IWS Documented News INTERNATIONAL

IWS Documented News Service

_______________________________

Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

________________________________________________________________________

 

Gross Domestic Product, 4th quarter 2011 and annual 2011 (second estimate) [29 February 2012]

http://www.bea.gov/newsreleases/national/gdp/2012/gdp4q11_2nd.htm

or

http://www.bea.gov/newsreleases/national/gdp/2012/pdf/gdp4q11_2nd.pdf

[full-text, 13 pages]

or

http://www.bea.gov/newsreleases/national/gdp/2012/xls/gdp4q11_2nd.xls

[spreadsheet]

and

Highlights

http://www.bea.gov/newsreleases/national/gdp/2012/pdf/gdp4q11_2nd_fax.pdf

 

 

Real gross domestic product -- the output of goods and services produced by labor and property

located in the United States -- increased at an annual rate of 3.0 percent in the fourth quarter of 2011

(that is, from the third quarter to the fourth quarter), according to the "second" estimate released by the

Bureau of Economic Analysis.  In the third quarter, real GDP increased 1.8 percent.

 

                The GDP estimate released today is based on more complete source data than were available for

the "advance" estimate issued last month.  In the advance estimate, the increase in real GDP was 2.8

percent (see "Revisions" on page 3).

 

                The increase in real GDP in the fourth quarter reflected positive contributions from private

inventory investment, personal consumption expenditures (PCE), exports, nonresidential fixed

investment, and residential fixed investment that were partly offset by negative contributions from

federal government spending and state and local government spending.  Imports, which are a subtraction

in the calculation of GDP, increased.

 

                The acceleration in real GDP in the fourth quarter primarily reflected an upturn in private

inventory investment and accelerations in PCE and in residential fixed investment that were partly offset

by a deceleration in nonresidential fixed investment, a downturn in federal government spending, an

acceleration in imports, and a larger decrease in state and local government spending.

 

                Final sales of computers added 0.12 percentage point to the fourth-quarter change in real GDP

after adding 0.22 percentage point to the third-quarter change.  Motor vehicle output added 0.43

percentage point to the fourth-quarter change in real GDP after adding 0.12 percentage point to the

third-quarter change.

__________________________

FOOTNOTE.  Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise

specified.  Quarter-to-quarter dollar changes are differences between these published estimates.

Percent changes are calculated from unrounded data and are annualized.  "Real" estimates are in

chained (2005) dollars.  Price indexes are chain-type measures.

 

      This news release is available on BEA’s Web site along with the Technical Note and Highlights

related to this release.  For information on revisions, see "Revisions to GDP, GDI, and Their Major

Components."

 

 

AND MUCH MORE...including TABLES....

 

 

________________________________________________________________________

This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

 

IWS Documented News Service

_______________________________

Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

________________________________________________________________________

AS YOU SOW

(As You Sow promotes environmental and social corporate responsibility through shareholder advocacy, coalition building, and innovative legal strategies)

 

PROXY PREVIEW 2012 [28 February 2012]

http://asyousow.org/publications/2012/ProxyPreview2012.pdf

[full-text, 84 pages]

 

EXECUTIVE SUMMARY

Shareholder advocates who want companies to take a more proactive position on key social and environmental issues have

filed a slightly smaller number of shareholder resolutions in 2012 than last year. But it is not for lack of success, since votes in

2011 were higher than they have ever been, crossing the 20% average support threshold for the first time and logging

five majority wins.

 

Political spending proposals continue to increase in both number and focus, now making up nearly a third of the 349 social

and environmental proposals filed so far—a jump from a quarter of the 360 proposals filed at this time last year.

 

A wide variety of environmental issues and requests for broad sustainability reports still are the most common category, though,

making up a little more than a third of the total. Requests for action and disclosure on climate change are being expressed

more in terms of energy efficiency, while the natural resource management focus is still mainly but not exclusively on coal and

hydraulic fracturing. Advocates have trimmed the number of human and labor rights proposals considerably; they make up just

7% of the total, down from 12% last year and 18% in 2010. Diversity, both on boards and for employee non-discrimination

policies, has held steady with 11% of the total, as have animal welfare-related issues with 6%. In all, 276 resolutions are now

pending, compared with 290 at this time last year. Companies have mounted SEC challenges that remain undecided for 62 of

these proposals.

 

2012 Proxy Season Overview

This section provides a brief overview of the upcoming proxy season, highlighting new issues and continued big campaigns.

The main body of the report, starting on p. 17, gives a detailed analysis for each category listed here.

