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11577 results in Macroeconomics

Page 357 of 579

  • 2 - Learning and Policy Ambiguity

  • Robert L. Hetzel
  • Book:
    The Monetary Policy of the Federal Reserve
    Published online:
    26 May 2010
    Print publication:
    17 March 2008, pp 6-10

  • Summary

    The Fed does not possess a systematic procedure for acquiring knowledge about the working of monetary policy and for communicating such knowledge to the public. In this chapter, I argue that to learn and communicate in a systematic manner the Fed must use the language of economics to engage in a dialogue with the academic community over the interpretation of monetary history.

    Disagreement over the Nature of Monetary Policy

    Disagreement arises over whether the Fed must choose between stabilizing unemployment and stabilizing prices. In the 1960s, the question was whether achievement of low unemployment required acceptance of inflation (Samuelson and Solow 1960). In the 1980s, when the Fed's primary objective changed from low, stable unemployment to low, stable inflation, the question became whether stability in prices required variability in unemployment (Modigliani and Papademos 1975). For those who answered affirmatively, the empirical correlations of the Phillips curve promised a quantitative answer.

    The fundamental disagreement comes from differing views over the nature of price-level determination. Is there a hard-wired (intrinsic) persistence to actual and expected inflation that exists independently of monetary policy? Alternatively, does the behavior of actual and expected inflation derive from the systematic part of monetary policy – the rational expectations assumption? The attempt here is to provide relevant evidence by using different monetary policies over the twentieth century as experiments yielding outcomes useful for testing hypotheses.

  • 26 - A Century of Monetary Experiments

  • Robert L. Hetzel
  • Book:
    The Monetary Policy of the Federal Reserve
    Published online:
    26 May 2010
    Print publication:
    17 March 2008, pp 311-318

  • Summary

    Deflation or inflation prevailed during most of the 65 years following the establishment of the Fed. Instability in the real economy accompanied monetary instability. In contrast, starting after the Volcker disinflation, low, stable inflation accompanied considerable real stability. An understanding of these outcomes requires a combination of knowledge about the way that monetary policy evolved and of theory. The evolution of monetary policy reflects an increased assumption over time by the Fed of a responsibility for actual and expected inflation. The theory assumes that actual and expected inflation are monetary phenomena shaped by the systematic part of central bank procedures. Also, in the absence of central bank behavior that makes the price level evolve unpredictably, the price system works well to maintain macroeconomic equilibrium.

    Three lessons emerge: (1) Inflation is a monetary phenomenon whose behavior is determined by the central bank. (2) Central bank credibility evidenced by stability in expected inflation is central to inflation stability. (3) The central bank must allow the price system to work. These lessons provide the foundation for understanding monetary policy in the V–G era as rule-like behavior that disciplined the lean-against-the-wind character of funds rate changes to ensure that macroeconomic shocks left actual and expected trend inflation unchanged.

    A Nominal Anchor Lost and Regained

    For the founders of the Fed, who took the gold standard for granted without understanding it, the marketplace determined the price level.

  • 9 - Bretton Woods

  • Robert L. Hetzel
  • Book:
    The Monetary Policy of the Federal Reserve
    Published online:
    26 May 2010
    Print publication:
    17 March 2008, pp 100-107

  • Summary

    In July 1944, the West, under the leadership of the United States and Great Britain, agreed on a postwar international monetary order at Bretton Woods, New Hampshire. The IMF Articles of Agreement required member countries to fix their exchange rates by setting a par value of their currency in terms of the gold content of the dollar. Countries received quotas on which they could draw to offset temporary payments imbalances. The United States committed to pegging the dollar price of gold at $35 an ounce. Success of the new system required U.S. monetary policy to provide the nominal anchor. The United States failed to do so.

    For the system to have functioned as a gold standard with gold as the nominal anchor, the United States would have had to allow its price level to vary to give the world's central banks the real amount of gold they desired to hold. Declines in the U.S. price level would have raised the purchasing power of gold and stimulated its production. A simulated gold standard would also have required that the U.S. price level adjust relative to foreign price levels to validate the equilibrium real exchange rate (given that the nominal exchange rate could not change). For the U.S. price level to have behaved in this way, the Fed would have had to allow the monetary base to decline in response to gold outflows. Only briefly in 1959 did it follow this classical gold standard rule.

