Search

Begin New Search Topic Economics Publication Year within 1 Year

131. Net International Investment Position Surplus: A Key to Reconciling Financial Stability and Internationalization

Author:
Young Sik Jeong and Yena Song
Publication Date:
08-2024
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
This study examines the influence of net international investment position (IIP) on financial stability and financial internationalization. We find a strong correlation between creditor status (IIP surplus) and resilience to financial crises. Net creditor countries appear to act as buffers, with foreign assets returning to the home country during potential crises, thus preventing deterioration in external sector soundness. Furthermore, our analysis reveals that external financial assets positively affect the revealed comparative advantage (RCA) of financial service. Specifically, the positive relationship between external financial assets and financial service RCA is more pronounced during periods of net IIP surplus compared to net IIP deficit periods. Our findings suggest that a net IIP surplus is beneficial for both financial stability and international competitiveness.
Topic:
Economics, Investment, Financial Stability, Internationalization, and Economic Competition
Political Geography:
Global Focus

132. Developing an International Macroeconomic Forecasting Model Based on Big Data

Author:
Sang-Ha Yoon
Publication Date:
06-2024
Content Type:
Policy Brief
Institution:
Korea Institute for International Economic Policy (KIEP)
Abstract:
In the era of big data, economists are exploring new data sources and methodologies to improve economic forecasting. This study examines the potential of big data and machine learning in enhancing the predictive power of international macroeconomic forecasting models. The research utilizes both structured and unstructured data to forecast Korea's GDP growth rate. For structured data, around 200 macroeconomic and financial indicators from Korea and the U.S. were used with machine learning techniques (Random Forest, XGBoost, LSTM) and ensemble models. Results show that machine learning generally outperforms traditional econometric models, particularly for one-quarter-ahead forecasts, although performance varies by country and period. For unstructured data, the study uses Naver search data as a proxy for public sentiment. Using Dynamic Model Averaging and Selection (DMA and DMS) techniques, it incorporates eight Naver search indices alongside traditional macroeconomic variables. The findings suggest that online search data improves predictive power, especially in capturing economic turning points. The study also compares these big data-driven models with a Dynamic Stochastic General Equilibrium (DSGE) model. While DSGE offers policy analysis capabilities, its in-sample forecasts make direct comparison difficult. However, DMA and DMS models using search indices seem to better capture the GDP plunge in 2020. Based on the research findings, the author offers several suggestions to maximize the potential of big data. He stresses the importance of discovering and constructing diverse data sources, while also developing new analytical techniques such as machine learning. Furthermore, he suggests that big data models can be used as auxiliary indicators to complement existing forecasting models, and proposes that combining structural models with big data methodologies could create synergistic effects. Lastly, by using text mining on various online sources to build comprehensive databases, we can secure richer and more real-time economic data. These suggestions demonstrate the significant potential of big data in improving the accuracy of international macroeconomic forecasting, particularly emphasizing its effectiveness in situations where the economy is undergoing rapid changes.
Topic:
Economics, Macroeconomics, and Data
Political Geography:
Asia and South Korea

133. Brazil Is Burning and Agribusiness Must Be Held Liable

Author:
Sabrina Fernandes
Publication Date:
10-2024
Content Type:
Commentary and Analysis
Institution:
The North American Congress on Latin America (NACLA)
Abstract:
As blazes set new records, it is important to denormalize the framing of forest destruction as a simple natural cycle, detached from criminal activity, intentional deforestation, economic interests, and climate change.
Topic:
Climate Change, Crime, Economics, Deforestation, and Agribusiness
Political Geography:
Brazil and South America

134. Sustainable Development Goals (SDGs) 8 Decent Work and Economic Growth Implementation: A review of the Indonesian case 2018-2022

