Tuesday, November 7, 2017

World Economics: Making Data Measurement Errors Transparent: The Case of the IMF

In 1950 Morgenstern pointed out that absolute precision and certainty are impossible in economic observations, but estimates are often hampered by a substantial degree of measurement error. Unlike the natural sciences, economists in general do not report measurement errors for the key concepts such as prices, value or production that it seeks to define, measure and explain. For most macroeconomic concepts two approaches are available: the Implicit Minimal Measurement Error and the Maximum Ratio.
Studying different vintages of the IMF World Economic Outlook data base it was found that the estimates on average have an implicit minimal measurement error of 4.3% and maximum ratio of 17.9%. An agenda is proposed for removing disincentives (creating incentives) for stakeholders (academics, data collectors and producers) since reporting measurement error will result in better research, better policy and ultimately better data.

Making Data Measurement Errors Transparent: The Case of the IMF in World Economics

Friday, October 20, 2017

Cryptocurrencies that are money

MORTEN L. BECH, Bank for International Settlements (BIS) - Committee on Payments and Market Infrastructures
Email: morten.bech@bis.org
University of California Santa Barbara
Email: garratt@ucsb.edu

New cryptocurrencies are emerging almost daily, and many interested parties are wondering whether central banks should issue their own versions. But what might central bank cryptocurrencies (CBCCs) look like and would they be useful? This feature provides a taxonomy of money that identifies two types of CBCC - retail and wholesale - and differentiates them from other forms of central bank money such as cash and reserves. It discusses the different characteristics of CBCCs and compares them with existing payment options. 

Book pp. 73-74

Monday, August 21, 2017

SDGs and income inequality

The new global targets for development, the Sustainabe Development Goals, do not consider income inequality although the SDGs pay some lip service. This new and exciting edited volume published by Edward Elgar provides an overview of the state of the art, including the often forgotten issue of how to measure progress regarding a more inclusive development of Earth

Friday, August 4, 2017

earnings inequality 1970-2015

OLLE HAMMAR, Uppsala University - Department of Economics, Research Institute of Industrial Economics (IFN)
Email: olle.hammar@nek.uu.se
Uppsala University - Department of Economics, Research Institute of Industrial Economics (IFN)
Email: daniel.waldenstrom@nek.uu.se

We estimate trends in global earnings dispersion across occupational groups using a new database covering 66 developed and developing countries between 1970 and 2015. Our main finding is that global earnings inequality has declined, primarily during the 2000s, when the global Gini coefficient dropped nearly 10 points and the earnings share of the world's poorest half doubled. Decomposition analyses emphasize the role of income convergence between poor and rich countries and that earnings have become more similar within occupations in traded industries. Sensitivity checks show that the results are robust to varying real exchange rates, inequality measures and population definitions.

Book pp. 67-71

Global factors and inflation

"Global Inflation: The Role of Food, Housing and Energy Prices"

     ECB Working Paper No. 2024


  Contact:  MILES PARKER

              Reserve Bank of New Zealand



ABSTRACT: This paper studies the role of global factors in causing common movements in consumer price inflation, with particular focus on the food, housing and energy sub-indices. It uses a comprehensive dataset of 223 countries and territories collected from national and international sources. Global factors explain a large share of the variance of national inflation rates for advanced countries ─ and more generally those with greater GDP per capita, financial development and central bank transparency ─ but not for middle and low income countries.

Common factors explain a large share of the variance in food and energy prices.

Book, pp. 29-32

Global data shadow economy 1991-2015

LEANDRO MEDINA, George Washington University - Department of Economics, International Monetary Fund (IMF) - Western Hemisphere Department
Email: leandrom@gwu.edu
Johannes Kepler University Linz - Department of Economics, CESifo (Center for Economic Studies and Ifo Institute for Economic Research), Institute for the Study of Labor (IZA)
Email: friedrich.schneider@jku.at

Using the MIMIC method, this paper is a first attempt to estimate the size of the shadow economy of 158 countries over the period 1991 up to 2015. In addition to performing a variety of robustness tests, this paper explicitly addresses endogeneity concerns to the use of GDP as cause and indicator, by using the light intensity approach as an indicator variable as proxy for the size of the economy. Results suggest that the average size of the shadow economy of these 158 countries over 1991-2015 is 32.5% of official GDP, which was 34.82% in 1991 and decreased to 30.66% in 2015.

Book p. 21

Wednesday, June 28, 2017

What is the World Bank Good for? Global Public Goods and Global Institutions

RAVI KANBUR, Cornell University, Centre for Economic Policy Research (CEPR), IZA Institute of Labor Economics
Email: sk145@cornell.edu

The World Bank is in the doldrums, or worse. The Global Public Goods (GPGs) argument is often put forward as a way of reviving and even rescuing an institution whose financial base to support conventional sovereign loans is receding sharply relative to needs and competition from other sources. The World Bank does have certain advantages as an institution, which the global community could use to address GPG issues. It has technical excellence and convening power to help build consensus on a range of GPG issues, although this cannot be fully realized without radical reform of its governance structures. It has experience with managing concessional and grant resources, which will be central to financing GPG mechanisms. And it also has experience with country operations to implement the country specific dimensions of GPG mechanisms. That is what the World Bank is good for now, three quarters of a century after its founding 

Book: Chapter 13

Friday, January 6, 2017

Global Financial Safity Net 1960-2015

BEATRICE D. SCHEUBEL, European Central Bank (ECB), Ludwig Maximilian University of Munich - Center for Economic Studies (CES)
Email: scheubel@lmu.de
European Central Bank (ECB)
Email: Livio.Stracca@ecb.europa.eu

This paper critically reviews the theoretical basis for the provision of the global financial safety net (GFSN) and provide a comprehensive database covering four elements of the GFSN (foreign exchange reserves, IMF financing, central bank swap lines and regional financing arrangements) for over 150 countries in the sample period 1960-2015. This paper also presents some key stylised facts regarding the provision of GFSN financing and compares macroeconomic outcomes in capital flow reversal episodes depending on how much GFSN financing was available to countries. Finally, this paper concludes with some avenues for further research on the possible evolution of the GFSN.