Trading with Friends in Uncertain Times
Author | : Adam Jakubik |
Publisher | : International Monetary Fund |
Total Pages | : 19 |
Release | : 2023-06-16 |
ISBN-10 | : 9798400244698 |
ISBN-13 | : |
Rating | : 4/5 (98 Downloads) |
Download or read book Trading with Friends in Uncertain Times written by Adam Jakubik and published by International Monetary Fund. This book was released on 2023-06-16 with total page 19 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper we seek to answer the question of how the patterns of bilateral trade are altered by rising trade policy uncertainty (TPU). Specifically, we investigate whether geopolitical alignments between country pairs determine how bilateral trade flows react during periods of greater uncertainty. Using a structural gravity framework augmented with a text-based TPU index and a geopolitical distance measure based on UN General Assembly voting records, we find a significant negative effect of the latter when TPU is elevated, indicating a shift to trading among “friends” in uncertain times.