Monday, April 16, 2012
Megacity Economics
23-5-25 Tokyo & Megacities - Economic Disparities - EcEx > .
Japan's Economy
24-5-13 Japan's Lost Decade - An Economic Disaster [Doc] - Cold Fusion > .Middle Income Trap
23-9-18 Xina's Economic Decline: Middle-Income Trap, Causes, Challenges - Dig > .
22-11-27 Dragon's Claw: Xina's Next 10 Years - Kamome > . skip > .
22-10-27 Xina's Economy 60% Smaller Than Claimed - Macro > . skip > .
22-10-27 GDP Deflator - Macro > .
22-10-25 Xina's Q3 details - Update > .
Middle-Income Trap - Means >> .Economic Walls - Compass >> .
How to avoid middle-income traps? Evidence from Malaysia .
China and the end of extrapolation .
Avoiding middle-income growth traps .
Europe’s growth model .
Why did Europe’s growth take-off happen first? .
The World Bank in Middle Income Countries: Middle Income Countries are a diverse group by size, population and income level, and are home to 75% of the world’s population and 62% of the world’s poor. MICs also represent about one-third of global GDP and are major engines of global growth.
The middle income trap is an economic development situation in which a country that attains a certain income (due to given advantages) gets stuck at that level. The term was introduced by the World Bank in 2006 and is defined by them as the 'middle-income range' countries with gross national product per capita that has remained between $1,000 to $12,000 at constant (2011) prices.
According to the concept, a country in the middle income trap has lost its competitive edge in the export of manufactured goods due to rising wages. However, it is unable to keep up with more developed economies in the high-value-added market. As a result, newly industrialized economies such as South Africa and Brazil have not, for decades, left what the World Bank defines as the 'middle-income range' since their per capita gross national product has remained between $1,000 to $12,000 at constant (2011) prices. They suffer from low investment, slow growth in the secondary sector of the economy, limited industrial diversification and poor labor market conditions.
In macroeconomics, the secondary sector of the economy is an economic sector in the three-sector theory that describes the role of manufacturing. It encompasses industries that produce a finished, usable product or are involved in construction.
This sector generally takes the output of the primary sector (i.e. raw materials) and creates finished goods suitable for sale to domestic businesses or consumers and for export (via distribution through the tertiary sector). Many of these industries consume large quantities of energy, require factories and use machinery; they are often classified as light or heavy based on such quantities. This also produces waste materials and waste heat that may cause environmental problems or pollution (see negative externalities). Examples include textile production, car manufacturing, and handicraft.
Manufacturing is an important activity in promoting economic growth and development. Nations that export manufactured products tend to generate higher marginal GDP growth, which supports higher incomes and therefore marginal tax revenue needed to fund such government expenditures as health care and infrastructure. Among developed countries, it is an important source of well-paying jobs for the middle class (e.g., engineering) to facilitate greater social mobility for successive generations on the economy. Currently, an estimated 20% of the labor force in the United States is involved in the secondary industry.
The secondary sector depends on the primary sector for the raw materials necessary for production. Countries that primarily produce agricultural and other raw materials (i.e., primary sector) tend to grow slowly and remain either under-developed or developing economies. The value added through the transformation of raw materials into finished goods reliably generates greater profitability, which underlies the faster growth of developed economies.
From 1960 to 2010, only 15/101 middle-income economies escaped the middle income trap, including Hong Kong, Taiwan, Singapore, South Korea and Japan.
Dual-Sector Model (developing economies) ..
This sector generally takes the output of the primary sector (i.e. raw materials) and creates finished goods suitable for sale to domestic businesses or consumers and for export (via distribution through the tertiary sector). Many of these industries consume large quantities of energy, require factories and use machinery; they are often classified as light or heavy based on such quantities. This also produces waste materials and waste heat that may cause environmental problems or pollution (see negative externalities). Examples include textile production, car manufacturing, and handicraft.
Manufacturing is an important activity in promoting economic growth and development. Nations that export manufactured products tend to generate higher marginal GDP growth, which supports higher incomes and therefore marginal tax revenue needed to fund such government expenditures as health care and infrastructure. Among developed countries, it is an important source of well-paying jobs for the middle class (e.g., engineering) to facilitate greater social mobility for successive generations on the economy. Currently, an estimated 20% of the labor force in the United States is involved in the secondary industry.
