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Policy Brief 10-12
Assessing the American Power Act: The Economic, Employment, Energy Security and Environmental Impact of Senator Kerry and Senator Lieberman's Discussion Draft
[pdf]
Trevor Houser, Shashank Mohan, and Ian Hoffman
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Senators John Kerry (D-MA) and Joseph Lieberman (I-CT) released details of their proposed American Power Act, a comprehensive energy and climate change bill developed over the preceding nine months by the two senators along with Senator Lindsey Graham (R-SC). In this policy brief the authors evaluate the effectiveness of the proposal and find the Act would lead to: (1) a drop in the total energy demand met by fossil fuels from 84 percent today to 70 percent in 2030 and an increase for renewable and nuclear energy from 8 percent each to 16 and 14 percent respectively in 2030; (2) a drop in US oil imports, cutting US spending on imported oil by $51 billion to $93 billion per year; (3) a reduction in greenhouse gas emissions—22 percent below 2005 levels by 2020—from sources covered by the proposed economy-wide carbon price; (4) an increase in average annual employment by about 200,000 jobs; and (5) a change in average annual household energy expenditures ranging from a $136 increase to a $35 decrease, depending on future improvements in vehicle efficiency.
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>> Listen to related interview
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Testimony
The Role of the International Monetary Fund and Federal Reserve in the Stabilization of Europe
Edwin M. Truman
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The IMF is a major policy instrument available to the United States for containment of the European crisis aftermath and the United States should continue to provide maximum constructive support for the IMF as it carries out its responsibilities in promoting global growth and financial stability. In his testimony, Truman provides four reasons why the IMF's role in the Greek and European crises is consistent with its mission: (1) the IMF's mission is to promote sustainable global growth and financial stability and it has near-universal membership; (2) all Fund members should be able to borrow from it under appropriate conditions; (3) the IMF follows through with its mission via surveillance, policy advice, and lending programs; and (4) the Fund has not limited itself to operating only in developing countries in recent years. The testimony also examines IMF financial resources, surveillance, and links to IMF reform.
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Paper
Beware of Greeks Bearing Debts
[pdf]
Michael Mussa
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The financial crisis in Greece raises fears of considerably broader problems in Western Europe, threatening an already weak economic recovery in the region and beyond. International efforts that help Greece avoid sovereign default give Western European countries now perceived to have potential fiscal sustainability problems an opportunity to better demonstrate fiscal probity; a default now could be systemically dangerous. For this reason, Michael Mussa argues against immediate restructuring of Greek debt and outlines possible scenarios were such a course of action to take place now. He also poses scenarios involving restructuring later. Mussa concludes that the lesson from the Lehman Brothers experience and from the present Greek case is that, whatever might trigger it, when a crisis threatens to go systemic, massive extensions of official financial support and government guarantees of a wide range of credits are sensible courses of action. It would be a great tragedy if the forceful efforts deployed to contain the recent systemic crisis were paralyzed by too much talk about ending bailouts with the result of recreating the disastrous situation of the early 1930s.
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Listen to interview with Michael Mussa on MSNBC, "United States: Next Greece or Japan?"
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Op-ed
Asia, Europe, and the IMF
Arvind Subramanian
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The current crisis in Europe provides an excellent opportunity for Asia to shift the balance of power in the International Monetary Fund. Arvind Subramanian posits that Asia should use the leverage it has gained from Europe's fiscal weakness to attain three things: (1) forcing Europe to reduce its voting share and give up its veto power; (2) reducing its representation on the IMF executive board; and (3) making it publicly commit to elect a non-European as the next managing director.
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Peterson Perspectives Interviews
Is Europe's Sputtering Economy a Danger to American Recovery?
Michael Mussa sees the contraction in Greece and other countries as rattling US markets but not yet posing a major threat to the US recovery.
Financial Overhaul: Another Step Forward
Morris Goldstein says the prospects for financial regulatory reform have improved greatly with Senate passage of a bill to rein in financial sector excesses.
More Turmoil on the Korean Peninsula
Marcus Noland assesses the factors that may have led North Korea to sink a South Korean warship—and to the ensuing diplomacy to defuse the latest crisis.
PIIE Noted in the News and on the Web
Market News International
US Fiscal Situation Unlikely to Improve Any Time Soon
Market News International reports on Adam S. Posen's comments on the US fiscal position and the euro area at a monetary conference in Germany.
Market News International
UK Fiscal Discipline about Pre-Empting Rate Hike
Adam S. Posen highlights some of the challenges facing the UK economy on its path to recovery.
Bloomberg
Posen Says UK at "Low Risk" of "Turning Japanese"
Scott Hamilton outlines Adam S. Posen's analysis of the risk of the US and UK economies entering a "lost" decade of stagnation as Japan did in the 1990s.
PBS Nightly Business Report
Simon Johnson on Europe's Financial Woes
PBS Nightly Business Report's Erika Miller interviews Simon Johnson about how the financial problems in Europe are impacting US investors.
Radio Netherlands Worldwide: The State We're In
North Korea: Police State, Prison State
Marcus Noland listens to interviews with a North Korean prison survivor and an escaped prison guard, and then comments on their experiences, drawing parallels between North Korea's belligerence toward neighboring countries and its treatment of its own citizens.
Preview of Our Next Issue
Working Paper
The Realities and Relevance of Japan's Great Recession: Neither Ran nor Rashomon
Adam S. Posen
Working Paper
US Trade and Wages: The Misleading Implications of Conventional Trade Theory
Robert Z. Lawrence and Lawrence Edwards
Working Paper
Do Developed and Developing Countries Compete Head to Head in High-Tech?
Robert Z. Lawrence and Lawrence Edwards
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