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222. The impact economy: balancing profit and impact
- Author:
- Dirk Schoenmaker
- Publication Date:
- 07-2020
- Content Type:
- Working Paper
- Institution:
- Bruegel
- Abstract:
- Governments and companies can reinforce each other in their pursuit of sustainable development, which is based on three pillars: economic, social and environmental. An impact economy, in which governments and companies balance profit and impact, is best placed to achieve the United Nations sustainable development goals.
- Topic:
- Economics, Environment, United Nations, Governance, Sustainable Development Goals, Business, and Private Sector
- Political Geography:
- Global Focus
223. Forecasting exchange rates of major currencies with long maturity forward rates
- Author:
- Zsolt Darvas and Zoltan Schepp
- Publication Date:
- 04-2020
- Content Type:
- Working Paper
- Institution:
- Bruegel
- Abstract:
- This paper presents unprecedented exchange rate forecasting results based upon a new model which approximates the gap between the fundamental equilibrium exchange rate and the actual exchange rate with the long-maturity forward exchange rate.
- Topic:
- Economics, Governance, Global Political Economy, and Exchange Rate Policy
- Political Geography:
- Global Focus
224. Transcending History’s Heavy Hand The Future in Economic Action
- Author:
- Jens Beckert and Timur Ergen
- Publication Date:
- 03-2020
- Content Type:
- Working Paper
- Institution:
- Max Planck Institute for the Study of Societies
- Abstract:
- This paper discusses sociological analyses of the formation and role of expectations in the economy. Recognition of the social constitution of expectations advances the understand- ing of economic action under conditions of uncertainty and helps to explain core features of modern capitalist societies. The range of applications of the analytical perspective is il- lustrated by closer examination of three core spheres of capitalist societies: consumption, investment, and innovation. To provide an idea of core challenges of the approach, three major research questions for the sociological analysis of expectations are presented.
- Topic:
- Economics, Markets, Sociology, Capitalism, and Innovation
- Political Geography:
- Global Focus
225. Low inflation bends the Phillips curve around the world
- Author:
- Kristin Forbes, Joseph E. Gagnon, and Christopher G. Collins
- Publication Date:
- 03-2020
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- This paper models inflation by combining the multicountry framework of one of its authors (Forbes) with the nonlinear specification proposed by the other two (Gagnon and Collins). The results find strong support for a Phillips curve that becomes nonlinear when inflation is low, in which case excess economic slack has little effect on inflation. This finding is consistent with evidence of downward nominal wage and price rigidity. The estimates also show a significant and economically meaningful Phillips curve relationship between slack and inflation when slack is negative (i.e., when output is above long-run potential). In this nonlinear model, international factors play a large role in explaining headline inflation, a role that has increased over time, supporting the results of Forbes’ linear model.
- Topic:
- Economics, Inflation, and Data
- Political Geography:
- Global Focus
226. What might have been: Globalization on the medal stand at the Tokyo Olympics
- Author:
- Soyoung Han and Marcus Noland
- Publication Date:
- 04-2020
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- The Summer Olympic Games are the most globalized sporting event on earth. Until now, the Summer Games had been postponed only three times—in 1916, 1940, and 1944—all because of world wars. So, the announcement that in response to the COVID-19 pandemic, the 2020 Tokyo Games would be postponed by a year is significant, implicit testimony to the destructiveness of the pandemic. The Tokyo Games were expected to continue the evolution of the Games away from the aristocratic European milieu where the modern Olympic movement began. As poverty has declined and incomes across the global economy have converged, participation in the Games has broadened and the pattern of medaling has become more pluralistic, particularly in sports with low barriers to entry in terms of facilities and equipment. This Policy Brief presents forecasts of medal counts at the 2020 Tokyo Summer Games had they had gone on as scheduled, setting aside possible complications arising from the coronavirus pandemic. The forecasts are not just a depiction of what might have been. They establish a benchmark that can be used when the Games are eventually held, to examine the impact of the uneven incidence of the pandemic globally.