  • 8 - Arthur Burns and Richard Nixon

  • Robert L. Hetzel
  • Book:
    The Monetary Policy of the Federal Reserve
    Published online:
    26 May 2010
    Print publication:
    17 March 2008, pp 77-99

  • Summary

    In 1969, newly elected President Nixon promised to lower inflation with only a small rise in unemployment. His CEA head, Paul McCracken, promised a return to price stability by maintaining unemployment modestly above 4%. After all, unemployment rates in excess of 4.5% had always been associated with inflation of less than 2%. Surely the economy could move down the Phillips curve just as it had moved up in the 1960s (Stein 1994, 150). The Phillips curve shown in the 1969 Economic Report displayed a clear inverse relationship between inflation and unemployment (Figure 8.1). Had not Samuelson and Solow (1960, 1344) said that the Phillips curve was a “reversible behavior equation”? Nevertheless, even though in 1970 the unemployment rate rose to 5% on its way to 6%, the inflation rate remained near 6%. Samuelson and Solow (1960, 1350) had written: “[I]f mild demand repression checked cost and price increases not at all or only mildly, so that considerable unemployment would have to be engineered before the price level updrift could be prevented, then the cost-push hypothesis would have received its most important confirmation.”

    The experiment in “mild repression” begun in 1969 appeared to demonstrate the existence of cost-push inflation. The comments of Samuelson and Solow (1960, 1352) had appeared prescient where they had talked about the high social costs (“class warfare and social conflict”) of controlling cost-push inflation through the creation of unemployment.

  • 17 - Monetary Policy Becomes Expansionary

  • Robert L. Hetzel
  • Book:
    The Monetary Policy of the Federal Reserve
    Published online:
    26 May 2010
    Print publication:
    17 March 2008, pp 218-226

  • Summary

    Credibility allowed the FOMC to run an expansionary monetary policy in response to the international economic crises that started in summer 1997. Expansionary policy appeared initially as strong real growth not inflation.

    The Fed's Response to Asia

    In 1997, the FOMC debated how to reconcile strength in the economy and a falling unemployment rate with low inflation. At his July 1997 Humphrey–Hawkins testimony, Greenspan talked of a “new paradigm” where technological growth would keep capacity in line with increased demand. However, he added that growth in employment could not indefinitely exceed growth of the labor force. By fall, the unemployment rate had fallen to 4.8%. In October 1997, a hawkish Greenspan (December 1997, 965) warned Congress: “The law of supply and demand has not been repealed. … Short of a marked slowing in the demand for goods and services … the imbalance between the growth in labor demand and expansion of potential labor supply … must eventually erode the current state of inflation quiescence.”

    Markets assumed that the FOMC was ready to raise the funds rate. Subsequently, the Asia crisis emerged. Although a rate hike had appeared likely at the November FOMC meeting, stock market volatility intervened. Concern over weakness in Asian equity markets produced a fall of 554 points in the DJIA on October 27, 1997. Added to the declines of the two prior days, the index fell 10.9%. Asia then came to dominate policy.

Dispute Settlement Reports 2006
  • Volume 5, Pages 1755–2244
  • World Trade Organization
  • Published online:
    13 December 2017
    Print publication:
    21 February 2008
  • The Dispute Settlement Reports of the World Trade Organization (WTO) include Panel and Appellate Body reports, as well as arbitration awards, in disputes concerning the rights and obligations of WTO members under the provisions of the Marrakesh Agreement Establishing the World Trade Organization. These are the WTO authorized and paginated reports in English. An essential addition to the library of all practising and academic trade lawyers, and needed by students worldwide taking courses in international economic or trade law. Volumes IV to VI report on European Communities – Measures Affecting the Approval and Marketing of Biotech Products.

  • United States - Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”) (WT/DS294): Report of the Appellate Body

  • World Trade Organization
  • Book:
    Dispute Settlement Reports 2006
    Published online:
    13 December 2017
    Print publication:
    21 February 2008, pp 417-520

  • Summary

    INTRODUCTION

    The European Communities and the United States each appeals certain issues of law and legal interpretations developed in the Panel Report, United States - Laws, Regulations and Methodology for Calculating Dumping Margins (“Zeroing”) (the “Panel Report”). The Panel was established to consider a complaint by the European Communities concerning the application by the United States of the so-called “zeroing methodology” when determining dumping margins in anti-dumping proceedings, including proceedings resulting in the imposition of anti-dumping measures as well as proceedings relating to the collection of anti-dumping duties.

