Critically Important: The Heterogeneous Effect of Diplomatic Tensions on Trade

Hinz, Julian;Leromain, Elsa
(2020) Review of Industrial Organization — Vol. 57, p. 309-331 (2020)

Files

Hinz-Leromain2020_Article_CriticallyImportantTheHeteroge.pdf
  • Open Access
  • Adobe PDF
  • 1021.02 KB
Download

Details

Authors
  • Hinz, JulianKiel Institute for the World Economy
    Author
  • Leromain, ElsaUCLouvain
    Author
Abstract
With global value chains interlocking today’s economies, what is the impact of diplomatic tensions on international trade? We exploit variation in monthly data on imports, a measure of imported input use in the domestic economy, and the incidence of bilateral diplomatic tensions to show that their impact on trade is heterogeneous across countries and industries. Trade in industries that are crucial for domestic production is more sensitive to political tensions. We expose the underlying mechanism in a simple framework before testing it in reduced form.
Affiliations

Citations

  • APA
  • Chicago
  • FWB

Hinz, J., & Leromain, E. (2020). Critically Important: The Heterogeneous Effect of Diplomatic Tensions on Trade. Review of Industrial Organization, 57, 309-331. https://doi.org/10.1007/s11151-020-09769-9 (Original work published 2020)