- Topic:
- Economics, Globalization, Sports, and Olympics
- Political Geography:
- Japan, Asia, and Global Focus
227. How the G20 can hasten recovery from COVID-19
- Author:
- Maurice Obstfeld, Adam S. Posen, Olivier Blanchard, Chad P. Bown, Cullen S. Hendrix, Ana González, Simeon Djankov, Anne-Laure Kiechel, Anna Gelpern, Sean Hagan, Adnan Mazarei, Christopher G. Collins, Simon Potter, Edwin M. Truman, and Joseph E. Gagnon
- Publication Date:
- 04-2020
- Content Type:
- Special Report
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- The world's leading economic powers must cooperate more to combat the health and economic shocks resulting from the COVID-19 pandemic. In a new PIIE Briefing, Peterson Institute experts outline how collective action by the Group of Twenty (G20) nations can make a difference. The PIIE agenda includes removal of trade barriers impeding the flow of medical supplies and food, and more money for research, testing, and disease control, especially for debt-burdened low-income countries. The World Bank and the World Health Organization need more resources to relieve suffering, and the International Monetary Fund must step up to stabilize the world financial system.
- Topic:
- Economics, Health, World Health Organization, International Monetary Fund, World Bank, G20, and Coronavirus
- Political Geography:
- Global Focus
228. Central bank policy sets the lower bound on bond yields
- Author:
- Joseph E. Gagnon and Olivier Jeanne
- Publication Date:
- 01-2020
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- This paper shows that the scope for bond yields to fall below zero is strictly limited by market expectations about how far below zero central banks are willing to set their short-term policy rates. If a central bank communicates a credible commitment to keeping its policy rate above a given level under all circumstances, then bond yields must be higher than that level. This result holds true even in a model in which central banks are able to depress the term premium in bond yields below zero via large-scale purchases of long-term bonds, also known as quantitative easing (QE). QE becomes less effective as bond yields approach their lower bound.
- Topic:
- Economics, Finance, Central Bank, and Global Bond Market
- Political Geography:
- Global Focus
229. Automatic stabilizers in a low-rate environment
- Author:
- Olivier Blanchard and Lawrence H. Summers
- Publication Date:
- 02-2020
- Content Type:
- Policy Brief
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- With interest rates persistently low or even negative in advanced countries, policymakers have barely any room to ease monetary policy when the next recession hits. Fiscal policy will have to play a major and likely dominant role in stimulating the economy, requiring policymakers to fundamentally reconsider fiscal policy. Blanchard and Summers argue for the introduction of what they call “semiautomatic” stabilizers. Unlike purely automatic stabilizers (mechanisms built into government budgets that automatically—without discretionary government action or explicit triggers—increase spending or decrease taxes when the economy slows or enters a recession), semiautomatic stabilizers are targeted tax or spending measures that are triggered if, say, the output growth rate declines or the unemployment rate increases beyond a specified threshold. The authors argue that the trigger should be changes in unemployment rather than changes in output, and the design of semiautomatic stabilizers, whether they focus on mechanisms that rely primarily on income or on intertemporal substitution effects (changing the timing of consumption), depends crucially on the design of discretionary policy.
- Topic:
- Economics, Government, Monetary Policy, and Finance
- Political Geography:
- Global Focus and United States of America
230. Global value chains and the removal of trade protection
- Author:
- Chad P. Bown, Aksel Erbahar, and Maurizio Zanardi
- Publication Date:
- 02-2020
- Content Type:
- Working Paper
- Institution:
- Peterson Institute for International Economics (PIIE)
- Abstract:
- This paper examines how trade protection is affected by changes in the value-added content of production arising through global value chains (GVCs). Exploiting a new set of World Trade Organization (WTO) rules adopted in 1995 that impose an exogenously timed requirement for countries to reevaluate their previously imposed trade protection, the authors adopt an instrumental variables strategy and identify the causal effect of GVC integration on the likelihood that a trade barrier is removed. Using a newly constructed dataset of protection removal decisions involving 10 countries, 41 trading partners, and 18 industries over 1995–2013, they find that bilateral industry-specific domestic value-added growth in foreign production significantly raises the probability of removing a duty. The results are not limited to imports from China but are only found for the protection decisions of high-income countries. Back-of-the-envelope calculations indicate that rapid GVC growth in the 2000s freed almost a third of the trade flows subject to the most common temporary restrictions (i.e., antidumping) applied by high-income countries in 2006.
- Topic:
- Economics, International Trade and Finance, Global Markets, Finance, and Trade
- Political Geography:
- Global Focus