12/03/2026 - 12:45 - Doyen 22

Mario Larch

(University of Bayreuth)

will give a presentation on 

Inverted Gravity: New Targets, Same Old Models?

Abstract 

Traditional international trade analyses aim at evaluating the effects of policy changes on trade and welfare (e.g., the impact of the 2022 sanctions on Russia), and there are well-established tools (e.g., structural gravity) to perform such analyses. Recently, the need for trade policy intervention has often been motivated by outcome targets (e.g., resilience, strategic autonomy, and balanced trade). However, there are no good tools to quantify/characterize the policies that are needed to achieve the desired outcomes (e.g., what is the tariff change between Russia and China that would offset the impact of the sanctions on Russia in terms of trade and/or welfare). The main contribution of this paper is to propose such tools. A byproduct of our methods is that they also deliver novel indexes of bilateral trade costs that take general equilibrium linkages into account.

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