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22. Is Doughnut Economics a Means Towards Achieving Planetary Health?
- Author:
- Jonathan Ramakrishna
- Publication Date:
- 11-2022
- Content Type:
- Working Paper
- Institution:
- Centre for Non-Traditional Security Studies, S. Rajaratnam School of International Studies
- Abstract:
- With the advent of climate change, the global focus is no longer lingering alone on climate change mitigation and has shifted towards climate adaptation as well. The 2015 Paris Agreement’s target of restricting the average temperature rise in the 21st century to well below two degrees Celsius compared to pre-industrial levels is increasing unlikely, given the inaction of states and the global lack of progress in meeting Paris Agreement goals. As nations scramble to meet Nationally Determined Contributions (NDCs) and effectively design climate policies, the global crisis has given rise to a new domain, Planetary Health. Planetary Health, an interdisciplinary field, is described as a solutions-focused discipline which aims to analyse, mitigate, and resolve human disruption to Earth’s natural systems in the new Anthropocene epoch. The Anthropocene epoch, on the other hand, is established as a geological climate where human activity is drastically altering earth’s systems to an extent that will be reflected in fossil records. Planetary Health inextricably links human health to the health of the planet and illustrates the interdependency of the two, and this relationship has been substantiated by findings which concur that countries with higher ecological threats concurrently experience greater social vulnerability. When climate-induced disasters occur due to human action, there are subsequent consequences on food, water, energy, and human security. The consequences are disproportionately felt by vulnerable communities in states that lack resources and capabilities to address the consequent impacts on human security, and climate instability is a driving force behind political instability. Thus, there is cause for concern not only for the planet’s health but also for human health as the environment’s health continues to dwindle in the Anthropocene Epoch. As such, the concept of Planetary Health is a response to threatened climate security and human security.
- Topic:
- Economics, Health, International Cooperation, and Strategic Stability
- Political Geography:
- Global Focus
23. Exchange Rate Predictability Based on Market Sentiments
- Author:
- Hyo Sang Kim, Eunjung Kang, Yuri Kim, Seongman Moon, and Huisu Jang
- Publication Date:
- 09-2022
- Content Type:
- Policy Brief
- Institution:
- Korea Institute for International Economic Policy (KIEP)
- Abstract:
- It is well-known that exchange rates are difficult to forecast using observed macro-fundamental variables. This discrepancy between economic theory and empirical results is called the Meese and Rogoff puzzle. The purpose of this study is to address this puzzle from a new approach. Rather than pursuing a linkage between macro-fundamentals and exchange rates, we focus on the market sentiment index as a factor that could possibly enhance exchange rate predictability. The analysis folds into three phases. First, we conducted an assessment of the traditional exchange rate predictability model, as well as the augmented traditional model incorporating the market sentiment index. Second, we predicted the exchange rate by applying the market sentiment index, based on the contrarian opinion investment strategy commonly used by foreign exchange dealers. Finally, we analyzed if the machine learning model incorporating both economic fundamentals and market sentiment index could enhance the predictability of the exchange rate.
- Topic:
- Economics, Markets, and Exchange Rates
- Political Geography:
- Global Focus
24. A Future Built on Data: Data Strategies, Competitive Advantage and Trust
- Author:
- Susal Ariel Aarsonson
- Publication Date:
- 06-2022
- Content Type:
- Working Paper
- Institution:
- Centre for International Governance Innovation
- Abstract:
- In the twenty-first century, data became the subject of national strategy. This paper examines these visions and strategies to better understand what policy makers hope to achieve. Data is different from other inputs: it is plentiful, easy to use and can be utilized and shared by many different people without being used up. Moreover, data can be simultaneously a commercial asset and a public good. Various types of data can be analyzed to create new products and services or to mitigate complex “wicked” problems that transcend generations and nations (a public good function). However, an economy built on data analysis also brings problems — firms and governments can manipulate or misuse personal data, and in so doing undermine human autonomy and human rights. Given the complicated nature of data and its various types (for example, personal, proprietary, public, and so on), a growing number of governments have decided to outline how they see data’s role in the economy and polity. While it is too early to evaluate the effectiveness of these strategies, policy makers increasingly recognize that if they want to build their country’s future on data, they must also focus on trust.
- Topic:
- Economics, Governance, Data, and Competition
- Political Geography:
- Global Focus
25. A Digital Loonie among Many Digital Currencies: Prospects and Outlook
- Author:
- Pierre L. Siklos
- Publication Date:
- 10-2022
- Content Type:
- Working Paper
- Institution:
- Centre for International Governance Innovation
- Abstract:
- Global interest in digitalization is growing in response to the COVID-19 pandemic and driving central banks to introduce retail central bank digital currencies (CBDCs). The successful rollout of retail CBDCs will depend on each country’s institutional capacity and the scope of international cooperation and regulation. Retail CBDCs are unlikely to replace domestic currencies but instead complement notes and coins in circulation, offering greater convenience and lower transactions costs.
- Topic:
- Economics, Science and Technology, Digital Economy, Currency, and Digitalization
- Political Geography:
- Global Focus
26. Why Diagnostic Expectations Cannot Replace REH
- Author:
- Roman Frydman and Halina Frydman
- Publication Date:
- 01-2022
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- Gennaioli and Shleifer (GS) have proposed diagnostic expectations (DE) as an empirically-based approach to specifying participants’ expectations, which, like REH, can be applied in every model. Beyond its supposedly general applicability, GS’s formalization of DE implies that participants systematically and predictably overreact to news. Here, we present a formal argument that Kahneman and Tversky’s compelling empirical findings, and those of other behavioral economists, do not provide a basis for a general approach to specifying participants’ “predictable errors.” We also show that the overreaction of participants’ expectations is not a regularity, but rather an artifact of GS’s particular specification of DE.
