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Open Access Publications from the University of California

Fiscal Policy in an Economically Integrated World

  • Author(s): Beckman, Tristin
  • Advisor(s): Cohen, Benjamin
  • et al.

Eight years after the 2008 Global Financial crisis the global economy continued to muddle through weak economic growth. At the same time elected officials have lashed against the post-war trend toward greater economic integration, as illustrated by the election of Donald Trump in the United States and the United Kingdom's vote to withdraw from the European Union. This dissertation argues that the relationship between economic growth and policies favoring economic integration are deeply intertwined. I argue that trade interdependence played an important role in causing policymakers to roll back expansionary fiscal policies before a robust recovery had taken hold. This anemic economic recovery then increased the policy influence of interest groups with more protectionist policy preferences. This dissertation, therefore, integrates economic interdependence with domestic politics to deepen our understanding of economic policy choices. To this point, however, the international political economy literature remains largely divided with respect to levels of analysis. At the domestic level, researchers continue to analyze domestic preferences and institutions as if they are independent from others states in the global economy; while at the systemic level, researchers tend to analyze relations between states independent from domestic politics. Much of this division is methodological. Until recently, statistical models assumed observations were independently distributed, forcing researchers to assume away interdependence in statistical analyses. This project takes advantage of recent advances in spatial econometrics that help to account for interdependence between units to offer a more complete understanding of domestic level policies.

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