Documents Capaldo, Jeronim 2 results

"The macroeconomic effects of free-trade agreements are typically assessed with Computable General Equilibrium models (CGE) assuming full employment and invariant income distribution. Unsurprisingly, these assessments point to positive effects on growth and employment. This paper assesses the effects of the Trans- Atlantic Trade and Investment Partnership (TTIP) with a demand-driven econometric model - the United Nations Global Policy Model. Macroeconomic adjustment is driven by competition on labor costs across trading countries while employment and income distribution adapt. Results are starkly different from official assessments with projected losses in terms of GDP, employment and personal incomes. Projections also indicate an increase in financial instability and a continuing downward trend in the labor share of GDP."

"This article assesses the effects of combining fiscal austerity with policies aimed at reducing labour costs and, in doing so, sheds new light on current policy debates. Taking a global perspective, the authors explore the aggregation problem by proposing a stylized analytical macro-model with explicit distribution dynamics. In this framework, flexibilization policies that suppress the labour share trigger global feedbacks that result in a downward spiral, with contraction even in export-led economies. The initial gains of more competitive economies are shown to be ephemeral. In the long term, the world economy is essentially wage-led and responds positively to coordinated Keynesian stimuli."