Trade in the Shadows

Accurate, timely and reliable statistics on international trade in goods and services are of considerable academic and policy relevance. A major source of illicit financial flows (IFFs) out of developing countries accrues from the under-invoicing of commodity exports. Researchers have highlighted the critical importance of reliable trade data to estimate the magnitude of IFFs and the related channels and drivers which erode the tax base of resource-rich low-income countries, and hence their capacity to mobilise domestic resources for development. Yet, data flaws and methodological weaknesses represent obstacles to identify the drivers and magnitude of the phenomenon, limiting the ability of developing countries to effectively curb IFFs. Drawing on six-year interdisciplinary research on commodity trade-related IFFs, this article examines the weaknesses of existing trade data repositories, notably, with regard to data aggregation, quality and consistency as well as missing data. We discuss the scope for improved data generation and transparency required to inform evidence-based policy debates and action. This, together with global taxation reform, can greatly contribute to effectively enhancing domestic resource mobilisation in developing countries.

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Characterizing Stagflation into Mild, Moderate and Severe Episodes

The study proposes a new framework to classify stagflation into mild, moderate, or severe episodes based on the magnitude and duration of high inflation and low-output growth. It uses the CPI and PCE deflators as inflation measures, real GDP as output growth measure, and a time-varying benchmark for growth and inflation to account for the changing nature of the US economy. The article identifies 13 episodes of stagflation from 1947 to Q1-2024, with five mild, four moderate, and four severe cases. The current episode (Q2–2021 to Q1-2024) is severe and the second-longest in history. The findings use Bloomberg’s consensus projections to estimate the end of the current stagflation episode by Q1–2024, and discuss the policy implications and lessons from past episodes.

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The Missing Piece: A Copyright Index

This paper aims to add to the literature on intellectual property protection by creating an index/database to reflect the strength of copyright and related rights for 109 countries for 2023. The index is primarily based on a range of factors like coverage of the law, membership in copyright conventions and its duration, copyright applications and enforcement mechanisms. The evidence indicates that developed countries and European nations tend to provide better protection to copyright holders.

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Relationship of Internet Activity to Income Inequality and Life Satisfaction

Prior research shows that the internet has enhanced information dissemination and facilitated economic development. However, the impact of the internet is not evenly distributed among countries or within countries of the world. While the internet facilitates an increase in economic activity, the economic reward from that activity is not evenly distributed to all segments of a society, which leads to income inequality. If income inequality is perceived as excessive, that may cause the population’s life satisfaction to go downward. Findings indicate a negative relationship between internet usage and income inequality, but a positive relationship between internet usage and life satisfaction. Thus, decreases in income inequality and increases in happiness are both associated with increases in internet usage.

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The Marketing Evaluation of Capital Investment Projects

Through this article the author attempts to put together in one logical and coherent sequence the steps to be followed when attempting to evaluate the competitiveness of a capital investment project. Over and above applying the correct cost–benefit analysis methodology and building an integrated and manageable financial model it is imperative to research the marketing aspects of the project and build these findings into the projections.

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GDP Growth in Bharat

Countries should be mandated to purchase carbon credits for their shortfall in nationally determined contributions to the Paris Agreement. The carbon credit purchase quantity for each country should be scaled by a country’s gross national happiness. Governments should fund this carbon credit purchase through national carbon pricing. Mandating government carbon credit purchases will facilitate far-reaching emissions reductions, carbon removal at scale and combat global inequality.

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The Informal Economy of the BRICS

This article evaluates the impact of trade liberalisation on the informal economy in the BRICS countries, which have significant unorganised sectors and trade policy changes. The article uses panel data from 1996 to 2015 to measure informality based on the method of Kaufmann and Kaliberda, which estimates the size of the informal sector as the difference between official GDP and electricity consumption. It finds that trade liberalisation has increased informality in the BRICS countries, implying that globalisation and economic growth have not benefited the unorganised sector or reduced inequality and development issues. It suggests that trade policy reforms should be accompanied by measures to improve governance, regulation, social protection and formalisation of the informal sector.

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Averting Public Debt Tsunami

This study introduces an innovative policy proposal designed to improve the fiscal stance of most countries towards long-term sustainability. We suggest implementing ‘deficit taxes’ for individuals and (100-fold higher) ‘deficit fines’ for politicians in any year in which a (cyclically adjusted) budget deficit occurs. In line with the theory of ‘rational inattention’, these taxes and fines will incentivise voters and politicians to stop ignoring debt accumulation and the threat of a fiscal crisis.

