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Discussion of deglobalization at the National Research University Higher School of Economics (Moscow)

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Faculty of World Economy and International Affairs School of World Economy 

VII Annual Conference on the Global Economy 

Ten years have passed after the Great Recession of 2008-2009, and a growing number of economists suggest that the new financial crisis may start next year. For the last years, most of the crisis predictors expected that it would start in Asia where a critical volume of bad debts had been accumulated. Then the focus of concerns shifted to US where the financial markets show some signs of overheating. US-China trade war and uncertainty around Brexit make the new global crisis even more possible. On the other hand, as Paul Samuelson noticed decades ago, markets had predicted “nine of the last five recessions”, and economists often see threats that fail to materialize. At the section, the following issues will be discussed: - Is it possible to predict financial crises and what indicators are the best to do it? - Does the global economy demonstrate any signs of the appro…

Rationality and trade wars

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"Trade Wars: Nobody Expects the Spanish Inquisition"
CEPR Discussion Paper No. DP14079 EDDY BEKKERS, World Trade Organization (WTO)
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JOSEPH F. FRANCOIS, University of Bern - Department of Economics, Centre for Economic Policy Research (CEPR), Vienna Institute of International Economic Studies (WIIW), University of Adelaide - School of Economics
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DOUGLAS NELSON, Tulane University - Department of Economics
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HUGO ROJAS-ROMAGOSA, CPB Netherlands Bureau for Economic Policy Analysis
Email:  This paper assesses the utility of economic theory of rational trade wars to predict such events or to prescribe courses of action to control their consequences. Trade wars are fundamentally political events whose causes are almost completely political and whose consequences are to a significant degree also political. Contemporary economic theory has developed during a uniquely peaceful and liberal…

5 seats lost

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Did Trump's Trade War Impact the 2018 Election?"
CEPR Discussion Paper No. DP14091 EMILY J. BLANCHARD, Dartmouth College - Tuck School of Business
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CHAD P. BOWN, Peterson Institute for International Economics
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DAVIN CHOR, Dartmouth College - Tuck School of Business, National University of Singapore (NUS) - Department of Economics
Email:  We find that Republican candidates lost support in the 2018 US congressional election in counties more exposed to trade retaliation, but saw no commensurate electoral gains from US tariff protection. The electoral losses were driven by retaliatory tariffs on agricultural products, and were only partially mitigated by the US agricultural subsidies announced in summer 2018. Republicans also fared worse in counties that had seen recent gains in health insurance coverage, affirming the importance of health care as an election issue. A counterfactual calculation suggests t…

Is terrorism, poverty, and refugees the dark side of globalization?

Mario Arturo Ruiz Estrada, Donghyun Park, Alam Khan, and Muhammad Tahir. present a new model on the impact of terrorism on the deglobalization process. The channels are faster poverty expansion, largest flows of refugees, expansion of trade protectionism, and last but not least, the dramatic expansion of economic desgrowth. This new model is entitled “TheDeglobalization Global Evaluation Model (DGE-Model)”. The objective of the DGE-Model is to offer policy-makers and researchers a new analytical tool to study the impact of terrorism on the deglobalization process of Muslim countries. The applicability of the DGE-Model is not limited to a specific group of Muslim countries or regions, nor is it constrained by the development stage. In short, the DGE-Model is a simple, flexible and versatile tool to study the link between terrorism and deglobalization. They apply their model to three Muslim countries, namely Syria, Iraq, and Afghanistan for 1999 to 2018, a period which witnessed acceler…

The costs of austerity: deglobalization

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"Did Austerity Cause Brexit?"
CEPR Discussion Paper No. DP13846 THIEMO FETZER, University of Warwick
Email: t.fetzer@warwick.ac.uk This paper documents a significant association between the exposure of an individual or area to the UK government's austerity-induced welfare reforms begun in 2010, and the following: the subsequent rise in support for the UK Independence Party, an important correlate of Leave support in the 2016 UK referendum on European Union membership; broader individual-level measures of political dissatisfaction; and direct measures of support for Leave. Leveraging data from all UK electoral contests since 2000, along with detailed, individual-level panel data, the findings suggest that the EU referendum could have resulted in a Remain victory had it not been for austerity.

The end of hegemony

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"Funding the Great War and the Beginning of the End for British Hegemony"
CEPR Discussion Paper No. DP13848 MARTIN ELLISON, University of Oxford
THOMAS J. SARGENT, New York University (NYU) - Department of Economics, Leonard N. Stern School of Business, National Bureau of Economic Research (NBER)
Email: thomas.sargent@nyu.edu
ANDREW SCOTT, London Business School - Department of Economics, Centre for Economic Policy Research (CEPR)
Email: ascott@london.edu Britain was the richest country in the world at the outbreak of the Great War, benefitting from all the resources of an industrialised country and a large empire. Funding the war contributed to the beginning of the end for British hegemony. Financiers in London extracted a high price for lending their money to the government to pay for the supplies and munitions needed to win the war. The US extracted a similarly high price for lending to Britain during the war. Russia never paid its war debts to Britain; France, Italy and Belgium…

Zbyněk Fiala on Deglobalization 2.0

However, the fear of exaggerated globalization is also expressed by serious economic science. There is no unity, but there is a stream that speaks of the recurrence and withdrawal of globalization. One such deglobalization occurred after the Great Depression in the 1930s and the other began after the Great Recession, as Americans call the financial crisis after 2008. Peter van Bergeijk writes about it in Deglobalization 2.0, Trade and Openess . The book has just been published by Elgar Publishing and is also available in electronic form, so I could read at least a summary of the first chapter. ( HERE )

Basically, today's processes of 'deglobalization', ascribed to Trump and Brexit, were much earlier. So we see symptoms, not causes. Like all economic processes, globalization has not only revenues but also costs. In the beginning, revenues grow faster than costs. Greater openness of the economy opens up huge profits that can be partly offered to the population in the form of…