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121. Fiscal resiliency in a deeply uncertain world: The role of semiautonomous discretion

Author:
Peter R. Orszag, Robert E. Rubin, and Joseph E. Stiglitz
Publication Date:
01-2021
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Orszag, Rubin, and Stiglitz outline a new fiscal framework that they argue would better equip policymakers to face deep uncertainties about future interest rates (which, they say, may not remain low forever), hard-to-predict global shocks, and climate risks. They reject fiscal anchors—simple limits on deficits or debt as a share of GDP that governments adopt to check their spending and borrowing—that have historically guided fiscal policy and believe any attempts to modify such targets for the current period of low interest rates are likely to fail. Instead they propose making the budget respond more automatically to economic distress (through stronger automatic stabilizers) and to long-term fiscal pressures (e.g., embedding adjustment mechanisms in health care and pension programs), as well as creating an infrastructure program and extending debt maturities to insure against interest rate changes. Such a "streamlined dashboard" would then allow policymakers to use discretion as necessary to take any additional actions—either to provide more stimulus during short-term difficulties or to adjust the automatic features themselves—rather than adhering to fiscal targets that may no longer be appropriate when economic conditions change.
Topic:
Financial Crisis, Economy, Fiscal Policy, and Fiscal Deficit
Political Geography:
Global Focus

122. Source – Assembly – Sink: Value Added Flows in the Global Economy

Author:
Robert Stehrer
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
In this paper we provide a method to characterise global value chains and a related decomposition of bilateral gross exports by distinguishing three different stages of the value-added flows: (i) the source of value added, (ii) the final assembly stage of a product, and (iii) the final absorption (sink) of this product. Methodologically this is embedded in a simple framework using matrix algebra allowing for intuitive interpretations of the individual decomposition terms and results. The approach leads to a novel decomposition of bilateral gross export flows and related value-added trade indicators. It is shown how these correspond to existing measures using the property of inverse matrices. Specifically, the paper sheds light on the nature of the double-counting terms discussed in the literature. Finally, the approach outlined is extended by incorporating insights from the hypothetical extraction method. We argue that this is a complementary approach which however can be used to flexibly define the value chains of interest and characterise the respective flows that are considered part of this defined value chain, again carefully differentiating the source, assembly, and sink dimensions.
Topic:
International Trade and Finance, Economy, Exports, Global Value Chains, and Decomposition
Political Geography:
Global Focus

123. Heterogeneous Effects of Non-tariff Measures on Cross-border Investments: Bilateral Firm-level Analysis

Author:
Amat Adarov and Mahdi Ghodsi
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
The Vienna Institute for International Economic Studies (WIIW)
Abstract:
We analyse the heterogeneous effects of technical regulations and safety standards embodied in non-tariff measures on foreign direct investment using global firm-level panel data of bilateral cross-border ownership relationships over the period 2008-2018. To this end, we develop a novel measure of time-varying bilateral ad valorem equivalents of sectoral non-tariff measures, which reveals that technical barriers to trade (TBTs) played a much greater role as a trade-inhibiting factor in comparison with import tariffs and sanitary and phytosanitary (SPS) measures over the period 1996-2018, with their relative importance increasing in the post-Great Recession period. Estimations using the Poisson pseudo-maximum likelihood framework reveal the importance of non-tariff measures as a driver of foreign direct investment, with heterogeneous effects observed for the measures imposed by the host and the home country, as well as across sectors and types of non-tariff measures. Among other results, we find that an increase in the stringency of technical barriers to trade imposed by the host country is associated with higher investment in the foreign subsidiaries operating in this country, pointing to the regulatory barrier-jumping motive of foreign direct investment. The effect is much stronger for the multinational corporations operating in the information and communications technology sector.
Topic:
International Trade and Finance, Foreign Direct Investment, Economy, and Business
Political Geography:
Global Focus

