Alex Izurieta

The Case for a Severe Recession

The authors argue that there are serious structural imbalances in the U.S. economy that make a deep recession likely. In fact, they say there is no natural process by which the economy will recover in short order. Rather, it will require serious government spending to restore economic growth.The authors argue that there are serious structural imbalances in the U.S. economy that make a deep recession likely. In fact, they say there is no natural process by which the economy will recover in short order. Rather, it will require serious government spending to restore economic growth.

Global Imbalances, Under‐consumption and Over‐borrowing: The State of the World Economy and Future Policies

This paper addresses the question of whether growth convergence can be sustained in the global economy without compromising welfare and without causing major crises. It employs a simplified stock-flow analytical framework to examine the proposition that the pace and pattern of global growth is conditioned by ‘under-consumption’ in some regions of the world and ‘overborrowing’ in other regions. A baseline projection using the Cambridge-Alphametrics model (CAM) illustrates consequences of resumed global imbalances after the 2008-2009 crisis. An alternative scenario exemplifies the case in which China and India shift towards internal income redistribution and domestic demand orientated policies and suggests that this will not be sufficient to correct global imbalances or induce improved growth rates in other developing regions. Finally a more ambitious development perspective is simulated. Such a scenario requires internationally-coordinated policy efforts, with greater role for governments in the management of demand, income distribution and environmental sustainability, as well as measures to reduce instability of exchange rate and commodity markets.

Does Fast Growth in India and China Help or Harm US Workers

Abstract A major issue today is whether globalization of the world’s labour, capital and product markets, together with rapid economic growth in India and China, will have an adverse effect on workers in the US and other advanced countries. Simulations of different scenarios using the Cambridge‐Alphametrics Model of the World Economy indicate that, at a bloc‐disaggregated level, there are severe supply‐side constraints relating particularly to natural resources (energy and raw materials) that thwart the expansionary demand effects of fast growth in India and China. This analysis is based on long‐term trends in the world economy prior to the current global financial crisis. However, for the sake of completeness, it also comments on the likely implications of this crisis for the USA and other advanced country workers.

Addressing Global Imbalances: A Development-Oriented Policy Agenda

The core of this working paper presents three different ‘scenarios’ for the world economy based on applying a world trade and income macroeconomic model. These three ‘scenarios’ are not forecasts; they are generated by the world macro model by making assumptions about basic macroeconomic parameters and then obliging the results to be consistent with recent historical trends and the current structure of the world economy. A brief description of the modeling methodology is presented in Section 2 while the blocs used for the model are identified in the Appendix.