Scott Baker, Nicholas Bloom, Steven Davis, 17 September 2019

Tariff threats, hikes, and retaliations have become a major source of economic uncertainty and stock market volatility. This column draws on three initiatives to demonstrate that recent rise in trade policy uncertainty, driven by the US withdrawal from the Trans-Pacific Partnership, tariff hikes on US steel and aluminium imports, ongoing Brexit uncertainty, and escalating US-China trade tensions, is extraordinary by several metrics. 

Panle Jia Barwick, Myrto Kalouptsidi, Nahim Bin Zahur, 11 September 2019

Despite the prevalence of industrial policies around the world, few empirical studies directly evaluate their welfare consequences. This column reveals that the scale of China’s industrial policy targeting the shipbuilding industry is massive, with the lion’s share going to entry subsidies. The effectiveness of different policy instruments is mixed, and the efficacy of industrial policy is significantly affected by the presence of boom and bust cycles, and by heterogeneity in firm efficiency. The ‘white list’ of firms chosen for government support did not include the most efficient firms. 

Johannes Eugster, Florence Jaumotte, Margaux MacDonald, Roberto Piazza, 10 September 2019

Bilateral trade balances have come under scrutiny recently, with some policymakers concerned that their large and rising size may reflect asymmetric obstacles to trade. This column argues that macroeconomic factors – rather than bilateral tariffs – have been the key drivers of the evolution of bilateral trade balances. While tariffs have played a modest role in the evolution of bilateral balances, declines in tariffs have lifted productivity by allowing a greater international division of labour, including through participation in global value chains. A sharp increase in tariffs would therefore create significant spillovers, leaving the global economy worse off. 

Daniel Gros, 09 September 2019

Traditional analysis of tariffs in a partial equilibrium setting can tell us much about the welfare consequences of the US-China trade war. The column argues that, as tariffs ratchet up, welfare costs for both sides increase disproportionately. The cost of trade diversion in the US to less-efficient suppliers likely overwhelms any terms-of-trade gain the US might enjoy. In all cases, exporters in the rest of the world benefit.

Alan Bollard, 05 September 2019

The World Wars precipitated unprecedented economic problems in all countries. This column, part of a Vox debate on the economics of WWII, describes how economists played a larger role in WWII than in any previous conflict. They advanced the methods of public finance and influenced the directions of the war effort. By the end of the war, economists were widely embedded in government and policymaking.

David Jacks, Dennis Novy, 23 July 2019

Against the backdrop of new tariffs imposed by the Trump administration and retaliation from targeted countries, notably China, the trade wars of the 1930s have received renewed attention. This column argues that they mainly served to intensify a pre-existing trend towards the formation of trade blocs. The trade wars of the present day may therefore serve a similar purpose as those in the 1930s, that is, the intensification of China- and US-centric trade blocs.

Marlene Amstad, Zhiguo He, 16 July 2019

China’s corporate bond ratings are sharply skewed upward, which is partly explained by the large amounts of bonds by issuers who are mostly linked to the government. This column proposes credit spreads as an alternative, market-based measure of credit risk. It also argues that the main reason for the high credit ratings and low dispersion of credit spreads is the very short and limited history of defaults in China. The post-2014 sharp rise in corporate bond defaults is therefore essential for further market development, particularly because Chinese defaults remain low relative to global standards.

Francois de Soyres, Alen Mulabdic, Michele Ruta, 12 July 2019

Common transport infrastructure can improve welfare for participating countries, but they are costly undertakings with potentially asymmetric effects on trade and income of individual countries. This column uses new data on China’s Belt and Road transport projects to quantify the economic impact of the initiative. Welfare in participating countries could increase by 2.8% if all projects are implemented, but some countries have a negative welfare effect because of the high cost of the infrastructure. 

Xuepeng Liu, Huimin Shi, 11 July 2019

The US-China trade war has continued for almost a year, but its effectiveness in preventing some Chinese origin products reaching the US may not be as great as it seems. This column shows how trade re-routing has been used in the past to circumvent antidumping duties in the context of trade tariffs. Firms may be able to avoid tariffs by sending their products to a third country, where the goods are reissued certificates of origin and then sent to the final destination country without being subject to the same tariffs.

