World Economics

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Beyond the Shadow Economy
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George C. Georgiou, World Economics, September 2017
Money laundering is illegal world-wide and constitutes a significant economic inefficiency. Current anti-money laundering and combating the financing (AML/CFT) efforts are primarily driven by the threat of terrorism and drug-trafficking, but the majority of illicit money flows is due to fraud. This paper assesses the costs and benefits of controls on the efficiency of the financial system in modern advanced economies and the less developed economies of the world. The significant costs imposed on financial institutions, increasing levels of regulation and the minuscule illicit money flows intercepted has resulted in moral hazard and significant conflicts of interest.
GDP as the champion of measurements
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Mark Esposito & Terence Tse, World Economics, March 2015
This paper considers the importance of measurement in complex societies and notes that the concept of measuring macroeconomic variables such as GDP was grounded in the impact of the 1929 Wall Street Crash on America. Simon Kuznets, a Harvard economist, produced a report for the National Bureau of Economic Research (NBER) which was published in 1934. Despite warnings of the limitations of GDP, its use has expanded to include government expenditures while to Kuznets government activities were an intermediate service and not part of final output. This paper considers particular inadequacies in using GDP as a measure of welfare when it includes, prison funding, natural disaster relief or expenditure on big sports events. The paper also argues that we should move beyond GDP while still recognizing its benefits as an organized methodology. Climate change, environmental disasters and international terrorism, transcend the assumption that economic growth is all we need. It concludes that an index capable of measuring social progress, independent from economic activity is needed.

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