Earth economics studies the economy of our planet from the perspective of an autarkic system (a “closed economy”). It ignores the constituent national and regional parts of the planet economy and focuses on the whole. The book respects the heritages of IS/LM (Keynes) and neoclassical growth (Solow) not out of economic respect but because these tools are very useful in understanding the crisis and the policy response to that crisis.
Forecasts for 2012 GPP growth adjusted in 11
editions of the World Economic Outlook
(April 2008-April 2013)
The latest edition of the IMF World Economic Outlook foresees a three speed recovery. In 2011 it foresaw a two speed recovery. The difference is mainly that Europe drags on, but at the same time the growth rates for the other continents although still in positive territory have been scaled down a bit. This scaling down is not typical for the present outlook. The figure shows the predictions that the IMF provided for GPP growth in 2012 in 11 different editions of the world economic outlook. Before the crisis broke out the expectation for world growth in 2012 was about 5% and the crisis reduced that outlook by half a percentage point only. It took untill october 2011 before the Fund started to adjust the prediction significantly and it took three editions to come close for the April 2013 estimate for 2012 (this is still an estimate and it may change a little bit). Book: Text Box 1.2, p. 6.