How should economists interpret current trade wars and the recent U.S. trade actions that have initiated them? This paper offers an interpretation of current U.S. trade actions that is at once more charitable and less forgiving than that typically offered by economic commentators.
... See More + More charitable, because under this interpretation it is possible to see a logic to these actions: the United States is initiating a change from "rules-based" to "power-based" tariff bargaining and is selecting countries with which it runs bilateral trade deficits as the most suitable targets of its bargaining tariffs. Less forgiving, because the main costs of these trade tactics cannot be avoided even if they happen to "work" and deliver lower tariffs. Rather, the paper shows that the main costs will arise from the use of the tactics themselves, and from the damage done by those tactics to the rules-based multilateral trading system and the longer-term interests of the United States and the rest of the world.
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Differences in life expectancy between high and low socioeconomic groups are often large and have widened in recent decades. In the United States, the differences may now be as large as ten to fourteen years.
... See More + These longevity gaps strongly affect the actuarial fairness and progressivity of many public pension systems, raising the question of possible policy reforms to address this issue. This paper reviews the empirical literature on the longevity differences across socioeconomic groups and their impacts on lifetime benefits, considers how these impacts depend on four different pay-as-you-go pension structures (calibrated on the US case), and discusses some policy options.
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Working Paper (Numbered Series) 136560 APR 01, 2019
This paper presents different deep neural network architectures designed to forecast the distribution of returns on a portfolio of U.S. Treasury securities.
... See More + A long short-term memory model and a convolutional neural network are tested as the main building blocks of each architecture. The models are then augmented by cross-sectional data and the portfolio's empirical distribution. The paper also presents the fit and generalization potential of each approach.
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Policy Research Working Paper WPS8790 MAR 21, 2019
Following a couple of decades of offshoring, the fear today is of reshoring. Using administrative data on Mexican exports by municipality, sector and destination from 2004 to 2014, this paper investigates how local labor markets in Mexico that are more exposed to automation in the U.S. through trade fared in exports and employment outcomes.
... See More + The results show that an increase of one robot per thousand workers in the U.S. -- about twice the increase observed between 2004-2014 -- lowers growth in exports per worker from Mexico to the U.S. by 6.7 percent. Higher exposure to U.S. automation did not affect wage employment, nor manufacturing wage employment overall. Yet, the latter is the result of two counteracting forces. Exposure to U.S. automation reduced manufacturing wage employment in areas where occupations were initially more susceptible to being automated; but exposure increased manufacturing wage employment in other areas. Finally, the analysis also finds negative impacts of exposure to local automation on local labor market outcomes.
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Policy Research Working Paper WPS8741 FEB 14, 2019
Since the introduction of the KiwiSaver scheme in New Zealand in 2006, several countries have implemented, or are in the process of implementing, voluntary funded pension systems with automatic enrollment features.
... See More + Since most of the literature has focused on countries with the common law tradition, including the United Kingdom and the United States, this note analyzes cases of countries with the civil code tradition, including Turkey, Poland, the Russian Federation, Chile, Brazil, and the Province of Quebec in Canada. This sample includes mostly emerging economies, with reforms at different stages, from those that have already been completed to those that are about to start discussions in their parliaments. Although they are not a substitute for necessary parametric reforms, automatic enrollment schemes offer the possibility of improvements in future retirement income for a significant part of the labor force. This note stresses that the paternalistic approach of automatic enrollment schemes imposes a great degree of responsibility on governments and requires careful consideration of the design of the system, including the industrial organization of the pension fund industry and default investment strategies. Sufficient time and resources for preparing communication and educational campaigns has played a key role in achieving high rates of participation.
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Policy Research Working Paper WPS8726 FEB 05, 2019
Sixteenth in a series of annual reports comparing business regulation in 190 economies, Doing Business 2019 covers 11 areas of business regulation.
... See More + Ten of these areas - starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency - are included in the ease of doing business score and ease of doing business ranking. Doing Business also measures features of labor market regulation, which is not included in these two measures. Doing Business provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. This economy profile presents indicators for Canada; for 2019 Canada ranks 22.
