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International friends and enemies
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International friends and enemies

Author

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  • Kleinman, Benny
  • Liu, Ernest
  • Redding, Stephen

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.

Suggested Citation

  • Kleinman, Benny & Liu, Ernest & Redding, Stephen, 2020. "International friends and enemies," LSE Research Online Documents on Economics 108480, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:108480
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    More about this item

    Keywords

    productivity growth; trade; welfare;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General

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