IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/35416.html

International Trade in an Uncertain World

Author

Listed:
  • Benny Kleinman
  • Ernest Liu
  • Stephen J. Redding
  • David Xu

Abstract

We develop a tractable quantitative model of international trade in which agents make bilateral investments in resilience under general equilibrium uncertainty. Under both complete and incomplete financial markets, we show that these bilateral investments solve a portfolio problem of choosing trade partners. Countries' risk profiles become determinants of trade flows, income and welfare, whose first moments are affected by the second moments of productivity and trade costs. Changes in global economic uncertainty have heterogeneous effects across countries, depending on how they affect real hedging opportunities. The opening of trade can raise or reduce income volatility, but is revealed-preferred to autarky.

Suggested Citation

  • Benny Kleinman & Ernest Liu & Stephen J. Redding & David Xu, 2026. "International Trade in an Uncertain World," NBER Working Papers 35416, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35416
    Note: ITI
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w35416.pdf
    Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:35416. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.