The Unassuming Economist

From China Daily:

“The just-concluded G20 Summit marked a critical moment for global governance, and offered China a platform to share its vision of inclusive growth, equitable global governance and pragmatic cooperation. President Xi Jinping’s proposals at the G20 Summit in Rio de Janeiro, Brazil, underscored China’s commitment to upgrade its efforts with the Global South in order to address pressing global challenges.

President Xi’s emphasis on the Global South was not just rhetoric but a genuine belief in making the global governance system fairer and more representative. By championing initiatives like the Initiative on International Cooperation in Open Science and pledging to increase imports from developing countries to $8 trillion by 2030, China reinforced its role as a partner of developing countries. The approach highlights China’s broader outlooks of global affairs: fostering South-South cooperation and amplifying the voices of emerging economies on the global stage.

Xi also outlined China’s eight actions for global development, which include expanding the Belt and Road Initiative, safeguarding food security and promoting international cooperation in science and technology. This aligns with the developmental goals of the Global South — the Chancay Port inaugurated just a few days before in the region serves as a good example.”

From Climate Economics:

“Here are the slides from my recent 25 minute talk. Here is the video where I speak first and then Siqi Zheng speaks about decarbonizing the real estate sector. Here is the entire lecture series.

Six Quick Points

#1 In the developing world, billions of people are moving from rural areas to the cities. Cities offer greater economic opportunity, more excitement and one’s productivity is higher and more robust for urbanites. Farming is more affected by wild weather than is urban life.

#2 People who expect to live their lives in cities invest more in their human capital. Those with more skills are better at solving new problems and are better able to adapt to whatever challenges climate change is posing.

#3 Urbanization raises our income and richer people, cities and nations are better able to adapt to risks. Economic development accelerates adaptation.

#4 Nations with a larger menu of cities to move to will be better able to adapt to climate change. If a nation has one dominant city, then rural to urban migration will cause the mega city to get too big and this will lower quality of life in the slums in that city.

#5 Government investments in place based infrastructure and social insurance often have the unintended consequence of crowding out private self protection investment. That is BAD! Social scientists need to figure out how to design resilience policies such that they are complements not substitutes for private adaptation efforts.

#6 The Lucas Critique; We are not passive victims in the face of climate change. We have an ever growing menu of adaptation strategies that protect us against the serious challenges we now face.”

From an IMF blog by Paula Beltran Saavedra, Nicolas Fernandez-Arias, Chanpheng Fizzarotti, Alberto Musso:

“For most Group of Twenty economies, growth is poised to weaken over the next five years and remain well below what was typical in the two decades before the pandemic.

That’s one of the biggest shared challenges for the group, which accounts for about 85 percent of global gross domestic product. Growth is more robust across the African Union, which joined the G20 last year, but booming populations mean those economies also must create jobs for millions of young people entering the labor market.

For both groups, as well as the European Union, lifting growth is essential to improving outcomes for people, and there’s a common solution: implementing priority reforms can significantly boost prospects for growth over the next five years, or medium term, as our new report to the G20 outlines. Our analysis also indicates that payoffs from structural reforms are greatest when they are carefully sequenced and reflect social consensus.

Various challenges underscore why it’s time to invest in growth-enhancing reforms. Subdued productivity growth, reinforced in some countries by adverse demographic trends, holds back potential growth, as Chapter 3 of the April 2024 World Economic Outlook details. Sustainable growth also is imperiled by elevated public debt, and increased geoeconomic fragmentation and protectionism.

As the Chart of the Week shows, the biggest priority across countries in these groups is reforming fiscal policy frameworks to aid lasting consolidation of government budgets.”

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From a paper by Malihe Ashena:

“Considering the vital role of money demand in monetary and economic policies and its importance in economic stability, it is necessary to know the factors affecting it. Focusing on the increasing role of new technologies and financial developments, this paper examines the effect of financial development and the expansion of information and communication technology (ICT) on the demand for money in developing countries. This study uses principal component analysis (PCA) to calculate the ICT index. The research model is estimated using annual data obtained from the World Bank and International Monetary Fund during 2002-2021 for a selected group of developing countries. The long-run relationship between the variables has been investigated in a Panel-ARDL model. The research results show that ICT and financial development both have a negative and significant impact on money demand. These results point to the development of ICT infrastructure and financial resources to control money demand. In other words, increasing access to financial instruments and widespread use of ICT technologies has reduced the need to hold cash. These results indicate that structural changes in the economy of developing countries, caused by financial and technological growth, lead to changes in monetary behaviors. Therefore, policymakers should adopt strategies that can help adapting these developments and better manage money demand.”

From a new paper by Ruoyu Chen, Guoqing Wang, Nabiha Jamil, and Najaf Iqbal:

“We exploit the recent inclusion of green bonds to the “Eligible Collateral Assets” (ECAs) for the “Medium-term Loan Facility” (MLF) by the People’s Bank of China (PBOC) as a quasi-natural experiment and analyze its impact on the credit spreads between green and non-green bonds. We use the daily bond market data and employ the difference-in-differences (DID) model for analysis. Adding green bonds to the pool of ECAs by the PBOC significantly reduces the credit spreads (the required return on green bonds was higher earlier). The policy has a more prominent effect on the bonds issued by high-rated and local banks, as well as the ones situated in the Green Finance Reform Innovation Pilot Zones (GFRIPZ). The results of the parallel trend test indicate that the policy effect has a short-term lag, but overall, it shows a trend of continuous enhancement during the sample period.”