The US-China trade dispute: A macro perspective

Rodney Tyers and Yixiao Zhou

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: The recent rise of populism and authoritarian politics has seen a turn from multilateralism and toward international disputes like that between the US and China. This paper uses a calibrated global macro model to assess the potential economic consequences of this conflict under explicit assumptions about monetary and fiscal policy. US unilateral protection emerges as “beggar thy neighbor” policy, the more so if new tariff revenue affords capital tax relief. China’s proportional losses are comparatively large and little mitigated by retaliation, which nonetheless constrains US net gains. Avoiding leakage by protecting against all sources causes substantial losses in third regions trading with China and the US.

Keywords: Trade disputes; China; macroeconomic policy; general equilibrium analysis; numerical theory (search for similar items in EconPapers)
JEL-codes: F13 F41 F47 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2019-02
New Economics Papers: this item is included in nep-cna and nep-int
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: The US-China Trade Dispute: A Macro Perspective (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2019-11

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