International Macroeconomic Interdependence

How does globalization in goods and asset markets alter the nature of economic recessions and the choices facing macroeconomic policy makers? This volume presents empirical and theoretical contributions of economist Paul Bergin to this vital question. By a number of metrics, including trade volume and price convergence, national goods markets have become more globally integrated over time. The same is true for asset markets, which today function more as a single global marketplace. Rigorous theoretical models are developed to explore how international integration in these markets provides channels by which shocks driving recession in one country can be transmitted to other countries. These theoretical concepts can shed light on the Great Recession of the last decade, which has been referred to as the first truly global recession. Theory is also brought to bear to explore how these international spillovers and the resulting international co-movement in recessions can create incentives for policy makers to coordinate their monetary and fiscal policies with each other, as they deal with the challenge of managing their national economies.

Contents:

• International Macroeconomic Comovement: The Role of Globalization in Goods and Asset Markets (Paul R Bergin)

• Business Cycles in a Global Context:

  • Offshoring and Volatility: Evidence from Mexico's Maquiladora Industry (Paul R Bergin, Robert C Feenstra and Gordon H Hanson)
  • Volatility Due to Offshoring: Theory and Evidence (Paul R Bergin, Robert C Feenstra and Gordon H Hanson)
  • Putting the "New Open Economy Macroeconomics" to a Test (Paul R Bergin)
  • How Well Can the New Open Economy Macroeconomics Explain the Exchange Rate and Current Account? (Paul R Bergin)

• Global Integration of Goods Markets: A Perspective from International Relative Price:

  • Pricing-to-Market, Staggered Contracts, and Real Exchange Rate Persistence (Paul R Bergin and Robert C Feenstra)
  • Endogenous Tradability and Some Macroeconomic Implications (Paul R Bergin and Reuven Glick)
  • Productivity, Tradability, and the Long-Run Price Puzzle (Paul R Bergin, Reuven Glick and Alan M Taylor)
  • Tradability, Productivity, and International Economic Integration (Paul R Bergin and Reuven Glick)

• Global Integration of Asset Markets:

  • Interest Rates, Exchange Rates and Present Value Models of the Current Account (Paul R Bergin and Steven M Sheffrin)
  • Understanding International Portfolio Diversification and Turnover Rates (Amir A Amadi and Paul R Bergin)

• International Dimensions of Macroeconomic Policy:

  • Fiscal Solvency and Price Level Determination in a Monetary Union (Paul R Bergin)
  • Does Exchange Rate Variability Matter for Welfare? A Quantitative Investigation of Stabilization Policies (Paul R Bergin, Hyung-Cheol Shin and Ivan Tchakarov)
  • Measuring Monetary Policy Interdependence (Paul R Bergin and Òscar Jordà)

Readership: Students and researchers who would like to understand the effects of globalization on policy coordination and economic policies in different countries.