Animal welfare: Animal welfare advocates have filed 21 resolutions, split evenly between those concerned with animals

used in laboratories, and those consumed for food or killed for fur. In a change from last year, no proposals relate to poultry

slaughter, but a few ask department stores to stop selling fur; there is also more emphasis on the confinement of pregnant

sows, which the groups say is inhumane.

 

Banking: It appears that four resolutions are likely to go to votes on bank foreclosure subjects, out of 12 that were filed. The

New York City pension funds have resubmitted a proposal asking for more information about loan modifications, foreclosures,

and securitization. Investors last year clearly affirmed these requests, giving all more than 20% support and one (at Bank of

America) nearly 40%. A Presbyterian Church (USA) proposal is also pending on loan modifications at JPMorgan Chase. New

resolutions on repurchase transactions were filed by the Sisters of Charity and the Maryknoll Sisters at JPMorgan Chase,

Citigroup, Stanley Morgan, and Bank of New York Mellon, although the latter has been withdrawn and the others failed

to survive SEC challenges.

 

Boards and governance: About two dozen proposals request structural reforms at companies in how they manage and

oversee social and environmental issues, asking for board committees on specific subjects, board member nominees who

have specialized expertise or a more varied background, and related executive pay changes.

 

Diversity: Proponents continue to wage their largely successful campaign to get companies to adopt sexual orientation and

gender identity non-discrimination policies, with 38 filings this year; there have been seven withdrawals to date given agreements

with companies and more are likely. A new proposal from Trillium Asset Management is asking Aflac to provide domestic

partner benefits for executives.

 

Environment: Environmental proposals fall into three major categories: climate change, natural resource management, and

toxics. This report includes a separate section on sustainability since those proposals invoke issues beyond the environment.

Climate change—Building on past success, proponents are broadening the definition of climate change risk. An

increased number of dialogues with companies has resulted in only 28 proposals, down from about 40 last year, although many

of the sustainability proposals also ask for climate action. Advocates still want companies to cut greenhouse gas emissions

and be more transparent about how they are doing this, and they are couching these requests in terms of energy efficiency and

renewable energy more this year than in the past. A new effort on more energy efficient set-top boxes deployed by cable

companies comes from the New York City Comptroller’s office, but it looks like only one of these resolutions will go to a vote,

at DISH Network. Efforts to get food firms to sign on to sustainable palm oil sourcing have borne fruit, but one or two proposals

TM

may nonetheless go to votes. Aside from the cable and food company proposals, the primary targets for climate proposals are

oil and gas, construction and real estate, and utility firms.

 

Natural resource management—Coal and hydraulic fracturing still dominate the group of 44 natural resource

management proposals, but the Fukushima nuclear disaster in 2011 has prompted nine new proposals about nuclear power,

as well. Coal and hydraulic fracturing resolutions earned record 2011 votes and account for 19 filings this year. Exxon Mobil

faces another oil sands proposal, and As You Sow is continuing to push for extended producer responsibility and more recycling

at five firms, while Domini Social Investments is moving forward with its focus on paper and forests. Social investment groups

have new proposals to apparel companies, too, asking them to report on supply chain water risks.

Toxics—More disclosure about bisphenol A (BPA) will likely result in an agreement to withdraw the resolution at Safeway,

and SEC approval for Coca-Cola to leave it out of its proxy statement, but the issue is still pending at Panera Bread. Danaher

faces another mercury proposal, as well, regarding its dental products.

Sustainability: Fourteen of the 29 sustainability reporting resolutions mention specific issues while asking for broad-based

reports on how companies are grappling with environmental and social issues. Environmental topics raised include climate

change, water, and energy efficiency, while social issues include vendor standards, product safety, and diversity. The New York

City pension funds are continuing a supply chain focus begun last year at Walmart and have persuaded three leading electronics

companies—Apple, HP, and Intel—to require their suppliers to issue sustainability reports—an issue that has particular

resonance given the recent focus on suicides and difficult working conditions at the giant Foxconn assembly plant in China.

Resolutions on this subject remain pending at Dell and Motorola Solutions.

 

Labor and human rights: As noted above, there has been a significant contraction in the number of proposals about

human rights, although a few of the sustainability reporting requests raise these issues. Mainly from faith-based investors, a

core group of these proposals persists in asking large defense contractors and a few others to be more stringent in how they

operate in global conflict zones (five proposals). Prison management is raised at Corrections Corp. of America and Geo

Group, while NorthStar Asset Management continues its push for the recognition of a human right to water (two proposals).

