{
  "title": "Playing with Blocs: Quantifying Decoupling",
  "publication": "IMF Working Papers, December 12, 2025",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2025/12/12/playing-with-blocs-quantifying-decoupling-572576",
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  "summary": "We adopt a data-driven approach to measure trade decoupling over 2015-2023. Countries are classified into three groups according to changes in their data-inferred trade costs with the US and China: those shifting toward the US bloc, those shifting toward the China bloc, and those with no change in a",
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    {
      "heading": "Research question and approach",
      "content": "- Adopt a data-driven approach to measure trade decoupling over 2015-2023.\n- Classify countries into three groups according to changes in their data-inferred trade costs with the US and China:\n  - those shifting toward the US bloc,\n  - those shifting toward the China bloc,\n  - those with no change in alignment."
    },
    {
      "heading": "Empirical findings on trade costs and alignment",
      "content": "- Cross-bloc trade costs rose over 2015-2023.\n- Within-bloc trade costs fell over the same period.\n- Average trade costs fell marginally, consistent with \"global trade resilience.\"\n- The analysis documents a modest amount of bloc misalignment: the median country would be better off switching blocs."
    },
    {
      "heading": "Quantitative model and simulated real income effects",
      "content": "- Use a quantitative model to compute real income effects of the observed reconfiguration of trade costs.\n- Model simulations suggest:\n  - Real income in the median country in the world rose by 0.4-0.6%.\n  - Real income in the median country within each bloc rose by 0.4-0.6%."
    },
    {
      "heading": "Policy-relevant interpretation",
      "content": "- The documented pattern—rising cross-bloc trade costs combined with falling within-bloc trade costs and marginally lower average trade costs—implies that trade decoupling may not follow trade-driven economic interests.\n- The finding that the median country would be better off switching blocs points to a modest degree of bloc misalignment relative to countries' trade-driven welfare incentives."
    },
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      "heading": "Publication and metadata",
      "content": "- Authors: Barthélémy Bonadio, Zhen Huo, Elliot Kang, Andrei A Levchenko, Nitya Pandalai-Nayar, Hiroshi Toma, Petia Topalova\n- Date: December 12, 2025\n- Series: IMF Working Papers, Working Paper No. 2025/263\n- Pages: 48\n- DOI: https://doi.org/10.5089/9798229034029.001\n- ISBN: 9798229034029\n- ISSN: 1018-5941\n- Subjects: Income, International trade, National accounts, Plurilateral trade, Trade agreements, Trade balance\n- Keywords: Baltics, bloc misalignment, decoupling, fragmentation, Global, global value chains, IMF working papers, Income, Plurilateral trade, switching bloc, Trade agreements, Trade balance, trade cost, trade costs\n\nSource: IMF Working Paper \"Playing with Blocs: Quantifying Decoupling\", December 12, 2025.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2025/12/12/playing-with-blocs-quantifying-decoupling-572576"
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    "Authors: Barthélémy Bonadio, Zhen Huo, Elliot Kang, Andrei A Levchenko, Nitya Pandalai-Nayar, Hiroshi Toma, Petia Topalova",
    "Published: December 12, 2025",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798229034029.001",
    "Adopt a data-driven approach to measure trade decoupling over 2015-2023.",
    "Classify countries into three groups according to changes in their data-inferred trade costs with the US and China:",
    "Cross-bloc trade costs rose over 2015-2023.",
    "Within-bloc trade costs fell over the same period.",
    "Average trade costs fell marginally, consistent with \"global trade resilience.\"",
    "The analysis documents a modest amount of bloc misalignment: the median country would be better off switching blocs.",
    "Use a quantitative model to compute real income effects of the observed reconfiguration of trade costs.",
    "Model simulations suggest:",
    "The documented pattern—rising cross-bloc trade costs combined with falling within-bloc trade costs and marginally lower average trade costs—implies that trade decoupling may not follow trade-driven economic interests.",
    "The finding that the median country would be better off switching blocs points to a modest degree of bloc misalignment relative to countries' trade-driven welfare incentives.",
    "Authors: Barthélémy Bonadio, Zhen Huo, Elliot Kang, Andrei A Levchenko, Nitya Pandalai-Nayar, Hiroshi Toma, Petia Topalova",
    "Date: December 12, 2025",
    "Series: IMF Working Papers, Working Paper No. 2025/263",
    "Pages: 48",
    "DOI: https://doi.org/10.5089/9798229034029.001",
    "ISBN: 9798229034029",
    "ISSN: 1018-5941",
    "Subjects: Income, International trade, National accounts, Plurilateral trade, Trade agreements, Trade balance",
    "Keywords: Baltics, bloc misalignment, decoupling, fragmentation, Global, global value chains, IMF working papers, Income, Plurilateral trade, switching bloc, Trade agreements, Trade balance, trade cost, trade costs",
    "**Working Paper**"
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