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Comment on trade wars and industrial policy competitions: understanding the U.S.-China economic conflicts

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  • Parro, Fernando

Abstract

•The welfare effects of industrial and trade policy in open economies stem from the interplay between terms of trade and misallocation motives.•In a world characterized by sectoral economies of scale, trade policy alone cannot achieve a first-best outcome; industrial policy is also essential.•In this context, international cooperation is crucial to achieve a first-best outcome.•The paper represents an important step forward in the quantitative analysis of the welfare effects of trade and industrial policies, viewed through the lens of recent changes in the trade and industrial policies of the United States and China.

Suggested Citation

  • Parro, Fernando, 2024. "Comment on trade wars and industrial policy competitions: understanding the U.S.-China economic conflicts," Journal of Monetary Economics, Elsevier, vol. 141(C), pages 59-61.
    • Handle: RePEc:eee:moneco:v:141:y:2024:i:c:p:59-61
    DOI: 10.1016/j.jmoneco.2023.10.007
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    References listed on IDEAS

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    1. Ahmad Lashkaripour & Volodymyr Lugovskyy, 2023. "Profits, Scale Economies, and the Gains from Trade and Industrial Policy," American Economic Review, American Economic Association, vol. 113(10), pages 2759-2808, October.
    2. Kyle Bagwell & Robert W. Staiger, 2001. "Domestic Policies, National Sovereignty, and International Economic Institutions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 519-562.
    3. Ju, Jiandong & Ma, Hong & Wang, Zi & Zhu, Xiaodong, 2024. "Trade wars and industrial policy competitions: Understanding the US-China economic conflicts," Journal of Monetary Economics, Elsevier, vol. 141(C), pages 42-58.
    4. Kyle Bagwell & Robert W. Staiger, 2004. "The Economics of the World Trading System," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262524341, December.
    5. Konstantin Kucheryavyy & Gary Lyn & Andrés Rodríguez-Clare, 2023. "Grounded by Gravity: A Well-Behaved Trade Model with Industry-Level Economies of Scale," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 372-412, April.
    6. Lorenzo Caliendo & Fernando Parro, 2015. "Estimates of the Trade and Welfare Effects of NAFTA," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(1), pages 1-44.
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