On October 24\, the Moynihan Institute and Trade\, Development and Political Economy series will host its first “Trad e Day.”
Trade Day is a full-day workshop focusing on how trade polic ies influence global development\, economic resilience and political insti tutions.
We investigate quantitatively how geopolitical rivalry shapes i nternational trade and technology transfer. Empirically\, we document a no vel fact: technology flows are far more sensitive than goods trade to geop olitical distance\, but only where IPR enforcement is weak. We also show t hat these geopolitical penalties have intensified since 2017\, consistent with the escalation of great-power rivalry and rising use of export contro ls. Motivated by this evidence\, we develop a new growth–trade model in wh ich geopolitical distance raises breach risk in licensing contracts. Count erfactuals show that (i) fragmentation generates larger welfare losses thr ough technology than through goods trade\, and (ii) once governments value relative techno-logical leadership\, export controls can be welfare-impro ving despite efficiency costs. \;
A
nson Soderbery
Associate Professor of Economics at the \;Daniels School of Business\, \;
Purdue University.
Co-author: Justin L.Tobias (Pu rdue)
Passthrough—the degree to which tariff increases are reflected in the prices paid by importers—is commonly studie d in international trade research and forms a crucial component in the eco nomic evaluation of trade policy. Many empirical analyses in the existing literature summarize passthrough via a single parameter and focus primaril y\, if not exclusively\, on whether or not passthrough is complete (i.e.\, if the tariff burden is entirely absorbed by the importing country). In t his paper we consider a variety of generalized models and\, using data on Chinese im-ports during the first Trump administration\, investigate if ra tes of passthrough vary across different traded goods. We introduce and de scribe a strategy for estimating a mixed discreet/continuous model that es timates probabilities of complete passthrough for all goods and examines h ow those probabilities change with good characteristics. We find strong an d consistent evidence that models allowing good-specific passthrough rates are favored by the data\, that agricultural (input) goods have the lowest (highest) rates of passthrough\, and that the evaluation of trade policy is sensitive to whether or not models permit heterogeneity in rates of pas sthrough at the product level. In addition\, we find that products subsidi zed by the Chinese government are associated with higher average rates of passthrough\, suggesting potential retaliatory responses to Trump era tari ff policies.
Nuno Limão \;
Wallenberg Chair Professor of Internation
al Business and Finance at \;Georgetown University.
“Econ
omic Consequences of US National (In)Security Export Controls”
Co-autho
rs: Kyle Handley (University of California\, San Diego) and \;Jingting
Fan (Pennsylvania State University)
We examine the structure\, rati onale\, and economic impacts of export controls and their growing use for national security reasons. U.S. export controls primarily target dual-use goods with both civilian and military applications—through licensing requi rements and multilateral agreements such as the Wassenaar Arrangement. Rec ent policy changes\, particularly in high-tech sectors like semiconductors and aerospace\, have increased trade frictions\, causing delays\, higher costs\, and regulatory uncertainty. About 44% of U.S. exports fall under s ome form of export control\, though only a fraction require a formal licen se. We estimate how much export controls\, even those requiring minimal li censing\, reduce exports and how the effects are mitigated for members of multilateral export control regimes (MECRs). We combine our estimated effe cts with a structural input-output general equilibrium model to quantify t he impact of unilateral versus multilateral control measures on trade.