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Sixteenth in a series of annual reports comparing business regulation in 190 economies, Doing Business 2019 covers 11 areas of business regulation.
... See More + Ten of these areas - starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency - are included in the ease of doing business score and ease of doing business ranking. Doing Business also measures features of labor market regulation, which is not included in these two measures. Doing Business provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. This economy profile presents indicators for United States; for 2019 United States ranks 8.
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Sixteenth in a series of annual reports comparing business regulation in 190 economies, Doing Business 2019 covers 11 areas of business regulation.
... See More + Ten of these areas - starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency - are included in the ease of doing business score and ease of doing business ranking. Doing Business also measures features of labor market regulation, which is not included in these two measures. Doing Business provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. This economy profile presents indicators for San Marino; for 2019 San Marino ranks 88.
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In December 2015, at the Conference of the Parties 21 (COP 21) in Paris, France, 196 countries came together to forge a climate change agreement that pledged to keep global warming to 2 degrees Celsius or less.
... See More + To bring the world to this 2-degree track, the international energy agency estimates that the cumulative investments needed in energy supply and efficiency reach United States (U.S.) 53 trillion dollars. Based on the International Finance Corporation (IFC) analysis of U.S. 23 trillion dollars in climate-smart investment opportunities in emerging markets between 2016 and 2030, this paper analyzes the role of the banking sector and debt capital markets to provide the financing necessary. Banks will need to rely on debt capital markets to help with the necessary maturity transformation to match primarily longer dated assets with long-term liabilities. The paper concludes with several case studies that showcase how lenders leverage debt capital markets to increase their lending capacity to meet the significant financing needs that the climate transition presents.
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The World Bank Monthly Operational Summary (MOS) reports on the status of projects in the WorldBank’s pipeline from the time the operation is identified to the signing of the Loan, Credit, or Grant Agreement.
... See More + It is a detailed accounting of the projects included in the country lending programs that are actively being prepared for implementation. The lending programs reflect the Bank’s strategy for each member country as set out in the Country Partnership Framework (CPF) presented to the Board of Executive Directors of the World Bank. On average, it takes about 13 months for the Bank to process a project from concept to approval. After a financing agreement is signed or a project is dropped from the program, the project entry is deleted from this summary. Each issue of the summary contains a list of projects reported for the first time and the list of projects deleted from the current issue. Familiarity with the Bank’s project cycle, summarized in the following paragraphs, can help potential bidders identify business opportunities with Bank borrowers. Each entry in the MOS indicates at what point the operation is in the project cycle.
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The fact that tens of millions of people are at risk of starving to death is a tragedy. And in the 21st century, the fact that we haven’t ended famine is a collective failure of shameful proportions.
... See More + It’s also a critical economic issue. From a human capital standpoint, famines raise child mortality, increase stunting, and impair cognitive development for children in utero at the time of the famine and of the children who survive. Child mortality increases by roughly 60 percent; the average height for children under five falls by two centimeters; and time in school drops by roughly half a year. Investing in more proactive responses to avert humanitarian crises could save millions of lives, and it can also reduce the costs to the international community by as much as 30 percent. Second, we need sustained collective action, before, during, and after crises. Humanitarian actors play a vital role in responding when famines strike, but they cannot do it alone. The development community must complement the talent, financing, and dedication of humanitarian workers, and indeed help safeguard all of the advances that have been made so that they can continue to push the frontiers of their efforts. Finally, the FAM will work with key partners and build on the ongoing efforts taking place at the country and global levels to help ensure that resources are channeled to the most effective and well-coordinated interventions. Instead of creating parallel structures, we will work with existing systems as much as possible to make the best use of our limited resources, such as building social safety nets.
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There is wide spread concern about a growing gap between top-performing publicly listed firms and the rest of the economy and the implications of this for rising inequality in the U.S.
... See More + Using conventional return calculations, there is indeed a widening gap between star firms (defined as those in top 10 percent of return on invested capital in any year) and the rest of the economy over time, especially in industries that rely on a skilled labor force. However, once measurement error in intangible capital is accounted for, this gap shrinks dramatically and has not been widening over time. While pricing power, as measured by markups, predicts star firm status, a large fraction of star firms have low markups and there is no evidence that star firms are cutting output or investment more than other firms for the same markup. The effect of star status is persistent. Five years later, star firms have higher growth, profits, and Tobin’s Q. A small subset of exceptional firms may pose more pressing policy concerns with much higher returns and the potential to exercise market power in the future.
