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1. Good Intentions, Better Outcomes: Shifting the Debate About Social Protection and Informality

Author:
James Heintz and Jayati Ghosh
Publication Date:
02-2024
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
The introduction of social protections for individuals engaged in paid employment frequently comes up against arguments that such measures would have an adverse impact on employment, reduce access to formal jobs, and result in greater informality. The argument is that, while well intentioned, such policies distort labor markets and generate significant economic costs that either leave some workers worse off than they would have been in the absence of such protection, or the interventions become a drag on overall economic performance, encumbering the process of development. In what follows we critically evaluate such arguments and provide responses to the claim that social protections lead to higher informality. We also consider the challenges involved in providing social protection to different types of workers, including not only those employed by others but specifically the self-employed and unpaid workers.
Topic:
Economics, Employment, Labor Market, Informal Economy, and Protection
Political Geography:
Global Focus

2. Entrepreneurship, Youths, and Women Economic Inclusion in Cameroon

Author:
Laurent Brice Nsengue, Bin Joachem Meh, and Jean-Cedric Kouam
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
The Nkafu Policy Institute
Abstract:
Bentham’s theory of utilitarian morality leads us to know that the purpose of economic activity is to ensure social progress for the happiness of the greatest number. Thus, excluding people from an economic system without considering their interests is considered a destruction of the common good. According to the United Nations (1962), population is one of the most important factors of economic productivity, as it influences the rate of development of a country. Women represent 49.6% of the world’s population and young people aged 10 to 24 represent 15.5% of the world’s population (UN World Youth Report, 2020; World Bank, 2020). In Cameroon, youth and women represent more than 60% of the population, but remain the most economically excluded (BUCREP, 2005). This reality appears to be a challenge for a country that wants to be an emerging country by 2035. The main objective of this paper is to show the role that entrepreneurial development could play in promoting the economic inclusion of youth and women in Cameroon. It is expected to raise awareness among public authorities as well as the private sector of the importance of economic inclusion of youth and women through entrepreneurship development. Based on studies carried out by credible international and local institutions, we focus on the challenges of entrepreneurship in the context of the economic inclusion of youth and women and the opportunity of entrepreneurship for the economic inclusion of young people and women in Cameroon.
Topic:
Economics, Women, Entrepreneurship, Discrimination, Youth, Equality, and Inclusion
Political Geography:
Africa and Cameroon

3. Mitigating Global Fragmentation in Digital Trade Governance: A Case Study

Author:
Douglas Lippoldt
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
Digital trade is growing rapidly, and regulators are trying to keep up. Concerns about privacy, consumer protection and national security demand regulatory attention, but too much regulation risks stifling digital trade. Current-generation trade agreements need to find the right balance between regulatory and liberal approaches to e-commerce. This paper looks at how five leading digital economies (Canada, the European Union, Japan, Singapore and the United States) are using regional trade agreements to address concerns while enhancing trade.
Topic:
Economics, International Cooperation, International Trade and Finance, Governance, and Digitalization
Political Geography:
Global Focus

4. An Economic Mirage: How Canadian Universities Impact Freedom to Operate

Author:
James Hinton, Mardi Witzel, and Joanna Wajda
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
Centre for International Governance Innovation
Abstract:
Canada’s universities drive research and innovation, but when publicly funded institutions partner with foreign firms and countries, who is the biggest beneficiary? Not Canada or the Canadian economy. According to the authors of this paper, foreign entities that invest in Canadian research often take their intellectual property (IP) (and the money it generates) out of the country, leaving Canadian taxpayers holding the bill, unable to benefit from the economic return on their investment. This paper looks at the U15, a collective of some of Canada’s most research-intensive universities, accounting for 79 percent of all competitively allocated research funding in Canada and 83 percent of all contracted private sector research in Canada. With a focus on research outcomes, specifically IP, this paper examines patent data; IP ownership; and the impact on freedom to operate, an indicator of Canadian firms’ ability to commercialize their technology, to maximize Canada’s return on investment.
Topic:
Economics, Education, Higher Education, and Freedom
Political Geography:
Canada and North America

5. Collective screening

Author:
Vincent Anesi and Peter Buisseret
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Nottingham Interdisciplinary Centre for Economic and Political Research (NICEP)
Abstract:
We study a dynamic principal-agent model in which the principal is a group whose members hold heterogeneous and evolving values from an agreement with the agent. Learning about the agent’s private information reduces the principals’ conflicts over their joint offer, mitigating a principal’s losses if she is not decisive over future offers. As a consequence, a principal in a group prefers to screen the agent more aggressively than a single principal. We study the dynamics of the principals’ collective choice, and obtain conditions under which decisive members of the group successively trade away their decision-making authority, leading inexorably to the concentration of negotiation power in the hands of a single principal.
Topic:
Economics, Political Science, and Decision-Making
Political Geography:
Global Focus

6. Carbon border adjustments, climate clubs, and subsidy races when climate policies vary

Author:
Kimberly Clausing and Catherine Wolfram
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Jurisdictions adopt heterogeneous climate policies that vary in terms of both ambition and policy approach, with some jurisdictions pricing carbon and others subsidizing clean production. We distinguish two types of policy spillovers associated with diverse policy approaches to climate change. First, when countries have different levels of climate ambition, free riders will benefit at the expense of more committed countries. Second, when countries pursue different approaches, carbon-intensive producers within cost-imposing jurisdictions will be at a relative competitive disadvantage compared with producers in subsidizing jurisdictions. Carbon border adjustments and climate clubs are attempts to respond to these policy spillovers, but when countries have divergent policy approaches, one policy alone will not be able to address both types of spillovers. We also consider the policy dynamics that result from carbon border adjustments and climate clubs; both have the potential to encourage upward harmonization of climate policy, but they come with risks. Further, the pressures of international competition in the presence of divergent climate policy approaches may result in subsidy races, which come with their own potential risks and benefits.
Topic:
Climate Change, Economics, Carbon Emissions, and Production
Political Geography:
Global Focus

7. Saving the WTO from the national security exception

Author:
Warren Maruyama and Alan Wm. Wolff
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
For any member of the World Trade Organization (WTO) not making alternative arrangements, enforceability of the rules of the global trading system, a distinguishing feature of the WTO, ceased to exist on December 11, 2019, because the United States blocked appointments to the Appellate Body of the WTO dispute settlement mechanism. A major obstacle to the United States accepting any resolution of this impasse—thus permitting dispute settlement to once again be binding on all WTO members—is settling the issue of whether claims of national security to legitimize trade measures are reviewable. This is a red line for the United States, which argues this claim is nonreviewable. In the emerging area of great power competition, the United States is unlikely to accept a return to fully effective WTO dispute settlement absent a compromise that finds determinations of national security nonjusticiable. This paper offers a compromise: There would be no adjudication of whether a trade measure was justified under the WTO’s national security exception, but those WTO members adversely affected would have an immediate right to rebalance trade concessions themselves by imposing retaliatory trade measures against the WTO member invoking the exception.
Topic:
Economics, International Trade and Finance, National Security, and World Trade Organization
Political Geography:
Global Focus

