Three “Seismic Shifts” in the Global Economy and Policy Challenges

Abstract

Three “seismic” shifts in the global economy are identified. (1) There is a persistent dampening fallout from the property bubbles, busts, and the ensuing financial crises in developed economies. (2) Information communication technology becomes ubiquitous and unfortunately employment -unfriendly. This impact is most severely felt in developed economies, but it will eventually impact on emerging economies as well. (3) Many economies have shifted or are close to shift from the demographic bonus phase of young and growing population to the demographic bonus phase of aging population. Most developed economies have turned this corner, and many emerging economies are about to follow suit. Finally, their policy implications are explored both in business cycles and long-run growth.