The choice of domestic policies in a globalized economy: Extended Version

Fischer, Justina A.V. (2012): The choice of domestic policies in a globalized economy: Extended Version.

Abstract

This paper describes the socio-economic adjustment effects exerted by globalization (taking as starting points competitive pressure, sectoral shifts, and financial market contagion) and discusses their relevance for domestic policy-making. I argue that these economic pressures and the resulting transformations in the domestic economy constrain government’s policy choice set to an extent that actual policies are quite freed from any political ideological context. However, important government tasks in a globalized economy remain: remedying information asymmetries between buyers and sellers, regulating markets to combat externalities, as well as providing essential goods.

• Item Type: MPRA Paper
• Language: English
• Keywords: globalization; trade; domestic policy; deregulation; competition; financial markets; government intervention
• Subjects: F - International Economics > F1 - Trade > F16 - Trade and Labor Market Interactions; F - International Economics > F1 - Trade > F15 - Economic Integration; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F42 - International Policy Coordination and Transmission; F - International Economics > F1 - Trade > F18 - Trade and Environment; D - Microeconomics > D6 - Welfare Economics > D62 - Externalities; H - Public Economics > H4 - Publicly Provided Goods > H41 - Public Goods; G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets; F - International Economics > F0 - General > F01 - Global Outlook; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design

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