8. Macro-financial implications of public debt in South Africa: The role of financial regimes

Author:
Theshne Kisten
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper examines the role of financial frictions in the public debt–growth nexus, documenting that a public debt shock has different macro-financial implications dependent on the state of financial markets in South Africa. A non-linear vector autoregression model is estimated which allows the transmission mechanism to be characterized by two distinct financial regimes: stressful versus normal. The empirical results suggest that a public debt shock has a broadly insignificant impact on economic growth over the full sample, reflecting the ineffectiveness of government borrowing in stimulating the economy, and could suggest that the high and growing debt service costs faced by the government reduces funds available for investment purposes. Debt shocks are found to be deflationary in both regimes, lending support to the precautionary savings effect and the existence of a well-developed financial market, while interest rates decline with the immediate impact being moderately larger in the stress regime, providing evidence of the accommodative stance between fiscal policy and monetary policy. In response to a public debt shock, financial conditions show an immediate and transitory improvement in the high-stress regime; however, in the low-stress regime there is an immediate yet negligible improvement in financial conditions. Lastly, the responses evolve over time, with fiscal policy being less effective in stimulating the economy in the post-crisis period, but it has been effective in reducing financial stress in the high-stress regime.
Topic:
Economics, Finance, Economic Growth, and Public Debt
Political Geography:
Africa and South Africa

9. Increasing Systemic Legal Risks in the EU: The Economic Impacts of Changes to the EU’s Product Liability Legislation

Author:
Matthias Bauer and Elena Sisto
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
European Centre for International Political Economy (ECIPE)
Abstract:
The EU’s Product Liability Directive (PLD) determines the rules for strict product liability in the EU. It establishes a framework in which manufacturers’ liability is determined solely based on the presence of defects in the product, regardless of the manufacturer’s fault. The PLD is intended to serve as a “safety net” when fault-based or contractual liability rules do not offer sufficient compensation to consumers. It operates independently from contractual arrangements between businesses and consumers, and it cannot be weakened by contractual agreements between businesses and consumers. The PLD is a horizontal regulation that applies to a wide range of industries in the EU because it applies to all products available on the EU market. The recently proposed changes by the European Commission would increase systemic legal uncertainty for producers and sellers of technology-intensive goods and services in the EU. The impact assessment of the European Commission does not sufficiently account for changes to the PLD proposed in 2022. Nor does it sufficiently account for the major impacts of increased legal uncertainty for European businesses. Legislators in the Council and the European Parliament should slow negotiations to allow time for policymakers to collect more evidence on the impacts on businesses, insurers, and courts we detail in this paper. This would be an opportunity to improve regulatory quality in light of the high levels of legal uncertainty associated with the changes proposed by the Commission.
Topic:
Economics, European Union, Legislation, and Risk
Political Geography:
Europe

10. Refugees from Ukraine Adapting to the European Labour Market

Author:
Jolanta Szymańska
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
The Polish Institute of International Affairs
Abstract:
Due to the length of the war in Ukraine, more and more refugees from this country have decided to take up employment in the EU. Preliminary data indicate that they are integrating into European labour markets faster than refugees from other regions. However, the mismatch between their jobs and qualifications remains a challenge. Despite the refugees’ inclusion, the deteriorating economic situation in Europe may lead to negative perceptions in host countries.
Topic:
Economics, European Union, Refugees, and Labor Market
Political Geography:
Russia, Europe, and Ukraine

11. US-ASEAN Digital Economy Cooperation

Author:
Hanh Nguyen
Publication Date:
07-2023
Content Type:
Working Paper
Institution:
Pacific Forum
Abstract:
Long criticized for its lackluster record in economic engagement with Southeast Asia, the US is now looking to bolster digital economy cooperation with the region as part of its Indo-Pacific strategy. Both sides have already engaged in several cooperation initiatives to strengthen Southeast Asia’s digital capacities. These actions/engagements aim to help the region capture the immense benefit and respond to potential socioeconomic disruptions brought by the digital economic boom. However, US-ASEAN cooperation will have to deal with two challenges. First, China has already established a comprehensive and prevalent presence in the region’s digital economy, from hard infrastructure and customer-facing businesses to developing digital standards. Second, Southeast Asia’s diversity in economic development leads to varied capacities among its members. These attributes carry certain security complications for Southeast Asia and the US in the long run. Addressing them will require both sides to further boost cooperation, particularly in shaping regional digital standards.
Topic:
Economics, International Cooperation, Digital Economy, and ASEAN
Political Geography:
North America, Southeast Asia, United States of America, and Indo-Pacific

12. Global Terrorism Index 2023

Author:
Institute for Economics and Peace (IEP)
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
Institute for Economics & Peace (IEP)
Abstract:
The GTI report is produced by the Institute for Economics & Peace (IEP) using data from TerrorismTracker and other sources. TerrorismTracker provides event records on terrorist attacks since 1 January 2007. The dataset contains almost 66,000 terrorist incidents for the period 2007 to 2022. In 2022, deaths from terrorism fell by nine per cent to 6,701 deaths and is now 38 per cent lower than at its peak in 2015. The fall in deaths was mirrored by a reduction in the number of incidents, with attacks declining by almost 28 per cent from 5,463 in 2021 to 3,955 in 2022. However, if Afghanistan was removed from the index, terrorism deaths would have increased by four per cent. Afghanistan remained the country most impacted by terrorism for the fourth consecutive year, despite attacks and deaths falling by 75 per cent and 58 per cent respectively. The GTI does not include acts of state repression and violence by state actors and, as such, acts committed by the Taliban are no longer included in the scope of the report since they took control of the government.
Topic:
Climate Change, Economics, Science and Technology, Terrorism, Finance, and Peace
Political Geography:
Middle East, North Africa, and Global Focus

