World Economic Future Systems (Essay Sample)

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The world economy has had a political enthusiasm for independence in central banks to have ‘hard currency’ regime as a solution for macroeconomic glitches. This enthusiasm matches to the current economic models, which have econometric evidence of a superior macroeconomic outcome. This superiority backs from policies that are institutionally tied to a non-accommodating policy rule. Bargaining monetary system responds empirically to all non-accommodating monetary policies. This paper combines all global macroeconomic objectives and explicit analysis of a monetary mechanism to establish most optimal choice.The future of the global economy solely lies on the decisions made by the current economic hegemonies. These include the European nations, China and US. For instance in a reality case, the world economy is expanding whereas the US still has less worldwide economic influence. As a result, no single hegemonic economic power hence the economic power continues to be shared among more national and regional players. (Kaelberer, 2001).Evidently, economies with strong bargaining power have a competitive labour market and consequently a full employment. These economies are not subject to asymmetric cost or demand shocks as the case with money monetary economies. Money economics have important problems and a strong correlated influence across the core development zones. Costs shocks and inflation development are the main potential teething troubles. These two monetary systems form from deviations on quantity solution though they are ideally related. However, the basic idea is the impact on choice of real balance and the participation decision (Frasher, 2013). Though intuitive, the result is grim to establish analytically because of the many small set of parameters that arise. The future of the global economic state remains a fantasy due to the large trade and current deficits because of the money supply without a corresponding expansion in production capacity that would in turn sustain the increased money in circulation. Most countries also lack domestic saving to provide investment capital for a new manufacturing capacity as a contributing factor. Other factors like the cost of maintaining a large military establishment and the decline in social fabric are also significant contributing factors. These two consume resources that would otherwise be invested in manufacturing sector hence maintain the international trade competition.Expansion of money supply due to poor fiscal policies is the main reason to large trade and current deficits in the world economy (Rodrik, 2011). The economic state will continue to continue to worsen as the debt for US rises whereas the rest of the world increasingly grows dependent upon exports to US. In the short run, real interest rates have increased falling confidence in US, which has triggered recession in the world economy through falling of imports. The world has added and aggravated domestic complexities in its current hence future economy. Eventually, there will be a great shift in the world economy and many emerging economies in Europe and Asia. The world eco...