Nominal global recession in IMF data

Data for the world economy in the data base of the World Economy show a nominal decrease in Gross Planet Product in 2015. This contradicts the estimates for real growth and inflation (both 3%) that would be consistent with a nominal GPP growth of 6%. The inconsistency may be due to the fallacy of composition or to underlying country assumptions that are too optimistic or may reflect measurement error or wrong aggregation.

It Ain't Over Till it's Over: A Global Perspective on the Great Moderation-Great Recession Interconnection

"It Ain't Over Till it's Over: A Global Perspective on the Great Moderation-Great Recession Interconnection" 
University of Milan Bicocca Department of Economics, Management and Statistics Working Paper No. 303

FABIO C. BAGLIANO, University of Turin - Department of Economics and Statistics, Center for Research on Pensions and Welfare Policies (CeRP), Collegio Carlo Alberto
Email: fabio.bagliano@unito.it
CLAUDIO MORANA, Università di Milano Bicocca, University of Milan, Bicocca - Department of Economics, Quantitative Methods and Business Strategies (DEMS), Center for Economic Research on Pensions and Welfare Policies (CeRP)
Email: claudio.morana@unimib.it

A large-scale model of the global economy is used to investigate the structural determinants of the Great Moderation and the transition to the Great Recession (1986-2010). Beside the global economy perspective, the model presents the novel feature of a broad range of included financial variables and risk factors measures. The results point to the relevance of various mechanisms related to the global monetary policy stance (Great Deviation), financial institutions' risk taking behavior (Great Leveraging) and global imbalances, in shaping aggregate fluctuations. The paper finally contributes to the literature on early warning indicators, assessing the information content of risk factor innovations for the prediction of the timing and depth of the Great Recession. 

Book: 

Flag of planet earth

It is a proposal only, but: a small step for man a giant leap for mankind http://www.flagofplanetearth.com

Giffen Behavior

A recent article in Oceanography "Evolutionary Control of Economic Strategy in Fishes: Giffen Behaviour could be a Common Economic Strategy on the Earth?"  by Eduardo Costas, Beatriz Baselga-Cervera, Camino García-Balboa and Victoria Lopez-Rodas quotes an article that I published with Charles van Marrewijk (Giffen Goods and the Subsistence Level, History of Political Economy (1990) 22 (2), pp. 145 148). The article in Oceanography provides an unexpected link to Earth Economics

The existence of Giffen behaviour (i.e. the opposite situation to the Law of Demand in which consumers respond to a rising price of a certain good by demanding more of it) associated with poor consumers is one of the major controversies in economics. However, economists rarely consider that nothing makes sense except in light of evolution. In this paper, we prove the existence of Giffen behaviour in animals that exhibit no intelligent reasoning. Sardines feed on phytoplankton, and zooplankton. If the amount of phytoplankton is greater than zooplankton, then Sardines fit the Law of Demand, but if the amount of phytoplankton is smaller, the Sardines apparently show Giffen behaviour. Evolutionary population genetics models show that Giffen behaviour has more adaptive value than follow the Law of Demand under resource scarcity. Since overwhelming animal species live in poverty, Giffen behaviour may be the common economic strategy on the Earth.

Earth's worth

Equitable Representation in Councils: Theory and an Application to the United Nations Security Council

Matthew Gould and Matthew Rablen develop a theoretical framework for equity in council voting games (CVGs). In a CVG, a fully representative voting body delegates decision-making to a subset of the members, as describes, e.g., the United Nations Security Council (UNSC). A general framework for analysing country- and region-level equitability in councils is developed under alternate assumptions regarding preference correlation and differing ex-ante and ex-post notions of equity. Allowing for a ternary set of voting possibilities in the council, we use our framework to evaluate the equitability of the UNSC, and the claims of those who seek to reform it. 

available at http://wp.peio.me/wp-content/uploads/PEIO8/Gould,%20Rablen%2018.11.2014.pdf

Book: chapter 14

Global Heterogeneity

A recent background paper for the UN Commission for Development Planning takes up the issue of hetrogenity pointing out that whereas for the group of developing countries heterogeneity has increased global hetrogeneity is decreasing after a rise in the 1980 and 1990s. The working paper provides an alsternative measure (coefficient of variantion op per capita GDP) although for a much shorter period) for the metrics of global fragmentation applied in Chapters 13 and 14 of Earth Economics (C1 to C4 ratio and Herfindahl). The underlying data sources are identical.

Source Alonso, J. A., Cortez, A. L., & Klasen, S. (2014). LDC and other country groupings: How useful are current approaches to classify countries in a more heterogeneous developing world? CDP Background Paper No. 21 /ESA/2014/CDP/21

Exercise: compare world fragmentation 1950-2008 according to figure 13.4 in Earth Economics to the UNCDP findings. What are your observations?