Author:
Arie Kusuma Paksi, Chalila Raihan Nabilazka, and Krisna Silawa
Publication Date:
05-2024
Content Type:
Journal Article
Journal:
Revista UNISCI/UNISCI Journal
Institution:
Unidad de investigación sobre seguridad y cooperación (UNISCI)
Abstract:
From 2018 to 2021, the global landscape was significantly impacted by the COVID-19 pandemic. Indonesia, which faced the highest number of COVID-19 cases in Asia, demonstrated remarkable resilience in maintaining the Sustainable Development Goal 8 (SDG 8) trajectory amidst these challenging times. This study aims to scrutinise Indonesia's sustained commitment to sustainable development during the global economic downturn. Using a qualitative methodology and a comprehensive literature review, this study uses the Voluntary National Review (VNR) reports as its primary source. It assesses the achievement of SDG 8 based on the process step indicators established by Allen et al. (2017). Despite experiencing a recession for four consecutive quarters, the study finds that Indonesia has successfully met all the established indicators, although there are challenges and areas that require further attention.
Topic:
Economics, Sustainable Development Goals, Resilience, COVID-19, and Implementation
Political Geography:
Indonesia and Southeast Asia

135. Disorderly Conduct: How U.S.-China Competition Upended the International Economic Order & What the U.S. Can Do to Fix It

Author:
Emily Kilcrease and Adam Tong
Publication Date:
06-2024
Content Type:
Special Report
Institution:
Center for a New American Security (CNAS)
Abstract:
To gauge the health of the U.S.-China economic relationship, one can turn to the words of Chinese Foreign Minister Wang Yi, who remarked in March 2024 that U.S. “tactics to suppress China . . . [were] reaching a bewildering level of unfathomable absurdity.”1 Rhetorical flourishes may be the one bright spot in the relationship. As tensions rise over economic restrictions and policies on both sides, economic relations have become a worrisome source of instability in the overall geopolitical relationship. The economic relationship has become increasingly dominated by security concerns, and integration is seen as not an opportunity but a risk to U.S. interests and values. The United States must develop a strong, pragmatic strategy for advancing its economic and security interests within the U.S.-China economic relationship, accounting for the fact that the security competition is now playing out across the economic landscape. To inform the development of an effective U.S. strategy for the economic relationship with China in the context of rising securitization, the United States must learn from its past attempts to advance its economic and security interests in the relationship. The first section of this report, “Where have we been?” examines past U.S. approaches, along with the challenges of pursuing similar policies in today’s geopolitical context. The second section, “Where are we going?” distills lessons from these past approaches and defines a new strategy for the United States, offering recommendations to implement it. Broadly speaking, prior U.S. strategies can be divided into two camps. First, the United States sought to bring the People’s Republic of China (PRC) into the rules-based order and incentivize it to be a responsible stakeholder.* When that failed, U.S. strategy pivoted to one of imposing costs on the PRC and taking actions to constrain behaviors that threatened U.S. economic security interests. Within those broad strategies, U.S. policymakers have pursued four main approaches, in differing combinations and intensity, all of which involve associated challenges. They are: Play by the rules: The intention of bringing the PRC into the rules-based international system was to create external pressure that would align PRC actions with U.S. economic and security interests. Key efforts under this approach included the U.S. support for the PRC’s accession to the World Trade Organization (WTO) and the later U.S. attempts to negotiate a bilateral investment treaty. Challenges for the approach include the fact that rules have a weak ability to constrain state behavior in a geopolitically contested environment where national security risks arise from economic integration. We need to talk: In light of increasing complexity in the bilateral relationship, U.S.-PRC dialogues were intended to identify and advance mutual interests while providing a regular forum to attempt to resolve disputes. This is seen in the Strategic Economic Dialogue (SED) in the Bush administration and the Strategic and Economic Dialogue (S&ED) in the Obama administration. In other contexts, such as ongoing talks under the Biden administration, dialogues have served primarily to communicate the rationale for U.S. policy actions in an attempt to put a floor under the bilateral relationship.2 Challenges to this approach include that commitments made in a dialogue process may not be enforceable, the meeting can become the deliverable, and the dialogue process cannot alter underlying geopolitical shifts. Defense is the best offense: Defensive approaches relied on domestic U.S. authorities to counter specific harms created by PRC practices and policies. The United States has a wide range of economic tools (e.g., tariffs and trade remedies) as well as national security–based tools (export controls and the Committee on Foreign Investment in the United States [CFIUS] process for conducting national security reviews of foreign investments), all of which have been used with greater frequency over the past decade. Challenges when using these tools include the disruptive and potentially escalatory nature of defensive approaches, and the lack of clear frameworks to assess the effectiveness of defensive policies. Additionally, relying on unilateral approaches can create friction within potential economic alliances. In the United States, defensive approaches have often suffered from a blending of economic, national security, and values concerns, eroding the legitimacy of the national security argument. Have more friends: These strategies centered on efforts to shape the PRC’s external environment through the negotiation of ambitious trade and investment agreements with major trading partners, with the goal of increasing economic integration with close partners, creating indirect pressure on the PRC to level up to higher standards, and developing common approaches to address concerns with nonmarket economies. Such an approach is challenging because traditional ways of shaping the external environment have not directly addressed securitization of the U.S.-China economic relationship. U.S. domestic political realities impose a considerable constraint on the use of trade policy as a strategic tool.
Topic:
Economics, Bilateral Relations, Trade, Strategic Competition, and International Order
Political Geography:
China, Asia, North America, and United States of America