13. Is the supermultiplier nil? - A Replication Study of Deleidi and Mazzucato (2021)

Author:
Jens Boysen-Hogrefe
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Analyzing US macro data via a structural vector-autoregressive model, Deleidi and Mazzucato (2021) find strong positive spillover of mission-oriented government spending on private research and development activity and on overall economic dynamism ("crowding in"). However the result hinges on specific transformation of the data. Deleidi and Mazzucato deflate all variables in their model via the GDP deflator. Applying originally price adjusted data a spillover on GDP cannot be found. Estimating the model with data starting in 1984, the results point at “crowding out” of private research and development activity.
Topic:
Economics, Fiscal Policy, Innovation, and Fiscal Multipliers
Political Geography:
North America and United States of America

14. The path of economics research production: Insights into the seesaw between theory and empirics

Author:
João Ricardo Faria, Rajeev K. Goel, and Neela D. Manage
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
This paper provides insights into the apparent seesaw between the generation of theoretical versus empirical economics research over time. A dynamic model considers the incentives of researchers to focus on empirical versus theoretical papers. It yields the main characteristics of the path-changing of economics research, from theoretical-intensive to empirical-focused. The model has two equilibria, one with a higher proportion of theoretical papers and another with a higher proportion of empirical papers. Curiously, the equilibrium with greater theoretical papers is stable, while the one with more empirical papers is a saddle point. This suggests that the current trend of increasing empirical research is unlikely to last.
Topic:
Economics, Research, and Innovation
Political Geography:
Europe, North America, and United States of America

15. The Ukraine Support Tracker: Which countries help Ukraine and how?

Author:
Christoph Trebesch, Ariana Antezza, Katelyn Bushnell, Andre Frank, and Pascal Frank
Publication Date:
02-2023
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
This paper presents the Ukraine Support Tracker, which lists and quantifies military, financial and humanitarian aid to Ukraine in the context of the Russia-Ukraine war. Since the third update we track support by 41 countries, specifically the EU member states, other members of the G7, as well as Australia, South Korea, Turkey, Norway, New Zealand, Switzerland, China, Taiwan, India and Iceland. The database is intended to support a facts-based discussion about support by other countries to Ukraine. Private donations and aid through non-governmental organizations are not included due to a lack of systematic data. To value in-kind support like military equipment or weapons, we rely on government statements as well as own calculations using market prices. We find significant differences in the scale of support across countries, both in absolute terms and as percent of donor country GDP.
Topic:
Economics, War, Foreign Aid, Military Aid, Geoeconomics, and Russia-Ukraine War
Political Geography:
Russia, Europe, Ukraine, Germany, and United States of America

16. Governance Practices in Turkey: A Comparative Perspective

Author:
Dimitris Tsarouhas
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Hellenic Foundation for European and Foreign Policy (ELIAMEP)
Abstract:
Turkey’s latest National Development Plan seeks to attain economic and social development equal to that of the world’s most prosperous states. By structuring expectations and incentives for economic and political actors, institutions play a key role in achieving sustainable, long-term development. This paper provides a systematic longitudinal analysis of core governance indicators which shed light on Turkey’s evolution over time from a comparative perspective. The results point to a sharp decline in the institutional efficacy of the Turkish apparatus of state vis a vis core aspects of the country’s development agenda, especially with regard to the rule of law, public administration, regulatory capacity, and predictability. Turkey’s declining scores in recent years fly in the face of its political agenda and severely undermine welfare gains made in the early 21st century.
Topic:
Development, Economics, Governance, and Domestic Politics
Political Geography:
Turkey and Middle East

17. Quantum technologies and value chains: Why and how Europe must act now

Author:
Georg Riekeles
Publication Date:
03-2023
Content Type:
Working Paper
Institution:
European Policy Centre (EPC)
Abstract:
As next-generation foundational technologies, quantum computing, communication, and sensing carry significant economic and security implications that go to the core of today’s strategic competition. In contrast with the US, where Big Tech actors dominate, Europe’s strengths lie in a vibrant ecosystem of research organisations and start-ups. This growing ecosystem is now at a critical juncture to develop into an internationally competitive European industry. This paper is based on research and a series of workshops conducted with European policymakers, stakeholders and industry actors looking into Europe’s technological position in contested international value chains. It proposes ten recommendations for the EU’s industrial policy mix under the following headings: KNOW – Embrace tech forecasting at the EU level COOPERATE – Combine European efforts in an EU Quantum Industrial Alliance INVEST – Mobilise European public-private capital for industrial scale-up PROTECT – Deploy Europe’s defensive toolbox prudently In a year that will see the launch of the EU Sovereignty Fund and adoption of the European Chips Act, quantum stands as a test case for the EU’s technological competitiveness and industrial policy agenda.
Topic:
Security, Economics, European Union, Industry, Quantum Computers, and Value Chains
Political Geography:
Europe

18. RCEP and Indonesia: Economic Reform and Prospects for Implementation

Author:
Yose Rizal Damuri and Deni Friawan
Publication Date:
01-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
The conclusion of the Regional Comprehensive Economic Partnership (RCEP) is very important for Indonesia as it may bring many benefits to the country. This paper is an attempt to see the role of domestic political-economy dynamics in facilitating and constraining Indonesia’s decision to join, ratify, and implement a free trade agreement (FTA). It also seeks some understanding on whether an FTA can bring significant market liberalisation. This paper focuses on two areas of observation. First, it discusses the current progress of the legislative process and public acceptance of the RCEP agreement in Indonesia and how the process is influenced by the political-economy dynamics of the country. Second, the paper also looks at the potential impacts of the agreement on Indonesia’s current reform agenda, especially the recently passed Jobs Creation Law (Law No. 11/2020). For these observations, we conduct a content analysis on RCEP-related news published in two newspapers in Indonesia, namely Kompas and the Jakarta Post. In addition to content analysis, we also conducted interviews with stakeholders, including parliament members and government officials from the Ministry of Trade who have been actively involved in RCEP negotiations and the ratification process. The paper provides some remarks and recommendations for the future agenda of RCEP ratification and implementation in Indonesia.
Topic:
Economics, Reform, Policy Implementation, Free Trade, and Trade
Political Geography:
Indonesia and Southeast Asia

19. What Japanese Tourism Amenities are Influenced in Terms of Affecting Inbound Tourist Demand?

Author:
Yoko Konishi and Takashi Saito
Publication Date:
08-2023
Content Type:
Working Paper
Institution:
Economic Research Institute for ASEAN and East Asia (ERIA)
Abstract:
Since 2012, the number of inbound tourists to Japan has increased every year, and new records of tourism-related economic indicators are being updated. On the other hand, the sudden inbound boom has led to a concentration of travel destinations, and over-tourism has become a problem. In this paper, we first statistically observe the concentration of tourists by accommodation type for each country of origin. Second, by identifying tourism amenities that contribute to inbound demand, we gain the knowledge necessary to shift demand from facilities with a high concentration of inbound tourists to facilities with lower occupancy. For the analysis, we utilised establishment data from the Online Travel Agency ‘Accommodation Travel Statistics Survey’ and data on tourism resources by region. The results show that the number of rooms, average price, membership of the hotel in a chain, internet availability, room type, number of World Heritage sites, and number of direct flights positively affect inbound demand. In particular, for ryokan (Japanese-style inns) with low occupancy rates and inbound guest ratios, their independence, internet availability, Western-style room availability, number of World Heritage sites, and hot spring facilities are effective in capturing demand.
Topic:
Economics, Tourism, Hospitality, and Travel
Political Geography:
Japan and Asia

