Samuel Delpeuch, Etienne Fize, Philippe Martin, 12 February 2021

How much can trade imbalances account for the rise in protectionism of the past ten years? This column reveals that both bilateral and multilateral trade imbalances are strong predictors of protectionist attacks, partly – but not entirely – driven by the US and the Trump years. Moreover, countries with more expansionary fiscal policies react to the ensuing trade imbalance by a more protectionist trade policy. A transatlantic gap in the fiscal response to the COVID crisis may therefore pave the way to renewed trade tensions.

David Welsch, 01 December 2020

The science behind mask usage and its ability to reduce airborne particles seems clear. Despite this, many individuals are sceptical that wearing masks can reduce the spread of COVID-19 and many refuse to wear one even when required. This column examines the effect of mask usage using county-level data from the US, employing an instrumental variable approach. The findings show that increasing the amount of individuals who frequently or always wear a mask when within six feet of people by 1% could reduce COVID-19 deaths by 10.5%, which translates into approximately six deaths in the average county. 

James Snyder, Hasin Yousaf, 28 November 2020

Holding large rallies is an especially important campaign activity for many populist leaders, including for Donald Trump during the 2016 US presidential race. This column studies the effect of campaign rallies held by Democratic and Republican US presidential candidates since 2008, including Donald Trump. It explores the effect of rallies on citizens’ preferences over candidates, policy issues, and their intention to vote. Populist leaders may be particularly effective in gaining support via their campaign rallies, at least temporarily. Populist leaders’ success may depend on connecting with voters via rallies.

Marcus Painter, Tian Qiu, 11 May 2020

Social distancing is vital to mitigate the spread of the novel coronavirus. Leveraging smartphone geolocation data, this column examines how political beliefs impact the effectiveness of state-level social distancing orders in the US. The findings suggest that Republicans and misaligned Democrats are less likely to adhere to social distancing orders. Bipartisan support for social distancing measures thus appears to be a key factor in how quickly we can mitigate the spread of the novel coronavirus.

Caroline Freund, Maryla Maliszewska, Aaditya Mattoo, Michele Ruta, 18 March 2020

Should the China-US trade agreement prompt relief or concern? This column argues that the answer depends on how China implements the agreement. Model simulations suggest that both countries would be better off under this ‘managed trade’ agreement than if the trade war had escalated. However, compared to the policy status quo, China is worse off and so is the rest of the world because of trade diversion. China can reverse those losses if instead of granting the US privileged entry, it opens its market for all trading partners.

Alejandro Cuñat, Robert Zymek, 17 February 2020

Most countries exhibit large variation in bilateral trade balances across their trade partners. This column argues that it is possible to use gravity trade models to describe the sources of this variation with greater clarity, but that a large portion of the variation still remains poorly understood. It also shows that tariffs imposed during the US-China trade war will reduce the US-China trade deficit in the long run, but only by worsening the US trade balance with other trade partners almost one-for-one.

Kym Anderson, 16 February 2020

Global alcoholic beverage markets have changed dramatically in recent years due to globalisation, income growth in emerging economies, changes in individual preferences, policy initiatives to curb socially harmful drinking, and, in particular, the dual trade policy shocks of Brexit and the US’s unilaterally imposed discriminatory tariffs. This column provides an overview of the major trends and projects the possible effects of Brexit and the US tariffs on the global alcohol market. It concludes that both shocks would reduce world trade in wine. Even countries not targeted by US tariffs can be worse off if those tariffs sufficiently reduce global consumption. 

Francesco Bianchi, Thilo Kind, Howard Kung, 25 January 2020

President Trump has frequently attacked the Federal Reserve, but if the markets believe that the Fed is immune to political pressure, these tweets should not affect expectations about future monetary policy. This column argues that this is not the case. Tick-by-tick fed funds futures data around the time of Trump tweets criticising the conduct of monetary policy suggest that market participants do not believe the Fed is fully independent.

Mario Monti, 13 November 2019

The Anglo-Saxons have been admired for their sense of rationality. However Mario Monti talks about recent political events that completely changed the situation. This video was recorded at the "10 years after the crisis" conference held in London, on 22 September 2017.

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. 

Chad Bown, Jennifer Hillman, 04 November 2019

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. 

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. 

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.

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.

Chad Bown, 22 July 2019

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.  


CEPR Policy Research