As part of the Vilfredo Pareto Research Seminar series, the International Economics Department at the Graduate Institute is pleased to invite you to the public talk Rational Trade Wars & Stupid Trade Disputes" (joint work with Eddy Bekkers, Joseph F. Francois and Hugo Rojas-Romagosa), given by Douglas Nelson, Professor of Economics in the Murphy Institute and the Department of Economics at Tulane University (USA).
Professor Nelson obtained his Ph.D. from the University of North Carolina at Chapel Hill in 1981. In addition to positions with the U.S. Treasury, The World Bank and the IMF, he has held regular faculty positions at Rutgers University, University of Texas-Dallas, and Syracuse University, and has held visiting positions at Washington University in St. Louis, the Australian National University, the University of Nottingham, Karl-Franzens-Universitat Graz, and ETH-Zurich. He is currently on sabbatical at the Schuman Center of the European University Institute in Florence. His primary research interests lie in the areas of political economy of trade and immigration policy, the empirical link between globalisation and wages, and governance of globalization in a time of populism..
Abstract: We propose to survey the theoretical and empirical literature on trade wars. On the one hand, this is a large literature that has engaged leading economists across more than two centuries, and more than a century for the modern, technical literature. After presenting the basic theory (optimal tariff theory and rational trade war theory) we briefly discuss the history of trade wars and systematically review the empirical literature on trade wars. We will conclude that the existing theory does not do a very good job of accounting for the observed trade policies of the major trading nations. This leads us to consider in detail the assumption structure of that theory and the way those assumptions map to the concerns of trade policy-makers. We conclude with a discussion of observed trade policies.