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Why doesn't the 2020 data come up in debates on inequality today? Especially on whether free trade caused its rise? Doesn't the recession and increase in inequality provide a strong argument against trade causing inequality? Were we wrong/right again?
https://www.bloomberg.com/opinion/articles/2019-10-10/inequality-globalization-and-the-missteps-of-1990s-economics
[1/9
https://www.bloomberg.com/opinion/articles/2019-10-10/inequality-globalization-and-the-missteps-of-1990s-economics
[1/9
Arguably, the main econ shock of Covid was a restriction in the ability to trade. Technology and tastes did not change. Borders closed. Trade within countries was subject to "quotas" (confinement rules) and "natural barriers" (risk of contagion).
https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15211
[2/9]
https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15211
[2/9]
On the other direction, from trade to health, globalization may increase or lower the spread of the disease. But the pandemic definitely comes with less trade, and lower gains from trade.
@HansbergRossi @ReddingEcon @pol_antras
https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15297
[3/9]
@HansbergRossi @ReddingEcon @pol_antras
https://cepr.org/active/publications/discussion_papers/dp.php?dpno=15297
[3/9]
This "natural experiment" of a massive increase in trade costs made us much poorer and increased inequality a lot. As usual, there are confounders, identification issues, ... But at least it's a huge, aggregate, unexpected, shock. @XJaravel @borusyak
https://ssrn.com/abstract=3269579
4/9
https://ssrn.com/abstract=3269579
4/9
To be clear, other past, large, aggregate shocks increased inequality in developing countries. I'm asking if there is a reason why this very relevant new data point pointing in the opposite direction isn't being noted. @PennyG_Yale @NinaPavcnik [5/9] https://www.aeaweb.org/articles?id=10.1257/jel.45.1.39
Weeks after Lehman, people were arguing it showed financial frictions matter, credit access causes inequality in employment, and monetary policy transmits through banks. Even if it took years for micro data studies to confirm these. @gchodorowreich
https://academic.oup.com/qje/article/129/1/1/1899226
[6/9
https://academic.oup.com/qje/article/129/1/1/1899226
[6/9
Aside: this reminds me of a point made by @paulmromer : the Volcker recession was as influential in showing that monetary policy matters for real activity as hundreds of VARs. Should I expect the same for Covid on inequality and trade?
@paulmromer
https://ccl.yale.edu/sites/default/files/files/The%20Trouble%20with%20Macroeconomics.pdf
[7/9]
@paulmromer
https://ccl.yale.edu/sites/default/files/files/The%20Trouble%20with%20Macroeconomics.pdf
[7/9]
It suggests the restrictions on trade defended in last few years to address inequality might backfire. Or, that free trade is even less important for the rise in inequality (not at all?) than previously thought @ElhananHelpman @genemgrossman @davidautor
https://doi.org/10.5871/jba/005.125
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https://doi.org/10.5871/jba/005.125
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Others on twitter know more about this topic, so I tagged them along. This thread arose from listening to @rodrikdani at @LSEpublicevents yesterday on globalization and populism (not online yet), and thinking back to his great book a few years back.
[9/9] https://www.amazon.co.uk/dp/0691177848/
[9/9] https://www.amazon.co.uk/dp/0691177848/