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Policy Research Working Paper WPS8534 JUL 13, 2018
Most manufacturing activities use inputs from the financial and business services sectors. But these services sectors also compete for resources with manufacturing activities, provoking concerns about de-industrialization -- financial services in industrial countries like the United States and the United Kingdom, and business services in developing countries like India and the Philippines.
... See More + This paper examines the implications of services development for the export performance of manufacturing sectors. It develops a methodology to quantify the indirect role of services in international trade in goods and constructs new measures of revealed comparative advantage based on domestic value added in gross exports. The paper shows that the development of financial and business services enhances the revealed comparative advantage of manufacturing sectors that use these services intensively but not that of other manufacturing sectors. It also finds that a country can partially overcome the handicap of an underdeveloped domestic services sector by relying more on imported services inputs. Thus, lower services trade barriers in developing countries can help to promote their manufacturing exports.
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Policy Research Working Paper WPS8450 MAY 22, 2018
The free flow of data across borders underpins today's globalized economy. But the flow of personal data outside the jurisdiction of national regulators also raises concerns about the protection of privacy.
... See More + Addressing these legitimate concerns without undermining international integration is a challenge. This paper describes and assesses three types of responses to this challenge: unilateral development of national or regional regulation, such as the European Union's Data Protection Directive and forthcoming General Data Protection Regulation; international negotiation of trade disciplines, most recently in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP); and international cooperation involving regulators, most significantly in the EU-U.S. Privacy Shield Agreement. The paper argues that unilateral restrictions on data flows are costly and can hurt exports, especially of data-processing and other data-based services; international trade rules that limit only the importers' freedom to regulate cannot address the challenge posed by privacy; and regulatory cooperation that aims at harmonization and mutual recognition is not likely to succeed, given the desirable divergence in national privacy regulation. The way forward is to design trade rules (as the CPTPP seeks to do) that reflect the bargain central to successful international cooperation (as in the EU-US Privacy Shield): regulators in data destination countries would assume legal obligations to protect the privacy of foreign citizens in return for obligations on data source countries not to restrict the flow of data. Existing multilateral rules can help ensure that any such arrangements do not discriminate against and are open to participation by other countries.
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Policy Research Working Paper WPS8431 MAY 07, 2018
The 2015 Paris Climate Agreement was the first instance of countries adhering to take a collective action against global warming. More than 190 countries came forward and submitted their contributions in the form of Intended Nationally Determined Contributions, reflective of their ability and capacity to reduce greenhouse gas emissions, as each country set its own targets and actions.
... See More + For some countries, it meant a significant decline in their emissions by 2030, while others, like China, the United States, and India, decided on a more gradual phasing out extending beyond 2030. This paper estimates the economic impacts of implementation of the Paris Climate Agreement in terms of its implications for welfare, gross domestic product, investments, and trade for major countries and regions. It uses a computable general equilibrium framework to model global, regional, and country impacts. The analysis suggests that the economic impacts will be mostly felt in the European Union if the Paris Agreement is fully implemented. The European Union is likely to suffer a welfare loss of 1.0 to 1.5 percent by 2030. Among non-European countries, Australia, New Zealand, and Mexico will also be affected, with an expected welfare loss of about 1.5 percent. Some of the major emitters, such as China and India, will experience minimal impacts to their welfare, and the United States will experience a welfare loss of only about 0.7 by 2030. The sectoral analysis of production and trade suggests a significant loss to fossil fuel–based sectors, while clean energy sectors can experience significant gains.
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Policy Research Working Paper WPS8392 APR 02, 2018
Corporations often have strong incentives to exert influence on the tax code and obtain additional tax benefits through lobbying. For the U.S.
