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Contents of the April 1999 Business Economics. Most of these articles are in the members section, and most of them are in Adobe Acrobat format. See the NABE FAQ for information on downloading the free Adobe Acrobat reader.
| Latin America Problems and Prospects | |
| Enrique Sanchez | Latin
America: Shifting to New Paradigms The characteristics of the countries in Latin America are changing. Democracies are replacing dictatorships, inflation rates are lower, fiscal deficits are shrinking, current account deficits are the result of opening of mar-kets and not government spending, and correcting struc-tural imbalances permits faster recoveries from financial crises. However, the region is still highly dependent on foreign capital. |
| Jonathan Heath | Mexico
Today: Bouncing Back from the Peso Crash Mexico made a remarkably rapid recovery after the devaluation of its currency in 1994 and a severe recession in 1995. The banking system, which permitted excessive credit growth, was at the core of the 1995 crash and still is a main weakness of the economy. However, it has been partly offset by a flow of funds from abroad and access to international capital markets. Mexico has been shifting from a large but inefficient industrial base to an efficient, globally competitive economy, helped in 1999 by the recovery in oil prices and the strength of the U.S. economy. Although Mexico’s growth prospects are the best of any of the Latin American countries, a major near-term problem is avoiding a political crisis as the presidential election approaches in July 2000. |
| Manuel Lasaga | Central
America Today Economic reform plus privatization have attracted foreign investment in Central America. The movement toward a Central American common market should increase investment opportunities in the various countries. These countries were relatively immune to the recent financial market turbulence and experienced little panic outflow of capital. The article describes important differences in individual countries. |
| Duncan Meldrum | Country Risk
and a Quick Look at Latin America Country risk refers to uncertainties related to cross-border transactions. Different types of risks should be analyzed using structures relevant to the type of transaction. A system designed to flag potential risks for a long-term foreign direct investment reveals a mixed situation in Latin America. Brazil and Venezuela present relatively high economic policy risks that may reduce anticipated long-run growth. Brazil’s exchange risk fell sharply after it floated the real. Argentina’s exchange risk, on the other hand, increased sharply in the past twelve months. Mexico’s policy and exchange risks fall in a middle range. |
| Peter H. Smith | Whither
Hemispere Integration? Prospects for hemispheric integration are uncertain. There are three potential routes to a Free Trade Area of the Americas (FTAA): North American Free Trade Agreement (NAFTA) accession, FTAA negotiations, and North-South docking. Different countries support different strategies for reasons of national interest. Key actors here are Brazil and the United States. Much will depend upon four factors: whether the United States obtains fast-track authority, the progress of subregional groupings in Latin America, prospects for a World Trade Organization (WTO) millennial round, and possibilities of a U.S.-Brazilian rapprochement on trade policy. |
| Applied Business Economics | |
| Richard D. Rippe (public section) | No Savings
Crisis in the United States This paper assesses the saving picture from several perspectives. The consumer sector is not severely strained by low saving, in part because of dramatic gains on the balance sheet. Moreover, the national saving rate has been advancing while the personal portion has declined. By international standards, conventional measures of gross saving make U.S. performance look poor, but after several corrections the picture is much more favorable. Although these findings are primarily positive, the United States should consider sensible policy initiatives that would either consolidate the recent gain in national saving or bolster it further. |
| Henry Kaufman | Protecting
Against the Next Financial Crisis Recent distress in world financial markets has underlined the need for supervising and regulating financial institutions and markets on a global basis. A new institution, in addition to the International Monetary Fund (IMF) and the World Bank, is required to set forth a code of conduct to encourage reasonable financial behavior and to super-vise risk-taking. It also should be empowered by member governments to harmonize minimum capital requirements, to establish uniform trading, reporting and disclosure standards, and to monitor the performance of institutions and markets under its purview. The IMF should be able to demand policy changes in anticipation of problems. Securitization and the development of financial derivatives have liberalized granting of credit, requiring steeper interest rates to end a period of excessive monetary expan-sion. Monetary policy also should be concerned with asset inflation as well as price inflation. |
| Business Economics In the Workplace | |
| Richard Yamarone | The Business
Economist at Work: Argus Research Corporation While formal academic training as an economist is indispensable, it only partly prepares for work as a financial markets economist. My job as a Wall Street economist at Argus Research includes creating and maintaining a database of economic statistics as well as a number of macroeconomic models. From this database springs the firm's forecast of all the major economic indicators released each trading day, as well as a longer-term view of economic trends. I also generate extensive commentary on current and future economic conditions for the firm and its clients. |
| Andrew Gross, Renaud De Maricourt and D. Steven White | Industry Corner:
Reality Check, or the Alchemy of Long-Range Industrial
Forecasting Although techniques in forecasting are improving, the availability and reliability of underlying data are always uncertain. A review of the accuracy of past forecasts made during the past three decades indicates that it is easier to forecast mature goods industries than demand for services or for high-tech and rapidly growing industries. Nevertheless, the demand for forecasts will continue. |
| Jennifer Polhemus | The
Consultants' Corner: Litigation and Pulbic Policy: Two
More Areas Where Consulting Economists Dare to Tread |
| Alan Garner | The Statistics Corner: A Closer Look at the Employment Cost Index |
| Robert P. Parker and C. Brian Groves | The Statistics Producers' Corner: Changes in the U.S. International Transactions Account |
| Bruce Kratofil (Public Section) | Window on the Web |
| Book Reviews(public section) | |
| National
Association for Business Economics 1233 20th Street NW #505 • Washington DC 20036 Phone: 202-463-6223 • Fax: 202-463-6239 |