Title

International Friends and Enemies

Author(s)

Benny Kleinman Benny Kleinman (Princeton University)

Ernest Liu Ernest Liu (Princeton University)

Stephen J. Redding Stephen Redding (Princeton University)

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.

Creation Date

2020-07

Section URL ID

Paper Number

2020-29

URL

https://scholar.princeton.edu/sites/default/files/ernestliu/files/nber-wp-27587.pdf

File Function

Jel

F14, F15, F50

Keyword(s)

Productivity Growth, Trade, welfare

Suppress

false

Series

13