If specific to various economies, some economists from the World Bank believe that the COVID-19 epidemic has increased the polarization of the global economy. Before the epidemic, emerging economies grew rapidly, narrowing the gap with developed economies. However, under the impact of the epidemic, the shortcomings of government governance and macro-control ability in emerging economies have been exposed.

Now, the global economy is clearly divided into two tracks: the growth rate of emerging economies has dropped, while several major economies including the United States, Europe and China have stabilized their growth momentum. The World Bank predicts that the United States will grow by 3.7%, the euro zone by 4.2% and China by 5.1% in 2022.

In recent years, the prediction frequency of macroeconomic data by various institutions is getting higher and higher. There is a report in The Economist called The Third Wave of Economics, which can explain this phenomenon. The article said that the COVID-19 epidemic not only profoundly changed the global economy, but also profoundly changed the discipline of economics and gave birth to the “third wave of economics”.

The first wave of economics was that Adam Smith initiated the discipline of economics. At that time, this discipline was called “political economy”. Like other social disciplines, it was based on ideological theory and data was scarce.

The second wave of economics is the rise of marginal revolution and econometrics. Especially after World War II, governments of various countries began to regularly count and release national economic data, and economists had enough data to build mathematical models and analyze economic problems.

However, these data are still not ideal. First, the granularity is very coarse; second, the time is seriously lagging behind, ranging from a few months to a year, which can not reflect the economic changes in real time. When the statistics are released, it is already too late to make policy adjustments based on this data. For example, in the 2007 subprime mortgage crisis in the United States, with hindsight, in December 2007, the American economy had already experienced a recession, but this change was not reflected in the statistics in real time. Half a year later, in May 2008, White House officials still insisted, “Statistically, we are not in the so-called economic recession.”

At present, the acceleration of global digitalization driven by the epidemic has given birth to the third wave of economics. This is the first time that economists have been able to obtain fine-grained and real-time updated economic operation data. Detailed daily passenger flow to the airport, the whereabouts of every freighter sailing on the global sea, hourly credit card consumption data, real-time retail price of supermarkets, daily reserved seats of restaurants, and so on. What this real-time fine data means to economists is like the first time that biologists have used a microscope and opened the door to a new world. This has brought several important changes to economic research.

First, the number of published papers has skyrocketed. Now, economists are sitting in a real-time updated data treasure house, and can study many phenomena that could not be studied before, and the output of papers is rising. According to the statistics of the National Bureau of Economic Research of the United States, the quarterly publication of economic papers last year nearly doubled at its peak. In contrast, it was also in the period of great economic changes, such as 2007~2009, but the data of economic papers did not skyrocket.

Secondly, compared with single-author papers, there are more and more papers with more than four authors, and the number of single citations is higher. Presumably, this is because teamwork is more efficient when dealing with complex data. Among the 20 economists whose new research was cited most frequently during the epidemic period, 3 have their own research teams, each of which has about 20 members, and can efficiently analyze massive data through division of labor.

These papers published in time help international institutions to better forecast global economic data. Here is a comparison: when the International Monetary Fund looks forward to the economic data of 2009, only 40% of the papers it cited were published that year; When it predicted the economic data for 2022 in the last 10 years, more than half of them were published that year.

Then, does the current “third wave of economics” mean that the discipline of economics has made great progress? It should be said that many economists actively embrace this wave, thinking that it can make economics encounter differences, instead of theoretical arguments, and just speak with data directly. However, some economists have questioned this transformation. In their view, using high-frequency data to concoct a large number of papers makes economics lose its soul. Economists can’t be “value neutral” like data scientists. Economists must have the underlying value judgment and political opinions.

By Demi Zhang