How have small open economies responded to the
- Slides: 15
How have small open economies responded to the challenge of globalization? Mark A. Wynne Federal Reserve Bank of Dallas Prepared for "The Challenges of Globalization for Small Open Economies with Independent Currencies“ Reykjavik, Iceland, May 31 - June 1, 2007
Small open economies • Which countries are small & open? • Smallness => price taker in global markets • Applebaum & Kohli (1979) – Canada-US relationship • Relevant price data difficult to obtain • Reliance on quantity measures
Openness to trade Correlation: -0. 35
Openness to capital Correlation: -0. 16
Openness to labor Correlation: -0. 17
United Kingdom population growth Net migration Natural increase
Globalization and fiscal policy • Tytell & Wei: no effect of openness to capital on budget deficits – No a priori reason to expect other dimensions of openness to matter • Other dimensions of fiscal policy – Tax competition
Adjusted top statutory tax rate on corporate income in the EU EU 15 NMS 10 EU 25
A case study: Ireland • Classic example of small open economy – Small: • 0. 2 percent of global GDP – Open: • Imports + Exports = 147% of GDP • Open labor market • Foreign assets + liabilities > 1500% of GDP • Poster child for benefits of globalization: – Per capita GDP: • 1960: $4, 987 (35% of US) • 2005: $29, 990 (80% of US)
The Celtic Tiger GDP per capita US Euro area Portugal Ireland Spain Greece
A case study: Ireland (II) • Monetary policy framework: – Currency board 1922 -1979 – Managed float 1979 -1999 – Monetary union 1999 -date • Fiscal policy – Corporate tax regime
The downside - inflation Ireland HICP Ireland CPI EMU 13 HICP
Sources of population growth in Ireland Net migration Natural increase
Independent floating currencies Total Number of countries with floating regime in 1990 that were still floating as of date shown
Concluding observations • Openness (to trade, capital, labor) seems to be associated with better inflation outcomes • Less evidence of an effect on fiscal policy – Tax competition does seem to be affecting corporate tax policy across the EU
- Open innovation open science open to the world
- A cube has 6 faces 12 edges and 8 vertices
- Sw asian economies comprehension check
- Outsourcing defintion
- Se asia's governments comprehension check
- Section 4 modern economies
- Financial economies of scale
- Financial economies of scale
- Types of economies of scale
- Experience curve benefits
- What is a "forward-falling supply curve"?
- Managing economies of scale in a supply chain
- Economies of scale supply chain
- Economies of scale ap human geography
- Mixed economies in a sentence
- Chapter 2 lesson 2 mixed economies