124. Scenarios for an impact assessment of global bioeconomy strategies: results from a co-design process

Author:
Ruth Delzeit, Tobias Heimann, Franziska Schunemann, and Mareike Soder
Publication Date:
07-2021
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
The replacement of fossil resources with renewable biomass in a bioeconomy is seen as a major contribution to climate change mitigation. This transformation will affect all members of society, making it crucial to consider the views of different stakeholders to ensure a socially acceptable transition towards a sustainable bioeconomy. To explore potential outcomes of bioeconomy strategies assuming different future pathways, a scenario analysis is a tool to inform decision-makers about policy impacts and trade-offs. The inter- and transdisciplinary research project “BioNex – The future of the biomass nexus” is the first project to develop bioeconomy scenarios together with stakeholders from politics, industry, and civil society in an iterative co-design process. As a result, three storylines describing diverging potential global futures are developed and quantified: Towards sustainability, business as usual, and towards resource depletion. The futures are driven by different assumptions on climate policy, cropland expansion, productivity growth in agriculture, prices of fossil energy, and consumption behaviour. Additionally, in the co-design process, three bioeconomy policies are developed: policy as usual, stronger development of the bioeconomy, and no policies. Besides presenting the results of the stakeholder workshops, this paper evaluates the strengths and shortcomings of a stakeholder approach in terms of policy-oriented research. According to the experience made within this study, it provides valuable insights for researchers and funding authorities they can use to optimise the employment of stakeholder-based research approaches.
Topic:
International Cooperation, Economy, Biology, and Models
Political Geography:
Global Focus

125. The Impacts of the New Coronavirus Pandemic on the Global Economy: A Nontechnical Summary

Author:
Kensuke Yanagida
Publication Date:
04-2020
Content Type:
Commentary and Analysis
Institution:
Japan Institute Of International Affairs (JIIA)
Abstract:
As of April 5, 2020, there are 177 countries/regions confirming cases of new coronavirus infections (COVID-19), making this an unprecedented pandemic. With the number of infected people increasing and medical systems under severe pressure, measures such as lockdowns and border restrictions have been tightly imposed in most countries/regions. As a result, economic activities in both production and consumption have been temporarily halted. Indeed, the pandemic is creating a situation that is simultaneously freezing the global economy. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), said that the impact of the Corona Shock on the global economy could be "far worse" than that of the 2008-2009 global financial crisis (also known as the Lehman Shock). 　　How much impact will the unprecedented pandemic have on the global economy? In this paper, the author will quantitatively analyze the impact of the Corona Shock using an applied general equilibrium model (Computable General Equilibrium (CGE)). The estimation results show that the longer the COVID-19 outbreak continues and the greater the spread of infections, the greater the negative impact on the global economy. The impact is forecast to be at or even above the level of the Lehman Shock.
Topic:
Economy, Crisis Management, and COVID-19
Political Geography:
Global Focus

126. COVID-19 and Public Support for Radical Policies

Author:
Leah Zamore and Ben Phillips
Publication Date:
06-2020
Content Type:
Policy Brief
Institution:
Center on International Cooperation (CIC)
Abstract:
A growing body of evidence shows that the COVID-19 crisis is significantly affecting people’s priorities for the future. With economies around the world suffering the impact of the pandemic, the global public wants governments to adopt bold approaches in response—and polls from a range of countries show that large majorities believe their actions have not been strong enough. In this briefing, Leah Zamore and Ben Phillips examine global polling data to show what kinds of policies—including those previously deemed “radical”—are now garnering widespread support. They find that people want governments to act boldly both in responding to the immediate economic crisis and in fundamentally transforming the social contract moving forward. The briefing examines polling on a range of topics, from wide support for redistributive programs and a rejection of austerity policies, to the growing popularity of measures that check corporate power in favor of workers and consumers.
Topic:
Governance, Public Opinion, Economy, Humanitarian Crisis, and COVID-19
Political Geography:
Global Focus

127. How Much Lockdown is Enough?

Author:
Sarah Cliffe, Paul von Chamier, and Nendirmwa Noel
Publication Date:
05-2020
Content Type:
Policy Brief
Institution:
Center on International Cooperation (CIC)
Abstract:
Lockdown measures have been an integral tool in the fight against COVID-19. But they come at a high cost, given their impacts on economies, employment and incomes, education, food systems, mental health and even the potential for civil unrest. This policy briefing by Sarah Cliffe, Paul von Chamier, and Nendirmwa Noel examines how countries are balancing the need for lockdown with policy measures to alleviate their effects and plans for reopening. It provides comparative data on the stringency of lockdowns, showing that while there has been a convergence towards more stringent measures over time, there is also wide variation among countries—even among those in the same region, or income group. A brief case study of Sierra Leone and snapshot examples of policy from ten other countries illustrates the range of answers to the question of how much lockdown is enough.
Topic:
Employment, Economy, and COVID-19
Political Geography:
Africa, Sierra Leone, and Global Focus