The secondary sector depends on the primary sector for the raw materials necessary for production. Countries that primarily produce agricultural and other raw materials (i.e., primary sector) tend to grow slowly and remain either under-developed or developing economies. The value added through the transformation of raw materials into finished goods reliably generates greater profitability, which underlies the faster growth of developed economies.
Avoiding the middle income trap entails identifying strategies to introduce new processes and find new markets to maintain export growth. Ramping up domestic demand is also important—an expanding middle class can use its increasing purchasing power to buy high-quality, innovative products and help drive growth.
The biggest challenge in escaping the trap is in moving from resource-driven growth that is dependent on cheap labor and cheap capital to growth based on high productivity and innovation. This requires investments in infrastructure and education—building a high-quality education system that encourages creativity and supports breakthroughs in science and technology that can be applied back into the economy. Diversifying exports is also considered important to escape the middle income trap.
Some analysts have suggested that China's Belt and Road and Made in China 2025 initiatives are, in part, a strategy for that country to escape the middle income trap.
The biggest challenge in escaping the trap is in moving from resource-driven growth that is dependent on cheap labor and cheap capital to growth based on high productivity and innovation. This requires investments in infrastructure and education—building a high-quality education system that encourages creativity and supports breakthroughs in science and technology that can be applied back into the economy. Diversifying exports is also considered important to escape the middle income trap.
Some analysts have suggested that China's Belt and Road and Made in China 2025 initiatives are, in part, a strategy for that country to escape the middle income trap.
From 1960 to 2010, only 15/101 middle-income economies escaped the middle income trap, including Hong Kong, Taiwan, Singapore, South Korea and Japan.
How to avoid middle-income traps? Evidence from Malaysia .
China and the end of extrapolation .
Avoiding middle-income growth traps .
Europe’s growth model .
Why did Europe’s growth take-off happen first? .
MMT - Modern Monetary Theory
.
MMT - Modern Monetary Theory - Weighs > .24-10-15 How the US Debt Crisis Affects Us All - Cold Fusion > .
23-1-16 Bretton Woods - Why it's Important - EEE > .
Modern Monetary Theory explained - Economics Understood > .
Economics - Introductory videos - Economics Understood >> .
MMT is used in policy debates to argue for such progressive legislation as universal healthcare and other public programs for which fiscally conservative governments claim not to have sufficient money to fund. Some say such spending would be fiscally irresponsible, as the debt would balloon and inflation would skyrocket. But according to MMT:
https://www.vox.com/future-perfect/2019/4/16/18251646/modern-monetary-theory-new-moment-explained .
https://en.wikipedia.org/wiki/Modern_Monetary_Theory .
https://www.cnbc.com/video/2019/03/01/stephanie-kelton-explains-modern-monetary-theory.html .
>> Money & Macro >>
Modern Monetary Theory (MMT) is a heterodox macroeconomic framework which contends that monetarily sovereign countries like the U.S., U.K., Japan, and Canada (which spend, tax, and borrow in a fiat currency that they fully control) are not operationally constrained by revenues when it comes to federal government spending.
MMT challenges conventional beliefs about how the government interacts with the economy, the nature of money, the use of taxes, and the significance of budget deficits. These beliefs, critics say, are a hangover from the gold standard era and are no longer accurate, useful, or necessary.
Expressed simply, the governments of monetarily sovereign countries do not rely on taxes or borrowing for spending because, as the monopoly issuers of the currency [and constrained only by inflationary risk] they can print as much money as they need. Since governmental budgets do not operate like a regular household’s, their policies should not be shaped by fears of rising national debt.
Expressed simply, the governments of monetarily sovereign countries do not rely on taxes or borrowing for spending because, as the monopoly issuers of the currency [and constrained only by inflationary risk] they can print as much money as they need. Since governmental budgets do not operate like a regular household’s, their policies should not be shaped by fears of rising national debt.
- Large government debt isn’t the precursor to collapse that we have been led to believe it is;
- Countries like the U.S. can sustain much greater deficits without cause for concern; and
- A small deficit or surplus can be extremely harmful and cause a recession since deficit spending is what builds people’s savings.
https://en.wikipedia.org/wiki/Modern_Monetary_Theory .
https://www.cnbc.com/video/2019/03/01/stephanie-kelton-explains-modern-monetary-theory.html .
