Spring 2017

Presentations and Other Activities

Prof. Claire Brunel presented the paper titled “Two Birds, One Stone? Local Pollution Regulation and Greenhouse Gas Emissions” at the annual meetings of the American Economic Association which took place in January in the city of Chicago. She and her co-author Erik P. Johnson, of the Georgia Institute of Technology, explain that theoretically, local and global pollutants can either be substitutes or complements in production, implying that local pollution regulation may either intensify or reduce global-warming concerns. They exploited new data on US greenhouse gas (GHG) emissions and variation in local pollution regulation across US counties to estimate this relationship, and found no evidence that more stringent local pollution regulation changes GHG emissions from manufacturing sectors. Therefore, local pollution regulation will not suffice to address global warming.

Brunel also presented the paper “Climate Change and Internal Migration in Brazil: The Role of Geography and Road Infrastructure,” at the DC Area Energy and Climate Workshop, which took place in February, and also at the annual meeting of the Midwest Economics Association, held in March in Cincinnati. Using the state of road infrastructure in Brazil as a proxy for migration costs, she and her co-author Maggie Liu, of Georgetown University and the World Bank, exploited exogenous variation in temperatures and precipitation rates across 137 mesoregions to examine the response of long-run migration flows between 1980 and 2010. Their results suggest that migration costs act as a significant deterrent to climate-driven relocation, and thus policies aimed at reducing those costs would go a long way in helping households cope through migration with the effects of climate change.

In April, Brunel presented the paper “Green Innovation and Green Manufacturing: Links between Environmental Policies, Innovation, and Production” at the US Department of State. She addressed the claim that environmental policies stimulate domestic economies, parsing the claim into two sequential parts: the effect of policies on innovation and the effect of that innovation on manufacturing production. Each part can either take place at home or abroad, and the location determines the consequences for the domestic economy. Studying OECD countries from 1988-2003, results suggest that renewable-energy policies boost domestic economic activity through manufacturing production but less so through innovation, with significant differences emerging across technologies. Only Germany, Japan, and the United States have been able to benefit from a boost in both activities.

Also that month, Brunel gave a talk on “The Environment, the Economy, and Contemporary Politics” at the Humanities Lab at AU. As the new Donald Trump administration takes shape, the future of energy policy looks focused on traditional fossil-fuel energy sources, which would accelerate the deterioration of the environment. But the Trump administration is also adamant about creating new jobs, and the renewable energy industry is ripe for the picking. Brunel thus discussed whether the environment and the economy are likely to be friends or foes in the Trump era.

Prof. Randall Henning presented his new book, Tangled Governance: International Regime Complexity, the Troika, and the Euro Crisis (Oxford University Press), at conferences held in the State Department; in April at SAIS-Johns Hopkins University; at the European Union Studies Association biennial meeting, which took place in Miami in May; and in June in Brussels at Bruegel, a leading European think tank that specializes in economic affairs. The book was cited in April in a New York Times article, and Henning was the focus of extended, June interviews in the Greek newspapers Kathimerini and To Vima.

Prof. Henning was interviewed on his book here, and Erik Jones, a professor of European studies and international political economy and Director of European and Eurasian Studies at SAIS-Johns Hopkins, has reviewed the book, calling it “required reading.” According to Jones, the question of why the European governments involved the IMF in the bailouts of Greece, Ireland, Portugal, Spain, and Cyprus cannot be answered solely by referring to the Fund’s expertise, credibility, trust, and money. “The critical point, Henning argues, is that the presence of the IMF made it easier for Germany to control the bailout process.” Within the European Commission all member states are equally powerful, and within the ECB, all member states are equally weak, Jones explained, “but the balance of forces is more clear-cut in the IMF; large creditor countries like Germany have greater influence. By pushing the IMF into an institutional troika with the Commission and the ECB, the German government [was able to] pull the whole complex closer to its national interests. … The implications of Henning’s argument are significant.”

Prof. Jennifer Poole presented the paper titled “The Impact of Digital Technologies on Skills: Do Labor Policies Matter?” as part of a panel on Digital Technology, Skills and Labor Policy in Latin America, at the January annual meeting of the American Economic Association, which took place in Chicago. Her research focused on experience in Brazil, and the key takeaways are that enforcement of labor regulations limits the degree to which companies shift away from labor as technology becomes available, and they differentially benefit the skilled rather than unskilled workforce, particularly those workers employed in non-routine, cognitive tasks.

In February, she presented at the annual meeting of the International Studies Association, held in Baltimore. She presented here too the paper “The Impact of Digital Technologies on Skills: Do Labor Policies Matter?” and then, as part of a panel on Changes to Trade and Tariffs, a paper titled “Trade Agreements and Outsourcing.” Poole investigated the criticism that free-trade agreements (FTAs) cause US firms to shift production and employment away from the United States to the new trading partners. However, she found no evidence of increased outsourcing following FTAs involving the United States, potentially because increased protections for overseas investment are offset by a reduced need to produce overseas to have access to overseas markets. Interestingly, when China enters an FTA, it increases US outsourcing to the country with which China enters into an FTA.

Prof. Arturo Porzecanski was quoted extensively in February by Puerto Rico’s leading newspaper El Vocero, as part of an interview on the more constructive attitudes displayed by the newly inaugurated governor, Ricardo Rosselló, toward investors in the island’s defaulted bond obligations. Porzecanski was quoted again on the topic of Puerto Rico in May, this time by the Los Angeles Times. Commenting on the impending closure of nearly 200 of the island’s public schools amid its economic crisis, he explained that the hiring of teachers had expanded greatly in the past decade even though the number of children attending public schools had dropped significantly. Therefore, Porzecanski was quoted as saying, “government agencies should have been whittled down proportionally, and now this is all happening during one of the worst moments in Puerto Rico’s history.” In late April, he was also interviewed by the Spanish radio station of the Voice of America. In this instance, the line of questioning was on the economic-policy initiatives of the Donald Trump administration during its first 100 days. Porzecanski explained that notwithstanding many campaign promises and early announcements, the federal government’s main economic policies had hardly changed during this initial period.

Prof. Stephen Silvia was quoted in February by the Toronto Globe and Mail in an article titled “How Donald Trump Can Sidestep Congress on NAFTA,” Toronto Globe and Mail, 14 February 2017. He stated that the new administration could negotiate side understandings with Canada and Mexico “and just use those to layer changes that they want on top of the existing deal.” The alternative, to have an official renegotiation, “would most likely mean … [submitting the] agreement through Congress, and that would be a dicey proposition.” In March, Silvia was quoted by Chile’s El Mercurio newspaper in an article on German Chancellor Angela Merkel’s visit to the White House, where he explained that a large majority of the German population has embraced globalization and has distanced itself from nationalism, something which put Merkel and her people at odds when dealing with President Trump.

Publications

Prof. Randall Henning wrote a book entitled Tangled Governance: International Regime Complexity, the Troika, and the Euro Crisis, published in April by Oxford University Press, which analyzes cooperation among international financial institutions over the financial rescues of European countries during 2010-15. The book locates the analysis within the framework of regime complexity, which are clusters of overlapping and intersecting regional and multilateral institutions. It tests conjectures spawned by that literature against the seven cases of financial rescues of Eurozone countries that were stricken by the crisis, concluding that regime complexity is the consequence of a strategy by key states to control “agency drift.” States mediate conflicts among institutions, through informal as well as formal mechanisms, and thereby limit fragmentation of the regime complex and underpin substantive efficacy. In so doing, the book answers several key puzzles, including why Germany and other Northern European countries supported IMF inclusion despite substantive positions opposed to their economic preferences; crisis-fighting arrangements endured intense conflicts among the institutions; and the United States and the IMF promoted further steps to complete the monetary union.

Prof. Henning also recently published the article “Avoiding Fragmentation of Global Financial Governance” in the journal Global Policy. In East Asia, Latin America and Europe, governments have developed an increasing number of financial arrangements to underpin the stability of their capital markets and combat financial crises. These arrangements vie for influence over international finance with the International Monetary Fund (IMF), as has been dramatically illustrated during the euro crisis, and threaten to fragment global financial governance. This article reviews the regional financial arrangements and their relationships to the IMF; examines the sources of conflict between these institutions; draws lessons from the euro crisis for institutional cooperation; and proposes a set of guidelines and principles to avoid fragmentation of financial governance in the future.

Prof. Jennifer Poole was published in the prestigious Journal of Development Economics. Its May issue included her article “Trade and Labor Reallocation with Heterogeneous Enforcement of Labor Regulations,” co-authored with Rita K. Almeida of the World Bank and IZA. It revisits the question of how trade affects labor market outcomes in a developing-country setting after a major change in the exchange rate. In the wake of Brazil’s currency crisis and depreciation in 1999, they show that plants facing stricter enforcement of labor laws increased employment by less than plants facing looser enforcement. These findings are consistent with the hypothesis that, in a context of strict de jure labor market regulations, increased enforcement limits the plant-level productivity gains associated with integration to a more global market, and thus greater labor-market flexibility would allow for greater gains from trade.

Prof. Arturo Porzecanski published an article titled “Sovereign Debt Restructuring After Argentina,” in the journal Development, the flagship publication of the Society for International Development, which for more than 50 years has explored innovative perspectives on crucial issues in economic development. His article explains that in the wake of Argentina’s recently concluded litigation and arbitration saga, sovereign debt restructurings will probably experience marginal changes because of recently adopted modifications in contractual terms being incorporated into new bond issues. However, Porzecanski forecasts, for the most part said debt restructurings will likely resemble what has generally worked so well in recent decades, to the satisfaction of most governments and private creditors. The statutory reforms that have been proposed to date are highly unlikely to gain traction for a variety of reasons, including the prospect that they would have been stymied when confronted with a rogue sovereign debtor such as Argentina.

