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The US-China phase one trade deal: An economic analysis of the managed trade agreement

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  • Funke, Michael
  • Wende, Adrian

Abstract

In light of the recent tit-for-tat trade dispute between China and the US, interest in quantifying the effects of the so-called phase one agreement has risen. To this end, the paper quantifies the impact of the asymmetric managed trade agreement using a multi-country open-economy dynamic general quilibrium model. Besides assessing the direct implications for China and the US, trade diversion effects are also analyzed. The model-based analysis finds noticeable positive (negative) impacts of the agreement for the US (China) as well as negative spillover effects for countries not directly affected by the managed trade deal due to trade diversion. The impact of possible future trade agreements is also examined.

Suggested Citation

  • Funke, Michael & Wende, Adrian, 2022. "The US-China phase one trade deal: An economic analysis of the managed trade agreement," BOFIT Discussion Papers 1/2022, Bank of Finland Institute for Emerging Economies (BOFIT).
    • Handle: RePEc:zbw:bofitp:bdp2022_001
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    More about this item

    Keywords

    phase one deal; managed trade; open-economy dynamic general equilibrium model; United States; China;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F42 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - International Policy Coordination and Transmission

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