http://www.fao.org/economic/esa/esag/en/ he United Nations Global Policy Model - Investment, finance, demand and the long run.

1. The United Nations
Global Policy Model
Investment, finance, demand
and the long run
Alex Izurieta
UNCTAD

2. UN Global Policy Model (GPM): Background
2007 ver 1: Department of Economic and Social Affairs (DESA) of
the United Nations
Drawing from:
World Model of the Cambridge Economic Policy Group (early
1980s)
Alphametrics Model of the World Economy (late 1980s and 1990s)
Main Areas: Macroeconomics, Finance, Trade and Energy
2011-12 ver 5: DESA in collaboration with ILO
Added: Employment, Income Distribution and feedbacks on Demand
2013-14 ver 5c: UNCTAD in collaboration with ILO
2015- … ver 6: UNCTAD in collaboration with ILO and Tufts
University (GDAE):
More on employment/soc. protection and of capital flows and
regulation

3. UN GPM Background: …continued
The Cambridge-Alphametrics Model (CAM)
A twin development of the GPM, maintained by researchers in universities
and think-tanks in Europe, Brazil, India and China. UNDP’s International
Policy Centre (Brasilia), financially supported several training sessions on
the model in Brazil, China and India.
2008-12: CAM developments (guided by F. Cripps - Alphametrics)
Further dissemination under the umbrella of ‘AUGUR’, a three-year project
financed by the European Commission and a continuing five-year EC project
'FESSUD', which has focused on financial issues.
Added: demography, well-being, finance and environment
2013- …
The CAM continues to be used by the School of Oriental and African
Studies: Centre for Development Policy and Research (CDPR), and the
FESSUD project, reaching out other universities in the United Kingdom,
Brazil, China and India. Active links have also been developed with FEPS,
the Foundation for European Progressive Studies in Brussels.

4. Main modules of the GPM with a focus on
investment and finance

5. • Financial conditions matter but investment is not ex-ante equal to
private saving
• At this level of aggregation demand determines investment while
the pace of growth of aggregate investment and demand lead to
technical progress and long-run productivity growth (Kaldor rather
than Solow…)
Model specification of investment

6. Long run generation of investment in the GPM
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2,000,000
2,200,000
1980 1990 2000 2010
USA
80,000
120,000
160,000
200,000
240,000
280,000
1980 1990 2000 2010
Canada
400,000
500,000
600,000
700,000
800,000
900,000
1980 1990 2000 2010
Japan
40,000
80,000
120,000
160,000
200,000
240,000
1980 1990 2000 2010
Australia
150,000
200,000
250,000
300,000
350,000
400,000
450,000
1980 1990 2000 2010
United Kingdom
300,000
350,000
400,000
450,000
500,000
550,000
600,000
1980 1990 2000 2010
Germany
200,000
240,000
280,000
320,000
360,000
400,000
440,000
1980 1990 2000 2010
France
200,000
220,000
240,000
260,000
280,000
300,000
320,000
340,000
360,000
1980 1990 2000 2010
Italy
500,000
600,000
700,000
900,000
1,100,000
1,300,000
1980 1990 2000 2010
Other E. Union
100,000
200,000
300,000
400,000
500,000
600,000
1980 1990 2000 2010
Russia
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
1980 1990 2000 2010
China
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1980 1990 2000 2010
India
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
1980 1990 2000 2010
Korea
0
40,000
80,000
120,000
160,000
200,000
240,000
280,000
320,000
1980 1990 2000 2010
Indonesia
0
40,000
80,000
120,000
160,000
200,000
1980 1990 2000 2010
Saudi Arabia
20,000
40,000
60,000
100,000
140,000
180,000
1980 1990 2000 2010
Turkey
20,000
40,000
60,000
80,000
100,000
120,000
140,000
1980 1990 2000 2010
Argentina
120,000
160,000
200,000
240,000
280,000
320,000
360,000
400,000
1980 1990 2000 2010
Brazil
80,000
120,000
160,000
200,000
240,000
280,000
320,000
1980 1990 2000 2010
Mexico
30,000
40,000
50,000
70,000
90,000
110,000
1980 1990 2000 2010
South Africa
90,000
100,000
110,000
120,000
130,000
140,000
150,000
160,000
170,000
1980 1990 2000 2010
Other Europe
12,000
16,000
20,000
24,000
28,000
32,000
1980 1990 2000 2010
Pacific
40,000
80,000
120,000
160,000
200,000
240,000
280,000
320,000
1980 1990 2000 2010
Other Central Asia
100,000
200,000
300,000
400,000
500,000
600,000
1980 1990 2000 2010
Other WestAsia
100,000
200,000
300,000
500,000
700,000
900,000
1980 1990 2000 2010
Other EastAsia
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
1980 1990 2000 2010
Other South Asia
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
1980 1990 2000 2010
Other America
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
1980 1990 2000 2010
Caribbean
80,000
120,000
160,000
200,000
240,000
280,000
1980 1990 2000 2010
North Africa
50,000
100,000
150,000
200,000
250,000
300,000
350,000
1980 1990 2000 2010
Other Africa
Private investment
Actual (blue), Predicted (red)

7. • Borrowing and financial investment are tied up by accounting
(stocks, valuations and flows) and behaviour (p. 16-23, CI 2014)
• It is not net saving but gross lending that influences investment
Lending is determined by the financial system

8. a. Highly disaggregated models (I/O, SAM-based CGEs, DSGE)
offer useful information about technical and employment
coefficients, but miss the aggregate patterns (macro-financial
≠∑micro)
b. Growth potential obtained as a fitted trend from factors of
production is bound to overstate either the role of investment or
the role of 'our ignorance' (TFP). A 'technical progress' aggregate
function seems less data-intensive and no less informative.
c. GPM captures environment limits in two forms:
* explosive price trends despite responsiveness of producers of
primary commodities and energy to demand trends
* CO2 emissions depending on energy sources (p.13-15 , CI 2014)
d. … g. Outside knowledge can be incorporated through 'add-
factors' or even complex scenario set up, but global endogeneity
cannot be replaced with partial analyses
Specific questions

9. • Cripps, F. & A. Izurieta. 2014. The UN Global Policy
Model; Technical Description.
• Lavoie, M. 2016. A Macro-financial Assessment of the
UN Global Policy Model.
• Onaran, O. 2016. Review of the Dynamics of
Employment and Income Distribution in the UN Global
Policy Model.
• Storm, S. 2016. Global Policy Coordination for
Development: the UN Global Policy Model.
NB: these papers and a few others (by F. Cripps, by M.
Landesmann, and by J. Michell) will soon be made available at an
UNCTAD site.
References

10. • Cripps, F. & A. Izurieta. 2014. The UN Global Policy
Model; Technical Description.
• Lavoie, M. 2016. A Macro-financial Assessment of the
UN Global Policy Model.
• Onaran, O. 2016. Review of the Dynamics of
Employment and Income Distribution in the UN Global
Policy Model.
• Storm, S. 2016. Global Policy Coordination for
Development: the UN Global Policy Model.
NB: these papers and a few others (by F. Cripps, by M.
Landesmann, and by J. Michell) will soon be made available at an
UNCTAD site.
References