In May, Porzecanski also released an essay titled “Human Rights and Sovereign Debts in the Context of Property and Creditor Rights,” as part of the SIS Research Papers Series. This is a pre-publication version of a chapter in a forthcoming book, Sovereign Debt and Human Rights, edited by Ilias Bantekas and Cephas Lumina, to be published in 2018 by Oxford University Press. The chapter attempts to build a first bridge between two largely unconnected fields of law: human rights law on the one hand, and property and creditor-rights law on the other. The disconnect is surprising because property and creditor rights are important for the attainment of other human rights, especially those of an economic nature, and many human rights are connected to, and are rather inseparable from, broadly conceived property rights. According to Porzecanski, neglect of property and creditor-rights considerations has led many contemporary human rights attorneys and other advocates down an infertile, if not inappropriate, intellectual and policy path. For instance, speculation that contracts governing cross-border debts and investments may not be sufficiently compelling, at least relative to human rights commitments, is unwarranted and counterproductive.

Prof. Stephen Silvia in May posted a comment in the Huffington Post titled “Gas Pains: What the Proposed Linde-Praxair Merger tells us about the German Social Market Economy Today.” In his view, declining demand for steel in recent years has intensified pressure to consolidate in the industrial gas sector, and the German company Linde and American firm Praxair are potentially good merger partners. However, strong resistance to the merger materialized among Linde’s shareholders and workers, with the latter denouncing the merger as a threat to German codetermination rights. According to Silvia, “regardless of the outcome, the Linde-Praxair merger bears watching for what it tells us about the German social market economy and German labor relations today.”

Fall 2016

Presentations and Other Activities

Prof. Daniel Bernhofen presented the co-authored paper “Understanding the Gains from Trade through the Window of Japan during the 19th-Century Globalization: Analysis of a Counterfactual,” at the annual meeting of the Economic History Association, which took place at the University of Colorado’s Boulder campus in mid-September. The paper quantifies the gains from trade to Japan during its first full decade of participation in the global economy, the period 1865-1876, concluding that they were substantial.

In September, Bernhofen also presented the co-authored paper “When and How Did Globalization Begin? Evidence from the Opening of the Suez Canal,” at a conference that took place in Panama City in celebration of the 100th anniversary of the Panama Canal. In the paper, he provides evidence that the inauguration of the Suez Canal facilitated a shift in the composition of UK imports towards goods with low value per weight, thus providing support for the view that the canal marked a discrete regime change towards 19^th century globalization.

In October, Bernhofen presented the co-authored paper “An Endowment Augmentation Formulation of the Gains from Trade” at a Wesleyan University Economics Department seminar. A high-quality data set on product- and task-specific factor employments in mid-19th-century Japan enabled him to quantify what economic effort would have been necessary to compensate the Japanese economy for an overnight suspension of trade in the country’s early trade years of 1865-1876. Bernhofen estimated that, in the absence of the gains from trade, Japan would have had to deploy an extra 5.5% of its female labor force, an additional 3.3% of its male labor force, and 3.9% extra arable land.

Prof. Claire Brunel presented a co-authored paper titled “Two Birds, One Stone? Local Pollution Regulation and Greenhouse Gas Emissions” at the American Political Science Association Annual Meetings which took place in September in Philadelphia. The paper uses new, comprehensive data on emissions of greenhouse gases (GHG) in the United States and exploits variations in local pollution regulation across U.S. counties to estimate whether local pollutants are substitutes or complements to a global pollutant like GHG. The authors found no evidence that more stringent local pollution regulation changes GHG emissions. In November, Brunel also presented the paper at the Southern Economic Association Annual Meetings that took place in Washington, DC. While there, she also chaired a session and presented a co-authored paper titled “Climate Change and Internal Migration in Brazil: The Role of Geography and Road Infrastructure.”

In December, Brunel was a guest of the Syracuse Maxwell School, where she presented the sole-authored paper “Green Innovation and Green Manufacturing: Links between Environmental Policies, Innovation, and Production.” It looks at the claim that environmental policies stimulate domestic economies by focusing first on the effect of policies on innovation, and then on the effect of innovations on resulting manufacturing production. The empirical evidence for the OECD economies suggests that renewable energy policies stimulate domestic economies through manufacturing, but less so through innovation.

Prof. Randall Henning presented the paper “The ECB in the Brave New World of Broad Central Banking,” at the American Political Science Association 2016 Annual Meetings in Philadelphia in September. The two-day workshop was preceded by a one-day “junior” workshop entitled “The Political, Economic, Legal and Historical Implications of the Multiple Crises in the EU.” At the same meeting, Henning was also the organizer, chair and presenter of the talk “Varieties and Transformations in Global Governance”. In December, Henning was a speaker on the panel “ASEAN+3 Financial Cooperation – New Opportunities and Challenges,” at the ASEAN+3 Financial Forum conference on “East Asia in a Dynamic New World,” in Guiyang, China. The event focused on the ASEAN regional outlook and policy response, and on regional financial cooperation. Discussants and speakers included high-level policymakers, renowned academics and economists who have a strong background and experience on the East Asia region.

Prof. Jennifer Poole was a discussant on a panel about “Bank Linkages and International Trade,” as part of the Western Economic Association International meetings which took place in July in Portland, Oregon. In October, she presented a draft of the paper titled “The Impact of Digital Technologies on Skills: Do Labor Policies Matter?” before the Global Economy and Development Research Cluster at American University, and again in November before an audience at the World Bank. This paper explores, for the case of Brazil, the extent to which the adoption of digital technology affected the demand for different types of skills and tasks, and the role of social protections in influencing the impact of digital technology on the demand for labor skills.

Prof. Arturo Porzecanski was a member of a June panel discussion in New York on “Iceland’s Selective Default?” sponsored by EMTA, the Trade Association for the Emerging Markets. The discussion revolved around recently passed legislation under which Iceland codified new restrictions and penalties on foreign investors trapped in the island by previously imposed capital controls, a decision that had alarmed members of the international financial community. Porzecanski’s prepared remarks in New York are available here. The event was covered by a reporter from Barron’s, who quoted some of his remarks. In September, he participated in another EMTA-sponsored panel discussion, this time on “Iceland’s Outlook After Capital Controls,” which on this occasion took place in Reykjavik, the capital of Iceland. His prepared remarks as delivered in Reykjavik are available here.

In November, Porzecanski was also the keynote speaker at a luncheon meeting hosted by mostly former U.S. State Department officials belonging to the Ford Latin America Group/Partners of the Americas. The topic of his talk, given at the DACOR-Bacon House in Washington, DC, was “Sovereign Debt Restructuring After Argentina,” during which he explained why Americans can be very proud of the U.S. judicial system – it performed best in the world in handling the complex disputes involving a sovereign nation (Argentina) and its private creditors. That month Porzecanski was also the keynote speaker at a discussion on “Iceland’s Retreat from Financial Markets,” which was sponsored by the CATO Institute and took place at its Washington, DC headquarters. At the time, Iceland had held a parliamentary election and thus the discussion revolved around what had transpired earlier in the year, especially in terms of the mistreatment of foreign investors, as well as what might happen under an incoming coalition government. Porzecanski’s prepared remarks as delivered at CATO are available here, and a video recording of the entire session can be watched here.

Prof. Stephen Silvia presented a paper on “Organizing in the South: What Works (and What Doesn’t). The United Auto Workers’ Experience with Freightliner and Mercedes Benz,” at the annual meeting of the Labor Employment Research Association, which took place in June in Anaheim, CA. He also gave a presentation in July on “Comparative Industrial Relations Systems” to the Foreign Service Institute of the US Department of State.

Publications

Prof. Daniel Bernhofen and his co-author John C. Brown marked the publication of the article “Testing the General Validity of the Heckscher-Ohlin Theorem,” in the November issue of the American Economic Journal: Microeconomics. The authors exploited Japan’s 19th century move from autarky to free trade to provide the first test of the general validity of the price formulation of the Heckscher-Ohlin theorem. Their test combined factor-price data from Japan’s late autarky period with the country’s factor content of trade calculated with the technologies of the country of origin of the traded goods. After evaluating Japan’s factor content of trade during 1865-1876 at autarky factor prices, they failed to reject the Heckscher-Ohlin hypothesis in each sample year.

Prof. Randall Henning published in September a paper via the Council on Foreign Relations titled “Global and Regional Financial Governance: Designing Cooperation.” His paper reflects on the fact that across an increasing number of regions of the globe, states have created international financial facilities to preempt financial crises and, when crises strike, to reestablish financial stability. East Asia and Europe are leading examples of regions that have established one of these regional financial arrangements (RFAs). This trend raises the prospect that the world could one day be populated by series of “monetary funds” at the regional level—a European monetary fund, an Asian one, and so on—vying for influence over international finance with the incumbent multilateral institution, the International Monetary Fund (IMF). Although that is a distant and uncertain prospect, the world faces the challenge of coordinating the activities of these institutions as they are currently evolving, and so Henning puts forth several recommendations. Regional institutions and initiatives have proliferated in the twenty-first century. The new regionalism presents the prospect for new benefits for global order as well as new risks. Five authors examine these dilemmas across five issue areas: finance, trade, development lending, and peace operations.

