Research project: Measuring the impact of geoeconomic fragmentation shocks - An empirical approach

The concept of geoeconomic fragmentation is well-established in trade economics literature, and it suggests that a more fragmented geoeconomic landscape can lead to a loss in economic welfare. While existing research has primarily relied on general equilibrium models to study the effects of fragmentation, often represented by extreme increases in trade barriers, there is an opportunity to make a valuable contribution to this field through data-driven approaches. To this end, I leverage the Global Trade Alerts database, which allows us to track the dates of trade restriction and liberalization measures across multiple countries. The dataset provides the opportunity to identify fragmentation and liberalization shocks in a narrative context, enabling us to measure how these shocks influence real economic aggregates. Moreover, the database's information on the number and types of trade measures introduced provides a more accurate measure of the severity of these shocks. In this research project, I employ a panel local projections approach to model how fragmentation shocks impact a range of advanced and emerging economies.