20. Housing in Wyoming: Constraints and Solutions

Author:
Thảo-Nguyên Bùi, Tim Freeman, Ricardo Hausmann, Farah Kaddah, Lucas Lamby, Tim O'Brien, and Eric Protzer
Publication Date:
04-2023
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Quantitative evidence supports the contention that Wyoming’s housing market is constrained, to a greater degree than many other parts of the US. Prices are persistently above expectations given economic fundamentals in most parts of the state, and the supply of new housing in Wyoming is on average less responsive to price increases than in other US counties. This has undermined natural population growth and contributed to a low amount of population density close to city centers in Wyoming, as compared to other US cities with comparable population levels. Importantly, this phenomenon is not simply the result of pandemic-era economic frictions. The evidence shows that these constraints have durably persisted in Wyoming. This housing constraint weighs heavily on the broader Wyoming’s economy, and chokes off growth in new industries that could add to the Wyoming economy beyond its natural resource base. Businesses consistently report a lack of access to workforce as a leading problem that ultimately results from a lack of housing. Some businesses have even tried to create their own housing for employees, and news reports abound of teachers and nurses who secure jobs in Wyoming communities but then have to leave because they cannot find housing. Key problems behind Wyoming’s housing constraints include excessive regulations concerning housing density and insufficient investment in arterial infrastructure. For example, there is evidence that over-regulated minimum lot sizes in Wyoming are blocking the creation of supply to match free-market demand for houses with smaller amounts of land. Other areas of over-regulation include those concerning allowable housing types, building height, parking spaces per dwelling, and the housing approval process itself. This may be seen as surprising given Wyoming’s reputation as a low-regulation state, but Wyoming maintains restrictions that other states and countries have discarded as outdated and highly counterproductive. Besides outright restrictions on housing development, we find that the most common cost driver undermining the housing development has to do with low public investment in needed arterial infrastructure, especially water systems. Land supply as well as material and construction costs are not primary constraints to housing development across the state, but may matter for select communities. We suggest a portfolio of policy changes for the state of Wyoming to explore in order to solve its housing constraints. One category of changes is regulatory, and focuses on deregulation, reducing bureaucratic overhead, and shifting from veto-cratic to democratic housing approval procedures. Another category is focused on investment on infrastructure to support housing, and exploration of state-local funding structures to facilitate continuous infrastructure improvement. If implemented, these changes will not only help to solve Wyoming’s housing constraints but also facilitate housing development in a way that combats urban sprawl, and in doing so protects open spaces outside of cities that Wyomingites value.
Topic:
Development, Economics, Public Policy, and Housing
Political Geography:
North America and United States of America

21. Exchange Rate Arrangements: Fix, Float, or Manage?

Author:
Nathaniel Cline, Carlos Schönerwald da Silva, and Matias Vernengo
Publication Date:
10-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
The paper tries to provide a concise summary of the main debates on exchange rate arrangements. It a simple taxonomy of exchange rate arrangements, fixed, flexible and managed, and a brief analysis of the main debates about their advantages and disadvantages. It emphasizes the different policy objectives of mainstream and heterodox schools of thought, suggesting that they tend to be more relevant than the specific defense of one particular exchange rate arrangement. In that sense, there are divergences on their preferences within schools of thought. The paper also discusses the causes of currency crises and the role of the dollar in the international monetary system.
Topic:
Economics, Monetary Policy, Crisis Management, Exchange Rate Policy, and Currency
Political Geography:
Global Focus

22. Optimal Inflation Targeting With Anchoring

Author:
Thomas Michl
Publication Date:
06-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
This paper presents an alternative foundation to the standard quadratic loss function characterizing central bank inflation policy. The alternative treats high employment as a social benefit. In recognition of the inherent asymmetry of the output gap, two self-imposed constraints provide guardrails that rule out excess unemployment and opportunistic reflation. The loss function includes a novel reverse discounting mechanism that penalizes the bank for more sustained inflation gaps that could undermine confidence in the central bank’s target. In the absence of anchoring, the central bank is obliged to use economic slack to accomplish a disinflation but the presence of anchoring creates greater policy flexibility freeing it from the tyranny of the sacrifice ratio. The central bank’s optimal policy differs dramatically from the standard Taylor Rule recommendation in choosing policy plans with higher employment, in its willingness to overshoot inflation targets, and in avoiding excess unemployment, all while observing the discipline needed for successful inflation targeting.
Topic:
Economics, Employment, Banks, and Inflation
Political Geography:
Global Focus

23. The Crisis of Capitalism, the Noun

Author:
Nancy Folbre
Publication Date:
05-2023
Content Type:
Working Paper
Institution:
Political Economy Research Institute (PERI), University of Massachusetts Amherst
Abstract:
This paper explores the challenges that feminist theory, stratification economics, and intersectionality pose to the characterization of capitalism as a unitary system. Attention to the structural basis for inequalities based on gender and race weakens traditional Marxian concepts of exploitation based on the appropriation of surplus value. On the other hand, the continuing relevance of many forms of collective conflict heightens appreciation of the ways in which capitalist institutions discourage the forms of cooperation necessary to address both ecological threats and shortfalls in care provision.
Topic:
Economics, Race, Capitalism, Intersectionality, Gender, and Feminist Theory
Political Geography:
Global Focus

24. Digitalization of Special Economic Zones in China

Author:
Jie (Jeanne) Huang
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
China Studies Centre, The University of Sydney
Abstract:
Special Economic Zones (SEZ) have become the forefront in China to test legal and technological reforms for digital trade. This chapter explores three cutting-edge case studies in China’s SEZs: the Beijing blockchain-based Single Window deposit box; newly established big data exchanges in Beijing, Tianjin, and Shanghai SEZs; and pilot projects in financial, medical care and automobile industries to flow data across the border in the Shanghai SEZ. It scrutinizes China's experiments in the context of its applications to join CPTPP and DEPA. It argues that the development of Chinese domestic law for digital trade is shifting away from the traditional paradigm that uses international commitments to push domestic reform or make domestic law according to international law. The development of Chinese domestic law for digital trade relies much more on China’s domestic needs than what FTAs negotiations require. FTAs are increasingly becoming a tool for China to shape international law rather than a benchmark for legislating domestic Chinese law.
Topic:
Development, Economics, International Trade and Finance, Hegemony, and Digitalization
Political Geography:
China and Asia