Prof. Arturo Porzecanski published in June an oped titled “Iceland’s Selective Default?” in The Financial Times. He criticized the Icelandic government’s decision requiring foreign investors, trapped by capital controls imposed in 2008, to accept either a 40% penalty if they exit the country in 2016, or else having their money locked up indefinitely in bank accounts earning a token interest rate. In October, he wrote an entry titled “Brexit: Limited Implications for Latin America” in the AULA Blog, which is hosted by AU’s Center for Latin American and Latino Studies. In it, Porzecanski explained that uncertainty and speculation among economic agents in Europe over the United Kingdom’s exit from the European Union will likely be a drag on economic growth especially in the UK during 2017-19, but that it need not generate the kinds of international waves that will reach – never mind derail – Latin America’s economic trajectory.

Porzecanski also released in October an essay titled “Sovereign Debt Restructuring After Argentina,” as part of the SIS Working Papers Series. This turned out to be the pre-publication version of the essay’s appearance in a forthcoming issue of Development, the flagship journal of the Society for International Development, which for more than 50 years has explored innovative perspectives on crucial issues in economic development. The essay forecasts that in the wake of Argentina’s litigation and arbitration saga, sovereign debt restructurings will experience marginal changes as a result of recent modifications in contractual terms being incorporated into new bond issues. However, Porzecanski wrote, for the most part said restructurings will likely resemble what has generally worked so well in recent decades, to the satisfaction of most governments and private creditors.

In November, the Fordham International Law Journal, one of the most competitive international law periodicals, published Porzecanski’s article titled “The Origins of Argentina’s Litigation and Arbitration Saga, 2002-2016.” In this in-depth article, which is an updated version of an SIS Working Paper version that he had released in May 2015, Porzecanski analyzes the roots, development and implications of the voluminous and protracted litigation and arbitration journey featuring the Republic of Argentina, mostly as defendant or respondent, respectively. According to Porzecanski, the many complaints filed in numerous judicial and arbitral fora have established important legal and arbitral precedents, as illustrated by three cases involving Argentina which were appealed all the way up to the U.S. Supreme Court and were settled in 2014.

Prof. Stephen Silvia saw the publication of his study titled ‘Organizing German Automobile Plants in the USA: An Assessment of the United Auto Workers’ Efforts to Organize German-Owned Automobile Plants,’ as part of a series released by the Hans-Böckler Foundation in Germany, an arm of the Confederation of German Trade Unions. Over the past three decades, all three German automobile producers (BMW, Daimler and Volkswagen) have built production facilities in the United States. Despite the similarities among the firms when it comes to collective employee representation in Germany, the employee-relations practices of each firm differ markedly in the USA. In all three cases, the United Auto Workers failed to achieve union recognition. According to Silvia, the lessons to be learned from failed unionization are: (1) the UAW on its own does not have the strength to organize workers in the southern United States; (2) the cases of Mercedes (Vance AL) and Volkswagen (Chattanooga TN) show that getting help from abroad is not sufficient for success; and (3) even when there is foreign support and the company is open to unionization, the VW case illustrates that antiunion forces, both at the regional and national levels, can intervene and thwart an organizing drive.

Spring 2016

Presentations and Other Activities

Prof. Claire Brunel presented in April the paper “Two birds, one stone? Local pollution regulation and greenhouse gas emissions” at the Midwest Economic Association meetings in Evanston, IL. In the paper, Prof. Brunel and co-author Erik Johnson used new, comprehensive data on GHG emissions in the United States and exploited variation in local pollution regulation across U.S. counties to estimate the relationship between local and global pollutants. She also presented another paper, “Green innovation and green manufacturing: links between environmental policies, innovation, and production,” at the Sixth Annual Washington Area International Trade Symposium later that month, held at JHU-SAIS. In the paper, Brunel used measures of policy, patent activity, and trade in the renewable energy sector to examine the effect of innovation on resulting manufacturing production.

Prof. Randall Henning was a panel discussion participant on “Policy Coordination and Spillover” issues at a Think Tank 20 conference on “China G-20 Presidency: Delivering on Growth and the Sustainable Development Goals (SDGs),” which took place in April at the Brookings Institution, in Washington DC.  The conference covered four topics: reinvigorating growth strategies; policy coordination and spillovers; investing in sustainable infrastructure; and the G20 and the implementation of the 2030 agenda on sustainable development. Henning’s session explored old and new challenges of macroeconomic policy coordination, spillovers from China, and the global trade outlook and the role of global value chains.

Prof. Henning organized and chaired a book launch meeting at SIS entitled, “Could Globalization Be Moral After All?” with Steve Weisman of the Peterson Institute. It was a presentation by Steven Weisman of his new book, The Great Tradeoff: Confronting Moral Conflicts in the Era of Globalization. The book blends economics, moral philosophy, history, and politics, and Mr. Weisman explores how the concepts of liberty, justice, virtue, and loyalty generate the passionate disagreements spawned by a globally integrated economy. Henning also organized a conference on “Financial Volatility’s Challenge to Global Governance,” in April. It addressed the substantive and institutional challenges that the rising powers pose for global governance in the domain of financial and macroeconomic cooperation. The conference released a book by the same title edited by Andrew Walter and Randall Henning and published by CIGI. The volume addresses the substantive and institutional challenges that the rising powers pose for global governance in the domain of financial and macroeconomic cooperation.

Prof. Arturo Porzecanski was profiled in the Winter 2016 issue of NIH MedlinePlus, a magazine published by the U.S. National Institutes of Health showcasing the latest medical breakthroughs from NIH-supported research. The article recognized his “indispensable” long-time collaboration with NIH researchers on an exceedingly rare and deadly disease called Systemic Capillary Leak Syndrome (SCLS), by having founded and grown a virtual community of patients, caregivers and health professionals from around the world who have provided the medical histories, and blood and tissue samples, necessary to advance NIH’s scientific research.

In January, Porzecanski was quoted by The Wall Street Journal in a piece about the background behind the start of negotiations between Argentina and its investors to end a long, bitter dispute and permit the country to return to the international financial markets for the first time in a decade-and-a-half. He was cited by the Journal again in February, in an article on the significance of Argentina having reached a preliminary deal to pay tens of thousands of Italian bondholders who had refused previous government efforts to restructure the country’s long-defaulted debts.

Porzecanski was interviewed in March by the newspaper El Vocero of Puerto Rico for a piece on the likely shape of the financial control board that the U.S. Congress was debating imposing on the island, and he made the point that given the ongoing financial emergency, this was not the time to talk about Puerto Rico’s hopes for sovereignty. He was also interviewed that month by Brazil’s leading newspaper O Globo regarding that country’s deepening economic and political crisis, and in the article Porzecanski’s assessment was that then-president Dilma Rousseff was no longer capable of providing leadership. In April, The Financial Times published a Letter to the Editor written by Porzecanski, explaining his disagreement with a prior oped claiming that Argentina’s recently concluded negotiations with its creditors had alarming implications for future sovereign debt renegotiations. He was also interviewed by the Chinese CCTV network about the likely repercussions on Brazilian financial markets and the economy of the impeachment of then-president Dilma Rousseff.

In early May, in a story about the widening government default in Puerto Rico, the Reuters news agency quoted Porzecanski’s opinions on the matter, including that the authorities’ approach was “symptomatic of all that is wrong with how Puerto Rico has dealt with its deteriorating financial situation.” A subsequent article in the newspaper El Vocero of Puerto Rico echoed his views on the wider ramifications of the island’s financial crisis for the U.S. municipal bond market. He was also interviewed that month regarding Puerto Rico’s woes by CNN en Español, the network’s Spanish-language affiliate, in the program “Global Portfolio.”

Prof. Stephen Silvia presented in May the paper “Employee Representation at German Automobile Plants in the United States: A Tale of Three Companies” at the 68th Annual Meeting of the Labor Employment Research Association (LERA). LERA is the singular organization in the country where professionals interested in all aspects of labor and employment relations network to share ideas and learn about new developments, issues, and practices in the field.

Prof. Krista Tuomi presented in May at the Angel Capital Association Annual Summit which was held in Philadelphia, PA. She spoke about crowdfunding and its implications for other “seed” investors. The summit brings together over 700 investors to discuss the latest data and trends in startup investing in different industry sectors.

Publications

Prof. Claire Brunel’s paper “Pollution Offshoring and Emission Reductions in EU and US Manufacturing” was accepted for publication in the journal Environmental and Resource Economics. In this paper, Prof. Brunel analyzes the pollution intensity of EU production and imports to examine which forces drove the EU cleanup of US manufacturing. The analysis of the paper follows Levinson’s model.

Prof. Randall Henning was a co-editor of the book Global Financial Governance Confronts the Rising Powers, published in April. Prof. Henning, alongside his co-editor Andrew Walter, address the challenge that the rising powers pose for global governance, substantively and institutionally, in the domain of financial and macroeconomic cooperation. The book examines the issues that are before the G20 that are of particular concern to these newly influential countries, and how international financial institutions and financial standard-setting bodies have responded.

Prof. Henning published a chapter entitled “The ECB as a Strategic Actor: Central Banking in a Politically Fragmented Monetary Union,” in the book, The Political and Economic Dynamics of the Eurozone Crisis which also came out in April. The book marks an important step towards a considered, reflective analysis of the tumultuous events and developments of the crisis period. Each of the book’s contributors identifies an important question and undertakes a careful empirical, theoretically-informed analysis that produces novel perspectives. Together they seek to balance many of the existing accounts that have rushed to sometimes unwarranted conclusions.

