DP14378 Globalization Cycles

Author(s): Maurice Obstfeld
Publication Date: February 2020
Keyword(s): deglobalization, Globalization
JEL(s): F52, F53, F60, N20, N40
Programme Areas: Economic History, International Macroeconomics and Finance
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14378

Mark Twain is reputed to have remarked that history does not repeat itself, but it often rhymes. While the Global Financial Crisis of 2008-2009 was not a catastrophe on the order of World War I, there is a broad similarity in the sequelae to both of these events â?? a failed attempt to return to pre-trauma normalcy, followed by a process of international economic disintegration in the face of changed geopolitical realities. In this essay, I explore three questions that this similarity raises. Does globalization inherently foster domestic or international dynamics that eventually lead to political backlash? If so, are these dynamics inevitable, or can complementary economic policies nurture a stable globalization? And finally, since policies are endogenous, when are policy approaches and institutions that complement and support globalization likely to arise?