25. Trump ended WTO dispute settlement. Trade remedies are needed to fix it.

Author:
Chad P. Bown
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Unhappy with the rulings of the WTO dispute settlement system, which disproportionately targeted US use of trade remedies, the United States ended the entire system in 2019. There are multiple hurdles to agreeing to new terms of trade remedy use and thus potentially restoring some form of binding dispute settlement. First, a change would affect access to policy flexibility by the now large number of users of trade remedies. Second, although China’s exports are the overwhelming target of trade remedies, exporters in other countries increasingly find themselves caught up in trade remedy actions linked to China. Third, critical differences posed by China’s economic model may call for new rules for trade remedies, but no consensus on those rules has emerged. Even some of the most promising reforms have practical limitations, create additional challenges, or may be politically unviable.
Topic:
Economics, Trade, Donald Trump, and WTO
Political Geography:
China and United States of America

26. The international financial system after COVID-19

Author:
Maurice Obstfeld
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
In March 2020, international markets seized up with a violence unequaled since the global financial crisis nearly a dozen years before. As economies around the world locked down in the face of the potentially deadly but completely novel SARS-CoV-2 virus, stock markets fell, firms and governments scrambled for cash, liquidity strains emerged even in the market for US Treasurys, and capital flows to emerging-market and developing economies (EMDEs) reversed violently. This paper reviews the evolution of global financial markets since the global financial crisis, changes in academic thinking about these markets’ domestic impacts, the strains seen during the COVID-19 crisis, and perils that may lie ahead. A key theme is that stability will be enhanced if the global community embraces reforms that elevate market resilience, rather than depending on skillful policymakers wielding aggressive but ad hoc policy interventions to ride to the rescue again.
Topic:
Economics, Markets, COVID-19, and Financial Systems
Political Geography:
Global Focus

27. Socioeconomic diversity of economics PhDs

Author:
Robert Schultz and Anna Stansbury
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
It is well documented that women and racial and ethnic minorities are underrepresented in the economics profession, relative to both the general population and many other academic disciplines. Less is known about the socioeconomic diversity of the profession. In this paper, we use data from the National Science Foundation’s Survey of Earned Doctorates to examine the socioeconomic background of US economics PhD recipients as compared with US PhD recipients in other disciplines, proxying for socioeconomic background using PhD recipients’ parents’ educational attainment. We find that economics PhD recipients are substantially more likely to have highly educated parents, and less likely to have parents without a college degree, than PhD recipients in other disciplines. This is true both for US-born and non-US-born PhD recipients, but the gap between economics and other disciplines is starker for those born in the United States. The gap in socioeconomic diversity between economics and other PhD disciplines has increased over the last two decades.
Topic:
Economics, Women, Diversity, and Academia
Political Geography:
Global Focus

28. WTO 2025: Restoring binding dispute settlement

Author:
Alan Wm. Wolff
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
Binding dispute settlement—the ability to obtain a final judgment of whether a member of the World Trade Organization (WTO) has acted inconsistently with its obligations—was the defining attribute of the WTO as created in 1995. Global commerce thrived on having the certainty provided by its taking place within this system. For well over a decade, the United States had complained that the dispute settlement system was undermining the trade remedies—antidumping, countervailing duties against subsidies, and safeguard actions against injurious imports—that were allowed under the WTO’s rules. When a populist US administration assumed office in 2017, it blocked appointments to the WTO’s Appellate Body. Today, the WTO dispute settlement system has become balkanized. The European Union and a number of other countries have banded together to put into place an alternative mechanism. Outside this system are the other two-thirds of the WTO members, including the United States. For most WTO members, no definitive result can be reached as to whether WTO obligations have been violated, as there is no assurance that WTO dispute settlement will be binding for them. This paper addresses how to reconstruct a system that the United States could join that would be broadly acceptable to others. It sets out a wide range of elements for negotiators to consider to rebuild the WTO dispute settlement system and make WTO agreements enforceable again.
Topic:
Economics, Trade, WTO, and Disputes
Political Geography:
Global Focus

29. WTO 2025: Enhancing global trade intelligence

Author:
Alan Wm. Wolff
Publication Date:
04-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
International trade flows based on information. Is the foreign market open? What are the conditions for entry? Are there customs duties to be paid and other regulations that need to be satisfied? Businesses thrive on getting as much certainty as they can find, and this requires reliable information. Is the competition subsidized? Are the competitors favored state-owned companies? During the pandemic, governments needed to know if food and medical supplies were going to be available from foreign sources and, most importantly, how available vaccines would be as most of the world’s countries could not produce any. Effective public policy cannot be made in the dark. The World Trade Organization, and the General Agreement on Tariffs and Trade before it, were founded with the idea of providing transparency. But more is needed to understand why trade is taking place, and even more important, when it is not, why not?
Topic:
Economics, Markets, Trade, and WTO
Political Geography:
Global Focus

30. WTO 2025: Constructing an executive branch

Author:
Alan Wm. Wolff
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The World Trade Organization (WTO) as an institution accords much less of a role to its chief officer and her staff, namely the WTO Director-General and the Secretariat, than do any of its sister international organizations—the World Bank, the International Monetary Fund, the Organization for Economic Cooperation and Development—to their chief officers and staff. The WTO Secretariat is much smaller than its peer international organizations and underfunded. In considering WTO reform, this deficiency needs to be rectified if the WTO’s performance is to live up to its Members’ needs.
Topic:
Economics, World Bank, IMF, WTO, and OECD
Political Geography:
Global Focus

31. Public responses to foreign protectionism: Evidence from the US-China trade war

Author:
David Steinberg and Yeling Tan
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
America's recent turn toward protectionism has raised concerns about the future viability of the liberal international trading system. This study examines how and why public attitudes toward international trade change when one's country is targeted by protectionist measures from abroad. To address this question, the authors fielded three original survey experiments in the country most affected by US protectionism: China. First, they find consistent evidence that US protectionism reduces Chinese citizens' support for trade. This finding is replicated in parallel experiments on technology cooperation, and further validated outside of the China context with a survey experiment in Argentina. Second, they show that responses to US protectionism reflect both a "direct reciprocity" logic—citizens want to retaliate against the United States specifically—and a "generalized reciprocity" logic that reduces support for trade on a broader, systemic basis.
Topic:
Economics, Political Economy, Public Opinion, Trade, and Protectionism
Political Geography:
China, Asia, North America, and United States of America

