Accommodating Emerging Giants in the Global Economy (nber.org)
- Reference: 0180440457
- News link: https://slashdot.org/story/25/12/22/2024246/accommodating-emerging-giants-in-the-global-economy
- Source link: https://www.nber.org/papers/w34530
> How has aggregate income and welfare in the United States been affected by globalization and rapid productivity growth in emerging economies? We use the class of constant elasticity trade models to provide quantitative evidence on these questions. We find that reductions in worldwide trade frictions over the period from 1960-2020 reduced the share of the United States in global GDP but raised its aggregate welfare. Similarly, productivity growth in Japan and China led to a decline in the relative income of the United States, but brought aggregate welfare gains from the resulting expansion in global production possibilities. Trade integration and foreign productivity growth have relatively modest effects on domestic income and welfare compared to domestic productivity growth.
[1] https://www.nber.org/papers/w34530
Aggregate Welfare? (Score:2)
Can anyone define what exactly they are referring to as "aggregate welfare"? It is an ambiguous term that they did not define.
Re: (Score:1)
"American blue collar workers got poorer and developing nations blue collar workers got richer and their relative standard of living rose a lot so in aggregate 'people' were wealthier."
Re: (Score:2)
they don't. i assume:
"aggregate income" is basically gdp, what the us produces as a whole, which has decreased in relation to the rest of the world.
"aggregate welfare" is basically buying power (income divided by prices), which has increased in the us.
so in a nutshell, the us economy has gotten less productive, but us citizens are in general better off. that's 1960-2020. sounds about right, but i wouldn't take that trend for granted if you factor in debt, rise in inequality and loss of global influence. i d
Re: (Score:2)
They did define it in the actual paper (Eq. (7) on pg. 8). Saying this, however, isn't particularly helpful. They define welfare as (essentially) "Real Wages = Income / Price Index".
I'm not an economist, but from a first read, what I see is that they take some existing simplified trade models which allow exogenous factors (ie, trade patterns *outside* the country in question) and then model it as a globalized system covering a bunch of countries. They model the results across multiple years while holding
Translation (Score:3)
The US has a smaller slice of a larger pie, for a net gain.
That is, it is better to have 30% of a Watermelon then it is to have 60% of an Orange, because the Watermelon is more than twice as big as an Orange.
Re: (Score:3)
Thanks, I was wondering if I had lost my grasp of the English language as I keep reading to try and work WTF the point of original post was. However, all this talk of food has made me hungry...