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Globalization and Political Geography

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  • Federico Etro

Abstract

I study a model of geopolitical organization endogenizing the size of nations, of their public spending and of their degree of openness. The optimal geography may not be a stable equilibrium and the Alesina-Spolaore bias toward too many nations tends to be confirmed. However, multiple equilibria can emerge with globalization backlash associated with large nations and high protectionism and equilibria with smaller countries and high openness which are also Pareto superior. A dynamic version of the model shows stable paths of decreasing size of nations, increasing globalization and (at least initially) increasing public spending. Such a process seems consistent with the historical experience, but it may converge toward a steady state with excessive globalization, too many countries and typically too much government spending.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 986.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_986

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Cited by:
  1. Staal, Klaas, 2006. "Country size and publicly provided goods," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University 187, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  2. K Staal, 2004. "Country size and public good provision," Econometric Society 2004 Australasian Meetings, Econometric Society 156, Econometric Society.
  3. Federico Etro, 2006. "Political geography," Public Choice, Springer, Springer, vol. 127(3), pages 321-343, June.
  4. Klaas Staal, 2004. "Country Size and Public Good Provision," Tinbergen Institute Discussion Papers, Tinbergen Institute 04-026/1, Tinbergen Institute.

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