EconPapers    
Economics at your fingertips  
 

A Framework for Geoeconomics

Christopher Clayton, Matteo Maggiori and Jesse Schreger
Additional contact information
Christopher Clayton: Yale U
Jesse Schreger: Columbia U

Research Papers from Stanford University, Graduate School of Business

Abstract: Governments use their countries’ economic strength from existing financial and trade relationships to achieve geopolitical and economic goals. We refer to this practice as geoeconomics. We build a framework based on three core ingredients: limited contract enforceability, input-output linkages, and externalities. Geoeconomic power arises from the ability to jointly exercise threats across separate economic activities. A hegemon, like the United States, exerts its power on firms and governments in its economic network by asking these entities to take costly actions that manipulate the world equilibrium in the hegemon’s favor. We characterize the optimal actions and show that they take the form of mark-ups on goods or higher rates on lending, but also import restrictions and tariffs. Input-output amplification makes controlling some sectors more valuable for the hegemon since changes in the allocation of these strategic sectors have a larger influence on the world economy. This formalizes the idea of economic coercion as a combination of strategic pressure and costly actions. We apply the framework to two leading examples: national security externalities and the Belt and Road Initiative.

JEL-codes: F02 P45 (search for similar items in EconPapers)
Date: 2024-01
New Economics Papers: this item is included in nep-gth and nep-int
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.gsb.stanford.edu/faculty-research/work ... amework-geoeconomics

Related works:
Working Paper: A Framework for Geoeconomics (2023) Downloads
Working Paper: A Framework for Geoeconomics (2023) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecl:stabus:4174

Access Statistics for this paper

More papers in Research Papers from Stanford University, Graduate School of Business Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2025-02-09
Handle: RePEc:ecl:stabus:4174