Intl102.10

Front 1

political trilemma of the world

Back 1

The trilemma suggested by Rodrik (2007) in which any two of the following preclude the third: 1. deep economic integration; 2. national sovereignty; 3. democratic politics.

Front 2

optimal currency area

Back 2

o Optimal currency area: OCA: when members have sufficiently similar econ and there’s a one size fits all monetary policy.
• Labor mobility is high. US people move from where there aren’t jobs to where there are.
• Membrs part of fiscal union. US unemployment insurance and reduced taxes cushion shocks.
• EU didn’t have these. Too different

Front 3

currency union

Back 3

share same currency, euro, 1999, 2001

Front 4

great recession

Back 4

08. Shook confidence of lending to EU. Periphery country debt mounted, foreign banks doubted they’d be able to repay which forced higher interest rates and then a viscious cycle. Seemed fine until 07 but underlying problems in spain Ireland and Greece. Imbalances of BOP led to housing bubbles in SP?IR and public debt in GR.

Front 5

greek debt

Back 5

o 2010 found out that GR lied about its accounts and the lending full stopped. Stop is the onset of the crisis.
o EU faced choice of GK default or bailout.
o IMF EU agreed to lend 146 billion over three years. Two years later they gave 130 billion.
o Core banks agreed to debt reduction of 53%
o Greece needed to impose more austerity!! Had to increase sales taxes, reduce public salaries pensions and eliminate bonuses.

Front 6

financial oligarchy

Back 6

elite business interests or financial oligarch are lead cause of crisis for emerging markets. had to have abck of gov, financiers were willing to risk lending/investing. urged gov to lower regulations on trade. quiet coup

Front 7

contagion

Back 7

• If debtor can’t borrow they’ll have to roll over then forced to default. If one defaults it could trigger defaults as a contagion. Coul bring down entire EU banking. Creditors can face huge losses if a country defaults.

great recession of 08

Front 8

environ kuznets curve

Back 8

inverted U relation between per capita income and pollution. Increase national income then intl trade should work to protect the environment. With appropriate institutions the pollution can be mitigated.

Front 9

race to bottom

Back 9

countries open to trade and invetment have weaker trade regulations out of fear of loss to competition.

Front 10

kyoto protocol

Back 10

malapportionment happens when geographic constituencies hsare legislative seats that aren’t equal to population. Like the US senate. Creates a rural bias. Rural voters rely more heavily on fossil fuels, then this malapportioned system should have lower gas tax and less commitment to climate change stuff.
• Rural areas have more pollution. Malapportioned political systems will take longer ot ratify Kyoto.
o Leads to rural bias in environmental policy.
o Rurals want less environmental taxes.
• Kyoto: rich countries to cut emission of greenhouse gasses by 5%. Global target, different countries have different goals like GR is 25%.

Front 11

factor price equalization

Back 11

o Therefore unskill wages fall and advance in other countries.
o This is factor price equalization: FPE: if US gets cheap goods from china then the US people who make the same things and get paid more for it will be hurt.

Front 12

trade adjustment assistance

Back 12

• New deal for G. historical EX of 1970, there was a trade adjustment program that tried to compensate for certain industries hurt by G. but not enough. After NAFTA effect of G is nation wide, can’t compensate to specific industries anymore, need more!

SK and EOI?

Front 13

fiscal implications of immigration

Back 13

o Immigration? SS says yes. Increases supply of low skill work in US, immigrants put downward pressure onwages of natives.
o Immigrants take advantage of welfare programs more so than natives. And thus increases net tax burden.
• Large welfare states are anti immigrant because they pay for the welfare. So are unkilled uneducated natives for they lose jobs