Conflict and Cooperation in International Economic Relations

Abstract

This chapter explores a number of conceptual and modeling issues that are germane to the analysis of conflict in international economic relations. Section II immediately following is devoted to a number of issues involving conflict that have been treated in the theory of international trade. The discussion focuses on departures from the free trade optimum that is the center piece of the theory of comparative advantage and the gains from trade. Also considered are conflict situations stemming from departures from full employment and external balance that figure importantly in internation macroeconomic theory. In Section III I draw on one of my research specialties, which is the use of computational models to analye international economic relations and policies. In particular, I disucss the design and implementation of the Michigan Model of World Production and Trade, which is a multi-country and multi-sector general equilibrium model of the international trading system that my Michigan colleague, Alan V. Deardorff, and I have been working with since the mid-1970s. Four applications of the Michigan Model are discussed in order to illustrate how the model has been used to provide quantitative analysis of potentially conflictual and cooperative international economic actions and policies.