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The United Nations
Global Policy Model
Investment, finance, demand
and the long run
Alex Izurieta
UNCTAD
UN Global Policy Model (GPM): Background
2007 ver 1: Department of Economic and Social Affairs (DESA) of
the United Nation...
UN GPM Background: …continued
The Cambridge-Alphametrics Model (CAM)
A twin development of the GPM, maintained by research...
Main modules of the GPM with a focus on
investment and finance
• Financial conditions matter but investment is not ex-ante equal to
private saving
• At this level of aggregation demand ...
Long run generation of investment in the GPM
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
2...
• Borrowing and financial investment are tied up by accounting
(stocks, valuations and flows) and behaviour (p. 16-23, CI ...
a. Highly disaggregated models (I/O, SAM-based CGEs, DSGE)
offer useful information about technical and employment
coeffic...
• Cripps, F. & A. Izurieta. 2014. The UN Global Policy
Model; Technical Description.
• Lavoie, M. 2016. A Macro-financial ...
• Cripps, F. & A. Izurieta. 2014. The UN Global Policy
Model; Technical Description.
• Lavoie, M. 2016. A Macro-financial ...
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The United Nations Global Policy Model - Investment, finance, demand and the long run

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he United Nations Global Policy Model - Investment, finance, demand and the long run.

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The United Nations Global Policy Model - Investment, finance, demand and the long run