    Before the Panel, the European Communities challenged, under the Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (the “Anti-Dumping Agreement”), the General Agreement on Tariffs and Trade 1994 (the “GATT 1994”), and the Marrakesh Agreement Establishing the World Trade Organization (the “WTO Agreement”):

  • (a) Sections 731, 751(a)(2)(A)(i)-(ii), 771(35)(A)-(B), and 777A(d) of the Tariff Act of 1930 (the “Tariff Act”); Section 351.414(c)(2) of the United States Department of Commerce (“USDOC”) Regulations (“Section 351.414(c)(2)”); certain provisions of the 1997 edition of the Import Administration Antidumping Manual (the “Anti-Dumping Manual”); the “Standard AD Margin Program”, which includes the “Standard Zeroing Procedures”; and the United States’ “practice or methodology” of zeroing;

  • (b) the use of “model zeroing” in certain “original investigations”; and

  • (c) the use of “simple zeroing” in certain “anti-dumping duty administrative reviews”.

    • In the Panel Report, circulated to Members of the World Trade Organization (the “WTO”) on 31 October 2005, the Panel made the following findings:

  • (a) The United States acted inconsistently with Article 2.4.2 of the [Anti-Dumping] Agreement when in the anti-dumping investigations listed in Exhibits EC-1 to EC-15 USDOC did not include in the numerator used to calculate weighted average dumping margins any amounts by which average export prices in individual averaging groups exceeded the average normal value for such groups.

  • (b) Sections 771(35)(A) and (B), 731 and 777(A)(d) of the Tariff Act are not as such inconsistent with Articles 2.4, 2.4.2, 5.8, 9.3, 1 and 18.4 of the [Anti-Dumping] Agreement, Articles VI:1 and VI:2 of the GATT 1994 and Article XVI:4 of the WTO Agreement with respect to the use of a zeroing methodology in the calculation of margins of dumping in original investigations.

Dispute Settlement Reports 2006
  • Volume 2, Pages 415–844
  • World Trade Organization
  • Published online:
    13 December 2017
    Print publication:
    21 February 2008
  • The Dispute Settlement Reports of the World Trade Organization (WTO) include Panel and Appellate Body reports, as well as arbitration awards, in disputes concerning the rights and obligations of WTO members under the provisions of the Marrakesh Agreement Establishing the World Trade Organization. These are the WTO authorized and paginated reports in English. An essential addition to the library of all practising and academic trade lawyers, and needed by students worldwide taking courses in international economic or trade law. Among others, DSR 2006:II reports on United States – Laws, Regulations and Methodology for Calculating Dumping Margins ('Zeroing').

  • Mexico – Tax Measures on Soft Drinks and Other Beverages (WT/DS308): Report of the Panel

  • World Trade Organization
  • Book:
    Dispute Settlement Reports 2006
    Published online:
    13 December 2017
    Print publication:
    21 February 2008, pp 43-398

  • Summary

    INTRODUCTION

    In a communication, dated 16 March 2004, the United States requested consultations with Mexico pursuant to Articles 1 and 4 of the DSU and Article XXII:1 of the GATT 1994, regarding tax measures imposed by Mexico on soft drinks and other beverages that use any sweetener other than cane sugar.

    The United States stated that it believed that these taxes were inconsistent with Mexico's national treatment obligations under Article III of the GATT 1994. In particular, they appeared to be inconsistent with Article III:2 of the GATT 1994, first and second sentences, and Article III:4 of the GATT 1994.

    The consultations took place on 13 May 2004. Pursuant to its request, Canada was joined in those consultations. However the parties failed to reach a mutually satisfactory resolution to this dispute.

    On 10 June 2004, the United States requested the establishment of a panel pursuant to Article 6 of the DSU. The DSB considered this request at its meetings of 22 June and 6 July 2004, and established the Panel on 6 July with standard terms of reference as follows:

    “To examine, in the light of the relevant provisions of the covered agreements cited by the United States in document WT/DS308/4, the matter referred to the DSB by the United States in that document, and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements.”