32. Defying United Nations Sanctions: Three Reasons for African Engagement with North Korea

Author:
Tycho van der Hoog
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
The United Nations (UN) sanctions against North Korea are weakened by structural evasion techniques and weak enforcement. The African continent is a crucial node in the global illicit networks of North Korea. This paper examines three motives for African states to cooperate with North Korea, with a particular focus on the context of southern Africa: historical affinity (reciprocity), the practical issue of maintenance dependency (necessity), and the presence of weak enforcement regimes (opportunity). Based on a deep reading of UN Panel of Experts reports, academic literature and policy papers, novel archival material, and an interview with a defected North Korean diplomat, this paper argues that solutions to strengthen the sanctions regime can be successful only if they are grounded in African initiatives.
Topic:
Security, Economics, United Nations, and Sanctions
Political Geography:
Africa, Asia, and North Korea

33. South Korea's Critical Moment in Digital Currency Policymaking: Between Regulating Cryptocurrencies and Launching a Central Bank Digital Currency (CBDC)

Author:
June Park
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Korea Economic Institute of America (KEI)
Abstract:
Why is South Korea pilot-testing its Central Bank Digital Currency (CBDC), and what made it shift from non-issuance to consideration? This paper investigates the Bank of Korea (BOK)’s CBDC-related developments amid the geopolitical contest between the U.S. and China. It examines the Moon Jae-in administration’s defiance of decentralized finance (DeFi) and the BOK’s sudden shift from non-issuance to potential issuance, which led to expedited research, development, and pilot-testing of CBDCs. As in the case of the digital yuan, the BOK envisions a hybrid architecture for the digital won, wherein central banks and associated partner institutions are CBDC distributors, though they are distinguished by placing the digital won on distributed ledger technology rather than by centrally controlling it. However, South Korea’s previously rash decision to forego DeFi under an undemocratic process has deprived the country of the time and opportunity to develop new innovations as a leading country in the digital frontier. By sticking only to digitalizing centralized finance, the country now aims to be in “standby” mode for its CBDC launch if and when required, so as not to fall behind in digital financial architecture. This paper scrutinizes the South Korean government’s moves on crypto and CBDCs and argues that 1) the Moon administration has shown incapability in addressing DeFi amid the crypto boom and bust, and 2) the BOK’s shift from non-issuance to potential issuance of the digital won is driven by its interest to uphold central bank independence amid swaying geopolitics between the U.S. and China and an unpredictable upcoming presidential election in South Korea.
Topic:
Economics, Elections, Finance, Cryptocurrencies, and Digital Currency
Political Geography:
China, Asia, South Korea, North America, and United States of America

34. Revisiting the links between economic inequality and political violence: The role of social mobilization

Author:
Patricia Justino
Publication Date:
02-2022
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The main aim of this paper is to explore theoretically important mechanisms through which economic inequalities may affect the emergence of political violence given the forms of social mobilization they (may) generate. The paper identifies and explores two mechanisms under which social mobilization in unequal societies may result in either non-violent or violent collective action and, ultimately, in violent conflict. The first condition is the level of social cooperation between different social groups that are formed during the process of social mobilization. The second is the efficacy of collective action to drive change, which is in turn shaped by the ability of individuals within groups to coordinate their actions. Forms of social mobilization become violent when antagonism is the dominant form of social interaction between different social groups in unequal societies, and when each of these social groups exhibits high levels of internal coordination.
Topic:
Political Violence, Economics, Social Movement, Inequality, Mobilization, and Collective Action
Political Geography:
Global Focus

35. Assessing the economic, societal and cultural impact of YouTube in India

Author:
Oxford Economics
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Oxford Economics
Abstract:
Recent research by Oxford Economics suggests YouTube contributed 6,800 Cr to the Indian economy in 2020 and supported 6,83,900 jobs. But its impact goes further, bringing a rich array of economic, cultural and societal benefits to India. YouTube generates substantial revenue for creators, artists, and media companies, who in turn support a broad ecosystem of employees and businesses in India. Creators deliver a wealth of educational tools and materials, which are valued by students, parents, and teachers alike.
Topic:
Economics, Mass Media, Social Media, and YouTube
Political Geography:
India and Asia

36. Cumulative climate shocks and migratory flows: evidence from Sub-Saharan Africa

Author:
Salvatore Di Falco, Anna B. Kis, and Martina Viarengo
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Centre for Trade and Economic Integration, The Graduate Institute (IHEID)
Abstract:
We re-examine the effects of negative weather anomalies during the growing season on the decision to migrate in rural households in five sub-Saharan African countries. To this end we combine a multi-country household panel dataset with high-resolution gridded precipitation data. We find that while the effect of recent adverse weather shocks is on average modest, the cumulative effect of a persistent exposure to droughts over several years leads to a significant increase in the probability to migrate. The results show that more frequent adverse shocks can have more significant and long-lasting consequences in challenging economic environments.
Topic:
Climate Change, Economics, Migration, and Drought
Political Geography:
Sub-Saharan Africa

37. The Instability of Preferences: Uncertain Futures and the Incommensurable and Intersubjective Nature of Value(s

Author:
Richard Bronk and Jens Beckert
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Max Planck Institute for the Study of Societies
Abstract:
The default assumption of standard economics is to treat preferences as exogenously ‘given’, consistent with one another, ‘revealed’ by past choices, and context independent. There has been increased interest recently (within behavioural economics) in the impact of inconsis- tent or irrational preferences and (more broadly) in dynamic and endogenous preferences. This paper builds on these challenges to standard assumptions by analysing the pivotal role of three aspects of preference formation in explaining capitalist dynamics and market insta- bility. These are the constant creation of new preferences and the indeterminacy of choice sets in the context of widespread product innovation; the moral indeterminacy implied by conflicting and incommensurable social norms attaching to market goods where there is no single scale of value and hence no unique set of rational trade-offs; and, lastly, the con- tingent social and market construction of the product differentiation, quality attribution, and value assessments central to preference formation. The paper concludes by considering implications for economics as a discipline.
Topic:
Economics, Capitalism, Norms, and Social Order
Political Geography:
Global Focus

