Macro Musings with David Beckworth Matteo Maggiori and Jesse Schreger on Geoeconomics and its Policy Implications
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Dec 4, 2023 Matteo Maggiori and Jesse Schreger, along with David Beckworth, discuss geoeconomics and its policy implications. They explore the basics and core concepts of geoeconomics, the key elements of a global hegemon, and real world examples. They also discuss China's influence on the entertainment industry, debt repayment, US financial sanctions, and the future of geoeconomics research and policy agenda.
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Geoeconomics Defined
- Geoeconomics uses existing trade and finance ties as a tool to achieve geopolitical and economic goals.
- It sits between blunt military force and full contractual enforcement, leveraging incomplete contracts and multiple relationships.
Power Comes From Multiple Ties
- Hegemons gain power by threatening coordinated withdrawal across multiple economic relationships.
- Jointly threatening loans, exports, or market access creates leverage absent in isolated disputes.
Hegemonic Power: Good And Bad
- Geoeconomic power can be both positive and negative for the global economy.
- Hegemons enable activities (like infrastructure) that markets won't provide, yet they also extract transfers and impose distortions.