Economics Thread

The question of trade and openness to trade and ideas and their connection to growth is one of the most important in economics. There is a tricky statistical issue having to do with endogeneity. But most of the evidence points in the direction of a positive causal relationship between openness to trade and growth.

China btw is a noteworthy recent case study. Their economic takeoff coincided with their opening to the rest of the world in the late 1970s. The UK is another recent case study, with its economy under-performing other advanced economies since Brexit. North and South Korea fall in the genre of interesting twin studies: one very closed one very open.

To the extent there is a seminal paper in the field, it would probably be Jeffrey Frenkel and David Romer's 1999 paper in the American Economic Review: "Does Trade Cause Growth?" It showed the way for trying to deal with the endogeneity problem.

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For countries like Canada and Mexico that rely on a large neighbor as their biggest market some comfort can be found in Finland's ability to reorient its economy. The collapse of the Soviet Union did cause a severe recession in Finland. But it has been able to make a very successful transition away from bilateral trade with the Soviet Union (Russia). Not a painless one to be sure. But it can be done. Canada and Mexico should consider joining the EU and I would hope the EU would be open to expanding in that direction. Canada, Mexico and the EU would also be smart to bolster their economic and strategic ties with China.
 
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Garmel said:
Not just that. He's trying to get the Canadians to drop their 200%+ Tariffs on some of their products.
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let's hope we can figure out who allowed Canada to take such huge advantage of us

Donald J. Trump
@realDonaldTrump
The great USMCA Trade Deal (Mexico & Canada) has been sitting on Nancy Pelosi’s desk for 8 months, she doesn’t even know what it says, & today, after passing by a wide margin in the House, Pelosi tried to take credit for it. Labor will vote for Trump. Trade deal is great for USA!
4:55 PM · Dec 19, 2019
 
Btw, we don't really don't want Canada as a 51st state. Why the hell would you want a state more left of Cal?
 
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sturg33 said:
let's hope we can figure out who allowed Canada to take such huge advantage of us

Donald J. Trump
@realDonaldTrump
The great USMCA Trade Deal (Mexico & Canada) has been sitting on Nancy Pelosi’s desk for 8 months, she doesn’t even know what it says, & today, after passing by a wide margin in the House, Pelosi tried to take credit for it. Labor will vote for Trump. Trade deal is great for USA!
4:55 PM · Dec 19, 2019
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?

Pretty certain that deal didn't cause this.
 
acesfull86 said:
I for one am shocked that the market is responding negatively to a long since debunked 17th century economic theory
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To be fair establishing causality is hard in the social sciences. There is always some element of uncertainty. But there is no need to insult "debunked 17th century economic theory" by lumping it with what is coming of out the Trump White House.
 
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