Who Is In Charge of Financial Stability, Why, and What They Can Do

Who Is In Charge of Financial Stability, Why, and What They Can Do. Brookings Institution. Rochelle M. Edge and Nellie Liang. August 11, 2017

Since the global financial crisis, many countries have set up new authorities to address emerging financial stability risks. In a new paper, Federal Reserve Board Associate Director Rochelle Edge and Miriam K. Carliner Senior Fellow Nellie Liang study these authorities to determine their ability to set macroprudential policies to reduce potential systemic risks that could arise, for example, from rapidly rising house prices or persistently low interest rates.

Using a new dataset for 58 countries, Liang and Edge find that although formal multi-agency financial stability committees (FSCs) have been created in 41 countries, just two have direct powers to set policies and only 11 can issue “comply or explain” directives, in which an agency is expected to respond by taking the directed action or explain why it did not. Regression results suggest the arrangements are designed more to share information than to take actions. As a result, most new financial stability authorities are not well positioned to direct countercyclical macroprudential policies, and provide meaningful alternatives to monetary policy to reduce time-varying financial stability risks. [Note: contains copyrighted material].

[PDF format, 46 pages, 617.19 KB].

“Like a Prison”: Asylum-Seekers Confined to the Greek Islands

“Like a Prison”: Asylum-Seekers Confined to the Greek Islands. Refugees International. Izza Leghtas. August 14, 2017

Greek government policies, taken to implement the March 2016 EU-Turkey agreement, have left thousands of men, women, and children trapped on Greece’s small islands in appalling circumstances. These policies seek to end the arrivals of asylum-seekers and migrants to Greece by sea, but have left thousands suffering in harsh living conditions, deprived of services and medical care, and often experiencing deteriorating mental health. A number of asylum-seekers refer to their lives confined on the Greek islands as living in a “prison.”

This report examines the impact of the EU-Turkey agreement and the practices of Greek authorities in their handling of thousands of asylum-seekers and migrants. The report is based on findings from an RI mission to the islands of Lesvos, Chios, and Samos in July 2017.

Though the EU-Turkey statement does not explicitly require it, Greece has put in place a containment policy on its Aegean islands with the aim of sending people back to Turkey: as a general matter, asylum-seekers and migrants arriving on these islands are not allowed to leave for the mainland. While the law allows for some people, including those identified as vulnerable to be allowed to leave for the mainland, flaws in the system meant to identify such people results in many people falling through the cracks. [Note: contains copyrighted material].

[PDF format, 16 pages, 3.50 MB].

Economic Impact of Infrastructure Investment

Economic Impact of Infrastructure Investment. Congressional Research Service, Library of Congress. Jeffrey M. Stupak. July 18, 2017

Infrastructure investment has received renewed interest as of late, with both President Trump and some Members of Congress discussing the benefits of such spending. Infrastructure can be defined in a number of ways depending on the policy discussion; in general, however, the term refers to longer-lived, capital-intensive systems and facilities, such as roads, bridges, and water treatment facilities.

Over the past several decades, government investment in infrastructure as a percentage of gross domestic product (GDP) has declined. Annual infrastructure investment by federal, state, and local governments peaked in the late 1930s, at about 4.2% of GDP, and since has fallen to about 1.6% of GDP in 2016. State and local governments consistently spend more on infrastructure directly than the federal government. In 2016, direct federal spending on nondefense infrastructure was less than 0.1% of GDP, whereas state and local spending was about 1.5% of GDP. However, the federal government transfers some funds each year to state and local governments for capital projects, which includes infrastructure projects, equaling about 0.4% of GDP in 2016. The United States also lags many other developed countries with respect to annual infrastructure spending. Spending on infrastructure, as a percentage of GDP, is higher in all G7 countries, except for Italy and Germany, than in the United States.

[PDF format, 19 pages, 813.5 KB].

Artificial Intelligence and National Security

Artificial Intelligence and National Security. Center for a New American Security. Greg Allen, Taniel Chan. August 12, 2017.

Partially autonomous and intelligent systems have been used in military technology since at least the Second World War, but advances in machine learning and Artificial Intelligence (AI) represent a turning point in the use of automation in warfare. Though the United States military and intelligence communities are planning for expanded use of AI across their portfolios, many of the most transformative applications of AI have not yet been addressed.
In this piece, the authors propose three goals for developing future policy on AI and national security: preserving U.S. technological leadership, supporting peaceful and commercial use, and mitigating catastrophic risk. By looking at four prior cases of transformative military technology—nuclear, aerospace, cyber, and biotech—they develop lessons learned and recommendations for national security policy toward AI. [Note: contains copyrighted material].

[PDF format, 132 pages, 1.50 MB].

