Banks Exposure to Sovereign DebtCounterparty RiskNobody really knows how much because most instruments are traded over the counter. Estimates range between 4 and 100 or more billion of exposure to a

34、Greek “credit event.”Hedging.CDSs.Naked CDSs.Public Debt as % of GDPNote: Data after 2009 are projections. Source: IMF.Net government lending (+) or net borrowing (-), % of GDP (Source: OECD)199519961997199819992000200120022003200420052006200720082009FranceCentral-5.28-4.09-3.54-2.91-2.09-1.67-1.69-

35、3.29-4.15-3.48-2.77-2.15-2.33-2.89-7.28Local-0.180.060.230.300.330.03-0.14-0.19-0.17-0.40-0.45-0.29GermanyCentral-8.31-2.19-1.51-1.67-1.261.39-1.48-2.00-2.19-2.41-2.30-1.27-0.31-0.27-2.19Lnder-1.15-1.10-1.13-0.72-0.47-0.34-1.29-1.43-1.51-1.26-1.00-0.450.170.07-0.68Local-0.21-0.030.010.22

36、0.270.26-0.05-0.23-0.33-0.11-0.010.120.400.31-0.17GreeceCentral-9.14-6.70-5.95-3.88-3.19-3.73-4.58-4.83-5.75-7.28-5.30-5.94-6.66-9.57-15.46Local0.070.050.060.050.090.000.140.000.04-0.14-0.05-0.11-0.05-0.03-0.03HungaryCentral-8.87-4.75-5.52-7.15-5.14-2.75-4.19-8.07-7.06-6.12-7.40-8.57-4.90-3.77-3.99L

37、ocal0.140.38-0.02-0.300.00-0.270.11-0.87-0.16-0.28-0.55-0.81-0.110.07-0.37IrelandCentral-2.24-0.291.262.212.454.911.430.040.111.291.412.720.24-7.03-14.23Local80.060.16-0.13-0.48-0.340.303-0.22-0.27-0.15ItalyCentral-7.48-6.56-2.49-2.83-1.19-0.72-2.82-2.20-3.09-2.57-3.52-2.34-1.3

38、3-2.35-4.88Local0.06-0.40-0.19-0.24-0.59-0.14-0.28-0.81-0.45-0.99-0.85-1.00-0.15-0.33-0.37JapanCentral-2.11-2.36-1.73-9.39-6.29-5.96-5.83-7.01-6.42-4.76-5.88-1.02-2.84-3.03Local-2.86-2.51-2.24-2.43-1.60-0.89-0.90-1.31-1.28-0.72-0.270.01-0.10-0.01MexicoCentral0.030.360.420.110.06-2.41-0.90State-0.070

39、.25-0.050.11-0.51-0.19-0.28Local0.11-0.090.000.01-0.030.07-0.14PolandCentral-3.40-3.75-3.57-3.29-1.43-2.62-4.81-4.58-5.81-5.48-3.94-3.38-1.93-3.50-6.20Local-1.02-1.12-1.07-0.98-0.88-0.41-0.46-0.40-0.380.09-0.14-0.250.04-0.18-1.04PortugalCentral-5.11-4.26-2.98-3.86-2.96-2.56-3.93-2.50-2.67-3.31-5.54-

40、3.95-2.58-2.63-8.70Local0.08-0.28-0.410.380.24-0.37-0.39-0.44-0.42-0.10-0.34-0.13-0.26-0.37-0.66SpainCentral-5.82-4.22-3.09-2.86-1.25-0.580.020.130.50-0.291.311.982.43-2.04-8.56CC.AA.-0.64-0.65-0.32-0.39-0.18-0.51-0.64-0.49-0.49-0.07-0.29-0.04-0.22-1.62-1.98Local-0.030.010.020.03-0.010.09-0.04-0.12-

41、0.240.01-0.060.08-0.31-0.49-0.58SwedenCentral-6.97-2.97-1.161.061.123.531.83-0.89-0.910.381.522.093.422.33-0.69Local-0.35-0.35-0.48-0.18-0.330.06-0.25-0.59-0.350.030.430.130.11-0.11-0.28TurkeyCentral1.01-0.76-1.10-5.94Local-0.17-0.41-1.12-0.76UKCentral-5.54-4.13-2.050.85-1.87-3.41-3.10-2

42、.98-2.67-2.62-4.63-10.89Local-0.38-0.13-0.14-0.27-0.20-0.30-0.27-0.110.10-0.27-0.360.02-0.06-0.26-0.40USACentral-2.76-1.90-0.570.541.081.910.39-2.60-3.83-3.61-2.76-1.82-2.23-5.25-10.50State-0.46-0.31-0.23-0.16-0.31-0.36-0.93-1.30-1.08-0.79-0.44-0.22-0.52-0.96-0.69The “PIIGS”Source: IMF, World Econom

43、ic Outlook (September 2011).Source: IMF, Global Financial Stability Report (September 2011).What Are Policymakers Doing?They are meetingOnly 440 in the fund.100 IT+ES; 70 PIG. and making some decisionsThe Euro Deal 27 October 2011Greek debt: haircut of 50%.Bank recapitalization for 106 bn ($146 bn).

