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Huw Edwards
Huw
Edwards
Globalisation as a ‘good times’ phenomenon: a search-based explanation
Loughborough University
2009
Globalisation
Trade
Search
Economics not elsewhere classified
2009-08-06 09:25:22
Preprint
https://repository.lboro.ac.uk/articles/preprint/Globalisation_as_a_good_times_phenomenon_a_search-based_explanation/9492458
Globalisation is associated with long periods of sustained economic growth and credit expansion, whereas major recessions tend to lead to falling trade and protectionism. The sensitivity of trade to global economic conditions is not simply driven by policy: rather, in a model of costly search, firms who are engaged in a searching process are very sensitive to changing economic circumstances. In turn, this causes protectionism to be partly endogenous, since optimal noncooperative tariffs can be high during periods when the sensitive, searching firms have exited the market.