Скачать или смотреть International Power - CEPR RPN European Economic Policy

A webinar organised by the CEPR RPN on European Economic Policy, in collaboration with the European and Monetary Union (EMU) Laboratory of the European University Institute (EUI).

Presenters
David Yang* (Harvard) and
Matteo Iacoviello (Fed Board and CEPR)

Organisers and Moderators:
Laura Bottazzi (Bologna University and CEPR)
Giancarlo Corsetti (EUI and CEPR)
Christoph Trebesch (Kiel Institute and CEPR)

Abstract: An interconnected world increases economic efficiency, while providing some nations with leverage over others. In their paper, Liu and Yang investigate how nations can exert coercive power using (the threat of) trade dispute. They first develop a theoretical model of trade from which they derive a measure of international power to take to the data. Then, analyzing nation-pairs over the past 20 years, they compile a rich dataset of bilateral engagement episodes, and quantify their measure of bilateral geopolitical relationships at high frequency. The paper documents that, on the one hand, a rise in the international power of a country— which raises the credibility of its threats to disrupt trade—induces more bilateral engagement and negotiations. On the other hand, a worsening of geopolitical relationships—in anticipation of future disputes---prompt nations to redirect their trade to strenghten their international power.