136. Economic implications of revoking China’s permanent normal trade relations (PNTR) status

Author:
Megan Hogan, Warwick McKibben, and Marcus Noland
Publication Date:
09-2024
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
The United States’ granting of permanent normal trade relations (PNTR) status, formerly known as most favored nation status, to China in 2000 resulted in a large expansion of bilateral trade. Concerns over Chinese trade practices and the impact of Chinese exports on US import-competing sectors have contributed to US political discontent and calls for the revocation of PNTR, including by former president Donald Trump in his reelection campaign and in the 2024 Republican Party Platform. The authors find that revoking China’s PNTR status would cause higher inflation and a short-term decline in US gross domestic product relative to baseline from which the economy never fully recovers. The loss of output and employment would be felt unevenly across the economy, with agriculture, durable manufacturing, and mining taking the biggest hits. Stock market prices would fall, with agricultural, durable manufacturing, and mining firms absorbing the biggest declines. All of these impacts would be magnified if China retaliates. Ironically, the revocation would damage the US industrial sector and contribute to a wider US trade deficit.
Topic:
Economics, Bilateral Relations, Manufacturing, and Trade
Political Geography:
China and Asia

137. Was Something Structurally Wrong at the FOMC?

Author:
Alan S. Blinder
Publication Date:
10-2024
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
There is little doubt that the Federal Reserve was late to start raising interest rates as inflation rose in 2021–22. The Federal Open Market Committee (FOMC) made a substantial, though perhaps understandable, error in failing to raise interest rates until March 2022. Much of that policy error can be attributed to faulty forecasts of inflation, which the Federal Reserve shared with many other forecasters. It was not an outlier. But the error was not quite as consequential as the Fed’s sharpest critics allege. Even if the FOMC had started to hike rates earlier, the econometric evidence suggests that the effects on peak inflation would likely have been small. Supply constraints, not excess demand, ruled the roost. They came, driving inflation higher; and then they went, pulling inflation down. Blinder says that the FOMC’s August 2020 framework shoulders more of the blame for the inflationary surge than it should—probably because the new wording revised both of the Fed’s goals, low inflation and high employment, in dovish directions. For that reason alone, the framework will almost certainly be changed in 2025, given the high inflation since. But how? Blinder suggests that the August 2020 change in the employment goal, from symmetry to “shortfalls,” is sensible and probably not too important anyway. But the change in the inflation goal, from a 2 percent point target to flexible average inflation targeting (FAIT), was probably consequential. It may have made the FOMC slow on the draw as inflation gathered steam, and it may have kept monetary policy too tight for too long in 2024. In both directions, Blinder argues, a 1.5 to 2.5 percent target range would be a better choice. To answer the question in the title of this Policy Brief, that may be the structural flaw the Fed should fix.
Topic:
Economics, Monetary Policy, Federal Reserve, Interest Rates, and Supply
Political Geography:
North America and United States of America

