Economics & Global Affairs

7 Items

Blog Post - Views on the Economy and the World

The Paris Agreement on Climate Change, C’est Bon

| Dec. 22, 2015
How should one evaluate the agreement reached in Paris December 12 by the 21st Conference of Parties to the UN Framework Convention on Climate Change (UNFCCC)?   Some avid environmentalists may have been disappointed in the outcome.  The reason is that the negotiators did not commit to limiting global warming to 1 ½ degrees centigrade by 2050, nor will the new agreement directly achieve the 2 degree limit.But such commitments would not have been credible.  What came out of Paris was in fact better, because the negotiators were able to agree on meaningful practical near-term steps.

Blog Post - Views on the Economy and the World

TPP Critics’ Nighttime Fears Fade by Light of Day

| Oct. 11, 2015
The TPP (Trans Pacific Partnership) that was finally agreed among trade negotiators of 12 Pacific countries on October 5 came as a triumph over long odds.  Tremendous political obstacles, domestic and international, had to be overcome over the last five years.  Now each country has to decide whether to ratify the agreement.Many of the issues are commonly framed as “Left” versus “Right."  The unremitting hostility to the negotiations up until now from the Left – often in protest at being kept in the dark regarding the text of the agreement -- has carried two dangers.

Blog Post - Views on the Economy and the World

Gas Taxes and Oil Subsidies: Time for Reform

| Aug. 10, 2015
World oil prices have been highly volatile during the last decade.   Over the past year they have fallen more than 50%.Should we root for prices to go up, down, or stay the same?   The economic effects of falling oil prices are negative overall for oil-exporting countries, of course, and positive for oil-importing countries.  The US is now surprisingly close to energy self-sufficiency, so that the macroeconomic effects roughly net out to zero.  But what about effects that are not directly economic?   If we care about environmental and other externalities, should we want oil prices to go up or down?  Up, because that will discourage oil consumption?  Or down because that will discourage oil production?The answer is that countries should seek to do both: lower the price paid to oil producers and raise the price paid by oil consumers.

Blog Post - Views on the Economy and the World

The World Economy in 2015

| Dec. 28, 2014
I am posting in three parts the results of an interview on the year-end outlook.  (The questions come from Chosun Daily, leading Korean newspaper. The interview is to be published there January 1.)Part 1. The Global Economy in 2015Q: Around this time next year, which countries do you predict will be the winners, and which will be the losers of the year?A: The big gainers will be oil-importing economies, particularly China, India and other Asian countries.Russia will be the big loser. It has now become clear to all how fragile and vulnerable the Russian economy was, especially with respect to world oil prices.

Blog Post - Views on the Economy and the World

Emissions Reduction by the Numbers

| Nov. 14, 2014
Discussions in Beijing between US President Barack Obama and Chinese President Xi Jinping – the leaders of the world’s two largest carbon-emitting countries – produced an unexpected, groundbreaking bilateral agreement on greenhouse-gas emissions. Under the new deal, the US is to reduce its emissions by 26-28% from 2005 levels within 20 years, and China’s emissions are to peak by 2030. In the absence of a binding global agreement, such unilateral or bilateral commitments by countries to rein in their contribution to global warming represent the most realistic hope for addressing climate change.

Blog Post - Views on the Economy and the World

What Do Obamacare and the EITC Have in Common with Cap-and-Trade?

| Feb. 21, 2014
My preceding blog post described how market-oriented mechanisms to address environmentally damaging emissions, particularly the cap-and-trade system for SO2 in the United States, have recently been overtaken by less efficient regulatory approaches such as renewables mandates.   One reason is that Republicans — who originally were supporters of cap-and-trade — turned against it, even demonized it.One can draw an interesting analogy between the evolution of Republican political attitudes toward market mechanisms in the area of federal environmental regulation and hostility to the Affordable Care Act, also known as Obamacare.

Blog Post - Views on the Economy and the World

The Rise and Fall of Cap-and-Trade

| Feb. 18, 2014
Markets can fail.  But market mechanisms are often the best way for governments to address such failures.  This has been demonstrated in areas from air pollution to traffic congestion to spectrum allocation to cigarette consumption.    Markets for emission allowances - in which those firms that can cheaply cut pollution trade with those that cannot - achieve desired environmental goals at relatively low economic costs.   As of a decade ago, that long-standing economic proposition had become widely recognized and put into action.