  1. 1. The United Nations Global Policy Model Investment, finance, demand and the long run Alex Izurieta UNCTAD
  2. 2. UN Global Policy Model (GPM): Background 2007 ver 1: Department of Economic and Social Affairs (DESA) of the United Nations Drawing from: World Model of the Cambridge Economic Policy Group (early 1980s) Alphametrics Model of the World Economy (late 1980s and 1990s) Main Areas: Macroeconomics, Finance, Trade and Energy 2011-12 ver 5: DESA in collaboration with ILO Added: Employment, Income Distribution and feedbacks on Demand 2013-14 ver 5c: UNCTAD in collaboration with ILO 2015- … ver 6: UNCTAD in collaboration with ILO and Tufts University (GDAE): More on employment/soc. protection and of capital flows and regulation
  3. 3. UN GPM Background: …continued The Cambridge-Alphametrics Model (CAM) A twin development of the GPM, maintained by researchers in universities and think-tanks in Europe, Brazil, India and China. UNDP’s International Policy Centre (Brasilia), financially supported several training sessions on the model in Brazil, China and India. 2008-12: CAM developments (guided by F. Cripps - Alphametrics) Further dissemination under the umbrella of ‘AUGUR’, a three-year project financed by the European Commission and a continuing five-year EC project 'FESSUD', which has focused on financial issues. Added: demography, well-being, finance and environment 2013- … The CAM continues to be used by the School of Oriental and African Studies: Centre for Development Policy and Research (CDPR), and the FESSUD project, reaching out other universities in the United Kingdom, Brazil, China and India. Active links have also been developed with FEPS, the Foundation for European Progressive Studies in Brussels.
  4. 4. Main modules of the GPM with a focus on investment and finance
  5. 5. • Financial conditions matter but investment is not ex-ante equal to private saving • At this level of aggregation demand determines investment while the pace of growth of aggregate investment and demand lead to technical progress and long-run productivity growth (Kaldor rather than Solow…) Model specification of investment
  6. 6. Long run generation of investment in the GPM 600,000 800,000 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 2,000,000 2,200,000 1980 1990 2000 2010 USA 80,000 120,000 160,000 200,000 240,000 280,000 1980 1990 2000 2010 Canada 400,000 500,000 600,000 700,000 800,000 900,000 1980 1990 2000 2010 Japan 40,000 80,000 120,000 160,000 200,000 240,000 1980 1990 2000 2010 Australia 150,000 200,000 250,000 300,000 350,000 400,000 450,000 1980 1990 2000 2010 United Kingdom 300,000 350,000 400,000 450,000 500,000 550,000 600,000 1980 1990 2000 2010 Germany 200,000 240,000 280,000 320,000 360,000 400,000 440,000 1980 1990 2000 2010 France 200,000 220,000 240,000 260,000 280,000 300,000 320,000 340,000 360,000 1980 1990 2000 2010 Italy 500,000 600,000 700,000 900,000 1,100,000 1,300,000 1980 1990 2000 2010 Other E. Union 100,000 200,000 300,000 400,000 500,000 600,000 1980 1990 2000 2010 Russia 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 1980 1990 2000 2010 China 0 200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 1980 1990 2000 2010 India 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 1980 1990 2000 2010 Korea 0 40,000 80,000 120,000 160,000 200,000 240,000 280,000 320,000 1980 1990 2000 2010 Indonesia 0 40,000 80,000 120,000 160,000 200,000 1980 1990 2000 2010 Saudi Arabia 20,000 40,000 60,000 100,000 140,000 180,000 1980 1990 2000 2010 Turkey 20,000 40,000 60,000 80,000 100,000 120,000 140,000 1980 1990 2000 2010 Argentina 120,000 160,000 200,000 240,000 280,000 320,000 360,000 400,000 1980 1990 2000 2010 Brazil 80,000 120,000 160,000 200,000 240,000 280,000 320,000 1980 1990 2000 2010 Mexico 30,000 40,000 50,000 70,000 90,000 110,000 1980 1990 2000 2010 South Africa 90,000 100,000 110,000 120,000 130,000 140,000 150,000 160,000 170,000 1980 1990 2000 2010 Other Europe 12,000 16,000 20,000 24,000 28,000 32,000 1980 1990 2000 2010 Pacific 40,000 80,000 120,000 160,000 200,000 240,000 280,000 320,000 1980 1990 2000 2010 Other Central Asia 100,000 200,000 300,000 400,000 500,000 600,000 1980 1990 2000 2010 Other WestAsia 100,000 200,000 300,000 500,000 700,000 900,000 1980 1990 2000 2010 Other EastAsia 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 1980 1990 2000 2010 Other South Asia 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 1980 1990 2000 2010 Other America 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 1980 1990 2000 2010 Caribbean 80,000 120,000 160,000 200,000 240,000 280,000 1980 1990 2000 2010 North Africa 50,000 100,000 150,000 200,000 250,000 300,000 350,000 1980 1990 2000 2010 Other Africa Private investment Actual (blue), Predicted (red)
  7. 7. • Borrowing and financial investment are tied up by accounting (stocks, valuations and flows) and behaviour (p. 16-23, CI 2014) • It is not net saving but gross lending that influences investment Lending is determined by the financial system
  8. 8. a. Highly disaggregated models (I/O, SAM-based CGEs, DSGE) offer useful information about technical and employment coefficients, but miss the aggregate patterns (macro-financial ≠∑micro) b. Growth potential obtained as a fitted trend from factors of production is bound to overstate either the role of investment or the role of 'our ignorance' (TFP). A 'technical progress' aggregate function seems less data-intensive and no less informative. c. GPM captures environment limits in two forms: * explosive price trends despite responsiveness of producers of primary commodities and energy to demand trends * CO2 emissions depending on energy sources (p.13-15 , CI 2014) d. … g. Outside knowledge can be incorporated through 'add- factors' or even complex scenario set up, but global endogeneity cannot be replaced with partial analyses Specific questions
  9. 9. • Cripps, F. & A. Izurieta. 2014. The UN Global Policy Model; Technical Description. • Lavoie, M. 2016. A Macro-financial Assessment of the UN Global Policy Model. • Onaran, O. 2016. Review of the Dynamics of Employment and Income Distribution in the UN Global Policy Model. • Storm, S. 2016. Global Policy Coordination for Development: the UN Global Policy Model. NB: these papers and a few others (by F. Cripps, by M. Landesmann, and by J. Michell) will soon be made available at an UNCTAD site. References
  10. 10. • Cripps, F. & A. Izurieta. 2014. The UN Global Policy Model; Technical Description. • Lavoie, M. 2016. A Macro-financial Assessment of the UN Global Policy Model. • Onaran, O. 2016. Review of the Dynamics of Employment and Income Distribution in the UN Global Policy Model. • Storm, S. 2016. Global Policy Coordination for Development: the UN Global Policy Model. NB: these papers and a few others (by F. Cripps, by M. Landesmann, and by J. Michell) will soon be made available at an UNCTAD site. References

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