Saturday, February 22, 2020

A Brief History of Globalization Essay Example | Topics and Well Written Essays - 3000 words

A Brief History of Globalization - Essay Example This research will begin with the definition of globalization as a process (or set of processes) which embodies a transformation in the spatial organization of social relations and transactions, expressed in transcontinental or interregional flows and networks of activity, interaction, and power. Globalisation is perhaps the most overused and least understood word, and one can easily see that the meaning and scope of the word has transformed and evolved dramatically over the past few years. The controversy associated with it proves how complicated scholars on both sides have made it. Under this backdrop, here is someone with a rational approach who seeks to clarify the concepts. Alex MacGillivray’s views are wry and balanced, replete with historic anecdotes and high-quality analysis of each aspect and implication of globalization. He litters his writing with speckles of benign humor when referring to the steady growth in the number of countries over the last few decades accord ing to membership of the UN, recognition by FIFA or entries in the CIA’s World Fact Book. His observations are woven logically into the fabric of first-rate primary data analysis. For instance, a new data set showing that much of the reputed growth of an international trade over the past two decades arise from regional (intra trading block), rather than a truly international movement of goods and services. This idea contrasts what organizations like WTO and World Bank acclaim as the benefits of globalization.

Thursday, February 6, 2020

Is Money Neutral Contrast the view regarding the neutrality of money Essay

Is Money Neutral Contrast the view regarding the neutrality of money between Real Business Cycle theory and New Keynesian Theor - Essay Example This is an important question to ask, as it affects the way, the government chooses to govern the economy and the ways to control it. The two schools of thought, the New Keynesian Theory and the Real Business Cycle Theory, debate the answer to this question (Mankiw, pp. 181-220, 2003). Both of these theories have a unique perspective to offer on the answer, and since each raises valid arguments, neither has yet been discredited for the other. The theory of money neutrality maintains that the effect of money does not affect real, inflation-adjusted factors like employment; real Gross Domestic Product (GDP) and ‘real’ consumption (real because they have are all adjusted for inflation). This is because this theory considers the force of money as an inflationary one, with no large implications for the economy in terms of the macroeconomic factors. However, the theory does acknowledge the impact money has on nominal variables, such as price and wages, and even exchange rate o f the country’s currency (Wickens, pp. 199, 2009). These factors bound to gain influence from the money rate of interest, as they have a direct link to money and its circulation in the economy. The two schools of thought that debates on the neutrality of money have opposite views about how far-reaching the effect of money can be in an economy. The classical model states that money is neutral in both the short run as well as the long run. This means that this model considers money to be a neutral force, one that does not affect macro factors such as GDP or employment in the economy. Whereas, the Keynesian school of thought states that a force as strong as money does have its impact on the economy in the end. It believes that monetary policy does have a strong impact on the real economy, if one waits enough time before observing the changes. Each of these schools believes that this effect is visible within the short run for a short period of time, which is a factor on which the y both see eye to eye, but for different reasons. For the long term however, they both offer opposing views (Wickens, pp. 199, 2009). The classical model presents the view that monetary policy cannot affect the real economy and its macro factors, neither in the short run, nor in the long-run (Gali, pp 50-79, 2008). It states that nominal shocks, which are changes in the money supply and money demand, do not have any effect on the business cycle. This monetary policy is one of the tools that a government uses to control the economy, which it does by manipulating the money supply and circulation. According to the theory, when ‘money supply’ changes, it affects price proportionately. However, there is no effect on the real variables in the economy, such as the real interest rate or the unemployment level in the economy. As mentioned above, the classical school does also believe that the money supply affects the real factors for a short period. However, it believes that ver y soon, the price level adjusts to this change in money supply, thus making it ineffective to any real factors in the economy. This is apparent in the diagram below, which shows how the equilibrium reverts to normal after a temporary price shock (Abel and Bernanke, pp. 2005). In other words, it believes that the non-neutrality of money is short-lived, persisting over a period of insignificant length. Thus,