44、 Must reach 9% of tier 1 capital within 9 months. (But the calculations based on just 70 banks out of the 5,000 in the Euro Zone.Firewall: 1 trillion European Financial Stability Facility, but with just 20% equity. The rest to be raised through Special Purpose Vehicles issuing collateralized debt ob

45、ligations (up to a 5 leverage). From The Economist, April 2-8, 2011.Europes Biggest Problem:Lack of LeadershipClaudio Barbaro (L), a member of the opposition FLI party, fought with Fabio Ranieri (R) from the Northern League in Italys Parliament on 26 October 2011. Photo Reuters. Is the Euro Good for

46、 Germany?Eurozone: 2/5 of German exports.The crisis in the periphery of the Eurozone has depressed the value of the euro. The DM would be overvalued nowadays.German firms benefited from the investment boom in the periphery.Large German firms in favor of bailouts; Mittelstand firms skeptical.The rate

47、 of inflation in Germany has been lower than with the DM.Reserves in DM + FFr + Guilders.Is the Euro Good for Greece?Source: Greeces ExportsShipping services.Tourism.Apparel.Vegetables & fruit.Non-ferrous metals.Pharmaceuticals.Electrical equipment.A White Knight?Balance of Payments in 2010 (US$bn)C

48、onceptFormula / NotationU.S.ChinaIndiaBrazilGross Domestic ProductGDP14582587917292088Trade balance in goods(Xg-Mg)-645.9+254.2-132.1+20.2Trade balance in services(Xs-Ms)+145.8-22.1+41.2-30.8Trade balance goods & services(X-M)-500.0+232.1-90.9-10.6Net income from abroad(INF-IFF)+165.2+30.4-13.1-39.6

49、Net transfers from abroadZ-136.1+42.9+52.2+2.8Current account(X-M) + (INF-IFF) + Z-470.9+305.4-51.9-47.4Net capital transfers to/from abroadF-93.8+226.0+67.6+99.7Net foreign loan (reserve change)SF-347.9+471.7+13.2+49.1Capital accountF SF+254.1-245.7+54.5+50.6Statistical discrepancyAs reported by ea

50、ch government+216.8-59.7-2.6-3.2Balance of payments(X-M) + (INF-IFF) + Z + F SF = 00.00.00.00.0Source: Re-calculated by M. Guillen with data reported by BEA, State Administration of Foreign Exchange, Central Bank of India, and Banco Central do Brasil.Additional Slides on the Euro CliffhangerSource:

51、Luc Laeven and Fabian Valencia, “Systemic Banking Crises: A New Database.” IMF WP 08/224.Frequency of Financial CrisesTwin crisis = banking + currency.Triplet crisis = banking + currency + sovereign debt.Source: Carmen M. Reinhardt and Kenneth S. Rogoff, “This Times is Different.” NBER WP 13882 (200

52、8).G7 Sovereign Debt (% of GDP)Source: IMF, “Long-Tern Trends in Public Finances in the G-7 Economies” (2010).G7 Sovereign Debt (continued)Source: IMF, “Long-Tern Trends in Public Finances in the G-7 Economies” (2010).Bank Holdings of Sovereign Debt (Dec 2010)Banks Capital Needs (adjusted for the im

53、pact of sovereign debt holdings, 2011)Trust in the BanksWere All Different“Italy is absolutely not in the same situation as Greece.”Jean-Claude Trichet, head of the European Central Bank, April 9 “What the Portuguese government wants the world to know is simpler: Portugal is not Greece.”The Economis

54、t magazine, April 22 “Portugal, Spain, Ireland or Italy are not in the same situation as Greece. And Belgium less yet.”Guy Quaden, governor of the National Bank of Belgium, May 7 “ Ireland is no Greece confirms latest economic forecast.”Ernst and Young, in its Economic Eye Summer Forecast, June 2010

55、 Greece is not Ireland; it doesnt have banking stability problems.”George Papaconstantinou, finance minister of Greece, Nov. 8 “Our economy is very different from that of Greece or Ireland because our financial sector has benefited by the supervision and regulation of the Bank of Spain, which was mi

56、ssing in Ireland.”Elena Salgado, the Spanish finance minister in an interview in the British newspaper The Independent, Nov. 25 Bank failures in Ireland had “nothing to do with Portugal.”ngel Gurra, secretary general of the OECD, in Bloomberg News, Nov. 22 “Portugal does not need any help, it is in

57、a very different situation to Ireland.”Herman Van Rompuy, the president of the European Council, Nov. 23 “Zapatero gets it and Spain is taking its medicine pre-emptively. Certainly, Spain faces serious economic growth and labor market challenges as it works its way through a devastating real estate

58、collapse in the coming quarters. But it has neither the debt stock of Greece, the bust banks of Ireland or the complacent government of Portugal.”Jacob Funk Kirkegaard, research fellow at the Peterson Institute of International Economics in a CNBC guest blog post, Nov. 24.Source: Landon Thomas, Jr.

59、, “They are not like Ireland. Really.” The New York Times (Nov. 27, 2010). but Some Animals are More Different Than Others.The “Exorbitant Privilege” of the Reserve Currency* Term used by French Finance Minister Valry Giscard dEstaing in the 1960s. Often misattributed to De Gaulle. Balance of Paymen

60、ts in 2010 (US$bn)ConceptFormula / NotationU.S.ChinaIndiaBrazilGross Domestic ProductGDP14582587917292088Trade balance in goods(Xg-Mg)-645.9+254.2-132.1+20.2Trade balance in services(Xs-Ms)+145.8-22.1+41.2-30.8Trade balance goods & services(X-M)-500.0+232.1-90.9-10.6Net income from abroad(INF-IFF)+1