DP14776 DEglobalizaion and Social Safety Nets in Post-Covid-19 Era: Textbook Macroeconomic Analysis

Author(s): Assaf Razin
Publication Date: May 2020
Keyword(s): deglobalization, social safety nets
Programme Areas: International Macroeconomics and Finance
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14776

Globalization is expected to be reversed, at least partially, in the post pandemic era. The Great Financial Recession of 2008â??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.