This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. ASSA Annual Meeting
  3. 2023
  4. Program
  5. How Can Trade Again Provide A Strong Stimulus to World Growth?
« Back to Results

How Can Trade Again Provide A Strong Stimulus to World Growth?

Paper Session

Saturday, Jan. 7, 2023 12:30 PM - 2:15 PM (CST)

New Orleans Marriott, Mardi Gras Salon D
Hosted By: Society of Policy Modeling
  • Chair: Dominick Salvatore, Fordham University

The Way Forward: Trade Policies’ Impacts on Global Trade Patterns

Robert Koopman
,
American University
Marc Bacchetta
,
World Trade Organization
Eddy Bekkers
,
World Trade Organization
Jeanne Metivier
,
World Trade Organization

Abstract

In this study, we investigate three trade policy scenarios: i) the revival of multilateralism, ii) plurilateral cooperation, and iii) geopolitical rivalry. In the first scenario, both tariffs and NTMs are reduced on a multilateral basis. In the second scenario, varying groups of countries cooperate on specific topics, such as e-commerce and services. In the last scenario, two main blocks emerge: a Western block and an Eastern block. International cooperation breaks down between blocks, leading to an increase in tariffs and NTMs, with blocks of countries setting up their own set of rules. Our findings are based on the WTO Global trade Model which has a specific novel feature: the diffusion of ideas between countries as a by-product of trade.

Can Digital Trade Agreements Provide a Stimulus to Global Growth?

Mary Lovely
,
Peterson Institute for International Economics

Abstract

The growing economic significance of cross-border digitally-enable commerce as well as domestic political constraints on further tariff reduction have raised hopes for successful digital trade negotiations. The Digital Economic Partnership Agreement of Singapore, Chile, and New Zealand offers a model for collaboration on digital trade issues, including interoperability between different digital regulatory regimes. The US-led Indo-Pacific Economic Framework aims to stimulate digital trade within a fourteen-nation bloc by harmonizing rules for data flows. This paper evaluates claims that enabling cross-border digital transfers stimulates economic activity, asks how it contributes to growth, through what channels, and in which sectors. The paper focuses on the claim that harmonization of digital rules differentially benefits small and medium enterprises and offers new opportunities for those operating outside the formal sector.

A Measurement of Aggregate Trade Restrictions and Their Economic Effects

Jonathan Ostry
,
GeorgeTown University
Julia Estefania Flores
,
International Monetary Fund
Davide Furceri
,
International Monetary Fund
Swarnali Hannan
,
International Monetary Fund
Andrew Rose
,
National University of Singapore

Abstract

We develop a new Measure of Aggregate Trade Restrictions (MATR) using data from the IMF's Annual Report on Exchange Arrangements and Exchange Restrictions. MATR is an empirical measure of how restrictive official government policy is towards the international flow of goods and services. MATR is simple, ad hoc, plausible, quantitative, easily updated, based solely on policy-relevant measures of trade policy, and covers an unbalanced sample of up to 157 countries annually between 1949 and 2019. MATR is strongly correlated with, but more comprehensive than, existing measures of openness and trade policy. We use MATR to show that trade restrictions are harmful for the economy and lead to significant contractions in output.

The Impact of the War in Ukraine on Global Trade and Investment

Michele Ruta
,
World Bank

Abstract

This study focuses on the direct impact of the war on world trade and investment. It identifies five trade and investment channels through which countries will be affected by the war in Ukraine. These encompass disruptions to: (i) commodity markets (especially food and energy), (ii) logistic networks, (iii) supply chains, (iv) foreign direct investment, (v) specific sectors. The study finds that world trade will drop by 1 percent, lowering global GDP by 0.7 percent and GDP of low-income countries by 1 percent. Beyond these direct effects, the war’s long-term implications for global trade and investment will largely depend on how governments respond to the changing geopolitical environment.

A Simultaneous Equations Model of International Trade and Economic Growth and Development

Dominick Salvatore
,
Fordham University

Abstract

This study examines the relationship between international trade and economic growth and development for advanced and developing countries, together and separately for large and small countries, using a simultaneous equations model, for all the 189 countries for which data was available over the 2004-2019 period. The model was estimated by FIML and then used for dynamic policy simulations of the policies most often advocated to increase nations’ exports and thus their growth and development. The results are that trade operated more as a “handmaiden” than as an “engine of growth” for most countries studied, and so would the policies to stimulate nations’ exports and their growth and development.

Discussant(s)
Dominick Salvatore
,
Fordham University
Pellegrino Manfra
,
CUNY-Queensborough Community College
JEL Classifications
  • F1 - Trade
  • F4 - Macroeconomic Aspects of International Trade and Finance