Peterson Institute for International Economics

While downstreaming—advancing from mining ore to processing & refining it—is a worthy goal, without large domestic renewable energy resources & capacity, downstreamed industries in developing & middle-income countries can incur prohibitive economic costs & massively increase these countries' carbon footprints. They can also render their industries noncompetitive during times of high energy prices.

Policies to address climate change are an increasing target of populist, right-wing, & anti-science opposition; mainstream parties must improve their communication to win support for decarbonization & address the costs of the green transition. Governments should free up trade in green technologies to provide citizens access to the cheapest possible products while channeling assistance to communities hard hit by the transition. Meanwhile, massive R&D is necessary to encourage innovation & avoid internal divisions in countries, especially the widening rural-urban divide.

PIIE president Adam S. Posen joined Bloomberg Surveillance to discuss how deporting migrants would be stagflationary for the US economy. The greater the restrictions & deportations, the more the recessionary effects outweigh the inflationary effects for the Federal Reserve, he says.

Ahead of its Third Plenary, what China urgently needs but seems unlikely to get is a high-level commitment to market liberalization. Over the past decade, the state sector has expanded, and power has been consolidated at the center. National security has been elevated to a priority equal to, if not more important than, economic development.

Scrapping the federal income tax & replacing it with revenues from sky-high tariffs on imports would cost jobs, ignite inflation, increase federal deficits, cause a recession, shift the tax burden away from the well off & substantially increase the tax burden on the poor & middle class, antagonize US allies & partners, provoke worldwide trade wars, damage global economic welfare, and undermine national security. It would also likely destabilize the global financial system. Whew.

NEW: As the 2024 US presidential election approaches & immigration remains a top priority for over half of Americans, we track here major US immigration policy changes between 2016 and June 2024 & compare the actions of former President Donald J. Trump & President Joseph R. Biden Jr. or their administrations. 

Center-right and far-right parties achieved victories in the European parliamentary elections, but the overall balance of power remains with centrist forces, allowing Parliament to maintain its goals of upholding carbon pricing policies, processing asylum seekers, and supporting Ukraine. https://lnkd.in/gKU4q8G9

The combination of a strong current account balance, large interest rate differentials, & a healthy central bank balance suggests the strong Mexican peso is the consequence of the structural strength of remittances & a very tight monetary policy. https://lnkd.in/gGM-RHxE

Despite the differences & complexities of the three countries, cooperation in the form of a China-Japan-Korea Trilateral free trade agreement could be a meaningful initiative to restore trust and rebuild institutions for sustained regional stability.

The CHIPS and Science Act of 2022 has provided subsidies and other support totaling nearly $80 billion to restore US competitiveness in semiconductors, challenging South Korea and other allies to match or outdo this funding to defend their positions in the global chip value chain. South Korean firms investing in the US are major beneficiaries of CHIPS Act funds, prompting Korea to respond with its own K-Chips Act, channeling assistance that includes infrastructure for chipmaking facilities; President Yoon Suk Yeol likens the semiconductor competition to “an industrial war.” The risk for investors from this subsidy bidding war is that it will invite an overproduction of chips in a notoriously volatile marketplace; to head that off, the US, Korea, Japan, and the EU should cooperate to avoid a glut of chips and costly, unnecessary subsidies.