JPMorgan Chase faces a proposal about investment connections to Sudan and Chevron a proposal regarding Burma (both

are re-filings). In a reversal of fortunes, proponents won a victory at the SEC on net neutrality and a slightly revised proposal this

year has avoided exclusion on ordinary business grounds (pending at AT&T, Sprint Nextel, and Verizon Communications.)

The AFL-CIO has resubmitted its 2011 proposal to oil refinery companies asking them to be more transparent about accident

prevention, a push it began last year following the BP oil spill in the Gulf of Mexico, with three pending and two withdrawn after

agreements (including at Tesoro, one of the 2011 majority votes).

 

Political spending: The headline issue for the 2012 proxy season is political spending, not just in elections, as has been

the primary focus until this year, but also after elections in terms of lobbying—speaking to the allegations of undue corporate

influence on politics and the economy raised by the Occupy Wall Street movement. Companies are providing more oversight

and disclosure of their political spending, but the investor appetite for more is huge, evidenced by both high votes and the sheer

number of proposals. There are 47 resolutions from the Center for Political Accountability on campaign spending and another

40 about lobbying—the big new push this year that is coordinated by Walden Asset Management and the American Federation

of State, County, and Municipal Employees (AFSCME). Trillium Asset Management and Green Century Capital Management

are proposing the all-out strategy of eschewing campaign spending altogether, at three companies, while NorthStar Asset

Management has expanded its request for advisory votes on political spending, going to seven companies.

 

Other proposals: A handful of resolutions have been filed by politically conservative groups, but only a few are likely to go

to votes given challenges at the SEC. In addition, three proposals raise health issues and four more ask companies to report

on tax law changes and reputational risk; this proposal does not appear likely to go to a vote, however.

 

Recent Regulatory Developments

Ongoing implementation of national financial reform, a petition to require political spending disclosure in securities filings, and

potential changes to the rules governing the shareholder resolution process are part of the changing regulatory landscape that

forms the backdrop for this year’s proxy season.

 

Financial reform: Key issues raised in shareholder resolutions were addressed in the Dodd-Frank Wall Street Reform and

Consumer Protection Act President Barack Obama signed into law on July 21, 2010. The landmark legislation had numerous

provisions, including the U.S. markets’ first regulatory oversight of derivatives markets and the creation of a Consumer Financial

TM

Protection Bureau (CFPB), now headed by former Attorney General of Ohio Richard Cordray. The bill has prompted controversy

and included several new disclosures to address various corporate responsibility issues that require the U.S. Securities and

Exchange Commission (SEC) to enact rules to implement them:

 

• Conflict Minerals (Section 1502) addresses the ongoing conflict in the Democratic Republic of the Congo (DRC) and

companies’ ties both directly and through supply chains to minerals mined in the DRC and fueling the conflict there.

With input from a multi-stakeholder group including industry, investors, and NGOs, the SEC issued a draft rule for

comment in December 2010. The rule has been met with swift opposition from the U.S. Chamber of Commerce, the

Business Roundtable, and other corporate interests who say that it is far too costly and onerous in its present form. The

SEC’s commissioners and staff are weighing these and other comments and plan to issue a final rule for a vote during

the first quarter of this year.

 

• Mine Safety (Section 1503) was included in Dodd-Frank as a reaction to the Massey Upper Big Branch Mine disaster

in West Virginia in April 2010. The SEC’s final rule on this portion of Dodd-Frank came into effect on January 27, 2012.

It adds a section to annual report filings Form 10-K, 20-F, and 40-F, as well as quarterly Form 10-Q, for companies titled

“Mine Safety Disclosures.” The new disclosure requires a company to include a statement whether it or one of its

subsidiaries is an operator of a coal or other mine covered by the Federal Mine Safety and Health Act of 1977. If so, the

company must add an exhibit that includes information on health and safety violations, orders and citations, related

assessments and legal actions, and mining-related fatalities. During the drafting and comment period for the rule, the

SEC staff estimated that only approximately 100 companies filing Form 10-K would be required to provide the disclosures

called for by the new provisions. All other companies can state that the item is “not applicable.”

