Macroeconomic effects of the current crises in Japan and MENA countries - A model-based assessment of the medium term

Two events currently preoccupy global news: the political unrest in the Middle East and North Africa (MENA) and the earthquake, tsunami and nuclear catastrophe in Japan. Both events are very different in its nature and location, but they not only affect economic developments within these countries but also across the world. In the current paper, the macroeconomic effects of both events and of a combination of both crises are analysed by applying a dynamic interindustry model. That not only allows to estimate the impact on other economies in the year of the crisis but also to consider the adjustment process in the preceding years. Overall, the analysis has shown that Japan’s natural disaster is likely to have hardly any effects on the world economy in general and its major trading partners in particular. Moreover, the long-run effects function like a stimulation package to the economy. On the contrary, the macroeconomic effects of a reduction in oil production due to the political disruption in the MENA countries are considerable and depend on country specifics concerning energy intensity, trade relations or degree of industrialization and energy efficiency. In conclusion, the analysis shows that the world economy heavily reacts on sudden world oil price changes but is less vulnerable to ad-hoc production shortages of leading industrial economies.Crises, world economy, dynamic interindustry model

Analysing the effect of climate policies on poverty through employment channels

The recently proposed Green Deals and "building back better" plans have affirmed the importance to make green transitions inclusive. This is particularly related to the labour market, which may witness significant changes. Empirically, this issue has until now received limited attention. The links between poverty and climate change are explored mainly through the lenses of climate change adaptation, or via the effects of rising energy prices on the purchasing power of poor households. We aim to address this gap by using results from a simulation of the global energy transition based on the IEA's Energy Technology Perspectives required to meet the 2-degree target, and compare this to the 6-degree baseline scenario. The simulation with a multi-regional input-output model finds that, overall, this transition results in a small net job increase of 0.3% globally, with cross-country heterogeneity. We complement this macro-level analysis with cross-country household data to draw implications of the effects on poverty through labour market outcomes. The few job losses will be concentrated in specific industries (manufacturing, electricity and construction), while new jobs will be created in industries that currently witness relatively in-work poverty rates, such as construction. We show that high in-work poverty in the industries of interest, and especially in middle-income countries, is often associated with low skills and an insufficient reach of social protection mechanisms. We conclude that green transitions must ensure that the jobs created are indeed decent including fair wages, adequate working conditions, sufficient social protection measures, and accessible to the vulnerable and poorest households.publishedVersio

Colloquium: Atomic spin chains on surfaces

In the present Colloquium, we focus on the properties of 1-D magnetic systems on solid surfaces. From the emulation of 1-D quantum phases to the potential realization of Majorana edge states, spin chains are unique systems to study. The advent of scanning tunnelling microscope (STM) based techniques has permitted us to engineer spin chains in an atom-by-atom fashion via atom manipulation and to access their spin states on the ultimate atomic scale. Here, we present the current state of research on spin correlations and dynamics of atomic spin chains as studied by the STM. After a brief review of the main properties of spin chains on solid surfaces, we classify spin chains according to the coupling of their magnetic moments with the holding substrate. This classification scheme takes into account that the nature and lifetimes of the spin-chain excitation intrinsically depend on the holding substrate. We first show the interest of using insulating layers on metals, which generally results in an increase in the spin state's lifetimes such that their quantized nature gets evident and they are individually accessible. Next, we show that the use of semiconductor substrates promises additional control through the tunable electron density via doping. When the coupling to the substrate is increased for spin chains on metals, the substrate conduction electron mediated interactions can lead to emergent exotic phases of the coupled spin chain-substrate conduction electron system. A particularly interesting example is furnished by superconductors. Magnetic impurities induce states in the superconducting gap. Due to the extended nature of the spin chain, the in-gap states develop into bands that can lead to the emergence of 1-D topological superconductivity and, consequently to the appearance of Majorana edge states

Review of macroeconomic approaches to modelling Wellbeing, Inclusion, and Sustainability

