What is the difference between macroeconomics and international macroeconomics or trade? There is a border. Just splitting an economy in two seems trivial, yet it matters. A lot. There is plenty of empirical evidence that borders matter. They inhibit trade. They allow for purchasing-power-parity deviations to persist. The economic well-being can differ dramatically across a border despite geographic similarities.
Emmanuelle Lavallée and Vincent Vicard note that the number of borders has considerably increased since World War II, with the number of countries going from 72 to 192. Given the border effect, this should be bad. But this has also a important side effect: transactions that were internal become international, thus boosting international trade statistics. Lavallée and Vicard find that measured international trade has increased by 9% solely because of new borders, but actual trade would have been 4% higher without those borders. While this is not negligible, we need to keep in mind that world trade has increased by a factor of 30 during this period.
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