    On 18 August 2004, the parties agreed to the following composition of the Panel:

    Chairman: Mr Ronald Saborío Soto

    Members: Mr Edmond McGovern

    Mr David Walker

    Canada, China, the European Communities, Guatemala and Japan reserved their rights to participate in the panel proceedings as third parties.

    The Panel met with the parties on 2 and 3 December 2004 and 23 and 24 February 2005. It met with the third parties on 3 December 2004.

    The Panel submitted its interim report to the parties on 27 June 2005. The final report was issued to the parties on 8 August 2005.

    FACTUAL ASPECTS

    The measures

    This dispute concerns certain tax measures imposed by Mexico on soft drinks and other beverages that use any sweetener other than cane sugar.

  • European Communities – Measures Affecting the Approval and Marketing of Biotech Products (WT/DS291, WT/DS292, WT/DS293): Report of the Panel

  • from ANNEXES A TO F
  • World Trade Organization
  • Book:
    Dispute Settlement Reports 2006
    Published online:
    13 December 2017
    Print publication:
    21 February 2008, pp 2245-2766

  • Summary

    TABLES SUMMARIZING THE HISTORY OF THEINDIVIDUAL APPROVAL PROCEDURES AT ISSUE IN THIS DISPUTE

    The Panel has prepared a series of tables summarizing relevant aspects of the history of the individual approval procedures at issue in this dispute The tables were prepared on the basis of information provided by the Parties, and in particular the detailed chronologies of individual approval procedures submitted by the European Communities

    Since the Panel's findings tend to focus on specific stages of individual approval procedures, it seemed useful to provide some background information on developments and activities at other procedural stages Consistent with their limited purpose, the Panel's tables do not reflect any and all activities of member State authorities, EC authorities or applicants of which the Panel has been made aware. It should also be noted that the information provided in the tables is more detailed for those stages and activities which the Panel has focused on for the purposes of its analysis, and less detailed for other stages and activities.

    In preparing the tables, the Panel has found it useful to distinguish the following procedural stages, which also reflect the main stages of the approval procedures set out in the relevant EC approval legislation for biotech products (Directives 90/220 and 2001/18 as well as Regulation 258/97):

    (a) Consideration of application at member State level (“Member State Level”)

  • (i) Initial assessment of application by lead CA. (“Lead Member State Level”).

    • (b) Consideration of application at Community level (“Community Level”)

  • (i) Circulation of lead CA assessment to other member States (“Other Member States”).

  • (ii) Consultation of EC scientific committee (“Scientific Committee Process”).

  • (iii) Preparation of draft measure to be submitted to the Regulatory Committee (“Commission”).

  • (iv) Consideration by the Regulatory Committee of the draft measure submitted by the Commission (“Regulatory Committee Process”).

  • (v) Preparation of draft measure to be submitted to the Council (“Commission”).

  • Mexico – Tax Measures on Soft Drinks and Other Beverages (WT/DS308): Report of the Appellate Body

  • World Trade Organization
  • Book:
    Dispute Settlement Reports 2006
    Published online:
    13 December 2017
    Print publication:
    21 February 2008, pp 3-42

  • Summary

    INTRODUCTION

    Mexico appeals certain issues of law and legal interpretations developed in the Panel Report, Mexico – Tax Measures on Soft Drinks and Other Beverages (the “Panel Report”). The Panel was established to consider a complaint by the United States concerning certain tax measures and bookkeeping requirements imposed by Mexico on soft drinks and other beverages that use sweeteners other than cane sugar.

    The measures challenged by the United States include: (i) a 20 per cent tax on the transfer or, as applicable, the importation of soft drinks and other beverages that use any sweetener other than cane sugar (the “soft drink tax”); (ii) a 20 per cent tax on specific services (commission, mediation, agency, representation, brokerage, consignment, and distribution), when such services are provided for the purpose of transferring products such as soft drinks and other beverages that use any sweetener other than cane sugar (the “distribution tax”); and (iii) a number of requirements imposed on taxpayers subject to the soft drink tax and to the distribution tax (the “bookkeeping requirements”). Before the Panel, the United States claimed that these measures are inconsistent with paragraphs 2 and 4 of Article III of the General Agreement on Tariffs and Trade 1994 (the “GATT 1994”).