Prof. Arturo Porzecanski released in January a paper titled “Peru’s Selective Default: A Stain on Its Creditworthiness,” which appeared as part of the SIS Working Papers Series. The paper details how the bonds given as miserly compensation to landowners in Peru during a major land reform in the 1970s became worthless during the 1980s, because hyperinflation raged and the Peruvian currency lost most of its value. In the wake of the filing of hundreds of lawsuits seeking judicial redress, in 2001 the country’s Constitutional Tribunal ruled that the government should resume payment of the land-reform debt after updating its nominal value on an actuarial basis. And yet, successive administrations have not acted on this ruling –- despite the fact that, since the mid-1990s, Peru has exhibited vigorous economic growth, significantly strengthened public finances, and substantially improved creditworthiness, such that governments have had ample fiscal resources with which to redeem the land-reform bonds at their full, original value.

In February, Porzecanski published an oped titled “Puerto Rico Needs the Right Kind of Financial Control Board,” in The Hill, a top U.S. political website read by the White House and more lawmakers than any other site, arguing that the island needs a federal control board that excludes a “Super-Chapter 9” mechanism, because it would set a terrible precedent for the U.S. municipal debt market. In March, he wrote an entry titled “Behind Argentina’s Making Up with its Creditors” in the AULA Blog, hosted by AU’s Center for Latin American and Latino Studies, explaining that Argentina’s new government had found it relatively easy and convenient to settle its overdue debts, but had yet to adopt most of the divisive and unpopular austerity measures that circumstances warrant.

Prof. Krista Tuomi contributed blog posts to the Policy Dialogue on Entrepreneurship. In February, she wrote a blog post titled “Patent Reform for Startups: Where are we now?” The Department of Energy’s “America’s Next Top Energy Innovator” makes it cheap and easy for startups to purchase and commercialize the Department of Energy’s thousands of unlicensed patents. She recommended that the application process be improved by shortening the time to patent denials. In March, Tuomi wrote the blog post “Puff the Magic Dragon? China Equity Group’s Incubator Purchase and What It Means for the US.” This post addresses whether US start-ups should be concerned about the Chinese recalibration, and what has been the experience of similar ventures in the US. And in May, she wrote on “How Innovative is Your State?,” providing a survey of innovation in various states and discussing incentives being provided.

Fall 2015

Presentations and Other Activities

Prof. Daniel Bernhofen In November presented the paper “An Endowment Augmentation Formulation of the Gains from Trade” at the Southern Economic Association 2015 Annual Meeting in New Orleans. In the paper, he and his co-author (John C. Brown) used a data set on product and task-specific factor employments in 19th-century Japan to estimate what factor augmentation would have been necessary to compensate the economy for an overnight suspension of trade in its early trade years of 1865-76.

In December, Bernhofen was in Germany and presented a forthcoming article titled “Estimating the Effects of the Container Revolution on World Trade” at the University of Tübingen School of Business and Economics Colloquium, and also at the University of Ulm Institute of Economics Research Seminar. Despite numerous claims about the importance of containerization in promoting international trade, econometric estimates on the effects of containerization on trade have been missing. This article fills this gap in the literature, with Bernhofen and his co-authors providing the first econometric evidence of the extent to which containerization has been a driver of 20th century economic globalization.

Prof. Giovanna Dore gave a presentation in August on “Public Sector Reform in Asian Emerging Markets: Indonesia and Vietnam” at the Faculty of Business and Economics, University of Hong Kong. In October, she presented the paper “Democracy in Myanmar: What Do Survey Data Reveal?” at the Institute of East Asian Studies, University of California at Berkeley. Dore also presented the paper “Myanmar in the News: A Quantitative Analysis of the American vs. the Myanmar Perspective” in November at the Center for Southeast Asian Studies, University of Michigan at Ann Arbor.

Prof. Randall Henning presented in September a paper titled “Internationalization of the Chinese Renminbi,” at the 2015 Annual Meeting of the American Political Science Association (APSA) held in San Francisco. Later that month, he was on a book launch panel discussion critiquing the book Demanding Devaluation: Exchange Rate Politics in the Developing World, written by David A. Steinberg, at the Johns Hopkins School of Advanced International Studies in Washington, DC, where Steinberg teaches. In October, Henning organized a seminar held at American University with Prof. Eleni Louri-Dendrinou (University of Athens), titled “Crisis and Reorganization of the Greek Banking System,” in cooperation with the Onassis Foundation and the Centre for International Governance Innovation (CIGI).

Prof. Jennifer Poole gave a presentation in October on “Trade Agreements and Foreign Direct Investment” at the Peterson Institute for International Economics.

Prof. Arturo Porzecanski was interviewed in August by CCTV on the implications of German Chancellor Angela Merkel’s visit to Brazil, especially with regard to the likelihood of progress of a free-trade agreement between the European Union and the Mercosur group of countries.

Later that month, he was also interviewed by the PBS NewsHour, where the topic was Puerto Rico’s deepening government-debt crisis and the authorities’ push to get the U.S. Congress to amend the federal bankruptcy law to allow the Commonwealth to restructure its debts. He was also interviewed in August by Argentina’s Infobae TV on the economic outlook for that country following presidential and congressional elections later in the year.

In September, Porzecanski’s opinions were featured in Brazil’s financial newspaper, Valor Econômico, particularly on Standard & Poor’s decision to downgrade that country’s sovereign credit rating to below investment-grade. That month he also co-led an afternoon-long discussion on “Argentina: Elections and Beyond,” at the invitation of the Bureau of Intelligence and Research, U.S. Department of State, which took place in mid-September at headquarters in Foggy Bottom, and was attended by South America analysts from most agencies of the federal government. Later that month, Porzecanski was the moderator of, and contributor to, a panel discussion in New York on “Puerto Rico at a Crossroads” sponsored by EMTA, the Trade Association for the Emerging Markets. And then he was back in New York for another EMTA event in mid-October to lead a discussion on”Argentina’s Elections: What the Future Will Hold.”

In November, Porzecanski was a panelist at a policy discussion on Puerto Rico’s fiscal crisis sponsored by The Hill newspaper and by The Capitol Forum, a news and analysis service. It took place at the Rayburn House Office Building and it was webcast. He was also a discussant on a panel about Puerto Rico’s financial dilemmas at the “Latin American High Yield & Distressed Winter Summit” sponsored by REDD Intelligence, a leading provider of material intelligence on distressed and high-yield investment situations. It was held at the Metropolitan Club in New York for the benefit of institutional money managers from throughout the United States.

Porzecanski was quoted in October by two newspapers in Argentina: a first article in El Cronista cited him as saying that the incoming government in Argentina would probably postpone until 2017 the most painful economic austerity and reform measures; the second, which appeared in the leading daily Clarín, had him commenting on the implications of a judicial ruling in New York federal court on litigation involving Argentina’s debt obligations. He was also quoted by The Wall Street Journal in November as part of a story on how hedge funds and other risk-prone investors that had piled into Argentine assets ahead of its presidential elections were being rewarded. He was also quoted by the Journal in December in another piece on how the new Mauricio Macri administration in Argentina was moving quickly to overhaul 12 years of populist policies, but would take a long time to undo the damage that populism had done.

Porzecanski’s views on the financial crisis in Puerto Rico were cited in October by The Bond Buyer, where he blamed Puerto Rico’s Governor Alejandro García Padilla of “wanting to have his cake and eat it too,” because on the one hand he was demanding that the U.S. Congress overwrite the Island’s Constitution which mandates the payment of senior debts before any other expenditures, while at the same time the Governor was resisting the idea of Congress imposing a federal Financial Control Board on Puerto Rico. Porzecanski’s views on the matter were also picked up by Puerto Rico’s leading newspaper, El Nuevo Día.

During December, he was also quoted twice by the other main newspaper in Puerto Rico, El Vocero: first, in a piece on the importance of the government in San Juan respecting the seniority structure of its debt obligations; and also in an article about the advisability on Gov. García Padilla either adopting the tough economic measures that circumstances warranted, or else opening the Island’s doors to a federal Financial Control Board that would do so.

Publications

Prof. Daniel Bernhofen received confirmation that one of his papers, “Testing the General Validity of the Heckscher-Ohlin Theorem,” joint with John C. Brown, was accepted for publication in the American Economic Journal: Microeconomics. The authors exploited Japan’s 19th century move from autarky to free trade to provide the first test of the general validity of the price formulation of the Heckscher-Ohlin theorem. Their test combined factor price data from Japan’s late autarky period with the country’s factor content of trade calculated with the technologies of the country of origin of the traded goods. After evaluating Japan’s factor content of trade during 1865-76 at autarky factor prices, they failed to reject the Heckscher-Ohlin hypothesis in each sample year.

Bernhofen also revised a paper, “Assessing Market (Dis)Integration in Early Modern China and Europe,” joint with three other co-authors, to resubmit for publication. This paper challenges established claims of comparable degrees of market integration in Europe and China on the eve of their industrialization. Using monthly grain prices for 1740-1820, the authors uncovered a secular process of market disintegration in numerous prefectures of Qing China, concluding that in terms of market integration, the Great Divergence was well under way decades before the start of the 19th century.

