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Freund, Caroline

Macroeconomics Trade & Investment
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Macroeconomics Trade & Investment
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Last updated: November 1, 2023
Biography
Caroline Freund is Director of Trade, Regional Integration and Investment Climate. Previously she was a Senior Fellow at the Peterson Institute for International Economics.  She has also worked as Chief Economist for the Middle East and North Africa at the World Bank, after working for nearly a decade in the international trade unit of the research department.  Freund began her career in the international finance division of the Federal Reserve Board and spent a year visiting the research department of the IMF.  She has published extensively in academic journals and is the author of Rich People Poor Countries: The Rise of Emerging Market Tycoons and their Mega Firms.  She is a US national and received a PhD in economics from Columbia University.
Citations 243 Scopus

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When Elephants Make Peace: The Impact of the China-U.S. Trade Agreement on Developing Countries

2020-03, Maliszewska, Maryla, Freund, Caroline, Mattoo, Aaditya, Ruta, Michele, Mattoo, Aaditya

Should the China-U.S. trade agreement prompt relief because it averts a damaging trade war or concern because selective preferential access for the United States to China's markets breaks multilateral rules against discrimination? The answer depends on how China implements the agreement. Simulations from a computable general equilibrium model suggest that the United States and China would be better off under this "managed trade" agreement than if the trade war had escalated. However, compared with the policy status quo, the deal will make everyone worse off except the United States and its input-supplying neighbor, Mexico. Real incomes in the rest of world would decline by 0.16 percent and in China by 0.38 percent because of trade diversion. China can reverse those losses if, instead of granting the United States privileged entry, it opens its market for all trading partners. Global income would be 0.6 percent higher than under the managed trade scenario, and China's income would be nearly 0.5 percent higher. By creating a stronger incentive for China to open its markets to all, an exercise in bilateral mercantilism has the potential to become an instrument for multilateral liberalization.