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Airport infrastructure updates costs are huge

(Greg, 8/1/2007, Washington post, “the cost of friendlier skies”, http://web.ebscohost.com/src/detail?vid=6&hid=11&sid=f914de9c-fc71-4b87-b8f2-30b20cfa3dbb%40sessionmgr104&bdata=JnNpdGU9c3JjLWxpdmU%3d#db=nfh&AN=4KB520070801030122004, 6/26/12, TAS)

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IL--US Key to Global Economy

U.S economic growth is key to global recovery

Washington Times, 10

[Erica Werner-Associated Press, “Obama: Strong U.S. economy key to global recovery”, http://www.washingtontimes.com/news/2010/nov/10/obama-strong-us-economy-key-global-recovery/]

SEOUL (AP) — President Obama said a strong, job-creating economy in the United States would be the country’s most important contribution to a global recovery as he pleaded with world leaders to work together despite sharp differences. Arriving in South Korea on Wednesday for the G-20 summit, Mr. Obama is expected to find himself on the defensive because of plans by the Federal Reserve to buy $600 billion in long-term government bonds to try to drive down interest rates, spur lending and boost the U.S. economy. Some other nations complain that the move will give American goods an unfair advantage. In a letter sent Tuesday to leaders of the Group of 20 major economic powers, Mr. Obama defended the steps his administration and Congress have taken to help the economy. “The United States will do its part to restore strong growth, reduce economic imbalances and calm markets,” he wrote. “A strong recovery that creates jobs, income and spending is the most important contribution the United States can make to the global recovery.” Mr. Obama outlined the work he had done to repair the nation’s financial system and enact reforms after the worst recession in decades. He implored the G-20 leaders to seize the opportunity to ensure a strong and durable recovery. The summit gets under way on Thursday. “When all nations do their part — emerging no less than advanced, surplus no less than deficit — we all benefit from higher growth,” the president said in the letter. The divisions between the economic powers was evident when China’s leading credit rating agency lowered its view of the United States, a response to the Federal Reserve’s decision to buy more Treasury bonds. Major exporting countries such as China and Germany are complaining that the Federal Reserve’s action drives down the dollar’s value and gives U.S. goods an edge in world markets.

US recession correlates with reductions in economic growth- US is the engine of the world economy

Dees, Principal Economist at European Central Bank, and Saint-Guilhem, Economist at European Central Bank, 10/9/10

(Stephane and Arthur, "The role of the United States in the global economy and its evolution over time", Journal of Economic Literature, 10/9/10, Accessed: 7/4/12, pg 574-575) AHL
The U.S. economy is very often seen as “the engine” of the world economy. As a result, any sign of slowdown in the United States rises concerns about harmful spillovers to the other economies. As the recent global economic recession has shown, the history of past U.S. recessions usually coincides with significant reductions in global growth. Figure 1 shows the relatively strong correlation of U.S. real GDP growth and that of the rest of the world. In addition to a large correlation (45%), it seems that in some periods, the U.S. cycle tends to lead the rest of the world one. Indeed, the correlation between the U.S. and the rest of the world growth rates lagged by one or two quarters increases to 49%. While this topic has been widely studied in the literature, it has received renewed attention recently. The increasing economic integration at the world level and the resulting emergence of large economic players, like China, is likely to have weakened the role of the U.S. economy as a driver of global growth. For instance, Dees and Vansteenkiste (2007) note that while the U.S. business cycle still leads the world’s, Asia, where China’s rise is helping the region to establish business cycles largely independent of its main trading partners, is a notable exception. Hence, when the United States entered into recession at the end of 2007, one has questioned the ability of the global economy to “decouple” from U.S. cyclical developments. While there were some signs of decoupling in the first quarters following the U.S. downturn, they disappeared rapidly toward the end of 2008, when the crisis became more global and the economic cycles turned out to be more synchronous across the world. Overall, the U.S.’s influence on other countries’ economies remains larger than direct trade ties would suggest, owing to third-market effects together with increased financial integration that tends to foster the international transmission of cyclical developments. Estimating the source and the size of spillovers across industrialized countries, Bayoumi and Swiston (2009) show that the U.S. shocks generate significant spillovers, while those from the euro area and Japan are small. They also show that financial effects tend to dominate the international spillovers. Analyzing the results for two subperiods (1970–1987 and 1988–2006), they finally show the importance of the great moderation in U.S. output fluctuations and associated financial stability in lowering output volatility elsewhere. As the study over two subperiods might hide recent changes, this article aims at showing the evolution over time of the role of the United States in the global economy. Based on a Global VAR (GVAR) modeling approach, this article shows first that the economies with a large trade exposure with the U.S. economy have a relatively larger sensitivity to U.S. developments. However, even for countries that do not trade so much with the U.S., they are largely influenced by its dominance through other partners’ trade. Moreover, while no clear trend seems to emerge, it seems that the role of the U.S. in the global economy has changed over time. Overall, for most countries— the latest recession excluded—a change in U.S. GDP had weaker impacts—though more persistent—for most recent periods. The latest recession, however, led to some renewed increase in the sensitivity of the economies to U.S. developments. Section 2 presents the modeling strategy chosen to study the international transmission of changes in U.S. economic activity. Section 3 shows the empirical results by distinguishing an analysis over the sample 1979–2009 and a time-varying analysis to identify any change in the degree of transmission over time. Section 4 concludes.

US shocks critical to global economy--shocks

Bayoumi and Bui, IMF analysts, 2/1/11

(Tamim and Trung, "Deconstructing The International Business Cycle: Why Does A U.S. Sneeze Give The Rest Of The World A Cold?", Journal of Economic Literature, 2/1/11, Accessed: 7/4/12, pg 14) AHL
This paper has explored the nature of growth spillovers across the main advanced country regions using a new identification method for VARs that accounts for the uncertainty associated with the estimation of the contemporaneous correlation matrix across shocks. As a result, the VAR identification involves only two assumptions—the variables included in the VAR and the chosen lag length. The results from 1970 through the end of 2007 describe a relatively coherent picture for international growth spillovers. First, U.S. shocks dominate the international business cycle. European financial market shocks—proxied by U.K. spillovers—may also matter for the euro area. Commodity price shocks—proxied by a grouping of smaller advanced and emerging markets—create negative effects on the major advanced country regions. Lastly, euro area shocks matter primarily through commodity prices. It is also striking that this description of global spillovers through end-2007 fits the experience of the great depression in 2008 and 2009 so well, as a disturbance largely emanating out of the U.S. had major global consequences.

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