Prof. Claire Brunel had two articles accepted for publication. The first, co-authored with Arik Levinson and titled “Measuring the Stringency of Environmental Regulation,” was accepted by the Review of Environmental Economics and Policy and has since been published in the Winter 2016 issue. The authors investigated how researchers have gone about determining whether environmental regulations discourage investment, reduce labor demand, or alter patterns of international trade. Brunel and Levinson identified four fundamental conceptual obstacles to evaluating measures of environmental stringency (multidimensionality, simultaneity, industrial composition, and capital vintage), and found that few of the recent approaches used by researchers come close to the ideal, namely, a theoretically motivated, tractable, single measure that captures environmental regulatory stringency empirically.

The second, joint with Rachel Brewster and Anna Maria Mayda and titled “Trade in Environmental Goods: A Review of the WTO Appellate Body’s Ruling in US‒Countervailing Measures (China),” was accepted by the World Trade Review and is scheduled to appear in the April 2016 issue. Brunel and co-authors claim that, in the WTO Appellate Body ruling in US‒Countervailing Measures (China), the decision did not put in question the practice of imposing countervailing duties (CVDs). While the United States has formally lost the case, a change in the procedures and tests used to motivate the CVD will allow the U.S. to continue using this policy tool on the specified products. From an economic point of view, this is not welcome news since CVDs have the standard distortionary effects of tariffs and could go against environmental goals. From a political-economy point of view, the CVDs in this case appear driven by pressure of domestic manufacturers of clean energy technology and products.

Brunel also resubmitted a paper for publication titled “Pollution Offshoring and Emission Reduction in European and US Manufacturing.” Between 1995 and 2008, the European Union and the United States raised environmental standards and concurrently experienced important reductions in emissions from manufacturing despite a rise in output. She provided the first analysis of the pollution intensity of E.U. production and imports to examine which forces drove the E.U. cleanup. Brunel found that concerns about the effect of pollution offshoring were unfounded in the European Union, not because the effect was small like in the United States, but because the patterns of specialization of E.U. production and imports were actually exactly opposite to what pollution offshoring would predict.

Prof. Giovanna Dore had her recent volume, Asia Struggles with Democracy, selected to be a spotlight book in the October 2015 issue of the journal PS: Political Science and Politics. The book, published by Routledge in July 2015, investigates the dynamics by which citizens embrace democratic rule and reject authoritarianism, and compares these dynamics with those of consolidating democracies around the world. Dore also discusses what it is about the nature of public opinion and the processes of day-to-day democratic participation that have made countries vulnerable to repeated crises of legitimacy. Using Indonesia, Korea, and Thailand as case studies, her book highlights the uniqueness of Asia’s path to democracy, and shows both the challenges and opportunities in getting there.

During the Fall semester, Dore also submitted three articles to various refereed publications. The first was titled “Hong Kong 2014: A Quantitative Investigation of the Impacts of Democratic Protests on the Political and Economic Life of the Special Administrative Region.” The second, co-authored with Karl Jackson and Aye Mya Mya Khaing, was titled “Myanmar in the News: A Quantitative Analysis of the American vs. the Myanmar Perspective.” And the third was titled “Democracy in Myanmar: What Do Survey Data Reveal?”, and was informed by an original set of public-opinion data known as Myanmar 2014: Civic Knowledge and Values in a Changing Society.

Prof. Randall Henning has been co-editing with Andrew Walter (University of Melbourne) a book titled Global Financial Governance Confronts the Rising Powers, to be published in April 2016 by Canada’s Centre for International Governance Innovation (CIGI). It addresses the challenge that the rising powers pose for global governance, substantively and institutionally, in the domain of financial and macroeconomic cooperation. The book will include twelve chapters by scholars mainly from emerging-market countries on the politics and economics of financial regulation and financial cooperation in the G20. Henning is authoring the chapter titled “The Global Liquidity Safety Net: Precautionary Facilities and Central Bank Swaps” and co-authoring with Walter an overview chapter, “Global Governance and the Changing Structure of International Finance.”

Henning is also contributing the chapter “Cooperation without Institutions: The Case of East Asian Currency Arrangements” with Saori Katada (University of Southern California) in the forthcoming book titled Asian Designs: Interests, Identities and States in External Institutions, edited by Saadia Pekkanen, to be published in 2016 by Cornell University Press. He will also be featured in the forthcoming book The Political and Economic Dynamics of the Eurozone Crisis, edited by James A. Caporaso and Martin Rhodes, to be published in April 2016 by Oxford University Press. He is writing the chapter titled “The ECB as a Strategic Actor: Central Banking in a Politically Fragmented Monetary Union,” about the strategic interaction between the ECB and the governments of the Eurozone in response to their recent sovereign debt crisis. According to Henning, strategic behavior helped to shape the timing and substance of ECB policy during 2010-2013 as well as the response of governments. While ex ante bargains between the monetary and fiscal authority can in principle preempt the struggle for dominance, political fragmentation of the euro area prevented such bargains during the crisis.

Prof. Jennifer Poole resubmitted a paper for publication titled “Trade and Labor Reallocation with Heterogeneous Enforcement of Labor Regulations.” It is coauthored by Rita Almeida and revisits the question of how trade openness affects labor market outcomes in a developing-country setting. Almeida and Poole explore the fact that plants face varying degrees of exposure to global markets and to the enforcement of labor market regulations, and rely on Brazil’s currency crisis in 1999 as an exogenous source of variation in access to foreign markets. Using administrative data on employers matched to their employees and on the enforcement of labor regulations at the city level over Brazil’s main crisis period, they document that the way trade openness affects labor market outcomes for plants and workers depends on the stringency of de facto labor market regulations.

Prof. Arturo Porzecanski published in August an oped in The Financial Times titled “What a New Argentina Could Do For Brazil.” It noted that during the past dozen years Argentina has been a destabilizing economic force within South America, because the highly populist and nationalistic policies adopted by the governments of Néstor (2003-07) and Cristina Kirchner (2007-15) have had adverse repercussions on Argentina’s neighbors. However, there is room for optimism regarding the emergence of a new, business-friendly Argentina after year-end elections, which would have the potential to repair a great deal of regional damage done.

Porzecanski subsequently published three opinion pieces in Forbes magazine. In September, the oped “Puerto Rico Needs an Effective Financial Control Board — Meaning, Not a Local One,” argued that the Island government’s proposal to set up a local Financial Control Board was futile, because such a board could only be effective if established by the U.S. Congress with the benefit of some distance from local pressure groups — the very ones that have been blocking the needed spending cuts and structural reforms. In November, another oped, “Congress Shouldn’t Provide a ‘Super Chapter 9’ Escape for Puerto Rico,” claimed that a “Super-Chapter 9” alleged solution to the Island’s financial woes, as proposed by the Obama Administration, would represent a legislative overreach which would set a dreadful precedent for states, municipalities and other territories in trouble. And in December, yet another oped, “Fitch, Moody’s and Standard & Poor’s Haven’t Learned Enough from the Financial Crisis,” put forth the idea that there is a growing risk that a deterioration in the creditworthiness of emerging-market countries in 2016 and beyond will leave the Big Three credit-rating agencies exposed to justified criticism that they were overly optimistic in their assessments — just as they had been prior to the financial crisis of 2008 when it came to complex mortgage-related securities.

Prof. Krista Tuomi marked the publication of a book for which she was an associate editor, Angels Without Borders: Trends and Policies Shaping Angel Investment Worldwide, which came out in October courtesy of World Scientific Publishing. Angel investors are those who provide small amounts of capital (under $3 million) to early stage, high-risk ventures, and some of the world’s most valuable and influential companies, such as Google, Facebook and Uber, were able to survive and thrive in their make-or-break early years only through the backing of angel investors. This book draws on chapter contributors from more than two dozen nations, examining this trend from a global perspective. Tuomi also continues to publish on the Angel Insights Blog hosted by the Angel Capital Association (ACA), the largest angel-investor professional development organization in the world. She also writes for the Policy Dialogue on Entrepreneurship, which informs and connects thought leaders looking to understand policies that help entrepreneurs start companies, create jobs and strengthen the economy. It is hosted by the Ewing Marion Kauffman Foundation and the Public Forum Institute.

Summer 2015

Presentations and Other Activities

Prof. Claire Brunel presented the paper “Green Innovation and Green Manufacturing: Links between Environmental Policies, Innovation, and Production” at the Society of Government Economists Conference held in May, in Washington DC. Also that month, Brunel chaired the panel on Environmental Economics and presented that paper at the Biennial Georgetown Center for Economic Research Conference (GCER), likewise in Washington DC. She also presented it in June at the 4th Annual AERE Summer Conference sponsored by the Association of Environmental and Resource Economists, held in San Diego. The paper addressed the claim that environmental policies stimulate domestic economies via the effect they have on innovation and the effect of that innovation on resulting manufacturing production. Prof. Brunel’s empirical evidence is based on measures of policy, patent activity, and trade in the renewable energy sector (solar, wind, geothermal, biomass and waste) of 27 OECD countries between 1988 and 2003. The results suggest that an additional policy promoting the development or use of renewable energies is associated with a significant rise in the adoption of existing foreign technologies, but few new inventions at home. Renewable energy policies stimulate domestic economies through manufacturing, but less so through innovation.