 

• Payments to Governments by Resource Extraction Issuers (Section 1504) was intended to combat corruption

and related investment risks—such as expropriation of funds, disruption of operations related to social unrest, pressure

from corrupt foreign officials, tax and regulatory risks, or harm to companies’ local or global reputation—through revenue

transparency. The SEC issued a draft rule for comment in December 2010, and, like the conflict minerals piece, it has

been hotly contested by the U.S. Chamber of Commerce, the Business Roundtable, the American Petroleum Institute,

and other associations representing resource extraction firms. The delays in implementing the rule for the provisions

have been so long that it prompted Senators Ben Cardin (D-Md.), Patrick Leahy (D-Vt.), Carl Levin (D-Mich.), Chuck

Schumer (D-NY), and John Kerry (D-Mass.) to send a letter to the SEC seeking swift action on the matter. The SEC is

expected to vote on a final rule in coming weeks.

 

Rules on conflict minerals and payments to governments are likely to be contested in court if enacted, so they face further

implementation hurdles.

 

Proposed SEC-mandated political spending disclosure: A group of 10 leading law school professors, dubbed

the Committee on Disclosure of Corporate Political Spending, submitted a rulemaking petition to the SEC on August 3, 2011.The

petitioners cite as support for their view the evolution of disclosure requirements at the SEC, increased interest by shareholders

in corporate political spending, increased voluntary disclosure by companies, the need for corporate accountability, and similar

disclosure rules for other corporate information. It requests that the SEC “initiate a rulemaking project” that would increase the

transparency of corporate political spending. Many of the groups who want to craft an effective response to the controversial

Citizens United Supreme Court decision, which opened the way to unlimited corporate and union spending on political

campaigns, are pressing hard to get the SEC to take action. But with its plate still overflowing with unfinished work on Dodd-

Frank, any immediate action on the petition appears unlikely. Despite this, comments on the petition have been pouring in from

groups who support the petition; these and others can be viewed on the SEC website and as of February 15th, 29,500 letters

have been submitted.

 

Proxy plumbing: The U.S. proxy voting system has not been substantially changed for three decades, despite the creation

of the Internet, the rise in electronic communications, changes in how stock is held by different participants in the financial

markets, and a host of other developments. In July 2010, as an initial step to map out possible reforms, the SEC approved a

“concept release” about the proxy voting system. So far the SEC has received more than 250 comment letters on the release.

Internal discussions on proxy plumbing continue within the SEC, but staff time has been consumed with implementation of

Dodd-Frank and no immediate action is expected.

 

Possible reforms include the regulation of proxy advisory services, which can substantially affect the outcome of any vote with

their recommendations that are used by many institutional investors. The proxy advisory industry is dominated by two players:

the ISS division of MSCI and Glass Lewis. The SEC also is looking at empty voting, in which the economic and voting

components of share ownership are decoupled, company communications with beneficial owners of their stock, and voting

instructions. The SEC wants to encourage more voting by retail investors. (One way these individual shareholders can find out

TM

more about issues coming to votes is from newcomers such as Moxy Vote and ProxyDemocracy.org, which are experimenting

with models where investors can emulate the decisions of well-known organizations they trust. Moxy Vote’s membership recently

surpassed 100,000 and continues to grow.)

 

Climate change: In a development that continues to affect the 2012 proxy season, in January 2010 the SEC approved

new interpretive guidance for companies that clarifies what they must report to investors concerning the risks and opportunities

presented by climate change. The SEC took this action in response to a petition filed in 2007 by a coalition of institutional

investors, state officials, and environmental groups. The timing of the guidance meant that 2011 was the first full year of

disclosure, when companies had to discuss in their annual 10-K reports and in other SEC filings any “material” effects on their

operations that arise from the:

 

• Direct effects of existing or pending legislation and regulations related to climate change.

• Indirect effects of these laws and regulations (including reputational risk—the risk that negative public perception of a company’s

publicly-reported greenhouse gas emissions might affect its business).

• Effect of physical changes caused by climate change (such as more severe weather events, water availability, changing patterns

of farmland arability

 

________________________________________________________________________

This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

 

IWS Documented News Service

_______________________________

Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

________________________________________________________________________

 

Global Labour University (GLU)

 

The Crisis: the Response of the European Trade Unions

Monday, February 20, 2012

by Bernadette Ségol

http://column.global-labour-university.org/2012/01/crisis-response-of-european-trade.html

or

http://www.global-labour-university.org/fileadmin/GLU_Column/papers/no_88_Segol.pdf

 

 

[excerpt]

The unanimous political response to the crisis across Europe today is that of austerity and budgetary discipline. Cutting pay and social welfare, attacking bargaining mechanisms and making employment contracts ultra-flexible: that is the current paradigm, the Berlin/Brussels consensus, offered as the only way forward.