Jason Garred, 09 July 2019

Like other countries participating in the multilateral trading system, China agreed to limit the use of import tariffs when it joined the WTO. As this column shows, however, it continued to employ other instruments of trade policy, including a new set of restrictions on exports which partly restored the asymmetric treatment of Chinese industries embodied in its pre-WTO import tariffs. Today's tariff wars appear to be just the latest example of an ongoing battle whose skirmishes have taken many forms.

Johannes Eugster, Giang Ho, Florence Jaumotte, Roberto Piazza, 12 June 2019

Technology diffusion to emerging markets helps share growth potential across countries and lift global living standards. Using a global patent citation dataset, this column estimates the magnitude and impact of international knowledge and technology diffusion, as well as the role that globalisation has played. In emerging markets, knowledge flows have increased innovation and productivity. Competition from emerging markets benefits global innovation.

Debin Ma, 04 June 2019

Over the last four decades, China’s economy grew at an astonishing pace while remaining firmly in the grip of an authoritarian political regime, thereby upending long-settled economic models. But an earlier era in Chinese history tells a different story. This column examines the period from 1900 to 1937, when rules governing the treaty port of Shanghai attracted major Western banks (and sheltered the Bank of China’s Shanghai branch) by curbing or side-stepping state power. This is a rare glimpse into a period of Chinese history in which financial practices were largely freed from the constraints of authoritarian rule. 

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Core Conference 2019:

In the 30 years since the fall of the Berlin Wall and the Iron Curtain, the former planned economies in East Germany and Eastern Europe have undergone fundamental processes of change. In the new federal states, the economic structure has undergone fundamental changes, but convergence with the old federal states is not complete. The economic catching-up process of the transition countries of Eastern Europe, some of which are now members of the European Union, is continuing. Where are East Germany and the transition countries today? How have democratic institutions and market-economy structures developed in the transition countries?

Richard Freeman, Wei Huang, Teng Li, 07 May 2019

Incentive systems that pay workers bonuses based on performance targets are widely used to increase productivity, but they can incur costs to firms from workers gaming the system. This column studies the introduction of one such non-linear incentive system by a major Chinese insurance firm. It finds that the system increased productivity and lowered turnover rates sufficiently to outweigh the gaming costs, and appears to have benefitted both workers and the firm.

Wilko Bolt, Kostas Mavromatis, Sweder Van Wijnbergen, 25 April 2019

Increasing protectionism will slow down world trade and may dampen global economic growth. This column examines the global macroeconomic consequences of a major trade conflict between the US and China, and shows that the two countries would be the biggest losers from a 10% ‘tit-for-tat’ trade war between them. As long as it does not get involved in the conflict, the euro area may temporally gain from trade diversion, as competitiveness improves and imports from regions whose exports are blocked elsewhere become cheaper.

Thiemo Fetzer, Carlo Schwarz, 23 April 2019

Tariff retaliation is widely believed to be politically motivated. This column presents evidence that retaliation against the Trump administration's tariff hikes seems to be systematically targeted against the Republican voter base. China appears to have been able to achieve a high degree of political targeting but likely harmed its own economy by targeting agricultural goods for which the US is a major supplier. The EU, on the other hand, appears to be more successful in navigating the trade-off. It also finds some evidence suggesting that Republican candidates fared worse in the mid-term elections in the US counties most exposed to retaliation.

Cecilia Bellora, Lionel Fontagné, 22 April 2019

Since 2018, the US administration has implemented several measures limiting free trade with China and other countries. Using cross-country data and a general equilibrium model, this column argues that a trade war hurts not only the targeted countries but also the country imposing the tariffs. Global value chains prompt countries to decrease tariffs when the domestic content of foreign-produced final goods and the imported content of domestic production of final goods are high. Once imposed, tariffs have an indirect effect on third sectors and countries through global value chains.

David Weinstein, 19 April 2019

Has the trade war with China been good for American businesses and consumers? The first results are in, and David Weinstein tells Tim Phillips who the winners and losers are.

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This call invites you to submit a paper or express your interest in attending the above Summer Institute, which will be hosted this year by Guanghua School of Management, Peking University, during 17 – 18 August 2019. The workshop intends to bring together the best scholars working on China in China, the US and Europe with other top level scholars who have an interest in working on China in the future. We welcome applications not only from those who want to present their research on China but also from anybody who has an interest in doing serious economic research on China and would like to use the workshop as means of exploring this possibility.

Please register online for possible presentation at the meeting or expressions of interest in attending the meeting by 6 May 2019.

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