Monetarism
21-2-24 Age of Monetarism - Hoover > .
17-11-14 Game of Theories: The Monetarists - mru > .
2021 Economist Responds to "Inflation is Already Here" - Money & Macro > . skip > . timestamps:
0:00 - introduction
1:57 - is the US like Weimar?
13:07 - when is hyperinflation unstoppable?
18:50 - is the US special?
20:27 - how to protect yourself
1:57 - is the US like Weimar?
13:07 - when is hyperinflation unstoppable?
18:50 - is the US special?
20:27 - how to protect yourself
1961-2021 Highest National Inflation Rate > .
Deflation ..
15-1-23 A Japanese Lesson in Deflation for Europe - WSJ > .Game of Theories: How to fight a recession - mru >> .
>> Weighs 'n Means >>
Inflation ..
Monetarism ..
Monetarism today is mainly associated with the work of Milton Friedman, who was among the generation of economists to accept Keynesian economics and then criticise Keynes's theory of fighting economic downturns using fiscal policy (government spending). Friedman and Anna Schwartz wrote an influential book, A Monetary History of the United States, 1867–1960, and argued "inflation is always and everywhere a monetary phenomenon".
Though he opposed the existence of the Federal Reserve, Friedman advocated, given its existence, a central bank policy aimed at keeping the growth of the money supply at a rate commensurate with the growth in productivity and demand for goods.
Monetarism is an economic theory that focuses on the macroeconomic effects of the supply of money and central banking. Formulated by Milton Friedman, it argues that excessive expansion of the money supply is inherently inflationary, and that monetary authorities should focus solely on maintaining price stability.
This theory draws its roots from two historically antagonistic schools of thought: the hard money policies that dominated monetary thinking in the late 19th century, and the monetary theories of John Maynard Keynes, who, working in the inter-war period during the failure of the restored gold standard, proposed a demand-driven model for money. While Keynes had focused on the stability of a currency's value, with panics based on an insufficient money supply leading to the use of an alternate currency and collapse of the monetary system, Friedman focused on price stability.
The result was summarised in a historical analysis of monetary policy, Monetary History of the United States 1867–1960, which Friedman coauthored with Anna Schwartz. The book attributed inflation to excess money supply generated by a central bank. It attributed deflationary spirals to the reverse effect of a failure of a central bank to support the money supply during a liquidity crunch.
Friedman originally proposed a fixed monetary rule, called Friedman's k-percent rule, where the money supply would be automatically increased by a fixed percentage per year. Under this rule, there would be no leeway for the central reserve bank, as money supply increases could be determined "by a computer", and business could anticipate all money supply changes. With other monetarists he believed that the active manipulation of the money supply or its growth rate is more likely to destabilise than stabilise the economy.
This theory draws its roots from two historically antagonistic schools of thought: the hard money policies that dominated monetary thinking in the late 19th century, and the monetary theories of John Maynard Keynes, who, working in the inter-war period during the failure of the restored gold standard, proposed a demand-driven model for money. While Keynes had focused on the stability of a currency's value, with panics based on an insufficient money supply leading to the use of an alternate currency and collapse of the monetary system, Friedman focused on price stability.
The result was summarised in a historical analysis of monetary policy, Monetary History of the United States 1867–1960, which Friedman coauthored with Anna Schwartz. The book attributed inflation to excess money supply generated by a central bank. It attributed deflationary spirals to the reverse effect of a failure of a central bank to support the money supply during a liquidity crunch.
Friedman originally proposed a fixed monetary rule, called Friedman's k-percent rule, where the money supply would be automatically increased by a fixed percentage per year. Under this rule, there would be no leeway for the central reserve bank, as money supply increases could be determined "by a computer", and business could anticipate all money supply changes. With other monetarists he believed that the active manipulation of the money supply or its growth rate is more likely to destabilise than stabilise the economy.
Most monetarists oppose the gold standard. Friedman, for example, viewed a pure gold standard as impractical. For example, whereas one of the benefits of the gold standard is that the intrinsic limitations to the growth of the money supply by the use of gold would prevent inflation, if the growth of population or increase in trade outpaces the money supply, there would be no way to counteract deflation and reduced liquidity (and any attendant recession) except for the mining of more gold.
