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Scenarios are not merely uncertain forecasts

Hans Timmer's picture

My previous blog ended with a question about the usefulness of anticipating the long-term future if that future is highly uncertain. Ever since the 1982 article on “Trends and random walks in macroeconomic time series” by Nelson and Plosser, there has been a debate about the long-term statistical properties of GDP and other macroeconomic variables. Nelson and Plosser could not reject the hypothesis of a random walk (with drift), which means that random shocks have a permanent impact on the level of GDP and that the uncertainty interval around forecasts becomes wider and wider with every year you try to peek farther into the future. The message seems to be: If next year’s world is already very uncertain, don’t even bother forecasting the world in 2030.

Others found that “macroeconomic time series are best construed as stationary fluctuations around a deterministic trend function”, if you allow for a few structural breaks in the trend. The consequences for long-term forecasting are huge because, in this case, random shocks are transitory, there is mean reversion, and it is in fact easier to analyze long-term trends than short-term fluctuations.

In the long run, we all want to be alive, and thrive

Hans Timmer's picture

Ninety years ago, in his A Tract on Monetary Reform Keynes famously wrote “In the long run we are all dead”. That observation recently stirred a lot of debate for all the wrong reasons, after Niall Ferguson obnoxiously claimed that Keynes did not care about the future because he was childless. Whether Keynes cared about the long-term future or not (and whether he had children or not) is completely irrelevant in this context, as many (e.g. Brad DeLong and Paul Krugman) have pointed out.

The actual context in which Keynes wrote this observation was a discussion about the quantity theory of money, which states that doubling the supply of money will only double the prices, but will have no consequences for other parts of the economy. This is the classical dichotomy between real and nominal variables. Keynes argued: “Now in the long run this is probably true”. But “In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again.”  So, Keynes’ point was obviously not that the future doesn’t matter. His point was that simple theories that might describe long-term relationships are just not good enough to deal with current issues. In the short run, changes in money supply can have all kinds of important consequences beyond the price levels. Economists will have to make their hands dirty and delve into the complicated dynamics of the here and now.

Seeing Between the Lines: Visualizing Global Poverty Trends

Johan Mistiaen's picture

Last month, while World Bank President Jim Yong Kim launched the gender data portal, U.S. Secretary of State Hillary Clinton remarked that “data not only measures progress, it inspires it”.  Indeed when data is both relevant and effectively communicated, it can help to inform policies, identify challenges, and catalyze changes and innovations that deliver development results.

With that goal in mind, we started an Open Data Lab.  One of our objectives is to help the development community become more effective data communicators by experimenting with different data visualization techniques and tools.  The human brain finds it easier to process data and information if it is presented as an image rather than raw numbers or words.  And visualizations that let and encourage users to interact with data can deepen their understanding of the information presented. 

Ten trends in technology use in education in developing countries that you may not have heard about

Michael Trucano's picture
not everyone is riding these big waves ... yet
not everyone is riding these big waves ... yet

Much of what we read and hear discussed about 'emerging trends' in technology use in education is meant largely for audiences in industrialized countries, or for more affluent urban areas in other parts of the world, and is largely based on observations on what is happening in those sorts of places. One benefit of working at a place like the World Bank, exploring issues related to the use of ICTs in education around the world, is that we get to meet with lots of interesting people proposing, and more importantly doing, interesting things in places that are sometimes not widely reported on in the international media (including some exciting 'innovations at the edges').

We are often asked questions like, "What trends are you are noticing that are a bit 'under the radar'?" In case it might be of interest to wider groups and/or provoke some interesting discussion and comment, we thought we'd quickly pull a list of these sorts of things together here.

Remittance flows to developing countries remained resilient in 2009, expected to recover during 2010-11

Dilip Ratha's picture

We have just released Migration and Development Brief 12 reporting the latest estimates of remittance flows for 2008-09 and forecasts for 2010-11.  Officially recorded remittance flows to developing countries reached $316 billion in 2009, down 6 percent from $336 billion in 2008. With improved prospects for the global economy, remittance flows to developing countries are expected to increase at 6.2% in 2010 and 7.1% in 2011, a faster pace of recovery in 2010 than our earlier forecasts.

The decline in remittance flows to Latin America that began with the onset of financial crisis in the United States appears to have bottomed out since the last quarter of 2009. Remittance flows to South Asia (and to a smaller extent, East Asia) continued to grow in 2009 although at markedly slower pace than in the pre-crisis years. Flows to Europe & Central Asia and Middle-East and North Africa fell more than expected in 2009.

These regional trends reveal that: (a) the more diverse the migration destinations, the more resilient are remittances; (b) the lower the barriers to labor mobility, the stronger the link between remittances and economic cycles in that corridor; and (c) exchange rate movements produce valuation effects, but they also influence the consumption-investment motive for remittances.

New horizons in educational technology

Michael Trucano's picture

your event horizon depends on your perspectiveLater today the 2010 Horizon Report: K-12 Edition will be formally released, the latest in a series of influential annual publications identifying "emerging technologies likely to have an impact on teaching, learning, research or creative expression within education around the globe".  Where there are references in the popular press to 'key trends in technology use in education', the Horizon Reports are quite often, directly or indirectly, the source. Previous editions of the Horizon Report influenced the selection of global educational technology trends discussed on this blog by Bob Hawkins in a heavily read post back in January.

This latest Horizon Report, a collaboration between the New Media Consortium and the Consortium for School Networking (CoSN) [disclaimer: I served on the project advisory board for this year's edition], is short and easy to read, and helpfully contains pointers to many examples/illustrations of projects representative of the various emerging educational technology trends.  And the trends themselves?  Here are the ones that made this year's list:

New global poverty estimates confirm China’s leading role in meeting MDGs

David Dollar's picture

The international community has endorsed the Millenium Development Goal of reducing the poverty rate in the developing world by 50% over the 25 years, 1990-2015.  While the target is arbitrary, it is nonetheless important to have a stretch goal like this to challenge us all to make the world a better place.  To measure progress, naturally we need pretty good estimates of global poverty.  The World Bank is the leading bean counter in this exercise.  It just today released new estimates of global poverty that have the potential to illuminate the progress, but also the potential to confuse a lot of people.  The research department of the World Bank has changed its global poverty line from $1 per day to $1.25 per day and has found about 468 million more poor people than it had previously estimated.  About 135 million of these newly found poor are in China.  How does one make sense of these new numbers?  Here are some pointers: