Globalization: The Macroeconomic Implications Of Microeconomic Heterogeneity

by Andrei A Levchenko

Overview

We live in an era of globalization: ever increasing international integration of goods, capital, and labor markets. The benefits and costs of increased trade and financial integration in the world today continue to be hotly debated. The reason globalization is controversial is that the impact of globalization is often nuanced, and theory reveals many possibilities. The impact of globalization on macroeconomic outcomes thus remains an empirical and quantitative question.Levchenko collects, in one volume, the results of a multi-year research program to build heterogeneous firm and sector models for the quantitative evaluation of globalization. The volume explores the impact of globalization on both welfare and macroeconomic fluctuations using these micro-founded quantitative models.Recent advances in international trade have built tractable theoretical models that can be implemented numerically and used to evaluate quantitatively the impact of a variety of phenomena. These models are global in scale — encompassing as many as 80 countries as well as multiple sectors — and at the same time feature rich micro-foundations of firm and technological heterogeneity. This combination means it is now possible to dramatically expand the set of questions that can be answered, in particular regarding the consequences of real-world heterogeneity present in the global economy, both at the firm and sector level.The book uses these frameworks to address the central questions about globalization around the world: the impacts of reductions in trade costs, long-run changes in comparative advantage, and migration of labor, among others. The book aims to provide a unifying perspective that merges traditional theory, econometric evaluation, and quantitative modeling. The running theme of this research program is that in order to understand the macroeconomic impact of globalization, it is essential to measure, and model, the microeconomic heterogeneity in the economy.

Product Details

ISBN-13:	9789814663007
Publisher:	World Scientific Publishing Company, Incorporated
Publication date:	09/23/2016
Series:	World Scientific Studies In International Economics , #54
Pages:	340
Product dimensions:	6.00(w) x 9.00(h) x 0.81(d)

Table of Contents

Dedication v

About the Author ix

Acknowledgements xi

Introduction xiii

Part I Sectoral Heterogeneity 1

1 A Multi-Country. Multi-Sector Model of Production and Trade 3

2 Ricardian Productivity Difference? and the Gains from Trade Jing Zhang 23

3 The Global Welfare Impact of China: Trade Integration and Technological Change Julian di Giovanni Jing Zhang 45

4 Comparative Advantage and the Welfare Impact of European Integration Jing Zhang 77

5 The Global Labor Market Impact of Emerging Giants: A Quantitative Assessment Jing Zhang 111

6 Comparative Advantage, Complexity, and Volatility Pravin Krishna 153

Part II Firm Heterogeneity 169

7 Power Laws in Firm Size and Openness to Trade: Measurement and Implications Julian di Giovanni Romain Rancière 171

8 Firm Entry, Trade, and Welfare in Zipf's World Julian di Giovanni 183

9 Country Size, International Trade, and Aggregate Fluctuations in Granular Economies Julian di Giovanni 197

10 Firms, Destinations, and Aggregate Fluctuations Julian di Giovanni Isabelle Mejean 247

11 A Global View of Cross-Border Migration Julian di Giovanni Francesc Ortega 285