Thus, where the money supply expanded, people would not simply wish to hold the extra money in idle money balances; i.e., if they were in equilibrium before the increase, they were already holding money balances to suit their requirements, and thus after the increase they would have money balances surplus to their requirements. These excess money balances would therefore be spent and hence aggregate demand would rise. Similarly, if the money supply were reduced people would want to replenish their holdings of money by reducing their spending. In this, Friedman challenged a simplification attributed to Keynes suggesting that "money does not matter." Thus the word 'monetarist' was coined.
The rise of the popularity of monetarism also picked up in political circles when Keynesian economics seemed unable to explain or cure the seemingly contradictory problems of rising unemployment and inflation in response to the collapse of the Bretton Woods system in 1972 and the oil shocks of 1973. On the one hand, higher unemployment seemed to call for Keynesian reflation, but on the other hand rising inflation seemed to call for Keynesian disinflation.
In 1979, United States President Jimmy Carter appointed as Federal Reserve chief Paul Volcker, who made fighting inflation his primary objective, and who restricted the money supply (in accordance with the Friedman rule) to tame inflation in the economy. The result was a major rise in interest rates, not only in the United States; but worldwide. The "Volcker shock" continued from 1979 to the summer of 1982, decreasing inflation and increasing unemployment.
There are also arguments that monetarism is a special case of Keynesian theory. The central test case over the validity of these theories would be the possibility of a liquidity trap, like that experienced by Japan. Ben Bernanke, Princeton professor and another former chairman of the U.S. Federal Reserve, argued that monetary policy could respond to zero interest rate conditions by direct expansion of the money supply. In his words, "We have the keys to the printing press, and we are not afraid to use them."
These disagreements—along with the role of monetary policies in trade liberalisation, international investment, and central bank policy—remain lively topics of investigation and argument.
Monetarists not only sought to explain present problems; they also interpreted historical problems. Milton Friedman and Anna Schwartz in their book A Monetary History of the United States, 1867–1960 argued that the Great Depression of the 1930s was caused by a massive contraction of the money supply (they deemed it "the Great Contraction"), and not by the lack of investment Keynes had argued. They also maintained that post-war inflation was caused by an over-expansion of the money supply.
They made famous the assertion of monetarism that "inflation is always and everywhere a monetary phenomenon." Many Keynesian economists initially believed that the Keynesian vs. monetarist debate was solely about whether fiscal or monetary policy was the more effective tool of demand management. By the mid-1970s, however, the debate had moved on to other issues as monetarists began presenting a fundamental challenge to Keynesianism.
Monetarists argued that central banks sometimes caused major unexpected fluctuations in the money supply. They asserted that actively increasing demand through the central bank can have negative unintended consequences.
Phillip D. Cagan .
Milton Friedman .
Alan Greenspan .
David Laidler .
Allan Meltzer .
Anna Schwartz .
Margaret Thatcher .
Paul Volcker .
Clark Warburton .
They made famous the assertion of monetarism that "inflation is always and everywhere a monetary phenomenon." Many Keynesian economists initially believed that the Keynesian vs. monetarist debate was solely about whether fiscal or monetary policy was the more effective tool of demand management. By the mid-1970s, however, the debate had moved on to other issues as monetarists began presenting a fundamental challenge to Keynesianism.
Monetarists argued that central banks sometimes caused major unexpected fluctuations in the money supply. They asserted that actively increasing demand through the central bank can have negative unintended consequences.
Notable Proponents of Monetarism
Karl Brunner .Phillip D. Cagan .
Milton Friedman .
Alan Greenspan .
David Laidler .
Allan Meltzer .
Anna Schwartz .
Margaret Thatcher .
Paul Volcker .
Clark Warburton .
Monetarism ..
Austrian School of economics .
Chicago school of economics .
Demurrage (currency) .
Fiscalism (usually contrasted to monetarism)
Inflation targeting .
Market monetarism .
Modern Monetary Theory .
General:
Macroeconomics .
Political economy .
Chicago school of economics .
Demurrage (currency) .
Fiscalism (usually contrasted to monetarism)
Inflation targeting .
Market monetarism .
Modern Monetary Theory .
General:
Macroeconomics .
Political economy .
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igitur quī dēsīderat pācem praeparet bellum therefore, he who desires peace, let him prepare for war sī vīs pācem, parā bellum if you wan...
