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This edition was written by Elijah Asdourian, Alex Conner, Georgia Nabors, and Louise Sheiner.
Are geopolitical tensions leading to a reversal in globalization? Using U.N. voting patterns from 1948 to 2021 to measure geopolitical similarity, Serhan Cevik of the International Monetary Fund finds that trade relationships were “resilient to occasional shifts in the geopolitical landscape” and that the geopolitical alignment between countries had statistically insignificant effects on their level of trade. The physical distance between countries and their respective levels of income were much more important factors, with proximity and higher incomes predicting increased trade between countries. Cevik argues that despite recent shocks “the widely used indicators of globalization...have rebounded strongly” and thus “there is no systemic retreat in trade globalization due to geopolitical developments.”
Social Security Disability Insurance (SSDI) gives those with disabilities access to public health insurance two years after they are first enrolled. Using data from the Current Population Survey from 2010 to 2020, Ari Ne’eman and Nicole Maestas of Harvard find that the Affordable Care Act’s Medicaid expansion increased SSDI participation by 5.1 percentage points among those with disabilities and 0.8 percentage points for the overall population. This spike in SSDI receipt is larger among individuals who are persistently disabled, particularly those ages 50-65. The authors conclude that access to Medicaid allows disabled workers who previously remained in their jobs only to maintain employer-provided health insurance to exit the labor force and enroll in SSDI. These individuals remain covered by Medicaid during the two-year waiting period before SSDI recipients typically gain access to Medicare.
Serhan Cevik of the International Monetary Fund and João Tovar Jalles of the University of Lisbon use data on 135 countries to estimate the effect of corruption on natural disaster fatalities between 1980 and 2020. Controlling for per capita GDP, health care availability, and economic openness, among other factors, the authors find that a 1% increase in the corruption index is associated with a 2.1% increase in per capita deaths caused by natural disasters. The index defines corruption as “the extent to which public power is exercised for private gain, including petty and grand forms of corruption, as well as capture of the state by elites and private interests.” These effects are stronger for emerging market economies, which see a 2.7% increase in per capita deaths for a 1% increase in corruption. The authors conclude that “Empirical findings presented in this study show that developing countries tend to be more vulnerable to the deleterious impact of corruption in natural disasters. In our view, this reflects the low quality of buildings and infrastructure and the weakness of health and risk management systems due to widespread corruption.”
"Global economic growth is slowing as expected as higher interest rates and tighter financial conditions restrain demand. But the composition is a bit different than we forecast in July. The U.S. economy has been surprisingly strong, while China has slowed more than expected. At the same time, geopolitical tensions have increased. The Russian war of aggression against Ukraine continues, and Hamas attacks in Israel have ignited conflict in Israel and Gaza. These wars are causing incalculable suffering. They are also hurting the global economy and adding uncertainty to the outlook," says Tiff Macklem, Governor of the Bank of Canada.
"In Canada, the economy has slowed, and the data suggest demand and supply are now approaching balance. With the economy expected to move into excess supply this year and with growth anticipated to be weak for the next few quarters, price pressures should ease further. We expect inflation to ease gradually and return to the 2% target in 2025. But we're worried that higher energy prices and persistence in underlying inflation are slowing progress."
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