    In its first written submission to the Panel, Mexico requested that the Panel decide, as a preliminary matter, to “decline to exercise its jurisdiction in this case” and that it “recommend to the parties that they submit their respective grievances to an Arbitral Panel, under Chapter Twenty of the NAFTA[], which can address both Mexico's concern with respect to market access for Mexican cane sugar in the United States under the NAFTA and the United States' concern with respect to Mexico's tax measures.” Mexico also stated that, in the event the Panel decided to exercise jurisdiction, the Panel should find that the measures are justified pursuant to Article XX(d) of the GATT 1994.

    On 18 January 2005, the Panel issued a preliminary ruling in which it rejected Mexico's request. In doing so, the Panel concluded that, “under the DSU[], it had no discretion to decide whether or not to exercise its jurisdiction in a case properly before it.”

Dispute Settlement Reports 2006
  • Volume 6, Pages 2243–2766
  • World Trade Organization
  • Published online:
    13 December 2017
    Print publication:
    21 February 2008
  • The Dispute Settlement Reports of the World Trade Organization (WTO) include Panel and Appellate Body reports, as well as arbitration awards, in disputes concerning the rights and obligations of WTO members under the provisions of the Marrakesh Agreement Establishing the World Trade Organization. These are the WTO authorized and paginated reports in English. An essential addition to the library of all practising and academic trade lawyers, and needed by students worldwide taking courses in international economic or trade law. Volumes IV to VI report on European Communities – Measures Affecting the Approval and Marketing of Biotech Products.

Dispute Settlement Reports 2006
  • Volume 3, Pages 845–1248
  • World Trade Organization
  • Published online:
    13 December 2017
    Print publication:
    21 February 2008
  • The Dispute Settlement Reports of the World Trade Organization (WTO) include Panel and Appellate Body reports, as well as arbitration awards, in disputes concerning the rights and obligations of WTO members under the provisions of the Marrakesh Agreement Establishing the World Trade Organization. These are the WTO authorized and paginated reports in English. An essential addition to the library of all practising and academic trade lawyers, and needed by students worldwide taking courses in international economic or trade law. Among others, DSR 2006:III reports on European Communities – Measures Affecting the Approval and Marketing of Biotech Products.

  • European Communities – Measures Affecting the Approval and Marketing of Biotech Products (WT/DS291, WT/DS292, WT/DS293): Report of the Panel

  • World Trade Organization
  • Book:
    Dispute Settlement Reports 2006
    Published online:
    13 December 2017
    Print publication:
    21 February 2008, pp 1757-2242

  • Summary

    Product-Specific Measures

    Measures at issue

    In addition to the general de facto moratorium on approvals, the Complaining Parties are also challenging a number of product-specific measures. The Panel begins its analysis by setting out the Complaining Parties’ general descriptions of the measures at issue and the European Communities’ comments in response.

    General

    The United States notes that it is challenging the failure by the Commission and the member States to consider for approval certain applications specified in its request for the establishment of a panel. The United States refers to these product-specific measures as “product-specific moratoria”. According to the United States, these product-specific moratoria are separate measures from the general moratorium affecting all applications. The United States also notes, however, that they are similar measures in that both refer to the European Communities’ failure to consider applications for approval. Also, since the general moratorium applied to all applications, a necessary corollary is that the European Communities also adopted product-specific moratoria on each of the relevant applications specified in the United States’ panel request. Accordingly, the evidence and arguments the United States adduced in support of the existence of a general moratorium also establish the existence of the product-specific moratoria, and that the European Communities did not undertake and complete its approval procedures for each individual application without undue delay.

    Canada states that it is challenging the failure by the European Communities to consider or approve, without undue delay, certain applications specified in its request for the establishment of a panel. Canada refers to the failure by the European Communities in this regard as the product-specific marketing bans. Canada contends that the general moratorium and the product-specific marketing bans are closely related, though distinct, measures. The product-specific marketing bans are a direct consequence of the moratorium as applied to individual applications. They are the manifestation of the moratorium in the context of the approval procedures of the four specific products of concern to Canada. Canada's arguments in relation to product-specific marketing bans are intended to focus on the direct and detrimental impact of the moratorium on specific applications.

Page 357 of 579