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Focus Winter 2010/11

We present and discuss current research and economic policy related topics in International Economics. This quarter about:

UN climate change conference in Cancún

Environmentalists have long feared that globalisation will harm the environment by allowing heavily polluting industries to migrate to countries with lax environmental standards. This column presents new evidence from several industries across many countries for all the major pollutants. It suggests that lax policy has only had a small effect on the pollution content of trade.

Der Spiegel online describes in its special the results of the climate conference of Cancún, which has ended last weekend. The United Nations call it a "historical agreement".

undefinedDer Spiegel online (German)

The loss of wood is the second most important origin of CO2 - how can poorer countries be convinced to protect their forests?. In Cancún Politicians seek for financial incentives. An agreement for protection could be made but some critical issues are still to be solved.

undefinedDer Spiegel (German)

The climate conference in Cancún reaches a critical stage. Until Friday the ministers for the environment from around the world negotiate a new climate treaty. Some differences have still to be reconciled. A mega-gathering with uncertain outcome.

undefinedDer Spiegel (German)

The UN climate change process "risks losing momentum and relevance" if the new round of negotiations that opened in Cancún yesterday (29 November) fails to make progress towards a new climate treaty, the EU's climate action commissioner has warned. 


The top U.S. climate-change negotiator said Friday after a "constructive" meeting with his Chinese counterpart that "there's a deal to be had" at the November global-warming summit in Mexico. Developing economies such as China and India say rich countries such as the U.S. should bear the heavier burden because they have a historical responsibility for carbon already in the atmosphere. But the U.S. and other nations argue that emerging countries such as China, which in 2007 surpassed the U.S. as the world's biggest emitter, need to do more.


China, the world’s biggest energy consuming nation, may have a carbon trading system in place as soon as 2013, said Richard Sandor, one of the pioneers of the carbon credit market.

"...Carbon is now the largest traded commodity in Europe, Sandor said. The system works and emissions are declining."


Incoming "currency war"?

What institutions should be responsible for financial stability? Do governments need distinct regulators for distinct objectives or should central banks pursue both price stability and financial stability? This column argues that monetary policy inevitably will involve considerations of financial stability due to its effects on banks' risk taking and says that central banks should embrace this dual role.

Today’s currency tensions are the result of a complex set of forces arising from the Great Recession. This column presents lessons from the break-up of the gold standard and of the fixed-rate dollar standard. While competitive devaluations are less likely today than is commonly feared, there is no room for complacency.

At the beginning of this week Beijing hosted the 3rd EU-China High Level Economic and Trade Dialogue. China has let it be known that it will be prepared to help out by buying bonds from stricken Greece and Portugal but part of the price will be enduring lectures from the new paymasters.


Muddling through isn’t working. This column argues that troubled Eurozone nations should simultaneously open restructuring talks while continuing to service their debts normally. Germany, France, and other core Eurozone nations would have to stand ready to recapitalise the banks most exposed to the restructured debt. The ECB would then stabilise the banking system and the EFSF would stabilise sovereign debt. This big bang could be prepared in a weekend; the market already seems to be pricing it in.

Irish interest spreads did not fall and contagion continues. Here one of the world’s leading international economists explains why. Short-sighted, wishful thinking by EU and German leadership designed a package that is not economically feasible in the long run (it would trigger a vicious debt deflation spiral) and it is not politically sustainable in the short run. The Eurozone had better have a Plan B for when the new Irish government rejects the package next year and imposes a haircut on Irish bank bondholders.

Politicians, public servants, and commentators have been queuing up in recent months to raise their concerns about global imbalances, particularly the China-US imbalance. This column argues that while the two economies may present opposing public stances, they are quietly playing a tango that neither can step out of.

Die Entscheidung über eine Aufstockung der Europäischen Finanzstabilitätsfazilität (EFSF) liege bei den Europäern, sagte ein US-Regierungsvertreter, der namentlich nicht genannt werden wollte. "Wir würden es sicherlich unter Einbeziehung des IWF unterstützen."

undefinedFinancialTimesDeutschland (German)

In this op-ed, Jean Pisani-Ferry captures a current hot topic of the financial world - “currency wars”. "...not all countries can have weak currencies at the same time."

undefinedBruegel (German)

Simon Johnson, former IMF-chief economist, is looking for culprits in the "currency war" issue. In the German Financial Times he finds the usual suspects. Nevertheless the main problems are in a different area.

undefinedFinancial Times Deutschland (german)

Robert Zoellick argues for a new (old) Bretton-Woods-like gold standard. The G20 -meets on Thursday in Seoul- has to coordinate their economic- and monetary policy says Zoellick in the Financial Times.

undefinedFinancial Times Deutschland (german)

The threat of a currency war between the US and China is one of the main concerns for the G20 ahead of this month’s meeting in Seoul. This column say that while policymakers appear to grasp some of the issues, they underestimate the impact of quantitative easing by large economies on exchange rates worldwide.

Josef Ackermann, director of Deutsche Bank rejects the plan of a new gold standard, does not share the critics about the fed´s policy and understands Chinas exchange rate actions.

undefinedFinancial Times Deutschland (German)

One of Chinas leading currency officials said that China has to reduce the dependence of foreign currencies, especially the dollar.

undefinedWirtschaftsblatt (German)

The G20-summit in the Republic of Korea is over. The declaration is now available.