 

This solution is not working and will not work. It stifles growth and blocks the way to job creation. We can no longer ignore its disastrous social consequences and the rise of nationalism in many European countries bringing into question our essential values based on solidarity.

 

We need to change the narrative.

 

Official voices are increasingly being raised against austerity, but mainly from outside Europe. The Organisation for Economic Co-operation and Development (OECD) and the International Labour Organisation (ILO) say that austerity without growth is a dangerous dead-end. International Monetary Fund (IMF) managing director Christine Lagarde has expressed concerns on behalf of the IMF. Even credit rating agencies – self-serving oligopolies that they are - have joined in the chorus.

But the message isn’t getting through to the finance ministers. While lip service is being paid in the European Council to the need to foster growth and employment, concrete proposals commensurate with the disaster we are facing are missing, in stark contrast to the sharp minutiae of the fiscal plans before us. The ETUC is for sound budgets. But the fiscal compact calls for a balancing social contract.

 

NOTE: Bernadette Ségol is the Secretary General of the European Trade Union Confederation. Previously she was the head of UNI Europa, the European trade union federation for services and communication which represents 7 million workers and 330 affiliated trade unions. One of her main focuses is wage equality in Europe.

 

 

________________________________________________________________________

This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

 

IWS Documented News Service

_______________________________

Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

________________________________________________________________________

 

Social Security Administration (SSA)

 

Social Security Programs Throughout the World: The Americas, 2011 [27 February 2012]

http://www.ssa.gov/policy/docs/progdesc/ssptw/2010-2011/americas/index.html

[go to this URL for Country Summaries]

or

http://www.ssa.gov/policy/docs/progdesc/ssptw/2010-2011/americas/ssptw11americas.pdf

 

 

[full-text, 201 pages]

 

[excerpt]

This fourth issue in the current four-volume series of Social Security Programs Throughout the World reports on the countries of the Americas. The combined findings of this series, which also includes volumes on Europe, Asia and the Pacific, and Africa, are published at six-month intervals over a two-year period. Each volume highlights features of social security programs in the particular region.

 

The information contained in these volumes is crucial to our efforts, and those of researchers in other countries, to review different ways of approaching social security challenges that will enable us to adapt our social security systems to the evolving needs of individuals, households, and families. These efforts are particularly important as each nation faces major demographic changes, especially the increasing number of aged persons, as well as economic and fiscal issues.

 

Table of Contents

Guide to Reading the Country Summaries, including:

•Table 1. Types of social security programs

•Table 2. Types of mandatory systems for retirement income

•Table 3. Demographic and other statistics related to social security, 2011

•Table 4. Contribution rates for social security programs, 2011

 

 

________________________________________________________________________

This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

 

IWS Documented News Service

_______________________________

Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

________________________________________________________________________

 

OECD

 

ECONOMIC POLICY REFORMS: GOING FOR GROWTH 2012 [24 February 2012]

http://www.oecd.org/document/4/0,3746,en_2649_34325_49693508_1_1_1_1,00.html

or

http://www.keepeek.com/Digital-Asset-Management/oecd/economics/economic-policy-reforms-2012_growth-2012-en

[Read online 223 pages]

Structural reforms can make the difference, Remarks by Angel Gurría, OECD Secretary-General

Country Notes 

Executive Summary

Struggling with the crisis: structural reforms can make the difference, Editorial by Pier Carlo Padoan, Deputy Secretary-General and Chief Economist, OECD

Press release

 

 

Table of Contents

Chapter 1. Structural reforms in times of crisis

Chapter 2: Country Notes

Chapter 3: Structural policies indicators

Chapter 4: Can structural reforms kick-start the recovery? Lessons from 30 years of OECD reform

Chapter 5: Reducing income inequality while boosting economic growth: Can it be done?

Chapter 6: Under shock: How to spread macroeconomic risks more fairly

 

 

 

 

________________________________________________________________________

This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.

 

IWS Documented News Service

_______________________________

Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

________________________________________________________________________

 

Congressional Research Service (CRS)

 

The Depreciating Dollar: Economic Effects and Policy Response

Craig K. Elwell, Specialist in Macroeconomic Policy

February 23, 2012

http://www.fas.org/sgp/crs/misc/RL34582.pdf

[full-text, 24 pages]

 

ummary

A trend depreciation of the dollar since 2002 raises concern among some in Congress and the

public that the dollar’s decline is a symptom of broader economic problems, such as a weak

economic recovery, rising public debt, and a diminished standing in the global economy.

