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Assessing consequences of global trade wars for world economies: Tools and forecasts

Author

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  • Mashkova, A.

    (Orel State University named after I.S. Turgenev, Orel, Russia
    Central Economics and Mathematics Institute, Russian Academy of Sciences, Moscow, Russia)

  • Bakhtizin, A.

    (Central Economics and Mathematics Institute, Russian Academy of Sciences, Moscow, Russia)

Abstract

In the context of growing global political tension and establishing the world trade barriers, the urgent task is to develop the new tools for assessing their consequences. In this paper we present the agent-based model of trade wars, considering organizations in different countries generated using initial statistical data of the countries' industries. Simulation determines changes in output and supplies of organizations under trade restrictions. Results of calculations on the developed model and comparison of various model complexes' forecasts with real consequences of trade wars between the USA and China in 2018 and Western countries against Russia in 2022 are presented. Four scenarios were considered: (1) baseline, (2) new mutual restrictions between China and the USA, (3) more serious sanctions against China and Russia by the USA and the EU, (4) global trade war. In the second scenario deviation GDP of the USA and China from the baseline scenario does not exceed 0.5%. In the third scenario, the number of countries involved is expanding, and the fall in their GDP is expected at the level of 0.7-1.0%. In the fourth scenario, the entire world economy experiences a serious slowdown, and the EU countries are facing the most severe consequences, going into recession.

Suggested Citation

  • Mashkova, A. & Bakhtizin, A., 2024. "Assessing consequences of global trade wars for world economies: Tools and forecasts," Journal of the New Economic Association, New Economic Association, vol. 62(1), pages 12-30.
    • Handle: RePEc:nea:journl:y:2024:i:62:p:12-30
    DOI: 10.31737/22212264_2024_1_12-30
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    References listed on IDEAS

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    1. Angel Aguiar & Badri Narayanan & Robert McDougall, 2016. "An Overview of the GTAP 9 Data Base," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 1(1), pages 181-208, June.
    2. Erwin Corong & Thomas Hertel & Robert McDougall & Marinos Tsigas & Dominique van der Mensbrugghe, 2017. "The Standard GTAP Model, version 7," Journal of Global Economic Analysis, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University, vol. 2(1), pages 1-119, June.
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