## Playing with Blocs: Quantifying Decoupling

_IMF Working Papers, December 12, 2025_

## Source details

**Canonical URL:** [Playing with Blocs: Quantifying Decoupling](https://www.imf.org/en/publications/wp/issues/2025/12/12/playing-with-blocs-quantifying-decoupling-572576)

## Other formats

- [Markdown version](/en/publications/wp/issues/2025/12/12/playing-with-blocs-quantifying-decoupling-572576/index.md)
- [Structured JSON version](/en/publications/wp/issues/2025/12/12/playing-with-blocs-quantifying-decoupling-572576/index.json)
- [Bundle manifest](/en/publications/wp/issues/2025/12/12/playing-with-blocs-quantifying-decoupling-572576/bundle-manifest.json)

## Bibliographic details
- 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

---

### Research question and approach
- 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:
  - those shifting toward the US bloc,
  - those shifting toward the China bloc,
  - those with no change in alignment.

### Empirical findings on trade costs and alignment
- 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.

### Quantitative model and simulated real income effects
- Use a quantitative model to compute real income effects of the observed reconfiguration of trade costs.
- Model simulations suggest:
  - Real income in the median country in the world rose by 0.4-0.6%.
  - Real income in the median country within each bloc rose by 0.4-0.6%.

### Policy-relevant interpretation
- 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.

### Publication and metadata
- 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

*Source: IMF Working Paper "Playing with Blocs: Quantifying Decoupling", December 12, 2025.*

---

## Content in this bundle

- **Working Paper**
  - [Working Paper (Markdown version)](/-/media/files/publications/wp/2025/english/wpiea2025263-source-pdf.pdf.md){rel="alternate" type="text/markdown"}
  - [Working Paper (PDF)](/-/media/files/publications/wp/2025/english/wpiea2025263-source-pdf.pdf){rel="external" type="application/pdf"}

---

_Source: https://www.imf.org/en/publications/wp/issues/2025/12/12/playing-with-blocs-quantifying-decoupling-572576_