THE BROOKINGS PANEL on Economic Activity held its seventy-first
conference in Washington, D.C., on March 29 and 30, 2001. This issue of
Brookings Papers on Economic Activity includes the papers and discussions
presented at the conference. The first paper investigates the causes of
the Russian financial crisis of 1998 and evaluates the emergency international
effort that was undertaken to avert the crisis. The second paper studies
the effect of interstate wage differences on the location decisions of
immigrants and estimates the resulting gains in macroeconomic efficiency.
The first report analyzes whether the decreased frequency of recessions
in the past two decades can be attributed to a secular decline in the variability
of quarter-to-quarter changes in output. The second report examines
the usefulness of the Index of Consumer Sentiment as a tool for forecasting
recessions. The issue concludes with a symposium of three papers on
the sustainability of the recent large current account deficits in the U.S.
balance of payments. Each takes a somewhat different approach to understanding
these deficits. The first symposium paper sees U.S. assets as
attractive investments that are likely to perpetuate large capital account
surpluses. The second focuses on entrenched global demand for the dollar
as international money. The third paper views capital flows in terms of
a country portfolio model in which investors at home and abroad increase
or reduce their holdings of U.S. assets in response to changes in wealth and
in risk-adjusted returns.