However, a falling currency is not always a problem, but possibly an element of economic

adjustments that are, on balance, beneficial to the economy.

 

A depreciating currency could affect several aspects of U.S. economic performance. Possible

effects include increased net exports, decreased international purchasing power, rising commodity

prices, and upward pressure on interest rates; if the trend is sustained, the United states may also

experience a reduction of external debt, possible undermining of the dollar’s reserve currency

status, and an elevated risk of a dollar crisis.

 

The exchange rate is not a variable that is easily addressed by changes in legislative policy.

Nevertheless, although usually not the primary target, the dollar’s international value can be

affected by decisions made on policy issues facing the 112th Congress, including decisions related

to generating jobs, raising the debt limit, reducing the budget deficit, and stabilizing the growth of

the federal government’s long-term debt. Also monetary policy actions by the Federal Reserve,

over which Congress has oversight responsibilities, can affect the dollar.

 

The exchange rate of the dollar is largely determined by the market—the supply and demand for

dollars in global foreign exchange markets associated with the buying and selling of dollar

denominated goods, services, and assets (e.g., stocks, bonds, real property) on global markets. In

most circumstances, however, international asset-market transactions will tend to be dominant,

with the size and strength of inflows and outflows of capital ultimately determining whether the

exchange rate appreciates or depreciates.

 

A variety of factors can influence the size and direction of cross-border asset flows. Of principal

importance are the likely rate of return on the asset, investor expectations about a currency’s

future path, the size and liquidity of the country’s asset markets, the need for currency

diversification in international investors’ portfolios, changes in the official holdings of foreign

exchange reserves by central banks, and the need for and location of investment safe havens. All

of these factors could themselves be influenced by economic policy choices.

 

To give Congress the economic context in which to view the dollar’s recent and prospective

movement, this report analyzes the evolution of the exchange rate since its peak in 2002. It

examines several factors that are likely to influence the dollar’s medium-term path, what effects a

depreciating dollar could have on the economy, and how alternative policy measures that could be

taken by the Federal Reserve, the Treasury, and the 112th Congress might influence the dollar’s

path.

 

Contents

Introduction...................................................................................................................................... 1

Broad Economic Forces That Affect the Dollar............................................................................... 2

Determinants of the Size and Direction of Cross-Border Asset Flows............................................ 3

Interest Rate Differentials Between the United States and Other Economies ........................... 3

Investors’ Expectations About the Future Path of the Dollar .................................................... 4

Investors Diversifying Their Portfolio of Assets ....................................................................... 5

Other Factors That Influence the International Demand for Dollar Assets ............................... 5

The Size and Liquidity of U.S. Asset Markets .................................................................... 6

U.S. Asset Markets are Often Seen as “Safe Havens” ........................................................ 6

The Dollar is the Principal Global “Reserve Currency” ..................................................... 7

How Will These Determinants Interact to Affect the Dollar?.................................................... 8

Likely Effects of Dollar Depreciation.............................................................................................. 9

A Smaller Trade Deficit............................................................................................................. 9

U.S. International Purchasing Power Decreases...................................................................... 11

U.S. Net External Debt Is Reduced ......................................................................................... 11

World Commodity Prices (in Dollars) Tend to Increase.......................................................... 12

Other Possible Effects of Dollar Depreciation............................................................................... 13

U.S. Interest Rates Could Increase .......................................................................................... 13

Dollar’s Reserve Currency Role Could Be Reduced............................................................... 13

Risk of a Dollar Crisis Could Be Increased............................................................................. 15

Policies That Could Influence the Dollar....................................................................................... 16

Does the United States Have a Dollar Policy? ........................................................................ 16

Policies to Influence the Demand for U.S. Assets................................................................... 17

Direct Intervention in the Foreign Exchange Market........................................................ 17

Monetary Policy ................................................................................................................ 18

Fiscal Policy and Federal Debt.......................................................................................... 18

Policies to Increase the Demand for U.S. Exports................................................................... 19

Lower Foreign Trade Barriers ........................................................................................... 19

Support for Development of New Products ...................................................................... 19

Indirect Government Influence on the Dollar.......................................................................... 19

Global Imbalances, the Dollar, and Economic Policy ................................................................... 20

 

Figures

Figure 1. Index of Trade-Weighted Exchange Rate of Dollar ......................................................... 2

 

Contacts

Author Contact Information........................................................................................................... 21

 

 

________________________________________________________________________

This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.