Research Seminar

Managing Foreign Pressures — Michael Porcellacchia

06 Dec 2022

12:30
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13:30
Institut für Weltwirtschaft

Speaker

Michael Porcellacchia (Kiel Institute)

Abstract

After WWII, the Soviet rise led some countries to align their policies to Soviet interests, whereas others increased their alignment with the US. Will China’s rise have a similarly polarizing effect? According to our theory, yes, and we show empirically that the process is already underway. We study how governments optimally align with the foreign powers (FPs) to manage foreign pressures. The model’s key implication is that a FP’s rise leads to rising cross-country polarization: countries that remain more exposed to the incumbent than the rising FP increase their alignment with the incumbent, whereas the others decrease it (switching to the rising FP). To test this, we construct a new yearly measure of the intensity of every government’s alignment with the FPs between 1978 and 2012. We show that the model can explain the heterogeneous dynamics in alignment with the US after the Soviet collapse and China’s rise.  

Authors

Matteo Camboni (University of Wisconsin-Madison) — Michael Porcellacchia (Kiel Institute)

Room

Lecture Hall (A-032)