In response to the urgent global challenges of climate change and rising inequality, the need to re-evaluate our traditional economic models and adopt new approaches focused on sustainability, wellbeing, and inclusion has become evident. The current economic paradigms, based on equilibrium thinking and GDP-centric measurements, have proven inadequate in addressing the intricate interplay between economic, social, and environmental dimensions. As we embark on a transformative journey towards a sustainable and equitable future, it is crucial to adopt diverse modelling approaches to provide policymakers and stakeholders with informed decision-making tools. This report delves into the analysis of five different macroeconomic model types (general equilibrium models, macro-econometric & input-output models, stockflow-consistent models, integrated assessment models, and system dynamics models), evaluating their respective strengths and weaknesses to propose an integrated framework that encompasses the multifaceted nature of our world. A key recommendation is to improve existing models by enhancing their dynamics and feedback loops between dimensions and systems, thus better reflecting the interactions and effects of different social and economic policies. Striking a balance between complexity and transparency is essential, ensuring that models remain flexible and capable of linking with models with greater detail but narrower focus. The report emphasizes the incorporation of WISE accounts (detailed data on Wellbeing, Inclusion, Sustainability, and Economy that will be collected and harmonized during the project) into macroeconomic models as an opportunity to overcome the challenge of data availability, which poses a significant obstacle in modelling endeavours. Robust and reliable data sources are crucial to the success of any model and require continual improvement in data collection processes. To broaden our understanding of the dynamics of WISE dimensions and the potential impacts of policies, integrating alternative perspectives, such as heterodox economics, can offer valuable insights. Co-creating quantitative analysis with stakeholders enhances ownership and uptake of the models and may help with bridging the gap between research and policy implementation. Furthermore, an integrated modelling framework that accounts for the non-linear interactions between human and earth systems is necessary to properly assess policies tackling 21st century challenges in the context of WISE dimensions. This integrated model should draw upon the data of WISE accounts and synergize elements of Input-Output models, System-Dynamics, and Stock-Flow consistent models to provide a structured tool for policymakers and researchers in shaping a sustainable and inclusive future

The role of sustainability characteristics in the diffusion of renewable energy technologies

This paper aims to investigate the role of sustainability factors in the diffusion of solar photovoltaic (PV) technologies. A combined economic innovation-diffusion model that accounts for additional sustainability aspects is proposed. Two and three-stage least square methods were used for the empirical estimation, and the results were compared to a maximum entropy econometric estimation. The findings indicate that sustainability characteristics (i.e., cell efficiency) have a statistically significant positive effect on installed capacity in all solar PV technologies under analysis. Results show that multijunction PV modules have a learning rate of 17.1%, while Monojunction and the global aggregate have similar learning rates of 19.5% and 19%, respectively. Thin film PV modules have learning rates of 17.9% for the period 1991–2019. Cost reductions in solar PV modules can be largely attributed to learning-by-doing activities, the effects of learning by searching are ambiguous and depend both on the estimation methodology and the period under analysis. The study recognizes the difficulty in measuring sustainability characteristics, such as social aspects of the SDGs or indirect environmental implications but suggest that qualitative research can complement the quantitative analysis.publishedVersio

Green change: renewable energies, policy mix and innovation

A far-reaching transformation to green, CO2–free solutions is needed to achieve the ambitious climate policy target of limiting the global temperature rise to not more than 2°C. With this in mind, the GRETCHEN project explored the impacts of the policy mix on innovation in renewable power generation technologies in Germany at three levels: the micro level, focusing on the perspective of individual companies, the meso level, examining industry structures and the innovation system, and the macro level, modelling macroeconomic effects and CO2 emissions. The impact of the policy mix was analysed at these three levels for the following aspects: political targets to expand power generation from renewable energy sources, technology push, demand pull and systemic instruments as well as their interaction within the instrument mix, and the consistency and credibility of the policy mix and the coherence of political processes. The policy mix needed for a green transformation of the energy system can be considered holistically and valuated with regard to its innovation impact based on the policy mix concept developed in the GRETCHEN project. The corresponding findings are synthesized in this report on the results of the GRETCHEN project concerning the influence of the policy mix on technological and structural change in renewable power generation technologies in Germany

Faster, broader, and deeper! Suggested directions for research on net-zero transitions

The growing attention to the political goal of achieving net-zero emissions by mid-century reflects past failures to alter the trajectory of increasing greenhouse gas (GHG) emissions. As a consequence, the world now needs to decarbonize all systems and sectors at an unprecedented pace. This commentary discusses how the net-zero challenge presents transition scholarship with four enhanced research challenges that merit more attention: (1) the speed, (2) breadth and (3) depth of transitions as well as (4) tensions and interactions between these.Faster, broader, and deeper! Suggested directions for research on net-zero transitionspublishedVersio