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International Friends and Enemies

February 25, 2021

Kuala Lumpur Research Seminar Series

  • We develop sufficient statistics of countries' bilateral income and welfare exposure to foreign productivity shocks that are exact for small shocks in the class of models with a constant trade elasticity. For large shocks, we characterize the quality of the approximation, and show it to be almost exact. We compute these sufficient statistics for over 140 countries from 1970-2012. We show that our exposure measures depend on market-size, cross-substitution and cost of living effects. As countries become greater economic friends in terms of welfare exposure, they become greater political friends in terms of United Nations voting and strategic rivalries.

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    Presentation Slides

  • Ernest Liu is an assistant professor in economics at Princeton University. He works on economic growth, international trade, and finance. One strand of his work uses production network theory to understand industrial policies, specifically the strong government support for upstream industries that are widely adopted in developing economies. Another strand shows how low long-term interest rates encourage market concentration and slow productivity growth. He received his Ph.D. in economics from MIT in 2017.


  • WHEN (KUALA LUMPUR TIME): Thursday, February 25, 2021 - 9:00 -10:00am
  • WHEN (ET/WASHINGTON, D.C. TIME): Wednesday, February 24, 2021 - 8:00 – 9:00pm
  • WATCH: Watch Recording