The Causes of Trade Tensions and their Consequences for Financial Stability

Andrew K. Rose

Andrew K. Rose, Dean NUS-Business, on leave from Berkeley-Haas, ABFER senior fellow, CEPR research fellow and NBER research associate, Tel: +65 6516-3075 bizaro@nus.edu.sg

JEL Classification: F15, G15

Abstract

I have two objectives in this short paper. First, I explore some of the reasons why the world is currently experiencing so much tension associated with international trade. Second, I discuss some of the consequences of this trade tension for financial stability.

Keywords:

Data, Empirical, International, Protection, Soft power

Acknowledgments

This paper was first delivered as a keynote address to the G20 Conference on Global Financial Stability in Seoul in November 2019; all mistakes are mine alone.

References

Alcalá, Francisco and Antonio Ciccone. “Trade and Productivity.” The Quarterly Journal of Economics 119 (No. 2 2004): 613-646. [https://doi.org/10.1162/0033553041382139]
Alesina, Alberto, Enrico Spolaore, and Romain Wacziarg. “Economic integration and political disintegration.” American Economic Review 90 (No. 5 2000): 1276-1296. [https://doi.org/10.1257/aer.90.5.1276]
Baxter, Marianne, and Michael Kouparitsas. “Determinants of Business Cycle Comovement.” Journal of Monetary Economics 52 (No. 1 2005): 113-157. [https://doi.org/10.1016/j.jmoneco.2004.08.002]
Boz, Emine, Gita Gopinath and Mikkel Plagborg-Møller. “Global Trade and the Dollar” NBER Working Paper No. 23 (2017): 988. [https://doi.org/10.3386/w23988]
Eichengreen, Barry. “Sequencing RMB Internationalization” CIGI Papers (No. 69 2015).
Frankel, Jeffrey A. and David Romer. “Does Trade Cause Growth?” American Economic Review 89 (No. 3, 1999): 379-399. [https://doi.org/10.1257/aer.89.3.379]
Frankel, Jeffrey A. and Andrew K. Rose. “The Endogeneity of the Optimum Currency Area” Economic Journal 108 (No. 449 1999): 1009-1025. [https://doi.org/10.1111/1468-0297.00327]
Gourinchas, Pierre-Olivier and Olivier Jeanne. “The Elusive Gains From International Financial Integration” Review of Economic Studies 73 (No. 3 2006): 715-741. [https://doi.org/10.1111/j.1467-937X.2006.00393.x]
Hall, Robert E. and Charles I. Jones. “Why Do Some Countries Produce So Much More Output per Worker than Others?” The Quarterly Journal of Economics 114 (No. 1 1999): 83-116. [https://doi.org/10.1162/003355399555954]
IMF, “Regional Economic Outlook: Asia and Pacific: Caught in Prolonged Uncertainty.” (2019) (https://www.imf.org/en/Publications/REO/APAC/Issues/2019/10/03/areo1023, )
McKinnon, Ronald I. The Order of Economic Liberalization: Financial Control in the Transition to a Market Economy 2nd edition, Johns Hopkins university Press (1993).
Nye, Joseph. Soft Power 80 (1990): 153-171. [https://doi.org/10.2307/1148580]
Nye, Joseph. Soft Power: The Means to Success in World Politics, Public Affairs (2004).
Rodrik, Dani, Arvind Subramanian, and Francesco Trebbi. “Institutions Rule.” Journal of Economic Growth 9 (No. 2 2004): 131-165. [https://doi.org/10.1023/B:JOEG.0000031425.72248.85]
Rose, Andrew K. (forthcoming) “Soft Power and Exports.” Review of International Economics and http://faculty.haas.berkeley.edu/arose/Orange.pdf, ; Summarized in “The Economic Cost of Repellent Leadership.” (https://voxeu.org/article/losing-soft-power-lowers-exports, )