Christine Arriola, Przemyslaw Kowalski, Frank van Tongeren, 15 November 2020

The Covid-19 pandemic has left in its wake a global economy damaged beyond what was thought possible a decade ago. The globalised nature of the 21st century global economy is a key component in terms of the dynamics, and effects, of the virus. This column presents an analysis of the importance of global value chains, both during the pandemic and throughout the recovery process. The results of the study suggest that increased localisation could do more harm than good, and that the international network of interconnected supply chains remains key to producing essential goods and services.

Koen Berden, Joseph Francois, Fredrik Erixon, 26 June 2020

Calls for more protectionism have been on the rise for some time now, and have surged again with the Covid-19 pandemic. This column points to similar policies and their negative consequences during the Great Depression. Discussing similarities and differences of the economic situation between then and now and drawing on lessons from the Great Depression, it highlights the very negative consequences of increasing protectionism.

Alvaro Espitia, Nadia Rocha, Michele Ruta, 24 May 2020

Although initial conditions in global food markets in the face of COVID-19 pandemic are good, disruptions across countries most affected could reduce global supplies of key staples. This column shows that escalating export restrictions would multiply the initial shock by a factor of three, with world food prices rising by up to 18% on average. Import food dependent countries, which are in large majority developing and least developed countries, would be most affected. Uncooperative trade policies could risk turning a health crisis into a food crisis.

Douglas Irwin, 05 May 2020

The COVID-19 pandemic has led policymakers and business leaders to question whether global supply chains have been stretched too far. This column argues that the pandemic simply adds further momentum to the deglobalisation trend. The fourth era of globalisation appears to have peaked in 2008, and since then we have been in an era of ‘slowbalisation’.

Anna Stellinger, Henrik Isakson, Ingrid Berglund, 01 May 2020

The world is in the midst of a dual crisis, threatening both the health of millions of people and the world economy. The crisis also touches upon various aspects of trade policy. Once the immediate crisis has abated it is not unlikely that the major trade debate will be about reshoring production. The argument goes that it is dangerous – both from an economic point of view and from a public health perspective – to be so dependent on imports. This column argues that the opposite is in fact true.

Richard Baldwin, Simon Evenett, 29 April 2020

Incomes and trade are collapsing worldwide. Many nations have imposed export restrictions on medical supplies and food, raising the spectre of across-the-broad protectionism. This column introduces a new eBook that asks: Should governments turn inward? The answer is “No”. Turning inwards won’t help tackle the health crisis, it will harm many (especially in developing nations), and it will hinder the collaborative spirit that the human race will need to defeat this disease. Trade isn’t part of the problem – it’s an essential part of the solution.

Chad Bown, Aksel Erbahar, Maurizio Zanardi, 23 March 2020

The decades preceding the Trump era saw a significant decline in trade barriers and a concurrent rise in global value chains. Evidence on the direction of causality between the two is still lacking. Using an exogenously timed WTO requirement for countries to re-evaluate previously imposed tariffs, this column argues that increased activity through global value chains had an important role to play in the countries’ choice to reduce trade protection during this period. 

Erhan Artuc, Guido Porto, Bob Rijkers, 06 January 2020

Questions about who benefits from free trade – and at what cost – have resurfaced as part of the backlash against globalisation. This column uses data from 54 low- and middle-income countries to show that in a majority of cases, trade liberalisation increases both incomes and inequality. Most of these trade-offs resolve in favour of liberalisation; despite exacerbating income disparities, trade liberalisation creates overall social welfare gains. 

Céline Carrère, Anja Grujovic, Frédéric Robert-Nicoud, 13 November 2019

Unemployment is absent from most quantitative trade models in the academic literature. Using a trade model that also includes unemployment and data between 2001 and 2008, this column shows that repealing NAFTA and the imposition of 20% bilateral tariffs between the US and Mexico in all sectors would reduce welfare by 0.31% in the US and by 6.6% in Mexico. An US increase of trade barriers on motor vehicles against imports from all countries bar Mexico and Canada would lead to a decrease in long-run welfare and employment in both Mexico and the US as well as in major car-producing countries. 

