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Slouching toward an illusion and scurrying toward a delusion: A COVID19-shocked doughnut model economy
Get PDFAbstract. An easy way of observing and predicting changes in the structure and behavior of any free-market economy is to track changes in its circular flow model of economic activity. Using book titles as a literature review in combinations with a few classics, I describe how the circular flows of free -market economies evolved from little, gentle, and now nearly powerless government role, culminating in super-duper capitalism. First the evolution generated great wealth and income, and of late also increasing inequality. Processes like globalization that allowed for economic convergence also spurred enormous tensions. The resulting stresses and strains are responsible for unpopular populism and nationalism. The doughnut economic model provides a reasonable framework for explaining what we observe. It shows a decline in the social foundations of human rights, made worse by breaches in the “planetary boundaries” both of which squeeze the livable space ever more tightly like a boa-constrictor suffocating its prey. In this paper I do not go as far as measuring my observations, but the directions for policy and future research have clearly been established. Regarding the latter, one may want to examine how COVID19 has shocked into scurrying towards a delusion of a system that was already slouching towards an illusion. It turns out that the illusion is not a new prediction. In his critique of Marx and rationalization of Kondratieff’s waves (K-waves) Schumpeter predicted that capitalism as an innovation is not immune to the “gale of creative destruction.”Keywords. Circular flow model, Doughnut economic model, Social foundations of human rights, Inclusive and sustainable development, Planetary limits, Unpopular populism, Super-duper capitalism.JEL. O47, O33, E19, Z0
What Can the U.S. learn from its Covid-19 response?
Get PDFAbstract. The COVID-19 pandemic gave minimal reaction time to governments around the world. While causing millions of deaths, it was also detrimental to the global economy. This paper is an attempt to understand what we can learn from our experience with the virus, with a focus on the United States. I discuss good and bad U.S. policies and the overall performance of institutions involved in pandemic response. The approach is economical because it connects what happened with some key economic principles. I talk about how markets helped us generate most of the knowledge we have on the virus, and I explain how existing regulations slowed down the production and distribution of essential items in the fight against Covid. Given the scarce nature of public attention, I also discuss the lack of consistent public messaging for the pandemic in the United States.Keywords. Coronavirus, Covid-19.JEL. I18
Taxation and mobility in dualistic models– (and) Some neglected issues of fiscal federalism
Get PDFAbstract. In this paper we present and confront the expected outcome of a raise in earnings taxes on the regional or sectoral allocation of labor force and employment. The basic frameworks are the benchmark dualistic scenarios. A single-input analysis of an homogeneous product economy is provided once extensions were designed to highlight the role of mobility barriers and how they interact with local wage-setting rules to determine regional allocation rather than trade issues or factor substitution. We report the main effects on equilibrium local after-tax wages, supply, employment and aggregate welfare surplus of a unilateral as well as a simultaneous unit tax increase of the (a) basic two-sector model in six different scenarios: free market; partial (one-sector) coverage with perfect intersector mobility; partial (one-sector) coverage with imperfect mobility (Harris-Todaro); multiple (two-sector) coverage with imperfect mobility (Bhagwati-Hamada); partial (one-sector) coverage with affiliation restrictions in the covered sector; partial (one-sector) coverage with limited employment generation ability in the traditional uncovered sector. Needless to say, the results would apply to any other production factor, one or other scenario being more appropriate for inference of the consequences of differential taxation systems.Keywords. Taxation and migration, Taxation and mobility, Taxation and segmented labor markets, Regional labor markets, Fiscal federalism.JEL. O15, O18, O24, R13, R23, R59, H29, H71, H73, J42, J61, J62, J68, F22, F42
Low numbers of Covid-19 related infereted individuals in regions having wind resources and energy: A case study
Get PDFAbstract. This paper investigates the relation between diffusion of COVID-19 and wind resources to provide insights on how sustainable policies for energy production can improve ecosystem, reduce environmental pollution, improve public health and prevent future epidemics. Results reveal that cities in regions with high wind energy production have a lower number of infected individuals of COVID-19, whereas polluted cities with less clean production and low production of energy from sustainable resources (i.e., wind) have higher numbers of infected individuals and deaths. These findings underscore the importance of sustainable energy production to support an ecosystem that protects human health and reduces the associated social welfare loss because of the COVID-19 pandemic and future similar infectious diseases.Keywords. COVID-19, Coronavirus, Wind Energy, Wind power plant, Clean energy, Climate, environmental sustainability, sustainable development, Environmental pollution.JEL. F21, F68, O53, K23
Economic optimality of the exchange rate regime applied in Morocco
Get PDFAbstract. The main objective of this study is to analyze from an economic point of view the optimality of the exchange rate regime applied in Morocco, while basing on a macroeconomic analysis on the gradual flexibility of the Moroccan exchange rate regime and while presenting the conditions of success of the gradual flexibility based on the optimal widening of the band of fluctuation of the exchange rate to +/-5% that have been adopted by the domestic monetary authorities.Keywords. Band of fluctuation, optimality, exchange rate regime, gradual flexibility, Moroccan economy, monetary authorities.JEL. C51, C68, E02, F31, F41