Prof. Randall Henning in May was the keynote speaker of the presentation titled “Global Financial Governance and the G20” at the conference titled “Prioritizing International Monetary and Financial Cooperation.” The conference was co-hosted by the Centre for International Governance Innovation (CIGI), the Economic Policy Research Foundation of Turkey (TEPAV), and Think Tank 20 (T20) and took place in Ottawa. The meeting involved representatives of think tanks from G20 countries, leading international experts and a number of senior officials. Later that month, Henning presented the paper “International Regime Complexity and the Euro Crisis” European Stability Mechanism in Luxembourg. Henning addressed the following questions in his presentation: what explains the institutional form of financial rescue?; how do states strategize the complex of institutions?; and is the regime complex for crisis finance fragmenting? The next day, Henning presented the paper to the Senior Faculty Research Seminar at the School of Government at LUISS Guido Carli University in Rome. In June, Henning presented a paper in Seoul, Korea, on “Regional Financial Arrangements and the IMF”at the 2015 KDI international conference on “The Role of Global Financial Safety Net and Regional Financial Arrangements (RFAs), sponsored by the Korea Development Institute (KDI) and the Society for the Study of Emerging Markets (SSEM).

Prof. Arturo Porzecanski was quoted in May by Bloomberg News in an article about how Puerto Rico may need the imposition of a financial control board akin to those enacted for New York City in the 1970s and the District of Columbia in the 1990s. In June, he was quoted twice by The New York Times in articles related to the financial crisis in Greece: first in a piece comparing the prospects for Greece in light of Argentina’s experience, and then in an article on the implications of a potential Greek exit from the Eurozone. Porzecanski was also interviewed in the print and TV editions of Infobae, a leading Argentine news outlet, discussing the implications of a recent ruling by U.S. federal judge Thomas Griesa granting partial summary judgment to many bondholders who years ago had filed suit in the U.S. courts against the government of Argentina, given its failure to pay on bonds issued in the 1990s.

In July, Porzecanski was quoted by The Wall Street Journal in a piece on how the application of federally mandated minimum wages to Puerto Rico had harmed job creation on that island. He was also cited by The New Yorker in a major article detailing events surrounding the violent death of Argentine prosecutor Alberto Nisman earlier in the year. In early August, he was interviewed by CNN on the impending default by Puerto Rico, which took place on August 3rd following the non-payment on a bond issued by its Public Finance Corporation. Porzecanski was quoted by The Wall Street Journal in a piece on the implications for the financial markets of the August primary elections in Argentina.

Prof. Jerald Schiff presented a paper titled “Avoiding Japanization: What Role for Fiscal Policy?” at a 2015 East-West Center/Korea Development Institute Conference on “Japanization: Causes and Remedies,” which took place in mid-August in Hawaii. His paper alongside the others is to be published later by Edward Elgar in a conference volume. “Japanization” is often used by economists to describe long-term stagnation and deflation, and its symptoms include high unemployment, weak economic activity, interest rates near zero, quantitative easing by governments, and population aging. The conference provided a forum for research presentations on the causes of Japan’s “lost decades” and on the lessons that can be learned from that experience. During the summer months, Prof. Schiff also spent two weeks in Bangkok, Thailand, teaching a course on fiscal policy for government officials from Myanmar, Laos and Cambodia. The course was hosted by the IMF-Singapore Training Institute.

Prof. Krista Tuomi acted as a consultant to the US-Pakistan Women’s Council and its goal to promote entrepreneurship among women in Pakistan, as part of a $500,000 grant from the U.S. Embassy in Pakistan to American University for the purpose of scaling up women’s businesses through a joint certificate training program to be conducted with Lahore University of Management Sciences.

Publications

Prof. Daniel Bernhofen had two articles become available for circulation in pre-publication format. The first was “Estimating the Effects of the Container Revolution on World Trade,” joint with Zouheir El-Sahli and Richard Kneller, forthcoming in the Journal of International Economics. Many historical accounts have asserted that containerization triggered complementary technological and organizational changes that revolutionized global freight transport. Bernhofen and colleagues are the first to suggest an identification strategy for estimating the effects of the container revolution on world trade. Applying container variables on a large panel of product-level trade flows for the period 1962-1990, their estimates suggest economically large concurrent and cumulative effects of containerization, lending support for the view of containerization being a driver of 20th century economic globalization.

The second article was “The Impact of Trade Preferences on Multilateral Tariff Cuts: Evidence from Japan,” joint with Tobias Ketterer and Chris Milner, forthcoming in the Journal of the Japanese and International Economies. Opposing theoretical predictions about the effects of trade preferences on multilateral tariff cuts point to the need for empirical analysis to determine whether preferential trade agreements promote or hinder multilateral trade liberalization. This article examined the impact of Japan’s trade preferences on its multilateral tariff reductions. Using detailed product level data, Bernhofen and colleagues found that Japan’s Generalized System of Preferences (GSP) acted as a stumbling block for the country’s external tariff liberalization during the Uruguay Round of multilateral trade negotiations.

Prof. Claire Brunel received confirmation that two of her articles will be published in 2016. The first is “Measuring Environmental Regulatory Stringency,” co-authored with Arik Levinson, and it will appear in the Review of Environmental Economics and Policy. Researchers have long been interested in whether environmental regulations discourage investment, reduce labor demand, or alter patterns of international trade. However, estimating those consequences of regulations requires devising a means of measuring their stringency empirically, so Brunel and colleague describe the long history of attempts to measure environmental regulatory stringency, assess their relative success, and propose a new measure of stringency to be based on emissions data and constructed separately for different pollutants.

The second is “Trade in Environmental Goods: A Review of the WTO Appellate Body’s Ruling in US-Countervailing Measures (China),” with Rachel Brewster and Anna Maria Mayda, which is forthcoming in World Trade Review. This paper reviews the WTO’s Appellate Body ruling on a case against the US application of countervailing duties on certain products from China in response to alleged Chinese subsidies. Focusing on environmental goods, the paper discusses the motivations for the subsidies and countervailing duties, both in terms of market distortions and strategic trade objectives, evaluating the effectiveness of each instrument in addressing these concerns. The authors’ assessment is that the countervailing duties are likely to be welfare-reducing because they have the standard distortionary effects of tariffs and could go against environmental goals.

Prof. Miles Kahler in July contributed to the debate over economic sanctions and the nuclear agreement with Iran with a blog entry in Lawfare, which is devoted to the “nebulous zone in which actions taken or contemplated to protect the nation interact with the nation’s laws and legal institutions.” Kahler’s conclusion was that “At this point in time, given the current Iranian leadership, the state of Iranian public opinion, and Iranian economic conditions, relying on unilateral economic leverage to obtain a better deal is an illusion. More likely it would drive Iran further in the direction of North Korea –an unrestrained nuclear program and an economically isolated, unreformed regime.”

Prof. Arturo Porzecanski in May released a lengthy paper titled “The Origins of Argentina’s Litigation and Arbitration Saga, 2002-2014,” which appeared as part of the SIS Working Papers Series. The paper details how a major deviation from best practices, which codified how economic policy adjustments are to be made in a way that minimizes damage to the investment climate, preserves access to the international capital markets, and promotes rapid and sustainable economic growth, lies at the root of Argentina’s travails in courts and arbitral tribunals around the globe. In June, he published an oped titled “Puerto Rico Needs Reform, Not Bankruptcy,” in Roll Call, which reports news of legislative and political maneuverings on Capitol Hill, arguing that the troubled island must change its business model and consider structural reforms to government services — everything from education to public utilities — in order to overcome its difficulties.

Prof. Jerald Schiff marked the publication of a book for which he was a co-editor and contributor, “The Future of Asian Finance” which came out in August courtesy of the International Monetary Fund. The book’s authors took stock of how financial systems in Asia’s advanced and emerging market economies compare with the rest of the world and how reforms to develop equity and bond markets have progressed;how Asian financial systems will likely evolve in complexity and interconnectedness, with implications for the regional financial centers of Hong Kong and Singapore;and how the region’s demographic dividend can be harnessed to finance infrastructure, the state of economic and financial integration in ASEAN, the role of capital flows, and how changes to global regulatory regimes are affecting Asian financial systems. There is an excerpt of the book here.

Prof. Krista Tuomi co-authored an article in the June issue of Venture Capital, an international journal of entrepreneurial finance. It is titled “Early Stage Business Tax Credits: Case Study of two US States,” and it looked at two US tax credit programs for investment in early stage business (in Maryland and Wisconsin), and estimated their net economic impact using the regional input–output modeling system.

Prof. Andrew Wolfe was a consultant to the Commonwealth of Puerto Rico and co-authored, together with former IMF colleagues Anne Krueger and Ranjit Teja, a report titled “Puerto Rico –A Way Forward.” The report, first published in June and then updated in July, analyzed the full extent of the Commonwealth’s fiscal condition including revenues, expenditures, deficits, and current and future obligations. It also discussed certain recommendations for a five-year fiscal adjustment plan. Among its conclusions was that even a major fiscal effort would leave residual financing gaps in coming years, which may have to be bridged by debt restructuring (in the form of a voluntary exchange of existing bonds for new ones with a longer/lower debt service profile).

Spring 2015

Awards

Spring 2015 IER graduate Peter Foley received the Kimberly Miller Award for Outstanding Commitment to European Studies and Community Spirit at the School of International Service Faculty, Student, and Staff Awards. Congratulations, Pete!