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Modern Money Theory

The article criticizes modern money theory (MMT), which is a macroeconomic policy that aims to achieve full employment by using money-financed fiscal deficits, without using any formal modelling. The article claims that MMT policy would not work in an open and internationally highly financially integrated economy, because it would either cause the money stock to grow unsustainably large or require domestic interest rates to be set at levels that would contradict the goal of full employment and create economic and financial instability. The article argues that MMT can only work, at best and if at all, in specific country circumstances, such as having high policy credibility or issuing an international reserve currency, which can prevent the negative effects of MMT policy and make expansionary demand shocks effective.

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Argentina, Crises and the International Monetary Fund

Argentina has a long history of economic, financial and currency crises and has been exhibiting crisis characteristics since 2018. Crises in Argentina may be analysed using currency crisis models and in particular, experience seems to fit the first-generation model. After a break of 15 years, Argentina has had programs with the International Monetary Fund, a standby agreement in 2018 and an extended fund facility agreement in 2022. The programs have incorporated fairly conventional IMF conditionality in terms of fiscal and monetary correction and currency realignment. On the basis of almost all criteria, the programs have not been successful, and it is important to understand why this is the case. In the recent presidential elections, one candidate advocated dollarization. However, there are underlying problems with this policy approach. Political factors in Argentina play an important role in determining policy choices and outcomes.

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Is ‘Make in India’ a Saga?

The ‘Make in India’ drive aims to boost domestic manufacturing and reduce import dependence, attracting global investors and producers to India’s potential and ecosystem. The manufacturing sector in India has shown weak growth in value added and employment, lagging behind the service sector, due to capital-intensive and labour-saving technologies. India ranks low in several indexing parameters, indicating a lack of strategic effort by the government to improve the manufacturing environment and competitiveness. For ‘Make in India’ to be successful, India needs to create a global workforce, use natural resources optimally, build world-class infrastructure, offer tax incentives and reduce reliance on China.

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A Mandatory Carbon Credit Purchase set by a Country’s Gross National Happiness

Countries should be mandated to purchase carbon credits for their shortfall in nationally determined contributions to the Paris Agreement. The carbon credit purchase quantity for each country should be scaled by a country’s gross national happiness. Governments should fund this carbon credit purchase through national carbon pricing. Mandating government carbon credit purchases will facilitate far-reaching emissions reductions, carbon removal at scale and combat global inequality.

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Enriching the Human Development Index through the Inclusion of Affordable Healthy Diet

This article presents research findings that support adding ‘affordable healthy diet’ as an indicator in the ‘Long and healthy life’ dimension of the Human Development Index (HDI). The article also aims to link the Sustainable Development Goal 2 (End Hunger, Achieve Food Security and Improved Nutrition and Promote Sustainable Agriculture) with the HDI, by showing the importance of food and nutrition security in human development. A quantitative analysis is used, including econometric and statistical methods, to establish the relationship and the statistical significance of affordable healthy diet in the HDI. The study aims to be the first to integrate food and nutrition security in the assessment of human development, using testable and established statistical methods to improve governance, regulation, social protection and formalisation of the informal sector.

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Measuring the 'Flat White Economy'

The ‘Flat White Economy’ defined in the eponymous book is the combination of tech and creative economies that developed initially in the east of London and have since evolved into becoming a significant component of the UK’s GDP and that of other economies. Research undertaken by the Centre for Economics and Business Research (Cebr) estimated that the sector had grown to 12% of the UK’s GDP in 2022, compared to around 9.2% for manufacturing. Measuring the value of services is difficult but measuring the output of creative and tech services, especially since the birth and expansion of the internet, creates additional problems which imply that current estimates of the size of the sector could be too low. There are four main measurement issues: the size, growth and lifecycle of the companies to be surveyed; the accounting treatment of investment in software; a flawed, out-of-date definition of R&D expenditure; and producing relevant price deflators while hindered by the difficulty in measuring quality.

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Monetary Facts and Inflation

Despite recent bouts of inflation in the United States, the United Kingdom, and Europe, central bankers have been attributing the rise in inflation to various non-monetary factors, such as supply chain problems and geopolitical events. However, this article argues that excess money supply is the real culprit behind inflation, echoing the famous quote by Milton Friedman, ‘Inflation is always and everywhere a monetary phenomenon.’ The study finds a high correlation between the rate of growth of the money supply and the rate of inflation, supporting Friedman’s assertion. The author presents updated data from 147 countries spanning the period from 1990 to 2021, reaffirming the tight linkage between changes in the money supply (M2) and inflation. This evidence contradicts claims by central bankers and supports the view that inflation is primarily a result of monetary factors rather than non-monetary ones.