Middle Class: Winners or Losers in a Globalized World?

Middle Class: Winners or Losers in a Globalized World? Center for Global Development. Nancy Birdsall. August 3, 2017.

Globalization is under attack in the West. The debate among pundits is no longer about whether globalization is to blame or not. It is about why globalization is now the bugaboo it has become.

Is the resistance to globalization grounded in economic losses for the once-secure middle class citizens of the Western-style democracies, and the fear of future losses for them and their children? Has anti-globalization grown because the growth of trade has brought economic competition from China, reducing high-wage manufacturing jobs, and more immigrants taking once steady working class “trades” and construction and other service jobs? Or is the anti-globalization movement (Trump’s America First) a by-product of what we call, in the United States, the “culture wars?” Is the rise of protectionism and anti-immigrant, nationalist xenophobia fundamentally about inchoate resentment of a new “cosmopolitan” elite: the corporate “Davos men,” bankers, lawyers, “experts,” even academics, whose globalist attitudes and networks are unmooring Western societies from allegiances to traditional nationalist, ethnic, and religious customs and values? [Note: contains copyrighted material].

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Meaningful Education in Times of Uncertainty: A Collection of Essays from the Center for Universal Education

Meaningful Education in Times of Uncertainty: A Collection of Essays from the Center for Universal Education. Brookings Institution. August 3, 2017

In March 2017 the Brookings Institution convened a meeting of top thought leaders in the fields of learning, innovation, and technology. The hosts asked them: how can we rapidly accelerate progress in education—not only to help marginalized communities catch up to where the privileged are today, but also to reach a more effective, holistic, and equitable education for every child in the world?

This collection of essays represents the outcome of those discussions. It addresses some of the most urgent and important issues of our time. [Note: contains copyrighted material].

[PDF format, 158 pages, 2.84 MB].

As Cities Grow Worldwide, So Do the Numbers of Homeless

As Cities Grow Worldwide, So Do the Numbers of Homeless. YaleGlobal. Joseph Chamie. July 13, 2017

Homelessness is a mark of failure for communities in providing basic security. Based on national reports, about 2 percent of the world’s population may be homeless. Another 20 percent lacks adequate housing, reports demographer Joseph Chamie. Such statistics come with a caveat. Obtaining accurate numbers is difficult, mostly due to wild variations in definitions around the globe. Also, measuring homelessness is costly: Cities may under-count due to embarrassment while individuals avoid officials due to shame and fear of arrest and harassment. Reasons for homelessness include “shortages of affordable housing, privatization of civic services, investment speculation in housing, unplanned and rapid urbanization, as well as poverty, unemployment and family breakdown,” Chamie explains. “Also contributing is a lack of services and facilities for those suffering from mental illness, alcoholism or substance abuse and displacement caused by conflicts, natural disasters and government housing policies.” Even people with jobs can struggle to keep homes. As experts debate whether the issue can be resolved or not, some governments offer support programs while others do what they can to chase the homeless off to other locales. [Note: contains copyrighted material].

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Will Rising Interest Rates Lead to Fiscal Crises?

Will Rising Interest Rates Lead to Fiscal Crises? Peterson Institute for International Economics. Policy Brief, 17-27. Olivier Blanchard and Jeromin Zettelmeyer. July 2017

A balanced, broad-based economic recovery seems under way in all major regions of the world. Managing the recovery poses challenges in the short run but they appear relatively benign. Looking forward, however, the authors see a set of new risks: (1) Partly because of the crisis and partly because of subsequent low growth, public debt has reached postwar historical highs in many advanced countries; (2) productivity growth, and with it potential growth, has declined. Whether it remains low or picks up in the future is uncertain; (3) interest rates are expected to increase from their current low levels. By how much and at what pace is—again—uncertain; and (4) many advanced countries have strong populist movements (or even populist leaders) espousing risky macroeconomic policies. The authors warn that rising interest rates, combined with low growth, high debt, and populist pressure, would be a recipe for fiscal crises. [Note: contains copyrighted material].

[PDF format, 7 pages, 172.09 KB].

Educational Differences in Employment at Older Ages

Educational Differences in Employment at Older Ages. Urban Institute. Richard W. Johnson, Claire Xiaozhi Wang. July 24, 2017

Working longer can significantly benefit older adults, improving their financial security and possibly their physical and emotional health. Older adults have been working more over the past two decades, but employment gains after age 65 have been concentrated among college graduates. Early retirement will likely create growing financial challenges for less-educated older adults, who risk falling further behind their better-educated peers. This chartbook shows how trends in various outcomes, including labor force participation, full-time employment, self-employment, and earnings, differ by education, age, and sex for older adults. [Note: contains copyrighted material].

[PDF format, 76 pages, 1.02 MB].