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

Author / Creator

Thoenig, Mathias, author

Available as

Online

Summary

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 elemen...

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.

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