Working Paper: CEPR ID: DP14079
Authors: Joseph Francois; Eddy Bekkers; Doug R. Nelson; Hugo Rojas-Romagosa
Abstract: This paper assesses the utility of economic theory of rational trade wars to predict such events or to prescribe courses of action to control their consequences. Trade wars are fundamentally political events whose causes are almost completely political and whose consequences are to a significant degree also political. Contemporary economic theory has developed during a uniquely peaceful and liberal period in world history, affecting how economists have thought about trade conflicts, leaving the profession unprepared to provide serious analysis or advice.
Keywords: trade wars; international political economy; optimal taxation; general equilibrium; trade models
JEL Codes: F13; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic theories of rational trade wars (F11) | understanding the causes and consequences of trade wars (F69) |
| political nature of trade wars (F13) | understanding the causes and consequences of trade wars (F69) |
| existing economic theories (B55) | complexities of real-world trade conflicts (F13) |
| assumptions of rational trade war theory (F11) | multifaceted motivations behind government trade policies (F13) |
| recognizing political dimensions of trade policy (F13) | coherent framework for understanding trade wars (F12) |