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  5. The World Economy: Where To From Here?
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The World Economy: Where To From Here?

Paper Session

Saturday, Jan. 7, 2023 10:15 AM - 12:15 PM (CST)

New Orleans Marriott, Mardi Gras Salon D
Hosted By: Society of Policy Modeling & American Economic Association
  • Chair: Dominick Salvatore, Fordham University

The World Economy: Uncoupled or Unhinged?

Barry Eichengreen
,
University of California-Berkeley

Abstract

The paper will consider decoupling scenarios for the world economy and specifically the possibility of it splintering into a pair of self-contained “Western” and “Eastern” blocs. It will first ask whether there is any evidence of decoupling to date. It will then analyze, if decoupling proceeds, what implications it might have for global supply chains, the monetary and financial system, and the course of economic growth.

Climate Policy and Global Challenges

Catherine Mann
,
Bank of England and Brandies University

Abstract

Could a coordinated approach to climate policy address the global challenges of slowed global engagement, persistent inequality, supply resilience, and sluggish productivity growth? Or is this just another 'silver bullet' much as the promise of digitalization in the late 1990s. How far can the efforts championed by central banks and regulators go? What role could a carbon border adjustment, or a green goods and services trade agreement play?

The Political Economy of Monetary and Fiscal Policy

Kenneth Rogoff
,
Harvard University

Abstract

Although credibility and political economy issues once played a central role in the analysis of fiscal and monetary policy, the modern debate on macroeconomic policy stabilization and stimulus has pushed these issues to the background, with the assumption being that long-run central bank inflation targets are fully credible, and government debt is “safe”, even in real terms. In this world, monetary and fiscal policy become almost interchangeable for stabilization, as in classic IS/LM analysis. But in reality, fiscal policy is almost always extremely political, and attempts to put this in check through fiscal councils and fiscal rules have had only limited success. At the same time, modern central banks have come under increasing political pressure. Proper consideration of political economy changes the debate.

Whither Multilateralism?

Joseph E. Stiglitz
,
Columbia University

Abstract

Russia’s invasion of Ukraine brought a sense of solidarity among a large proportion of the world, but it was, unfortunately, short lived. Developing countries and emerging markets, many of which had been hard hit by the pandemic, and some of which confronted looming debt crises, bore the fall-out from the war—higher food and energy prices. Still embittered by the “vaccine apartheid” of Covid-19 and the failure of the WTO to enact an IPR waiver, the lack of assistance or even a plan to handle the looming debt crises further undermined multilateralism. How will all of this play out, especially if the world divides further into two or more blocs, is yet to be determined. But what is already clear is that it will have profound impacts both on global integration, on the global economy, and on national economic policies

Discussant(s)
Dominick Salvatore
,
Fordham University
JEL Classifications
  • E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
  • F4 - Macroeconomic Aspects of International Trade and Finance