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?

World real interest rates

New and exciting information appears in a new voxeu publication on secular stagnation
Global interests on average have moved into unknown territories. This makes the concept of the liquidity trap very relevant.

Book 5.1 pp 53-4
Book 7.3 pp. 81-84

Global perspective on macroprudential policies

"Macroprudential Policies in a Global Perspective" 
CEPR Discussion Paper No. DP9875

OLIVIER JEANNE, Johns Hopkins University - Department of Economics
Email: ojeanne@jhu.edu

This paper analyzes the case for the international coordination of macroprudential policies in the context of a simple theoretical framework. Both domestic macroprudential policies and prudential capital controls have international spillovers through their impact on capital flows. The uncoordinated use of macroprudential policies may lead to a "capital war" that depresses global interest rates. International coordination of macroprudential policies is not warranted, however, unless there is unemployment in some countries. There is scope for Pareto-improving international policy coordination when one part of the world is in a liquidity trap while the rest of the world accumulates reserves for prudential reasons. 

Book: chapters 6 and 9

A nuanced view on globalisation

"The Evidence on Globalization" 
CESifo Working Paper Series No. 4708

NIKLAS POTRAFKE, CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute
Email: potrafke@ifo.de

Globalization is blamed for many socio-economic shortcomings. I discuss the consequences of globalization by surveying the empirical globalization literature. My focus is on the KOF indices of globalization (Dreher 2006a and Dreher et al. 2008a), that have been used in more than 100 studies. Early studies using the KOF index reported correlations between globalization and several outcome variables. Studies published more recently identify causal effects. The evidence shows that globalization has spurred economic growth, promoted gender equality, and improved human rights. Moreover, globalization did not erode welfare state activities, did not have any significant effect on labor market interaction and hardly influenced market deregulation. It increased however within-country income inequality. The consequences of globalization thus turn out to be overall much more favorable than often conjectured in the public discourse. 

Book: 152-154

Growth in the global economy. Why does the industrialzied world continue to stagnate?

In a recent working paper "Sluggish Postcrisis Growth: Policies, Secular Stagnation, and Outlook"  Canuto, Nallari, and  Griffith investigate why  advanced economies continue to have low growth. Is this slow postcrisis growth the result of a policy response that was overly reliant on monetary policy, which ran into the zero interest rate lower bound before growth was restored? Looking deeper, is secular stagnation, which is related to the zero lower bound and was recently brought to the fore by Larry Summers, another potential cause for advanced economies’ failure to return to pre-crisis growth levels? This note seeks to answer these questions as well as identify what alternative policies might be pursued by advanced economies to escape secular stagnation, should stagnation proponents be proven correct. After a brief review of secular stagnation, Summers’ hypothesis is tested through a review of academic literature and opinion pieces. However, the secular stagnation theory is not without its critics; moreover, there is a debate between “Keynesian versus Schumpeterian” economists, which could help to shed light on the medium-term postcrisis outlook.

Book: 
Liquidity trap pp. 104-106.
Saving glut (Paradox of Thrift) p. 46.
Secular slowdown (Long Wave), pp. 140-144.