If all modern day countries on Earth today decided to merge into a single unified power, what would its economy look like? Because there are no more independent nations, I imagine that changes the way wealth circulates around. Would a world government's economy be better than the global economy today?
Would this world government look more like the USA? Or North Korea? There's a big difference between the two.
If we assume that such a government would look most like Europe, then that's your answer. The world economy would look much like Europe's. Some states would do great. Others would struggle, the way Greece is now.
Note that the world government would not have to unify things like regulation and minimum wages. Europe has different minimum wages by country. Also look at the US example. There is a federal minimum wage of \$7.25 with state and local minimum wages as high as \$15.
It's also not evident that it will be the first world nations that will struggle under such a system. Note that in Europe, it is Greece, not Germany, that is having trouble with a single currency.
It's not that hard to recall currency. Since most currency flows through a bank deposit at least once a year, you can recall currency by simply asking banks to accept the currency item but not give it out. It's also worth noting that bills need to be replaced every few years anyway.
If we start with a government like the US, then we should realize that we have some challenges. Initially expect the global government to do very little while the "country" governments still do most everything.
Over time, there will be a lot of pressure from the less successful areas to get more subsidy from the more successful areas. Since India has more people than the US and Europe combined, India can outvote them in the global equivalent of the House of Representatives. And in the global Senate, the twenty Central American countries would outvote the US and Canada unless they break up into separate states and provinces for Senate representation. In case of breakup, there are fifty-four African nations that would outvote the US states while the Central American countries would outvote Canada's provinces. Europe already has a mix of rich and poor countries.
The hope would be that the poor countries would become rich, but it seems just as likely that this would make the rich countries poor. The world GDP per capita is roughly a third of the US GDP per capita, so even distribution without increased production would make the US a lot poorer.
All the third world countries would benefit incredibly and the first world countries would start having very hard times. These two worlds have to merge into one, becoming an average of it all (or less than average to adjust for logistics and losses involved in moving all the riches to the poorer parts).
Currency should be merged into a single kind, but it would most likely take many years. It would be easiest and cheapest to replace all the various existing currencies with a global digital credit type of currency (but not bitcoin). It would be more solid to back the digital credit with real gold, but who knows what they will do, maybe back it with oil? (probably not). Hacking attempts would be rampant at first, but eventually security will be good enough to prevent most hackers. Attempting to replace ALL physical currencies with another physical currency would be a tremendous effort with enormous costs.
There would still be corruption locally in all the places that are likely to have it, but it may be easier to find and eliminate than before, assuming the higher levels of government are making it one of their goals to eliminate corruption.
It would take many years, but eventually we would either run out of resources from all the waste and already declining resource availability and fail horribly, or find a way to work together efficiently and make it work by discovering fusion (or other source of power) and conquering our solar system to become the next level of civilization (probably need a dyson sphere-like thing). It most likely would not be sustainable for us to average out our "wealth" over all the countries, but I think it would be more sustainable to have all the wealthy countries heavily assist in the growth of the poorer areas. The divisions of countries help us to more easily manage resources and logistics and these divisions will most likely still exist in some form or shape.
In many ways finance and money in general would be simplified. 1. Fiscal and Monetary policy would have to merge. 2. Certain concepts would cease to exist such as Forex trading and currency exchange. 3. Accounting would be much more simplified as the rules are the same for everyone across the globe. 4. Outsourcing would cease to exist. If it's one government, everyone works in the same country. Furthermore, everywhere would have the same minimum wage. There would be no advantage to shifting jobs to China or India from the US or Europe as they would be making the same amount.
Like mentioned by WeekzGod, one advantage to this system is the fact that everyone, everywhere receives the same minimum wage (assuming there is one omnipotent world government). However, this means that poorer regions of the world that are not as socially and economically developed, may increase the price of basic necessities in other richer regions. There would be no need to change currency but on the other hand, it would take FOREVER to recall a defective coin or something. There's also the fact that if these regions are isolated from each other, a loaf of bread that costs 5 currency in one region could cost 40 in another, so in a way, these would still be similar to local currencies.