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Are We Underestimating the Gains from Globalization for the United States?
|May 5, 2005|
|Note To Editors||
The latest edition of the Federal Reserve Bank of New York’s Current Issues in Economics and Finance, Are We Underestimating the Gains from Globalization for the United States? is available.
Authors Christian Broda and David Weinstein examine globalization’s effects on the U.S. economy by measuring the value to consumers of being able to choose from a broader set of imported goods. The authors estimate that the growth in global varieties from 1972 to 2001 produced benefits to U.S. consumers of roughly $260 billion.
The study—the first to calculate the gains from variety growth—begins with a new analysis of the 1972-2001 trade data. The authors show that over this period, the variety of goods imported by the United States more than tripled. Traditional analyses of the impact of globalization have failed to assign a value to this increased variety and hence have underestimated the gains to consumers.
Christian Broda is an economist in the International Research
Function of the Research and Statistics Group; David Weinstein
is Carl S. Shoup Professor of the Japanese Economy in the
Department of Economics at Columbia University.