Working Paper: CEPR ID: DP14776
Authors: Assaf Razin; Efraim Sadka; Alexander Schwemmer
Abstract: Globalization is expected to be reversed, at least partially, in the post pandemic era. The Great Financial Recession of 2008–10 marked a historic turning point in the direction of weakening the degree of global economic integration. Now, in the post-pandemic era, policymakers appear poised to take deliberate steps to reinforce the movement toward de-globalization. At the same time, safety nets are expected to be strengthened. In this paper, we develop a model, with which we analyze central macroeconomic interactions between globalization and safety nets. We put together stylized elements of trade globalization, financial globalization, international tax competition, immigration, and welfare state, all in a two-skill, two-period stylized model, where policy (taxes and social benefits) is determined through majority voting.
Keywords: Deglobalization; Social Safety Nets
JEL Codes: N/A
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| globalization (F60) | social safety nets (I38) |
| COVID-19 pandemic (H12) | nationalism (F52) |
| nationalism (F52) | retreat from globalization (F69) |
| trade globalization intensity (F69) | domestic factor prices (F16) |
| domestic factor prices (F16) | income distribution (D31) |
| financial globalization (F30) | tax competition (H26) |
| tax competition (H26) | shift in tax burden (H22) |
| shift in tax burden (H22) | income distribution (D31) |