WHAT ASPECT OF the American economy has changed most in the
twenty-five years since Brookings Papers on Economic Activity first began
appearing? If you took a poll of economic journalists, businessmen,
or policy intellectuals other than professional economists, globalization-
the growing integration of the United States with the world economy-
would probably top the list. It is now conventional wisdom in
many circles that the growth of world trade and investment has transformed
the ground rules for economic policy.