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Are Purchasing Power Parity Exchange Rates Misleading in Oil-Rich Gulf Countries?

This article examines the accuracy of purchasing power parity (PPP) rates in Saudi Arabia. It highlights concerns about the perceived wealth of Saudi citizens based on interviews with American expatriates and wage statistics. It discusses the limitations of the Saudi International Comparison Program (ICP) data, including variations in data quality, differences in product selection, limited coverage and the assumption of uniform consumption patterns. It analyses the divergence between Saudi Arabia’s PPP rates and the fixed market exchange rate and examines the relationship between Saudi Arabia’s PPP rates and oil prices, revealing the paradoxical decline in living standards during periods of high oil prices. In conclusion, the PPP exchange rates for Saudi Arabia appear to fail to accurately assess living standards in Saudi Arabia.

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Reconciling with Two Decades of Quantitative Easing

Credit-based growth has been the cornerstone of industrialisation efforts among most of the world’s present-day advanced economies. This was premised upon the issuance of interest-free credit and/or the regulation of the flow of credit to favour investment in tangible capital formation over speculation. The quantitative easing measures carried out today have benefited mainly the ultra-rich and are unsustainable. As nations respond to inflation, there is high risk of a financial collapse. Central banks such as the Bank of Japan have little they can do within their current policy range to stop this. Japan needs demand for Japanese credit, for productive purposes. It is likely to find this in nations embarking upon credit-based growth to achieve industrialisation in the developing world. This would be a benefit to both the people of Japan and the developing world.

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Exchange Rate Fluctuations and Stock Market Returns in Emerging Asian Economies

Exchange rates are a prominent macroeconomic variable that exposes emerging stock markets to international economic risks. This study attempts to understand and explain stock market returns and exchange rate dynamics in the progressive emerging market group of Asia. The study applies the ARDL modelling technique and Granger causality test to monthly time-series data. It finds that import-dominated countries (India, Indonesia and Turkey) have positive exchange rate coefficients while for export-dominated countries (China), an increase in real effective exchange rate affects stock returns negatively. Causality analysis reveals informational inefficiency among the sample countries except for Indonesia, because exchange rate movements lead stock prices. The study concludes that the exchange rate is highly significant for investors (global and domestic) and policymakers in the Asian economies reviewed, who focus on it to better diversify their portfolios.

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The Impact of Macroprudential Transparency on Price Stability in Advanced and Emerging Economies

Transparent macroprudential policy promotes economic and financial stability by maintaining price stability and enhancing the resilience of financial systems. This study evaluates the impact of macroprudential transparency on inflation levels and expectations using data from 65 economies during the period 2000–2015. It employs panel data methodology and the generalised method of moments approach. The research findings reveal that macroprudential transparency is associated with lower inflation rates and inflation expectations in developing economies and emerging markets. Additionally, the efficiency of prudential transparency is confirmed for countries that do not adopt inflation targeting.

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The Impact of Foreign Direct Investment and Exports on Vietnam’s Economic Growth: 1991-2022

The article examines the impact of foreign direct investment (FDI) and exports on Vietnam's economic growth from 1991 to 2022. Data on FDI, exports and real gross domestic product (GDP) were collected and analysed using EViews 8 software. The results show that both FDI and exports have a positive relationship with economic growth in Vietnam. Specifically, a 1% increase in FDI leads to a 0.2352% increase in economic growth, and a 1% increase in exports results in a 0.5425% rise in economic growth. The study suggests policy implications to promote FDI attraction and export activities to foster Vietnam’s economic growth and development.

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Climate Change Convention: COP27 Activities and Study of GCF Pledged Finance

COP27 focused on adaptation efforts in small island developing states (SIDS) and Africa, aiming to strengthen the resilience of vulnerable local populations and restore land to address biodiversity loss and climate change. This article examines the methodological aspects of the research design and highlights the significance of COP27 in achieving global goals and the objectives of the Paris Agreement. It evaluates Global Climate Fund (GCF) access modalities, such as request for proposals (RFP), the Simplified Approval Process (SAP) and direct access, to engage multiple stakeholders in addressing greenhouse gas mitigation, adaptation, food security, biodiversity conservation and desertification. The GCF’s Readiness Private Sector Programming (PSP) played a crucial role in implementing Nationally Determined Contributions (NDCs) and National Adaptation Plans (NAPs) during COP27, supporting investment in climate action. The article also emphasises the importance of transparency frameworks, domestic policy implementation and national-level decision-making in line with the ambitions of the Rio Conventions. Additionally, the comprehensive approach to channelling funds into sustainable sectors within countries is analysed as a means to achieve the stated goals.

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