38. China’s increased presence in Latin America: Win-win relations or a new dependency? A state of the art

Author:
Daniel Agramont Lechín
Publication Date:
01-2022
Content Type:
Working Paper
Institution:
Postgraduate Program on Sustainable Development and Social Inequalities in the Andean Region (trAndeS)
Abstract:
The rise of the Popular Republic of China (PRC) is one of the most significant events in contemporary international relations. However, at the global level, the “reemergence of China as a major global power has led to a considerable debate over the likely consequences for the rest of the world” (Jenkins, 2010: 810). China’s growing power raises questions as to the meaning of its superpower status as a nation, and the impact of its newfound influence in not only the Asia-Pacific region, but also the Global South (Dessein, 2015). In the specific case of Latin America and the Caribbean (LAC), the debate centers on the potential disadvantages that China’s vast supply of financial resources might bring for the region. Accordingly, the current paper is intended to examine the debate that has arisen in recent literature around the impact of China’s increased economic presence on Latin America –with win-win relations on the one hand and new dependency on the other.
Topic:
International Relations, Economics, Investment, and Dependency
Political Geography:
China, Asia, and Latin America

39. The Israeli Economy in an Uncertain Global Environment

Author:
Tomer Fadlon and Esteban F. Klor
Publication Date:
08-2022
Content Type:
Working Paper
Institution:
Institute for National Security Studies (INSS)
Abstract:
Economic uncertainty has increased in recent months following the macroeconomic figures published by the major economies. The return of inflation, the supply chain crisis, and the war in Ukraine are leaving their mark on the global economy and arouse concern among both politicians and central banks. In contrast to most of the world's countries, Israel seems like an island of economic stability: inflation is relatively low, and while Western countries are posting negative growth, second-quarter growth in Israel exceeded the expectations. Yet despite the positive data, the slowdown among Israel's main trading partners is expected to affect the local economy, which will have to contend with a challenging economic environment in the coming months.
Topic:
Economics, Globalization, International Trade and Finance, Inflation, and Supply Chains
Political Geography:
Middle East and Israel

40. Improving the Palestinian Authority’s Fiscal Outlook

Author:
Haggy Erkes and Esteban F. Klor
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Institute for National Security Studies (INSS)
Abstract:
Recent reports by the IMF and the World Bank emphasized the dismal fiscal situation of the Palestinian Authority, and recommended boosting foreign aid and implementing structural spending reforms. This article proposes an additional policy: a tax on work permits for Palestinians working in the Israeli econony. This measure stands to reduce the Palestinian deficit by one third, and offset some of the adverse effects of employment in Israel.
Topic:
Economics, Leadership, Fiscal Policy, and Palestinian Authority
Political Geography:
Middle East, Israel, and Palestine

41. A Gateway to Africa? Economic Opportunities in Israel-Morocco Relations

Author:
Morr Link
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Institute for National Security Studies (INSS)
Abstract:
Since renewing diplomatic relations between Jerusalem and Rabat, the scope of trade indeed has grown between the two countries, but the full potential still has not been realized. How can the economic cooperation be improved, which also entails many policy opportunities for both Israel and Morocco?
Topic:
Economics, International Cooperation, International Trade and Finance, Bilateral Relations, and Economic Cooperation
Political Geography:
Africa, Middle East, Israel, and Morocco

42. Demonstrations in Iran in Protest of the Sharp Rise in Prices of Basic Goods

Author:
Raz Zimmt
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Institute for National Security Studies (INSS)
Abstract:
At least three people were killed and dozens were injured and arrested in protests that erupted in southwestern Iran due to a controversial move by the government in Tehran. Until now, the scope of the protest is very limited and does not threaten the regime’s stability, but it is additional evidence of the severe economic crisis, which can be added to the long list of challenges facing President Raisi
Topic:
Economics, Protests, Demonstrations, and Standard of Living
Political Geography:
Iran and Middle East

43. Iraq-Gulf Relations: An Anchor for Stability and Restraining Iranian Involvement in the Region?

Author:
Yoel Guzansky and Yaron Schneider
Publication Date:
05-2022
Content Type:
Working Paper
Institution:
Institute for National Security Studies (INSS)
Abstract:
While weathering a political crisis, Iraq is now at a crossroads regarding the future of the state. In tandem, neighboring Sunni states, led by Saudi Arabia, are moving closer to Baghdad. What are the reasons for this development, and how is it likely to affect the Middle East, Iran’s expansion in the area, and Israel?
Topic:
Economics, International Cooperation, Economic Stability, and Regional Power
Political Geography:
Iraq, Iran, Middle East, and Gulf Nations

44. MF Dollars for Dictators? The Allocation of SDR to Moderate and Isolated Countries

Author:
Haggy Etkes
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Institute for National Security Studies (INSS)
Abstract:
“The International Monetary Fund assisted radical regimes, including the Russian government and the Taliban in Afghanistan”: This claim was made given the allocation of Special Drawing Rights (SDR) by the IMF to states in the region. Is there truth to this charge?
Topic:
Economics, International Cooperation, Finance, and IMF
Political Geography:
Afghanistan, Russia, Europe, and Middle East

45. World Economy Autumn 2022: Global growth falters

Author:
Klaus-Jurgen Gern, Ulrich Stolzenburg, Nils Sonnenberg, Stefan Kooths, and Jan Reents
Publication Date:
09-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
In spring 2022, world economic growth came to a standstill amid high inflation, persistent supply bottlenecks and elevated uncertainty. In many countries real wages are declining significantly dampening private consumption even though extra savings accumulated during the pandemic are still available to mitigate the adverse impact to some extent. At the same time financial conditions have also deteriorated as central banks tightened their policies. In China, the strict zero-covid policy and problems in the real estate sector are slowing economic activity. Against this backdrop, the outlook for the global economy has deteriorated further. We have, again, lowered our forecast and are now expecting global output to increase by only 2.9 percent this year and 2.2 percent next year (calculated on a purchasing power parity basis). The forecast assumes that commodity prices will gradually decline in line with forward prices, which will over time reduce the upward pressure on prices and provides the foundations for an economic upturn in 2024. However, the pass-through of higher commodity prices into consumer prices is probably not yet complete and wage increases are likely to intensify in many countries. Consequently, underlying inflation is likely to remain higher than in the years before the Covid crisis and remain above central bank targets over the forecast horizon
Topic:
Economics, Globalization, Economic Growth, and COVID-19
Political Geography:
Global Focus

