Trade policy in the shadow of war: A quantitative toolkit for geoeconomics

Mathias Thoenig

No 18419, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper presents a quantitative toolkit for investigating the interplay between international trade and interstate war. A generic modeling framework is first constructed based on two core elements: (i) a structural gravity model of trade and (ii) a game of diplomatic negotiation that aims to deescalate geopolitical tensions and prevent armed conflicts. Methodologically, the setup extends the conventional quantitative procedures of trade policy evaluation to incorporate conflict risk. A series of empirically relevant scenarios is then simulated to assess the welfare gains of trade in a context of heightened conflict risk. Finally, the framework is used to structure a survey of the existing literature on trade and war.

JEL-codes: F1 F5 (search for similar items in EconPapers)
Date: 2023-09
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