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International friends and enemies

Kleinman, Benny, Liu, Ernest and Redding, Stephen (2020) International friends and enemies. CEP Discussion Papers (1708). Centre for Economic Performance, LSE, London, UK.

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Abstract

We develop sufficient statistics of countries’ bilateral income and welfare exposure to foreign productivity shocks that are exact for small shocks in the class of models with a constant trade elasticity. For large shocks, we characterize the quality of the approximation, and show it to be almost exact. We compute these sufficient statistics for over 140 countries from 1970-2012. We show that our exposure measures depend on market-size, cross-substitution and cost of living effects. As countries become greater economic friends in terms of welfare exposure, they become greater political friends in terms of United Nations voting and strategic rivalries.

Item Type: Monograph (Discussion Paper)
Official URL: https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information: © 2020 The Authors
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HC Economic History and Conditions
J Political Science > JZ International relations
JEL classification: F - International Economics > F1 - Trade > F14 - Country and Industry Studies of Trade
F - International Economics > F1 - Trade > F15 - Economic Integration
F - International Economics > F5 - International Relations and International Political Economy > F50 - General
Date Deposited: 19 Jan 2021 09:45
Last Modified: 21 Jan 2021 00:48
URI: http://eprints.lse.ac.uk/id/eprint/108480

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