Working Paper: CEPR ID: DP17530
Authors: Richard Baldwin
Abstract: Globalisation affects the functioning of the macroeconomy. The macroeconomy’s functioning, in turn, conditions the conduct and impact of monetary policy. This is why globalisation matters for central banks. It is also why central bankers should pay attention to the evolution of globalisation. And evolve it has. This paper argues that the future of trade is trade in services – especially trade in intermediate services. Barriers are radically higher and falling radically faster for services versus goods, and, unlike farm and factory goods, there is no capacity constraint when it comes to the export of intermediate services from emerging markets. Undertaking the macroeconomic analysis for services trade that was done in the 2000s for goods trade, however, will require a substantial upgrading of the data available.
Keywords: globotics; services trade; global inflation hypothesis
JEL Codes: E31; E41; E62
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| globalization (F60) | macroeconomy (E66) |
| macroeconomy (E66) | monetary policy (E52) |
| globalization (F60) | wage formation (J31) |
| globalization (F60) | employment dynamics (J63) |
| automation (L23) | labor market conditions (J29) |
| automation (L23) | inflation rates (E31) |
| globalization (F60) | job creation and displacement (J68) |
| digital technology (L86) | automation of service sector tasks (O14) |
| globalization (F60) | precarious work arrangements (J63) |
| automation (L23) | Phillips curve flattening (E31) |