We often hear the question “isn’t this economic crisis becoming as bad as the Great Depression?” Economists can offer a variety of reassurances, but each of them is quite circumscribed:
Category Archives: international trade
The Euro at Ten: Why Do Effects on Trade Among Members Fall Short of Historical Estimates in Smaller Monetary Unions?
By roughly the five-year mark after the launch of the euro in 1999, enough data had accumulated to allow an analysis of the early effects of the euro on European trade patterns. Studies include Micco, Ordoñez and Stein (2003), Bun and Klaassen (2002), Flam and Nordström (2006), Berger and Nitsch (2005), De Nardis and Vicarelli (2003, 2008), and Chintrakarn (2008). The general finding was that bilateral trade among euro members had indeed increased significantly, but that the effect was far less than the one that had earlier been estimated by Rose and others on the larger data set of smaller countries. Overall, the central tendency of these estimates seems to be a trade effect in the first few years on the order of 10-15%. None came anywhere near the tripling estimates of Rose (2000), or the doubling estimates (in a time series context) of Glick and Rose (2002).
Anti-Shirking Import Penalties in US Climate Change Bills Could Backfire
So both the Democratic and Republican parties have officially nominated their candidates. Remarkably — from the vantage point of just a few years ago – both Senators McCain and Obama are on record as supporting strong action for aggressive cuts in US emissions of greenhouse gases (GHGs). In June 2008, the floor manager’s version of the Lieberman-Warner bill — S. 2192: America’s Climate Security Act of 2007, which would cut emissions more than 50% by 2050 — came close to passing the Senate. Some think that with the likely Democratic gain in Senate seats in November, and a more supportive White House, a form of the bill may well pass next year.
(Incidentally, the July Snowmass presentations regarding Integrated Assessment models of the effects of such emission-reduction policy plans, which I plugged in my preceding blog post, are now accessible to the public.)
But issues of competitiveness and how to address it have risen to the top in the climate change policy debate among politicians. The Lieberman-Warner bill – would have required the president to determine what countries have taken comparable action to limit GHG emissions; for imports of covered goods from covered countries, the importer would then have had to buy international reserve allowances – equivalent to a tariff. (The same with some of the bill’s competitors such as the Bingaman-Specter “Low Carbon Economy Act” of 2007.)