- Topic:
- Economics, Models, and Predictability
- Political Geography:
- Global Focus
27. Why Diagnostic Expectations Cannot Replace REH
- Author:
- Roman Frydman and Halina Frydman
- Publication Date:
- 01-2022
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- Gennaioli and Shleifer (GS) have proposed diagnostic expectations (DE) as an empirically-based approach to specifying participants’ expectations, which, like REH, can be applied in every model. Beyond its supposedly general applicability, GS’s formalization of DE implies that participants systematically and predictably overreact to news. Here, we present a formal argument that Kahneman and Tversky’s compelling empirical findings, and those of other behavioral economists, do not provide a basis for a general approach to specifying participants’ “predictable errors.” We also show that the overreaction of participants’ expectations is not a regularity, but rather an artifact of GS’s particular specification of DE.
- Topic:
- Economics, Academia, and Models
- Political Geography:
- Global Focus
28. After the Allocation: What Role for the Special Drawing Rights System?
- Author:
- Tobias Pforr, Fabian Pape, and Steffen Murau
- Publication Date:
- 03-2022
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- In August 2021, the IMF made a new SDR allocation to help ease pandemic-induced financial strains in the Global South. This paper assesses the potential of the SDR system to address debt- related problems in global finance. We analyze the SDR system as a web of interlocking balance sheets whose members can use SDR holdings—the system’s tradable assets—for conversion into usable currency as a perpetual low-interest loan or to make payments to each other. Using original IMF data, we study how the system has been practically used since 1990. Though widely perceived as a solution in search of a problem in the post-Bretton Woods era, we find that the SDR system provides three mechanisms through which IMF members borrow and lend usable currency to each other, with different strings attached: first, transactions by agreement; second, the IMF’s core lending facilities for which the SDR system offers additional resources; and third, IMF-sponsored Trusts which seek to harness the SDR system for development purposes and are the basis for the current idea of ‘voluntary channeling’. Overall, given the SDR system’s idiosyncratic accounting rules, the new allocation can improve the liquidity position of a country and offer some limited avenues for sovereign debt restructuring but comes with new interest and exchange rate risks. Voluntary channeling cannot happen without a wealth transfer, neither the SDR allocation nor the use of Trusts can overcome this problem. Still, Trusts can be a useful instrument to help with debt forgiveness and to ensure that borrowed funds are used for their intended purpose.
- Topic:
- Economics, International Cooperation, Finance, and IMF
- Political Geography:
- Global Focus
29. An Economic Defense of Multiple Antitrust Goals: Reversing Income Inequality and Promoting Political Democracy
- Author:
- Mark Glick
- Publication Date:
- 03-2022
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- Two recent papers by prominent antitrust scholars argue that a revived antitrust movement can help reverse the dramatic rise in economic inequality and the erosion of political democracy in the United States. Both papers rely on the legislative history of the key antitrust statutes to support their case. Not surprisingly, their recommendations have been met with alarm in some quarters and with skepticism in others. Such proposals by antitrust reformers are often contrasted with the Consumer Welfare Standard that pervades antitrust policy today. The Consumer Welfare Standard suffers from several defects: (1) It employs a narrow, unworkable measure of welfare; (2) It excludes important sources of welfare based on the assumption that antitrust seeks only to maximize wealth; (3) It assumes a constant and equal individual marginal utility of money; and (4) It is often combined with extraneous ideological goals. Even with these defects, however, if applied consistent with its theoretical underpinnings, the consideration of the transfer of labor rents resulting from a merger or dominant firm conduct is supported by the Consumer Welfare Standard. Moreover, even when only consumers (and not producers) are deemed relevant, the welfare of labor still should consistently be considered part of consumer welfare. In contrast, fostering political democracy—a prominent traditional antitrust goal that was jettisoned by the Chicago School—falls outside the Consumer Welfare Standard in any of its constructs. To undergird such important broader goals requires that the Consumer Welfare Standard be replaced with the General Welfare Standard. The General Welfare Standard consists of modern welfare economics modified to accommodate objective analyses of human welfare and purged of inconsistencies.
- Topic:
- Economics, Democracy, Income Inequality, and Antitrust Law
- Political Geography:
- Global Focus
30. Government Deficits and Interest Rates: A Keynesian View
- Author:
- Brett Palatiello and Philip Pilkington
- Publication Date:
- 04-2022
- Content Type:
- Working Paper
- Institution:
- Institute for New Economic Thinking (INET)
- Abstract:
- We test the neoclassical loanable funds model which postulates that, ceteris paribus, government borrowing increases the long-term rate of interest. The empirical literature exploring such a connection remains largely mixed. We clarify the conflicting results by deploying an ARDL model to decompose the relationship in the United States into long and short-run effects across multiple measures of the government deficit and long-term interest rate. We find a tendency for changes in the deficit to increase long-term interest rates in the short run but the effect is reversed in the long run. We argue that these results are consistent with John Maynard Keynes’ view of the long-term rate as being heavily influenced by monetary policy, central bank credibility and market convention.
- Topic:
- Economics, Governance, Economic Theory, Keynes, and Deficit
- Political Geography:
- Global Focus