Chang Sun, Zhigang Tao, Hongjie Yuan, Hongyong Zhang, 03 November 2019

The trade war between the US and China has had impacts on other countries – including Japan, one of the most important trading partners of both countries. The column uses quarterly sales data and stock market returns to show that the operations in China of Japanese MNCs have been negatively affected by the trade war, especially when Chinese affiliates rely heavily on trade with North America. This has led to a reduction in their stock prices. 

Michael Bordo, Mickey Levy, 18 October 2019

The history of tariffs and immigration and capital barriers provides clear lessons of the potentially sizeable economic costs of anti-globalisation policies. This column describes how the US-China tariff war and policy-related uncertainties are harming economic performance, and are also distorting the Federal Reserve’s monetary policy and undermining its credibility and independence. Tariffs and discretionary monetary policy are a toxic mix, and the authors encourage a de-escalation of burdensome barriers to trade and urge the Fed to adopt a systematic, rules-based approach to monetary policy.

Stefania Garetto, Lindsay Oldenski, Natalia Ramondo, 08 October 2019

Multinational enterprises play an important role in coordinating production around the globe. This column presents a dynamic quantitative model of multinational enterprise expansion that can be used to analyse the effects of policies that affect the cost of the operations of such firms. It uses this model to estaimte the impact of potential implementations of Brexit.

Gene Grossman, Phillip McCalman, Robert Staiger, 23 September 2019

While tariffs have been reduced significantly in the last decades, other barriers to trade, such as differing regulations across countries, continue to pose obstacles. This column presents a new framework to analyse how different forms of trade agreements can address these non-tariff barriers. For various economic environments, it discusses whether and how these treaties can achieve global efficiency.

Luisa Kinzius, Alexander Sandkamp, Erdal Yalcin, 16 September 2019

Since the inauguration of Donald Trump as the president of the US, the world has observed an unprecedented rise in border tariffs. This column shows that trade protection had in fact started much earlier, in the form of non-tariff barriers. An empirical analysis reveals that the average trade dampening effect of such barriers is comparable to that of trade defence instruments such as anti-dumping duties. However, this negative effect can be mitigated by free trade agreements.

Gabriel Felbermayr, Feodora Teti, Erdal Yalcin, 10 September 2019

Rules of origin exist to avoid trade deflection, but they distort global value chains and are costly to abide by. This column shows empirically that in preferential trade agreements, trade deflection is unlikely to be profitable because tariffs are generally low, that countries in a common free trade agreement tend to have similar external tariff levels, and that when tariff levels differ, deflection is profitable at most for one country in the pair. Moreover, transportation costs create a natural counterforce. It appears that rules of origin are primarily used to limit trade, and hence represent an instrument for trade protection. 

Lucrezia Reichlin, 25 July 2019

Lucrezia Reichlin argues that in an increasingly globalised world, there is more need than ever for Europeans to work together in order to make our currencies robust, to cope with the refugee crisis, and to defend ourselves from the threat of protectionism.

Rafael Di Tella, Dani Rodrik, 01 July 2019

Economists have traditionally emphasised the benefits of openness to trade, but populists resist it. How generalised is the demand for trade protection? And how does it compare with other disruptions in the labour market? This column suggests that people often react by demanding trade protection when faced with shocks that generate unemployment, with the largest effects observed when it is caused by imports arriving from a poor country. 

Meredith A. Crowley, Ralph Ossa, Heiwai Tang, 20 June 2019

A new book from the CEPR argues that the current trade war is a long-term danger to all economies, not just those of the US and China. Editor Meredith Crowley of the University of Cambridge and two of the authors tell Tim Phillips why prospects for the world economy are 'grim'.

Meredith A. Crowley, 30 May 2019

As a trade war of unprecedented scope and magnitude engulfs the world’s two largest economies, this column introduces a new Vox eBook that seeks to shed light on the origins of the conflict, the current impacts on economic activity around the world, and the likely consequences for the future of globalisation. It concludes that the prospects for the future of the multilateral trading system look grim.  

Chad Bown, 10 May 2019

Who will be the biggest loser in this trade war? Chad Bown tells Tim Phillips why it could be the WTO's dispute resolution system, and why we should worry if this happens.



CEPR Policy Research