Presentations and Other Activities

Scholars, political scientists, and economists from around the world attended the “New Thinking and the New G-20” conference on April 15 at the Capitol Hilton Hotel in Washington, DC. Launched in 2013 by Distinguished Professor Miles Kahler of the School of International Service (SIS) and Barry Eichengreen of the University of California, the project works to bring new ideas and the perspective of emerging economies to global discussions of policy change and institutional reform. Additionally, the project aims to link researchers in the emerging economies more effectively to research networks in the industrialized world and to global policy discussions. The project is supported by the Centre for International Governance Innovation (CIGI) and the Institute for New Economic Thinking (INET).

In early 2014, two interdisciplinary teams composed of economists and political scientists from both industrialized and emerging economies were identified and tasked with producing individual papers and collective policy recommendations. One team, led by SIS Professor Randall Henning, devoted its research to macroeconomic and financial cooperation. According to Professor Henning, who organized the conference, this event also provided a foundation for expanding the project’s research network. “The conference was the launching point of building a broader network to influence global economic governance and to inject ideas and recommendations into upcoming G-20 meetings,” said Henning.

Prof. Arturo Porzecanski was interviewed in Portuguese as part of a documentary sponsored by Brazil’s chamber of commerce Fecomercio discussing the need to reform that country’s bloated public sector, which was released in February. His critique of the Central Bank of Brazil’s failure to keep inflation under control was published in the country’s leading daily, Folha de São Paulo, in March. Subsequently, in April, Prof. Porzecanski was featured in videos discussing “Argentina’s Fight with America’s Courts” which were published by the multi-platform media company Fusion. In May, he was a panel moderator at an EMTA event held in New York City headlined “Argentina Update,” which served as a forum to discuss the country’s economic and political outlook and also its legal entanglements in the U.S. courts.

Prof. Porzecanski also served as a discussant on a panel, Will Brazil Keep its Investment Grade Status? at the Wilson Center’s Brazil Institute in April. The Institute convened a panel of experts to assess Brazil’s economic outlook, in the wake of the newly appointed Finance Minister Joaquim Levy’s attempt to secure congressional approval of unpopular austerity measures, and his development of initiatives to shorten the ongoing recession and restore confidence in the government — a delicate situation which has caused speculation about whether the country could lose its coveted investment grade. Prof. Porzecanski served alongside the Secretary for Economic Affairs of the Ministry of Finance; a senior rating-agency analyst from Standard & Poor’s; and a scholar from the Peterson Institute for International Economics.

In April, Prof. Krista Tuomi presented at the Angel Capital Association Annual Summit in San Diego on “Best Practice in Public Policy on Financing Start-Ups.”

Publications

Prof. Daniel Bernhofen presented a paper titled “Assessing Market (Dis)integration in Early Modern China and Europe,” at both the Chinese Economists Society North America Conference which took place at the University of Michigan (Ann Arbor, MI) in mid-March, and also at the Public Choice Seminar at George Mason University (Fairfax, VA) in mid-April. His paper contributes to the debate on China’s level of market integration on the eve of Western industrialization.

Prof. Arturo Porzecanski published an essay titled “Brazil’s Place in the Global Economy” as a chapter in the book Brazil on the Global Stage: Power, Ideas, and the Liberal International Order, edited by Matthew Taylor and Oliver Stuenkel, released by Palgrave Macmillan in April. He also wrote an article titled “The Origins of Argentina’s Litigation and Arbitration Saga, 2002-2014,” which was released as part of the SIS Working Papers Series in May and was disseminated via the Social Science Research Network (SSRN). Earlier in the semester, in February Prof. Porzecanski presented a written submission on H.R. 870, the “Puerto Rico Chapter 9 Uniformity Act of 2015,” to the chairmen and ranking members of the House Committee on the Judiciary and the House Subcommittee on Regulatory Reform, Commercial and Antitrust Law. In March, he published an oped in The Financial Times titled “Argentina is in Checkmate and Must Negotiate a Way Out.” In April, his oped on “Why Chapter 9 for Puerto Rico is a Bad Idea” appeared in The Hill.

Prof. Jerry Schiff co-edited — and contributed to — the International Monetary Fund’s new book, “Can Abenomics Succeed? Overcoming the Legacy of the Lost Decades?” with Dennis Botman and Stephan Danninger, published in March.

Prof. Krista Tuomi co-authored a paper, “Early Stage Business Tax Credits: Case Study of two US States,” which is forthcoming in Venture Capital: An International Journal of Entrepreneurial Finance.

Fall 2014

Awards

In December, Prof. Stephen Silvia received the 2014 German Academic Exchange Service Prize for Distinguished Scholarship in German and European Studies for his career contributions to the field of Economics/Economic History.

Presentations and Other Activities

Prof. Miles Kahler spoke on two panels at the American Political Science Association Annual Meeting in August 2014. He also visited Duke University in October, first serving as a panel participant on Strategy and Development at the Sarah Bermeo Book Workshop, and, primarily, to give a talk, “The Study of World Politics in a Post-Paradigm, Post-Post-Cold War World,” at the Duke University Faculty & Graduate Student International Relations Symposium. In October, he presented a paper, “Middle Powers, Network Power, and Soft Power,” at a conference, “South Korea as a Middle Power,” at the Center for Strategic and International Studies (CSIS). Later in October, he presented a paper, “Rising Powers and Alternative Modes of Global Governance,” and was a keynote speaker on “The State of the Nation-State, 1914-2014,” at the Frank M. Woods Lectures at the University of Toronto Munk School of Global Affairs’ Trudeau Centre for Peace, Conflict and Justice. In November, Kahler organized and chaired a Council on Foreign Relations (CFR) roundtable on Rising Powers and World Politics. He also led a panel discussion, “Regional Cooperation” at the Inter-American Development Bank‘s December event, “Regional Public Goods and Sustainable Development.”

Prof. Arturo Porzecanski gave a talk in October 2014 at Johns Hopkins SAIS, “Argentina and the Debt Default Saga.” In November, he was a discussant in two panels, one on “After Argentina: Government Debt Crises, Global Finance and the Law,” at Georgetown University Law School, and another on “Are BRICS a New Platform for Global Economic Governance?” at Columbia University’s SIPA, in New York. In December, Prof. Porzecanski spoke at a meeting of the National Economists Club in Washington, DC about the ongoing Argentine debt crisis, in a talk titled “Argentina’s Sovereign Debt Saga: Facts and Implications.” He was also a discussant on a panel in New York about “Puerto Rico: Scenarios for 2015” sponsored by EMTA, the Trade Association for the Emerging Markets.

Prof. Stephen Silvia gave an October 2014 presentation titled “Internationalization of Industrial Relations: The Example of German Car Manufacturers in the USA,” at an industrial relations conference in Bologna, Italy. That same month, he presented on German economic unity at a Catholic University of America conference, “Celebrating the 25th Anniversary of the Fall of the Berlin Wall.” In November, Prof. Silvia spoke on, “Germany Since 1989: Economic and Social Developments,” at the US Department of State’s Foreign Service Institute.

Prof. Krista Tuomi gave a presentation in November, “Tax Incentives: What Works?,” at the European Trade Association for Business Angels’ Annual Conference in Helsinki, Finland.

Publications

Prof. Miles Kahler authored a chapter, “Who is Liberal Now? Rising Powers and Global Norms,” for inclusion in the forthcoming Why Govern? Rethinking Demand, Purpose, and Progress in Global Governance, edited by Prof. Amitav Acharya of SIS.

Prof. Arturo Porzecanski was published twice by the Financial Times in the Fall: in September regarding an initiative to involve the United Nations in the resolution of sovereign debt problems, and in November about expectations surrounding the G20 Summit in Australia, “The G20 must keep it focused“. An oped written by him on “Puerto Rico Needs a Financial Control Board” was published in the Washington DC newspaper The Hill in October. He was interviewed three times during October-November on CCTV about developments and prospects in Brazil: on its economic challenges, post-election outlook, and election-related economic issues. In October, Uruguay’s El Pais newspaper featured Prof. Porzecanski in a lengthy interview about the track record of economic policy in that country, and likewise Brazil’s leading daily Folha de São Paulo interviewed him concerning Brazil’s worsening reputation in international markets. In September, Argentina’s El Cronista newspaper featured an interview with him on that country’s debt crisis, and so did Uruguay’s El Observador, which ran an interview on Prof. Porzecanski’s thoughts on Uruguay’s relationship with Argentina.

Prof. Stephen Silvia co-authored a chapter this Fall, “Gewerkschaften und Arbeitgeberverbände,” [Unions and Employers Associations],” in a book, Handbuch Gewerkschaften in Deutschland (Wolfgang Schroeder, ed.).

Prof. Manuel Suárez-Mier published a weekly column on current economic events in the “Money” section of Mexico’s leading newspaper Excelsior and also several commentaries as a scholar affiliated with CATO’s Spanish-language institute.

Prof. Krista Tuomi produced a working paper this year, “Early Stage Business Tax Credits: Benefit or Cost for US States?”

Summer 2014

Prof. Stephen Silvia Takes on New Responsibilities

IER is pleased to announce the promotion of faculty member Stephen Silvia from Associate Professor to Professor within the School of International Service. Dr. Silvia has also stepped down as the inaugural director of the Online Master of Arts in International Relations program after two years of service, and will be taking on a newly elected position as Chair of the university’s Committee on Faculty Actions for AY 2014/15.

This summer, Prof. Silvia gave a June presentation, “Labor Markets in Europe,” at the US State Department’s Foreign Service Institute. In July, he spoke on “Employment Creation in the United States of America,” at a labor symposium held at Taiwan’s Ministry of Labor.

