A lot of people in the richer economies appear doubtful that economic globalisation has been good for them. But there are hundreds of millions in the rest of the world for whom globalisation has been a critical part of their escape from poverty. * Globalisation means the greater international movement of goods and services, finance,… Continue Reading
Tag Archives: growth
Are we heading for a world like that of “1984”?
I think the world may be fragmenting into increasingly separate economic and cultural regions, one dominated by China, another led but not dominated by the US, with other nations watching and wondering how best to position themselves. This reminds me of the novel 1984. * When people refer to a world like that in George… Continue Reading
Thinking about the risks to global economic growth
The fundamentals of global economic growth seem broadly positive but there are some reasons for caution, which can be understood through the savings-investment framework described in the previous blog. If savings are “too high” or investment “too low” then the equilibrium rate of interest that makes savings and investment equal may be negative. That means… Continue Reading
The fortunes of nations: how long term growth rates change countries
Countries that had similar levels of economic prosperity two or three generations ago have diverged spectacularly. Getting economic growth right makes a huge difference to the lives of people. Here are two examples: The US and Argentina, and South Korea and Ghana. I recently came across the Maddison Project website, which has estimates of long… Continue Reading
On the difficulties of using macroeconomic data for policy advice
The economics blogosphere and now the mainstream financial press are full of discussion about the flaws in widely cited research done by Professors Ken Rogoff and Carmen Reinhart. These authors produced an excellent and path-breaking book This Time Is Different which surveyed in detail several centuries of financial crises. This book, which suggested, unfortunately correctly, that… Continue Reading
US healthcare spending as the central budgetary problem
I make the point in classroom discussions of the US fiscal outlook that, simplifying only a little, the problem of US federal spending reduces to the problem of the US health care system. All rich countries face an increase in public spending arising from a combination of a higher proportion older people and a rise… Continue Reading
Chinese investment – too much of a good thing?
A key feature of macroeconomic analysis is the relationship between a country’s savings and investment rates. Savings represent income that is not consumed. Investment means spending on assets that will last for some period of time, such as factories, houses, cars and infrastructure. Savings are resources – you cannot invest if you don’t set aside… Continue Reading