... See More + financial crisis of 2007-09, this paper shows that lobbying activity intensified, driven by large firms in sectors that depend more on external finance. Using a heterogeneous agent model with financial frictions and endogenous lobbying, the paper studies the aggregate consequences of this rise in lobbying activity. When calibrated to U.S. micro data, the model generates an increase in lobbying that matches the magnitude and the cross-sector and within-sector variation observed in the data. The analysis finds that lobbying for capital tax benefits, together with financial frictions, accounts for 80 percent of the decline in output and almost all the drop in total factor productivity observed during the crisis for the non-financial corporate sector. Relative to an economy without lobbying, this mechanism increases the dispersion in the marginal product of capital and amplifies the credit shock, leading to a one-third larger decline in output. The paper also studies the long run effects of lobbying. Restricting lobbying implies welfare gains of 0.3 percent after considering the transitional dynamics to the new steady state.
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Policy Research Working Paper WPS8394 APR 02, 2018
This paper examines the impact of U.S. market access on local labor markets in a developing country, Vietnam. The study finds that following the implementation of the Vietnam–United States bilateral trade agreement in December 2001, manufacturing employment increased in provinces that were more exposed to U.S. tariff cuts.
... See More + In those provinces, employment also increased in many service sectors, reflecting strong spillovers of job gains. The new job opportunities have attracted labor from agriculture, thus reducing agricultural employment. The paper examines three possible channels of job gain spillovers, namely, demand, production, and real estate. Although there is evidence for all three channels, the demand channel is the most important.
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Policy Research Working Paper WPS8366 MAR 13, 2018
This report discusses the speech by the World Bank Group President Jim Yong Kim at the Fagility Forum 2018 Washington, D.C., United States in March 05, 2018.
... See More + He discusses the World Bank Group (WBG) is strengthening support to address fragility, conflict and violence (FCV), to achieve its goals to end extreme poverty and promote shared prosperity. He focuses on economic growth, jobs, and investments in people to prevent instability and conflict before they begin. He mentioned to remember that these are not just problems for low-income countries. He joined with the UN, the Islamic Development Bank, and others, we’re responding to Jordan’s needs with the Global Concessional Financing Facility – a fund that provides financing at the levels typically reserved for low-income countries to help create jobs and provide education, healthcare, and infrastructure for both Syrian refugees and their Jordanian hosts. He eagerly to hear your ideas about innovative ways we can work together to address drivers of fragility, prevent conflict, reduce violence, and help countries build resilience.
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This paper presents and discusses the arguments offered by several sovereigns that have joined a trend starting in 2013 whereby sovereign and corporate issuers, especially in Latin America, have gradually replaced a portion of the funding raised in U.S. dollars with euros.
... See More + The trend seems to respond to the divergent monetary policies followed by the U.S. Federal Reserve Board and the European Central Bank. The selected country cases state strategic and tactical arguments for increasing their issuance in euros. The strategic reasons relate to internal currency benchmarks and their rationale. In some cases, such substitution is supported by the argument that further diversification in the investor base was needed. This argument was reinforced by the relatively tight conditions in the U.S. dollar market. Tactical arguments refer to the need to open the market to the private sector and raise funding in euros, or the need to access new investors as a preliminary step to attract them to the domestic market. Several countries also admit that the optical effect of lower coupons was a relevant consideration. This paper highlights that it is important that sovereigns avoid making decisions by comparing nominal coupons in both currencies. More important, a formal debt management strategy, including a target for the currency composition, should guide debt managers. Without a strategy, the debt manager cannot tell how the issuance in a particular currency affects the exposure of the debt portfolio to foreign currency risk and helps or not in achieving the debt management objectives.
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Policy Research Working Paper WPS8324 JAN 30, 2018
This paper finds that capital and labor incomes in the United States have become more closely associated since the 1980s. This contributed to the well-known increase in the top 1 percent's share of total income, exacerbating rising inequality in capital incomes and earnings.
... See More + The paper shows that the trend in the association is U-shaped, as the recent increase contrasts with a tendency toward a weakening association until the 1980s. The paper uses data derived from tax records, studies the asymmetries in the association, tests for robustness to alternative income definitions, and discusses the potential role of declining top marginal tax rates.
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Policy Research Working Paper WPS8268 DEC 11, 2017
