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This paper studies the potential long-term effects of three illustrative scenarios using a multi-sector computable general equilibrium (CGE) trade model calibrated to 165 countries. The first scenario estimates effects from potential U.S. auto tariffs. The second analyzes a ‘transactional deal’ between the U.S. and China to close their bilateral deficit. The third, in the absence of such a deal, considers a potential escalation in bilateral tariffs between the two countries. Some common features emerge across all three scenarios: the overall effects on GDP tend to be relatively small albeit negative in most cases, including for the U.S. However, sectoral disruptions and positive and negative spillovers to highly exposed ‘by-stander’ economies can be large. There is also heterogeneity at the subnational level in the U.S. -- richer states tend to benefit from certain scenarios. We discuss how estimated impacts depend on the extent to which the U.S. is able to re-shore production in protected sectors. These results can usefully complement estimates obtained through macroeconomic models that are better suited to capture dynamic effects, such as those stemming from trade policy uncertainty. More generally, our results both underscore the value of adhering to the existing levels of liberalization, and highlight the risks associated with a fragmentation or even a complete breakdown of the trading system.

International trade --- Mathematical models. --- Exports and Imports --- Taxation --- General Equilibrium and Disequilibrium: Input-Output Tables and Analysis --- Computable and Other Applied General Equilibrium Models --- Trade: General --- Models of Trade with Imperfect Competition and Scale Economies --- Trade Policy --- International Trade Organizations --- Public finance & taxation --- International economics --- Tariffs --- Exports --- Imports --- Trade tensions --- Trade barriers --- Taxes --- Tariff --- Commercial policy --- United States

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In this paper we seek to answer the question of how the patterns of bilateral trade are altered by rising trade policy uncertainty (TPU). Specifically, we investigate whether geopolitical alignments between country pairs determine how bilateral trade flows react during periods of greater uncertainty. Using a structural gravity framework augmented with a text-based TPU index and a geopolitical distance measure based on UN General Assembly voting records, we find a significant negative effect of the latter when TPU is elevated, indicating a shift to trading among “friends” in uncertain times.

Macroeconomics --- Economics: General --- Exports and Imports --- Information, Knowledge, and Uncertainty: General --- Neoclassical Models of Trade --- Trade Policy --- International Trade Organizations --- International Relations and International Political Economy: General --- Empirical Studies of Trade --- Economic & financial crises & disasters --- Economics of specific sectors --- International economics --- Trade policy --- International trade --- Trade balance --- Plurilateral trade --- Trade tensions --- Trade barriers --- Currency crises --- Informal sector --- Economics --- Commercial policy --- Balance of trade

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International cooperation, economic and financial integration, and technological progress have delivered enormous benefits across the globe during the past decades. Yet, in many countries, these benefits have not been shared adequately to prevent eroding trust in institutions and weakening support for the global system that has made these gains possible.

Exports and Imports --- Macroeconomics --- Public Finance --- Criminology --- Policy Objectives --- Policy Designs and Consistency --- Policy Coordination --- Illegal Behavior and the Enforcement of Law --- Trade Policy --- International Trade Organizations --- Debt --- Debt Management --- Sovereign Debt --- Institutions and the Macroeconomy --- Corporate crime --- white-collar crime --- International economics --- Public finance & taxation --- Integrated Policy Framework --- Illicit financial flows --- Trade tensions --- Public debt --- Structural reforms --- Crime --- International trade --- Macrostructural analysis --- Economic policy --- Money laundering --- Debts, Public --- Japan

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The Fund has a range of modalities and tools to cover spillovers. However, there remains scope to enhance synergies between global and country-specific spillover coverage and to foster cross-country dialogue. Practical guidance and enhanced information-sharing would also allow for more systematic surveillance of spillovers. Furthermore, the COVID-19 pandemic has underscored the need to continue expanding the research frontier covering new spillovers and channels and developing new tools and data sets. Therefore, filling these remaining gaps in the Fund’s spillover work would allow for a more coordinated and evenhanded surveillance of spillovers.

Money and Monetary Policy --- Political Economy --- Macroeconomics --- Diseases: Contagious --- Emigration and Immigration --- Finance: General --- Exports and Imports --- Monetary Policy --- Externalities --- Health Behavior --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- International Migration --- General Financial Markets: Government Policy and Regulation --- Trade Policy --- International Trade Organizations --- Monetary economics --- Political economy --- Infectious & contagious diseases --- Migration, immigration & emigration --- Finance --- International economics --- Monetary policy --- Spillovers --- Financial sector policy and analysis --- COVID-19 --- Health --- International monetary system --- Money --- Migration --- Population and demographics --- Financial sector stability --- Trade tensions --- International trade --- Economics --- International finance --- Communicable diseases --- Emigration and immigration --- Financial services industry --- China, People's Republic of

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This 2019 Article IV Consultation with People’s Republic of China highlights that after the slowdown in 2018, reflecting financial regulatory strengthening and softening external demand, growth stabilized in early 2019. Financial deleveraging and reduced interconnectedness between banks and non-banks have helped contain the build-up of financial risks, but vulnerabilities remain elevated and progress on rebalancing is mixed. While a moderate slowdown is expected in 2019, uncertainty around trade tensions remains high and risks are tilted to the downside. Successfully shifting from high-speed to high-quality growth in a highly uncertain environment requires stabilizing the economy amid rising trade tensions while continuing with deleveraging and strengthening rebalancing. It is important to improve external policies and frameworks by working constructively with trading partners to better address shortcomings and enable a trading system that can more readily adapt to economic changes in the international environment.

Economic indicators. --- Business indicators --- Economic indicators --- Indicators, Business --- Indicators, Economic --- Leading indicators --- Economic history --- Quality of life --- Economic forecasting --- Index numbers (Economics) --- Social indicators --- Banks and Banking --- Macroeconomics --- Money and Monetary Policy --- Public Finance --- Statistics --- Exports and Imports --- Debt --- Debt Management --- Sovereign Debt --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Data Collection and Data Estimation Methodology --- Computer Programs: Other --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Nonprofit Organizations and Public Enterprise: General --- Trade Policy --- International Trade Organizations --- National Government Expenditures and Related Policies: General --- Public finance & taxation --- Monetary economics --- Econometrics & economic statistics --- Banking --- Public ownership --- nationalization --- International economics --- Public debt --- Credit --- Public enterprises --- Expenditure --- Money --- Trade tensions --- International trade --- Economic sectors --- Debts, Public --- Banks and banking --- Finance --- Government business enterprises --- Expenditures, Public --- China, People's Republic of