International Economics: IB Economics

That's why they earn the big bucks: Kristalina Georgieva asserts that the Ukraine war remains a barrier to growth. I love it when pronouncements like this get air time. I would never have been able to figure this sort of thing out myself. 

I've 'scooped' this World Bank clip not so much because of the impact of the scope of the Recovery and Reconstruction Project, but because of how you might think of modelling both the original natural disaster, and the subsequent recovery from it. 

How might you use AD-AS analysis to do this? What other important macroeconomic concepts might you bring to bear? Why is the multiplier relevant here? Are there any features of such projects that might limit their effectiveness, and how would you evaluate them?

US inflation continues to fall down to 4% more than half of UK inflation, and largely as a result of falling food and petrol prices. It would seem that other economies are coming through their supply-side shocks more rapidly than we are.  

This World Bank clip looks at the resilience of the South Asian economy in the wake of a series of recent shocks - floods in Pakistan, the economic crisis in Sri Lanka and the war in the Ukraine. The net result has been to see the World Bank downgrade regional growth to 5.8%. 

Can Germany keep the lights on this year? It's a pressing concern, and the government has encouraged consumers to reduce consumption but it would have dramatic supply-side implications. 

You heard it here first - the World Bank is predicting that the war in Ukraine will represent the biggest global price shock since the OPCE oil price shock of 1973-74. And that's without Russia cutting off gas to Poland and Bulgaria.

Food prices, and other commodity prices are expected to rise and poverty levels across the world are going to rise.

This BBC article looks at the fact that for many of us, Christmas might be spoilt by the fact that many presents may well already be stuck in shipping containers backed up around the world. 

It highlights, once again, the fragility of the global supply chain, and implies that the global economy is going to experience a substantial supply-side shock going forward.

Yet more evidence of global supply chain issues...

It's grim. Up North. And South. And everywhere else, according to the IMF.  

Supply chain issues and global inflationary pressure represent threats to economic stability across the globe. 

The IMF has revised its global economic forecast downwards largely as a result of the continued COVID divide between rich and poor nations. 

In July, the group forecast global growth of around 6% but this inequality and the continued issues with global supply chains are going to see the figure reduced. 

Nouriel Roubini raises the spectre of stagflation - which you, and your parents - might have to look up. However, it's a phenomenon associated with the supply-side shocks of the 1970s and implies sluggish growth, high inflation, and led eventually to rising unemployment too.

He identifies a number of things likely to precipitate this, stemming from shocks to the global supply chain and wonders how things are going to play out as a consequence.

If you don't want to know the score...look away now!

Where is the global economy headed? This Nouriel Roubini article suggests that there's a very real possibility of stagflation emerging, as a result of accomodative policy, and the adverse supply-side effects of the pandemic. 

However, might innovation and the application of artificial intelligence more broadly mitigate against this? It's an interesting article, although the conclusion - that we are going to experience a post-pandemic period of sustained high inflation as a result of the features of the economy. 

The scale of the rise in US unemployment is unprecedented - whereas seven weeks ago, unemployment was at its lowest level in 50 years, today US unemployment stands at close to 20%, something not seen since the Great Depression. 

It has put immense pressure on the unemployment funds of individual states, some of which are going to struggle to cope, such as California and North Carolina, and it also represents a seismic shock to both the demand-side and the supply-side of the US economy, which you should be able to draw.

Of longer-term concern is the possibility of hysteresis, or labour market scarring which might adverse affect the position of the LRAS curve.

One for the "That's why the earn the big bucks" file - the current crisis in the Middle East poses all sort of problems for the global economy going forward: economic growth may slow, inflation may rise, and unemployment might rise with it. 

However, be cautious: at the moment it looks like a temporary shock but there's still the possibility of a wider regional conflict which would be far more damaging. 

This World Bank clip looks at how a shop in Tonga has recovered from repeated cyclones, a king tide  and then a tsunami - massive supply-side shocks. It shows how investment in resilient infrastructure can enhance sustainable development prospects. 

I scoop this because it looks at both climate change and development, with the latest WHO data suggesting an uptick in the incidence of malaria in response to extreme weather events. The impact of this is not just higher healthcare costs and adverse distributional effects in the short-term but the potential for adverse supply-side effects in the longer-term, a smaller, less productive workforce and all of the macroeconomic implications of this. 

This is a fascinating article that details how COVID has affected the US labour market, with implications for the wider macroeconomy. According to the National Bureau of Economic Research (NEBR) as well as 250,000 people of working age dying from the virus, around 500,000 have also left the labour force. This represents a supply-side shock and will have implications for other macroeconomic objectives too.  

A brutal quantification of the costs of conflict, with the Kyiv School of Economics estimating a weekly cost of £3.6bn worth of building damage: that's quite some opportunity cost.

And worse, in the longer-term, it clearly has massive implications for Ukraine's supply-side once the conflict is over. 

It seems that oil transportation and storage companies in Europe have been hacked - and according to the article: "experts caution against assuming this is a co-ordinated attack".

I'm not as cautious; I suspect the culprits are fairly obvious...

This Guardian piece looks at the impact of the pandemic on global trade, globalisation and the response of the global economy to this. It highlights the fragile nature of global supply chains and the dangers of hyperglobalisation.

Larry Elliott reminds us that 13 years ago the global financial crisis broke, and he uses that as a convenient hook to suggest that we could face another global crisis as a result of the ongoing supply chain issues. Happy days!

First China, now India - this BBC article details the fact that India's coal-fired power stations are running short of fuel, to the extent that future blackouts are a very real prospect. 

If both of these Asian superpowers are struggling, it doesn't bode well for global economic growth. 

But at the same time, proof that supply chain issues are a global phenomenon, with Nike and Costco alerting consumers to product shortages and delays in the US.

That said, if you've seen my earlier scoop about the logjam of shipping of the Californian coast, you'll be unsurprised. Now, the day's big task - off to find some petrol!

Evidence of the extent to which supply chain problems are affecting the whole global economy - with a record backlog of container ships stuck off the coast of California, waiting to dock. 

This World Bank clip looks at the importance of Vietnam's coastline to its development and the impact of natural disasters upon its supply-side capacity. The clip focuses on the measures taken by the Vietnamese government to develop resilience in the face of climate change and increased disaster risk, and ensure sustainable development.