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Safeguarding Free Trade in Recessions: - A Game-Theoretic Interpretation of the Multilateral Policy Response to the 2008 Crisis
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2011 (English)Independent thesis Basic level (degree of Bachelor), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

I propose a simple approach to trade cooperation in economic shocks. A two-country, two-good trade model provides a stage setting. In a dynamic model, international demand for traded goods is allowed to be subject to sudden shocks. Numerical simulations predict that negative, sustained demand shocks may spark trade wars. Negative demand shocks that are short relative to the period it takes for governments to detect violations render instead incentives in free trade agreements more robust. I find that the multilateral policy response to the 2008 crisis - to temporarily enhance multilateral information mechanisms - may have worked to strengthen this effect.

Abstract [sv]

I den här uppsatsen analyseras incitament i handelsavtal under ekonomiska chocker utifrån grundläggande spelteori. Jag finner att långa lågkonjunkturer påverkar incitamenten på ett sätt som kan få parterna att frångå avtalet och starta ett tullkrig. Korta lågkonjunkturer stärker i stället incitamenten i avtalet. Jag argumenterar för att brytpunkten mellan en tullkrigsutlösande lågkonjunktur och en incitamentstärkande lågkonjunktur kan regleras genom att tillfälligt stärka informationsmekanismerna kring avtalet och att de multilaterala åtgärderna i krisens spår kan ha haft den effekten.

Place, publisher, year, edition, pages
2011. , p. 39
Keyword [en]
G20, WTO, terms-of-trade theory, game theory, trade cooperation, trade agreements
Keyword [sv]
WTO, G20, handel, lågkonjunkturer, spelteori, handelsteori, handelsavtal
National Category
Economics
Identifiers
URN: urn:nbn:se:uu:diva-144966OAI: oai:DiVA.org:uu-144966DiVA, id: diva2:395108
Uppsok
Social and Behavioural Science, Law
Supervisors
Examiners
Available from: 2011-02-22 Created: 2011-02-04 Last updated: 2011-02-22Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
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Output format
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