128. Holding to Account: How Publishing Facts about Foreign Corruption Creates Accountability

Author:
Aaron Sayne and Melanie D. Reed
Publication Date:
01-2020
Content Type:
Policy Brief
Institution:
Natural Resource Governance Institute
Abstract:
The complex, secretive nature of foreign corruption calls for a collaborative, all-hands-on-deck approach. Corrupt actors go to great lengths to hide their wrongdoing, using layers of legal entities, transactions, secrecy jurisdictions and middlemen. No one response can detect and prevent every bad act, and different anticorruption actors have their own unique interests, mandates and abilities. In many cases, they may struggle even to learn the facts of what went wrong. Prosecuting a corruption crime generates reams of valuable information. This can include the names of bribe takers and payers; the industries, countries and public institutions involved; how the proceeds of crime changed hands; and who facilitated or turned a blind eye. Who should get to see this information? Thought leaders on anticorruption, from Transparency International (TI) to the Organization for Economic Cooperation and Development’s Working Group on Bribery (OECD WGB), have long endorsed greater transparency in foreign corruption cases. They argue, for example, that access to information raises awareness, gives guidance to anticorruption practitioners, encourages cooperation with prosecutors and boosts confidence in law enforcement. Conversely, opacity in corruption cases can weaken the deterrent value of prosecutions, open doors for prosecutorial misconduct and thwart efforts to make victims whole. These concerns are particularly keen in cases that settle via tools like deferred prosecution agreements (DPAs) or plea bargains. Many governments share evidence from corruption cases confidentially, through formal legal instruments and close working relationships. But how does public disclosure of facts from corruption cases, whether by courts or other law enforcement bodies, aid the broader fight against corruption? Put differently: At a time when enforcement of anticorruption laws remains low in many countries, could more transparency help anticorruption efforts by regulators, companies, the media, civil society and others? To answer this question, the authors of this briefing analyzed materials from foreign corruption cases that have arisen since the inception of laws banning foreign bribery. During the past four years, they also conducted over two dozen interviews with experts government, the private sector, civil society and the press. From this work, they found instances in which other anticorruption actors used published facts from court cases to do their jobs more effectively. Although they undertook this research as part of the Natural Resource Governance Institute’s (NRGI’s) programming aimed at reducing corruption risks in the oil, gas and mining sectors, they did not limit themselves to cases in the extractive industries. Accordingly, their findings and recommendations apply broadly to corruption in other sectors.
Topic:
Corruption, Government, Economy, and Accountability
Political Geography:
Global Focus

129. Digitalising the Fiscal Contract: An Interdisciplinary Framework for Empirical Inquiry

Author:
Christian van Haldenwang
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
Taxation is above all a political rather than a technical issue. But what happens if new digital technologies cause profound power shifts in the relationship between revenue authorities and taxpayers? The paper seeks to lay the conceptual groundwork for the analysis of this interplay.
Topic:
Economy, Tax Systems, and Fiscal Policy
Political Geography:
Global Focus

130. Cling Together, Swing Together: The Contagious Effects of COVID-19 on Developing Countries through Global Value Chains

Author:
Stefan Pahl, Clara Brandi, Jakob Schwab, and Frederik Stender
Publication Date:
01-2020
Content Type:
Working Paper
Institution:
German Institute of Development and Sustainability (IDOS)
Abstract:
This paper estimates the economic vulnerability of developing countries to disruptions in global value chains due to the COVID-19 pandemic and reveals that adverse demand-side effects reduce GDP up to 5.4 percent, and collapsing foreign supply generates a drop in GDP of a similar magnitude.
Topic:
Developing World, GDP, Economy, Global Value Chains, and COVID-19
Political Geography:
Global Focus