{
  "title": "Globalization and the New Normal",
  "publication": "IMF Working Papers, April 6, 2018",
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  "summary": "This study expands the empirical specification of Cerra and Saxena (2008), and allows short-term output growth regimes to be determined by globalization.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- This study expands the empirical specification of Cerra and Saxena (2008), and allows short-term output growth regimes to be determined by globalization.\n- Relying on a non-linear dynamic panel representation, it reconciles the earlier results in the literature regarding the two opposite narratives of the effects of globalization on output growth.\n- Countries experience higher growth, on average, the more open and integrated they are into the world.\n- However, once they reach a certain globalization threshold (endogenously estimated), countries may also experience a new normal, persistently lower short-term output growth following a financial crisis.\n- The benefits, as well as vulnerabilities, accrue earlier in the globalization process for low- and middle-income countries.\n- To solely reap the globalization benefits on growth, sound policies should be in place to mitigate the negative effects stemming from increased vulnerabilities brought by globalization."
    },
    {
      "heading": "Key findings",
      "content": "- Higher openness and integration into the world are associated with higher average growth.\n- An endogenously estimated globalization threshold exists such that, beyond it, countries may face a \"new normal\" of persistently lower short-term output growth after a financial crisis.\n- Low- and middle-income countries reach both the benefits and the vulnerabilities of globalization earlier in the globalization process."
    },
    {
      "heading": "Methodology",
      "content": "- Empirical approach: expands Cerra and Saxena (2008) empirical specification.\n- Model: non-linear dynamic panel representation.\n- Regime determination: short-term output growth regimes are allowed to be determined by globalization (with an endogenously estimated threshold)."
    },
    {
      "heading": "Policy recommendations",
      "content": "- Implement sound policies to mitigate negative effects and vulnerabilities that arise from increased globalization if the objective is to reap globalization benefits on growth."
    },
    {
      "heading": "Subject and keywords",
      "content": "- Subject: Banking crises, Financial crises, Financial markets, Globalization, Production, Production growth, Stock markets\n- Keywords: Banking crises, banking crisis, Financial crises, Global, Globalization, globalization threshold, high-globalization regime, Index value, KOF globalization Index, New Normal, Output growth, Production growth, Stock markets, trade globalization, WP\n\n---\n\n Content in this bundle\n\n- Globalization and the New Normal, WP/18/75, April 2018\n  - Globalization and the New Normal, WP/18/75, April 2018 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Globalization and the New Normal, WP/18/75, April 2018 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2018/04/06/globalization-and-the-new-normal-45780"
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    "Authors: Alina Carare, Bertrand Candelon, Jean-Baptiste Hasse, Jing Lu",
    "Published: April 6, 2018",
    "Series: IMF Working Papers",
    "This study expands the empirical specification of Cerra and Saxena (2008), and allows short-term output growth regimes to be determined by globalization.",
    "Relying on a non-linear dynamic panel representation, it reconciles the earlier results in the literature regarding the two opposite narratives of the effects of globalization on output growth.",
    "Countries experience higher growth, on average, the more open and integrated they are into the world.",
    "However, once they reach a certain globalization threshold (endogenously estimated), countries may also experience a new normal, persistently lower short-term output growth following a financial crisis.",
    "The benefits, as well as vulnerabilities, accrue earlier in the globalization process for low- and middle-income countries.",
    "To solely reap the globalization benefits on growth, sound policies should be in place to mitigate the negative effects stemming from increased vulnerabilities brought by globalization.",
    "Higher openness and integration into the world are associated with higher average growth.",
    "An endogenously estimated globalization threshold exists such that, beyond it, countries may face a \"new normal\" of persistently lower short-term output growth after a financial crisis.",
    "Low- and middle-income countries reach both the benefits and the vulnerabilities of globalization earlier in the globalization process.",
    "Empirical approach: expands Cerra and Saxena (2008) empirical specification.",
    "Model: non-linear dynamic panel representation.",
    "Regime determination: short-term output growth regimes are allowed to be determined by globalization (with an endogenously estimated threshold).",
    "Implement sound policies to mitigate negative effects and vulnerabilities that arise from increased globalization if the objective is to reap globalization benefits on growth.",
    "Subject: Banking crises, Financial crises, Financial markets, Globalization, Production, Production growth, Stock markets",
    "Keywords: Banking crises, banking crisis, Financial crises, Global, Globalization, globalization threshold, high-globalization regime, Index value, KOF globalization Index, New Normal, Output growth, Production growth, Stock markets, trade globalization, WP",
    "**Globalization and the New Normal, WP/18/75, April 2018**"
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