Oct 12, 06:30 PM - 08:00 PM (CET)
CFA SOCIETY ITALY invites CFA SOCIETY SPAIN members to the webinar:
Integrating Circularity and Qualitative Growth: the Novel Strategy and Macroeconomic Theory for Sustainable Development
Though there is agreement that the green transition needs some form of circular economy, in order to achieve decoupling, it is necessary to integrate circularity and qualitative growth. Sustainable development needs a novel macroeconomics: the theory of qualitative growth and a new descriptive framework for economies.
This webinar develops the new macroeconomics of the green transition, outlines its applications, and discusses the current controversy that risks paralyzing the green transition.
Welcome Remarks by CFA Society Italy Giancarlo Sandrin , CFA - Head of Italy & Spain - LGIM
Integrating Circularity and Qualitative Growth: the Novel Strategy and Macroeconomic Theory for Sustainable Development Sergio Focardi , PhD - Founder - Economics and Complexity
The webinar in detail
Part I : why we need to integrate some form of circular economy with qualitative growth.
We first present data on global warming and the exhaustion of natural resources, citing the relevant literature. Next, we discuss the circular economy. We show how implementing a full-fledged circular economy has a huge social impact and economic cost. The circular economy requires to redesign production processes. The circular economy, per se, does not guarantee growth. We argue that, in order to achieve decoupling, it is necessary to integrate some form of circular economy with qualitative growth.
We also discuss what we might call the “green transition controversy”. As the European and American governments began to push for the green transition, opponents started pointing out political and ethical concerns as well as potential technological issues and the possibility of a devastating recession.
Part II : the theory of qualitative growth .
We begin by observing that modern, advanced economies are evolutionary complex systems that output a large number of heterogeneous products and services that change qualitatively and innovate. Therefore, it is impossible to aggregate the quantities of output. The quantity of output is not an observable.
Since the Bretton Woods conference, the magnitude of an economy is measured by the nominal GDP, that is, the sum of all final transactions. But in order to compute growth, we need to compare GDP in different moments. Computing GDP in different moments requires evaluating inflation. But given the evolving nature of products and services, inflation is not a well-defined concept. In practice, a large fraction of price changes due to qualitative changes, are computed as inflation.
Simply put, real economies have become evolutionary complex systems, but mainstream economics have not followed this evolution. We propose a new macroeconomic framework based on the methodological principles of modern physical sciences. Modern physical sciences are based on theories that include abstract terms that acquire meaning through the entire theory. Observations are determined by the entire theory.
We apply these principles to economics. We create economic models where the growth of the observable nominal GDP depends on several abstract terms, in particular Quantity, Quality, and Generalized Inflation. We link these abstract terms to empirical data through measurement processes. Measurement processes include the observation of measure of complexity. We use the measures of complexity based on export data introduced by Hidalgo and Hausmann. However, we observe that the circular economy might greatly affect export and therefore new complexity measures might be needed. We also briefly cite the possibility of using techniques of quantum probability to represent decision making processes that are subject to superposition of states.
We conclude by showing applications of the new economic thinking we propose analysing current inflation and the stagflation of the 1970s. We discuss how the new economic thinking, that requires a profound change of the descriptive framework of an economy might be useful for asset management and for risk management.
The paper "Reconciling Circularity and Growth: The Model of Qualitative Economic Growth" can be downloaded here
Registrations will close on 10 October, 6 PM CET.
A kind reminder with instructions to connect to Zoom platform will be sent to all registered participants on 11 October.
This event will be recorded.
This event will be held in English .
CFA Institute Regular and Affiliate members can self report 1 PL credit accessing their account page on the CFA Institute website.