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Globalisation as a ‘good times’ phenomenon: a search-based explanation

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.

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Paper provided by Department of Economics, Loughborough University in its series Discussion Paper Series with number 2009_07.

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Date of creation: Jun 2009
Date of revision: Jun 2009
Handle: RePEc:lbo:lbowps:2009_07
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  14. Tibor Besedes & Thomas Prusa, 2006. "Ins, outs, and the duration of trade," Canadian Journal of Economics, Canadian Economics Association, vol. 39(1), pages 266-295, February.
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  16. Van Marrewijk, Charles, 2012. "International Economics," OUP Catalogue, Oxford University Press, edition 2, number 9780199567096, December.
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  18. David S. Jacks & Christopher M. Meissner & Dennis Novy, 2008. "Trade Costs, 1870-2000," American Economic Review, American Economic Association, vol. 98(2), pages 529-34, May.
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