46. German Economy Summer 2022: Slowly progressing recovery

Author:
Jens Boysen-Hogrefe, Nils Jannsen, Saskia Meuchelbock, Dominik Groll, Stefan Kooths, and Nils Sonnenberg
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The German economy navigates troubled waters. The catch-up process in the contact-intensive service industries is continuing at a fast pace and companies in the manufacturing sector are sitting on well-filled order books. However, high inflation is reducing the purchasing power of disposable incomes and thus dampening the recovery in consumption. In addition, supply bottlenecks have recently worsened again due to the war in Ukraine. As a result, the recovery will regain strength only in the second half of the year, when prices will no longer rise as rapidly and supply bottlenecks will begin to ease. Overall, we expect GDP to increase by 2.1 percent this year, as in our spring forecast. In 2023, GDP will grow by 3.3 percent (spring forecast: 3.5 percent). At 7.4 percent, inflation in the current year will be higher than ever before in reunified Germany. Next year, inflation will probably remain high with 4.2 percent. The recovery in employment continues. Effective earnings will rise strongly, also because labor shortages have reached an all-time high. In the current year, however, the increase of about 5 percent will lag behind the rate of inflation. Public budget deficits will decline as revenues increase strongly and pandemic-related expenditures are reduced. In 2023, public debt in relation to GDP is expected to be slightly above 60 percent.
Topic:
Economics, GDP, Inflation, and Russia-Ukraine War
Political Geography:
Europe and Germany

47. World economy in summer 2022: Inflation is curbing global growth

Author:
Klaus-Jurgen Gern, Ulrich Stolzenburg, Nils Sonnenberg, Stefan Kooths, and Jan Reents
Publication Date:
06-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
In a situation with already elevated inflation, the war in Ukraine and the zero-covid policy in China have led to additional upward pressures on prices and reinforced the global supply chain problems. Real wages are declining in many countries, dampening personal consumption expenditures even though households are often able to draw from a substantial amount of extra savings accumulated during the pandemic. Given the widespread inflationary pressures, central banks have shifted towards a more restrictive monetary policy stance. Against this backdrop, the outlook for global growth has weakened. We forecast global growth of 3.0 percent in 2022 and 3.2 percent in 2023 (measured in terms of purchasing-power parities), representing a reduction by 0.5 and 0.4 percentage points for 2022 and 2023, respectively. The forecast is based on the assumption that commodity prices have peaked, which would reduce inflationary pressures considerably going forward. However, there is the risk that inflation proves to be more persistent than central banks expect. In such a case, central banks would need to step on the brakes more than assumed, with the risk of a recession in advanced economies and a pronounced deterioration in financial conditions in emerging markets
Topic:
Security, Economics, Inflation, COVID-19, and Russia-Ukraine War
Political Geography:
Global Focus

48. German Economy Spring 2022: Recovery at risk – Soaring Inflation

Author:
Jens Boysen-Hogrefe, Nils Jannsen, Saskia Meuchelbock, Jan Reents, Dominik Groll, Stefan Kooths, Martin Ademmer, and Nils Sonnenberg
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The German economy is once again facing strong headwinds. The war in Ukraine is leading to rising commodity prices, new supply bottlenecks and dwindling sales opportunities. These factors will affect the German economy in different ways. Higher commodity prices reduce the purchasing power of disposable incomes and thus dampen private consumption. Moreover, new supply bottlenecks will dampen industrial production in the coming months. Finally, sales opportunities will deteriorate at least temporarily due to the sanctions and the increased uncertainty caused by the war. All this is hitting the economy in a phase in which the dampening effects of the pandemic are fading out and a strong recovery has begun to emerge. The dampening factors are cushioned because private households have accumulated large amounts of extra savings since the beginning of the pandemic, so that high inflation does not fully impact private consumption. In addition, industrial firms have an unusually high stock of orders, which will cushion the temporarily lower sales opportunities. As a result, the recovery is likely to continue this year, albeit at a noticeably slower pace than expected in winter. Overall, we now expect GDP to rise by 2.1 percent in this year (winter forecast: 4 percent) and by 3.5 percent in 2023 (winter forecast: 3.3 percent). With 5.8 percent inflation is likely to be higher this year than ever before in reunified Germany. Even if commodity prices stop rising and supply bottlenecks gradually ease, inflation is still likely to be unusually high at 3.4 percent next year, also because recent producer price increases are only gradually being passed through to consumers. The labor market is expected to remain robust. Public spending will rise in response to the war and its economic consequences, so that budget deficits will remain at elevated levels for a longer period.
Topic:
Economics, GDP, Inflation, and Purchasing Power
Political Geography:
Europe and Germany

49. Place-based policies and agglomeration economies: Firm-level evidence from Special Economic Zones in India

Author:
Holger Görg and Alina Mulyukova
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
This paper exploits time and geographic variation in the adoption of Special Economic Zones in India to assess the direct and spillover effects of the program. We combine geocoded firm-level data and geocoded SEZs using a concentric ring approach, thus creating a novel dataset of firms with their assigned SEZ status. To overcome the selection bias we employ inverse probability weighting with time-varying covariates in a difference-in-differences framework. Our analysis yields that conditional on controlling for initial selection, SEZs induced no further productivity gains for within SEZ firms, on average. This effect is predominantly driven by relatively less productive firms, whereas more productive firms experienced significant productivity gains. However, SEZs created negative externalities for firms in the vicinity which attenuate with distance. Neighbouring domestic firms, large firms, manufacturing firms and non-importer firms are the main losers of the program. Evidence points at the diversion of inputs from non-SEZ to SEZ-firms as a potential mechanism.
Topic:
Economics, Business, Special Economic Zones, and Geography
Political Geography:
India and Asia

50. Who Lends to Africa and How? Introducing the Africa Debt Database

Author:
David Mihalyi and Christoph Trebesch
Publication Date:
03-2022
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Africa’s sovereign debt markets are not well understood, partly due to a lack of data. This paper introduces the Africa Debt Database (ADD), the most granular and comprehensive dataset on external borrowing by African governments thus far. Our project moves beyond existing aggregate datasets and instead releases information on individual loans and bonds, in particular on the financial terms of each instrument. Taken together, we cover nearly 7000 loans and bonds between 2000 and 2020, with a total volume of 644 billion USD. Using this data, we study Africa’s record lending boom of the 2010s in detail. The debt boom was mainly driven by large sovereign bond issuances in London and New York, as well as growing lending by Chinese state-owned banks. The micro data also reveal a large variation in lending terms across countries, time, and creditors. Sovereign external bonds have interest rates of 6 percent, on average, Chinese banks charge 2-4 percent, and multilateral organizations just 1 percent. Strikingly, many governments in Africa simultaneously borrow large amounts from both private and official creditors, at vastly different rates. The large differences in debt servicing costs are indicative of a cross-creditor subsidy, as cheap concessional loans can be used to pay the high interest to private or Chinese creditors.
Topic:
Economics, Foreign Aid, Credit, and Influence
Political Geography:
Africa, China, and Asia