Spring 2014

Awards

Two IER graduate students won sought-after awards at the School of International Service Annual Awards Ceremony:

Alex Choy won the Alan Taylor Memorial Award for Excellence in Outstanding Academic Performance and Service to the University.

Alena Sakhonchik won the Charles H. Heimsath Memorial Award for Excellence in Style and Substance of Written Work in International Relations at the Undergraduate Level.

Congratulations to our students!!!!

Presentations and Other Activities

Prof. Daniel Bernhofen presented a paper at the American Economic Association Meetings in Philadelphia, PA, on January 3-5, 2014. He also organized a session at that conference titled “Assessing the welfare impacts of economic integration: evidence from the 19th and 20th centuries”. He also gave a presentation at Syracuse University on February 25, 2014, titled “Estimating the effects of the container revolution on world trade”, with Drs. Zouheir El-Sahli and Richard Kneller, as part of the Maxwell School’s Trade, Development, and Political Economy Workshop series.

Prof. Randall Henning presented a paper, “The ECB as a Strategic Actor: The Brave New World of Central Banking in the Euro Crisis,” at the annual meeting of the Council of European Studies in Washington in March 2014. Prof. Henning also spoke at the Brookings Institution conference on Europe’s Economic Future on June 6, 2014.

Prof. Arturo Porzecanski spoke at a program on “Argentina at the Crossroads” sponsored by the Hudson Institute, which took place in Washington DC on January 15, 2014. He was also a panelist at a seminar on “Sovereign Debt Restructuring: A Better Way Forward?” hosted by EMTA, which was held in Washington DC on January 16, 2014. Furthermore, he spoke on “Economic Trends in the Southern Cone (of South America)” at the U.S. State Department’s Foreign Service Institute, in Arlington VA on February 4, 2014. He was also a panelist at an American University Kay Spiritual Life Center Lounge discussion on “New Rules for the International Financial Order“which took place on February 19, 2014. Moreover, he was a panelist at an event on “The Future of Argentina: Through the Looking Glass” sponsored by EMTA, which took place in New York City on February 28, 2014. He was also the moderator for a discussion of Argentina’s economic and political outlook, co-sponsored by the Brookings Institution and American University, which was held in Washington DC on March 24, 2014. Furthermore, he spoke on “The Economic and Political Outlook in Argentina” at the U.S. Defense Intelligence Agency, in Washington DC on March 26, 2014. Porzecanski also chaired a discussion on “Argentina: Next Steps” as part of BBVA Bank‘s 4th Latin American Local Markets & Issuer Conference, which took place May 8, 2014, at the Pierre Hotel in New York. He also participated in a meeting of The Good Judgment Project, sponsored by the Intelligence Advanced Research Projects Activity, which took place at American University on May 15, 2014.

Prof. Stephen Silvia presented a paper, “German Trade Unions Wrestle with Reform: The Strategies of IG Metall, IG BCE and ver.di” a the Council for European Studies’ 21st International Conference of Europeanists in Washington, DC in March 2014. On April 9, 2014, Dr. Silvia gave a talk, “The Euro and the European Welfare State,” at an event concerning “The Sustainability of European Welfare Systems following the Debt Crisis,” at The George Washington University in April 2014. He also gave a talk, “European Labor Markets and Social Policy,” at the US Department of State’s Foreign Service Institute in February.

Prof. Manuel Suárez-Mier took over as the new Director of American University’s Center for North American Studies as of January 1, 2014, succeeding Founding Director Prof. Robert Pastor, who retired at the end of 2013 and passed away on January 8, 2014. He was also interviewed in January on National Public Radio.

Prof. Krista Tuomi led a panel discussion focused on “Tax Policy: What Works,” at the Angel Capital Association Annual Conference in Washington, DC, in April 2014.

Publications

Prof. Daniel Bernhofen published an article titled “Preferences, rent destruction and multilateral liberalization: The building block effect of CUSFTA” with Tobias Ketterer and Chris Milner in Journal of International Economics.

Prof. Gregory Fuller authored a chapter titled “Europe and the Global Economic Crisis,” for the fifth edition of Europe Today: A Twenty-First Century Introduction, due out in June 2014. He also authored sections on “Structural Adjustment Programs” and “Sovereign Debt” in World Democracy: From Ancient Times to the People’s Revolutions of the 21st Century, due out in 2014.

Prof. Arturo Porzecanski published a chapter titled “Borrowing and debt: how do sovereigns get into trouble?” in the book Sovereign Debt Management edited by Lee C. Buchheit and Rosa M. Lastra, published by Oxford University Press in January 2014. He also published an oped article titled “Time to get serious at the IDB” in The Financial Times on January 13, 2014. In addition, on February 3, 2014, he was interviewed exclusively in El País (Uruguay) newspaper on international and regional economic issues, and also in Brazil’s leading financial daily, Valor Econômico on Mexico’s improved creditworthiness relative to Brazil’s, on February 6, 2014. Porzecanski also published two op-eds in the Brazilian press critical of Brazilian foreign economic diplomacy, the first in Valor Econômico on March 20, 2014, and the second in Folha de São Paulo on April 12, 2014. On May 29, 2014, his views on the economic and banking situation in Puerto Rico were published in the Capitol Hill newspaper The Hill. On June 12, 2014, the Financial Times blog beyondbrics featured his views on Argentina’s debt restructuring.

The February 18, 2014 edition of The New York Times published Prof. Stephen Silvia‘s op-ed, “Prove to Workers That their Lives will be Better,” concerning unionization in the United States. He also authored two blog posts in February, on, “Five key questions — and answers — about the threat to Volkswagen investment in the South,” for the Washington Post’s The Monkey Cage, and the other, “Transplant Rejection: A UAW-VW Post Mortem,” for the American Institute for Contemporary German Studies (AICGS).

Prof. Manuel Suárez-Mier published a weekly column on current economic events in the “Money” section of Mexico’s leading newspaper Excelsior and also several commentaries as a scholar affiliated with CATO’s Spanish-language institute.

Fall 2013

Presentations and Other Activities

Prof. Daniel Bernhofen presented a paper, “A Ricardian factor characterization of the gains from trade,” at the Washington Area Economic History Seminar at American University in November. He also presented a paper called “The effects of preferential trade agreements on the multilateral process,” at the Heidelberg Center for American Studies Conference in Heidelberg, Germany, in December.

Prof. Gregory Fuller presented a paper titled “Destructive Creation: The Unintended Consequences of the Rise of Finance,” at the European Union Studies Biennial Conference in Baltimore, MD.

Prof. Arturo Porzecanski spoke at a program on “Argentina As a ‘Bad Actor’ On the World Stage” at a Heritage Foundation event which took place in Washington DC on September 25, 2013. He was also a panelist in “Five Years Later: Lessons from the 2008 Financial Crisis” as a part of the French-American Global Forum, which took place at American University on October 14, 2013. He was also the keynote speaker at “A Discussion of Argentina’s Sovereign Debt Case” which was hosted by the School of Advanced International Studies (SAIS-JHU), and took place in Washington DC on November 14, 2013. Furthermore, he spoke at a program on “Argentina v. Holdout Creditors: Applying the Rule of Law to Resolve Debt Default” hosted by the CATO Institute in Washington DC, on December 11, 2013. Moreover, he was a panelist at an event on “Sovereign Debt Restructuring: A Better Way Forward?” sponsored by EMTA, which took place in New York City on December 18, 2013.

Prof. Stephen Silvia gave several presentations related to his new book, “Holding the Shop Together,” throughout Fall 2013. In addition, he gave several talks on European economics and labor to the U.S. Department of State Foreign Service Institute. Dr. Silvia also presented a paper, “Is Economic Hegemony Necessary for Maintaining Open Trade? An Empirical Challenge to the Hegemonic Stability Theory,” coauthored with Michael Stanaitis, to the American Political Science Association Annual Meeting in Chicago in September 2013.

Prof. Manuel Suárez-Mier was the co-organizer of a major conference titled “The NAFTA Promise and the North American Reality: The Gap and How to Narrow It” which took place at American University on October 31-November 1, 2013. He was also interviewed multiple times on China’s 24-hour television network CCTV, CNN en Español, Televisa and on Mexico’s TV Azteca, on topics related to the economic situation of various Latin American countries.

Publications

Prof. Daniel Bernhofen co-edited the October 2013 Palgrave Handbook of International Trade together with Rod Falvey, David Greenaway, and Udo Kreichemeier.

Prof. Arturo Porzecanski published a chapter titled “Behind the 2012 Greek Default and Restructuring” in the book Sovereign Debt and Debt Restructuring edited by Eugenio A. Bruno, published by Globe Business Publishing. He also published an oped article titled “Argentina threw its creditors under the bus” in The Financial Times on November 12, 2013. Prof. Porzecanski also authored a monograph titled “Brazil’s Place in the Global Economy” in the series Perspectives on the Americas released by the University of Miami’s Center for Hemispheric Policy, in December 2013.

Prof. Stephen Silvia published a new book, “Holding the Shop Together: German Industrial Relations in the Postwar Era,” which investigates the role of industrial relations and trade unions in the rise of the German economy after World War II. Dr. Silvia also authored a commentary, “Waiting for German Domestic-led Growth,” for the American Institute of Contemporary German Studies.

Prof. Manuel Suárez-Mier published a weekly column on current economic events in the “Money” section of Mexico’s leading newspaper Excelsior and also several commentaries as a scholar affiliated with CATO’s Spanish-language institute.