138. The Rise of US Economic Sanctions on China: Analysis of a New PIIE Dataset

Author:
Martin Chorzempa, Mary Lovely, and Christine Wan
Publication Date:
12-2024
Content Type:
Policy Brief
Institution:
Peterson Institute for International Economics (PIIE)
Abstract:
Concerns over China’s national security and human rights activities have led the United States to rely increasingly on financial sanctions and export controls to curb Beijing’s behavior. But the tools are so complex it is difficult to assess their effectiveness. A new PIIE dataset sheds light on this economic statecraft. The first Trump administration added three times as many Chinese entities to export control and other sanctions lists than the previous four administrations; the Biden administration added even more to these lists. Most sanctions and controls target high-tech sectors, especially electronics, military and defense entities, aviation, space, and aerospace; targets are chosen under a veil of secrecy, raising questions over accountability and transparency. The benefits of isolating Chinese firms come with potential costs, hobbling innovation for US and allied business, encouraging circumvention of sanctions, and accelerating Chinese innovation.
Topic:
Economics, Human Rights, National Security, Sanctions, and Exports
Political Geography:
China, Asia, North America, and United States of America

139. Spillover effects of the recent US monetary policy shocks on the South African economy: The role of monetary and fiscal policy coordination

Author:
Guangling Liu and Marrium Mustapher
Publication Date:
11-2024
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This study examines how different policy mix regimes affect the impact of recent US contractionary monetary policy on South Africa’s inflation and business cycles. The study uses a small open economy New Keynesian Dynamic Stochastic General Equilibrium model with an integrated fiscal block to analyse these effects. Regime M (active monetary policy) is more effective at containing the spillover effects but leads to higher public debt, requiring larger future fiscal surpluses. The commitment to price stability under Regime M increases real interest rates, raising domestic debt service costs and the debt-to-GDP ratio. Regime F (active fiscal policy), in contrast, stabilizes debt more quickly but at the cost of higher inflation, as it does not use future surpluses to manage public debt. These spillover effects are more amplified under both Regime M and Regime F in the case of a complete exchange rate pass-through and a higher degree of trade openness, with Regime F exhibiting a stronger amplification effect.
Topic:
Foreign Policy, Economics, Monetary Policy, Inflation, and Fiscal Policy
Political Geography:
Africa, South Africa, North America, and United States of America

140. Economic geography determinants of spatial wage disparities in South Africa: Evidence from a firm‐level panel

Author:
Sanduku Mulumba, Lawrence Edwards, and David Fadiran
Publication Date:
08-2024
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
In this paper, we use the new economic geography (NEG) framework to estimate the extent to which spatial wage disparities in the South African manufacturing sector are an outcome of economic forces such as market access. To test the relationship, we use the anonymized tax data on employers and employees made available by the South African Revenue Service and National Treasury in collaboration with UNU-WIDER. We first document the key stylized facts that characterize the spatial distribution of wages across regions in South Africa using exploratory spatial data analysis (ESDA) techniques. We then test for the existence of a wage structure across South African local and metropolitan municipalities, controlling for individual and firm characteristics using a two-stage estimation method. Consistent with the NEG predictions, we find that wages are higher in municipalities that are closer to large markets, as measured by the Harris market potential index. However, much of the wage effect is driven by the income and employment density of the municipality’s own market, and not that of surrounding areas. These results point to a combination of large spatial rigidities leading to highly localized effects of market potential, together with wage and productivity effects arising from urban agglomeration economies.
Topic:
Economics, Manufacturing, Wages, and Market Access
Political Geography:
Africa and South Africa