Discussion Paper Details

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Title: Trade Wars: Nobody Expects the Spanish Inquisition

Author(s): Eddy Bekkers, Joseph Francois, Doug R Nelson and Hugo Rojas-Romagosa

Publication Date: October 2019

Keyword(s): general equilibrium trade models, International Political Economy, optimal taxation and trade wars

Programme Area(s): International Trade and Regional Economics

Abstract: This paper assesses the utility of economic theory of rational trade wars to predict such events or to prescribe courses of action to control their consequences. Trade wars are fundamentally political events whose causes are almost completely political and whose consequences are to a significant degree also political. Contemporary economic theory has developed during a uniquely peaceful and liberal period in world history, affecting how economists have thought about trade conflicts, leaving the profession unprepared to provide serious analysis or advice.

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Bibliographic Reference

Bekkers, E, Francois, J, Nelson, D and Rojas-Romagosa, H. 2019. 'Trade Wars: Nobody Expects the Spanish Inquisition'. London, Centre for Economic Policy Research.