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| 1978-2008: an Anniversary for 30 Years of Research |
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1st
Quarter 2008 |
In 1978, when the CEPII was created by Prime Minister Raymond Barre, it was far from evident that Europe would face the shaking wave of globalisation that has been experienced since then. To be sure, Europe had already suffered a world economic shock – the first oil shock – and was about to face a second one. Capital flows were still highly regulated as well as services, and China and the Soviet Union were still out of the world economy. From the very beginning, the CEPII put together and harmonised data on the world economy to produce consistent analyses on ongoing deep changes in trade flows, sector specialisation, the international monetary system and new industrialized countries that were later to be renamed ‘emerging countries’. Here we overview 30 years of CEPII’s researches in two areas: international trade, and exchange rates, based on successive issues of La Lettre du CEPII.
International Trade
Measuring countries specialisation has been a major concern from the very beginning of CEPII’s research. A first indicator is proposed in 1979, which measures specialisation independently from trade balances. In the late 1970’s and early 1980’s, the focus is on the dynamic aspect of specialisation (countries can build their comparative advantages) and on the distinction between its "intensity" and "quality", the latter depending on adaptation to world demand (1983). In 1987, an innovative typology is proposed that makes a distinction between one-way trade (a product is either exported or imported), vertical two-way trade (a product is both exported and imported but at different levels of quality) and cross-trade of similar products (horizontal two-way trade). This typology, subsequently refined in the 1990’s, is widely used today. It led CEPII to build, alongside the CHELEM database used since 1978, a new harmonised bilateral flow database, BACI, detailing bilateral trade volumes and values for some 5,000 products. To assess the trade negotiations launched by the WTO, in 2001 the CEPII built a general equilibrium model – MIRAGE – for simulating trade policies while accounting for the interaction of markets for goods, services and production factors, in quantities and prices, covering all economies participating in the negotiations. As negotiations are taking place at a very detailed level of tariff lines, the model had to be linked to a fine, exhaustive, bilateral database on obstacles to trade: the MAcMaps database was developed jointly by CEPII and the International Trade Centre. This model has been extensively used by the CEPII and partner institutes for studying the Doha agenda, but also regional integration and bilateral initiatives.
Exchanges Rates
In September 1980, the dollar lies at a low level (the equivalent of 1.63 euro!). It can be read in La Lettre du CEPII that "the exchange rate has once again become an economic weapon" and that the dollar is under-valued against many currencies (with the notable exception of the yen) in terms of purchasing power parity, but also in terms of a standard incorporating levels of development (Balassa-Samuelson effect). In 1994, several years after the Plaza and the Louvre agreements, the CEPII notes the inability of the international monetary system to prevent "long-term distortions of real exchange rates", the instability of nominal exchange rates and, already, the accumulation of current account imbalances. It lists three challenges that the international monetary system would have to meet: the spread of capital market liberalisation, the development of regional monetary co-operation agreements and the rise of emerging economies. It suggests that international co-ordination should no longer be based directly on exchange rates but, upstream, on the principles of economic policy. It calls for the reactivation of IMF multilateral monitoring of exchange rate policies, particularly those of emerging economies. International monetary co-ordination assumes agreement on "normal" or "equilibrium" exchange rate values. Since the mid-1990’s, the CEPII’s research highlights, respectively, the uncertainty surrounding calculations of equilibrium exchange rates, the extent of exchange rate adjustments necessary to correct world-wide imbalances, the need to consider regional interaction in assessing exchange rate distortions and, finally, the need for a multilateral approach to exchange rate distortions. The period 1999-2007 started with a strong depreciation of the euro against the dollar, followed by a spectacular rise. This volatility of the euro came as no surprise to CEPII, which anticipated it in 1997. In 2000, the CEPII mentions the risk of "an upward overshooting, which it would perhaps be difficult to combat due to the potentially diverging interests of the players in European economic policy". As a matter of fact, the very strong rise of the euro since 2001 and, even more so, since 2006, has not created sufficient consensus in Europe to establish an exchange rate policy. |
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Global Overview of Trade Policies, David Laborde, May 2007, La Lettre du CEPII, N° 267.
WTO Trade Talks: a Bird in the Hand is Worth Two in the Bush, Lionel Fontagné, David Laborde, Cristina Mitaritonna, January 2007, La Lettre du CEPII, N° 263.
Argentina's Debt and the Decline of the IMF, Jérôme Sgard, January 2005, N° 241.
Speculating on the Yuan, Bronka Rzepkowski, May 2004, N° 234.
The World Market: Market Shares and Export Performances, Angela Cheptea, Guillaume Gaulier, Soledad Zignago, February 2004, N° 231.
The WTO: in the Trough of the Trade Round, Lionel Fontagné, Sébastien Jean, September 2003, N° 226.
Sovereign Debt Crises and Multilateral Action Following the Rejection of the Krueger Proposal, Jérôme Sgard, May 2003, N° 223.
Argentina One Year On: From a Monetary Crisis to a Financial Crisis, Jérôme Sgard, December 2002, N° 218.
Euro/dollar : Every Body can Make Mistakes, Agnès Bénassy-Quéré, September 2002, N° 215.
International Trade, Borders and Market Institutions, Jérôme Sgard, July-August 2002, N° 214.
Market Access: the Objectives after Doha, Lionel Fontagné, Jean-Louis Guérin, Sébastien Jean, April 2002, N° 211.
Can the Argentine Peso Resist Competition from the Dollar?, Jérôme Sgard, February 2002, N° 209.
Rethinking the South's Openness, Isabelle Bensidoun, Agnès Chevallier, Guillaume Gaulier, October 2001, N° 205.
Trade Integration and Monetary Integration, Jean-Louis Guérin, Amina Lahrèche-Révil, September 2001, N° 204.
How is Trade Protectionism to be Measured?, Antoine Bouët, Estelle Dhont-Peltrault, November 2000, N° 195.
The IMF and the Challenge of Global Governance, Michel Aglietta, Sandra Moatti, October 2000, N° 194.
Exchange Rate Regimes: With or Without the Sucre?, Agnès Bénassy-Quéré, June 2000, N° 191.
The Ecuadorian Crisis and the International Financial Architecture, Jérôme Sgard, March 2000, N° 188.
Openness, Competition and Multilateralism, Michel Fouquin, Guillaume Gaulier, November 1999, N° 184.
What Should the Framework for Opening up to the International Economy be?, Jean-Louis Guérin, July-August 1999, N° 181.
The Devaluation of the Yuan: "A Little Impatience May Ruin a Great Project " (Confucious), Stéphane Dées, Françoise Lemoine, April 1999, N° 178. |
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