Nicolas Wesseler

How much does geopolitical alignment affect international trade? We study this question using the Cold War as a natural experiment in geopolitical fragmentation. Leveraging detailed bilateral trade data from 1945–1990 and measures of ideological distance derived from United Nations General Assembly voting patterns, we document that politically distant countries faced substantially higher trade frictions. The tariff equivalent of the ideological gap between the United States and Soviet Union was approximately 25%, rising to 38% for superpower trade relationships—comparable to the trade costs of armed conflict. However, these gravity estimates confound causation with reverse causality and omitted variables. To establish causality, we exploit sudden shifts in political alignment caused by coups, revolutions, and close elections as exogenous shocks to bilateral political distance. Using event study designs, we find that successful coups that increased (decreased) political distance with trading partners led to significant reductions (increases) in bilateral trade flows, with effects of 15–20% within three to four years. While smaller than the correlational estimates, these causal effects were substantial and strongest when at least one superpower was involved. Importantly, both correlational and causal effects disappeared entirely after the Cold War ended in 1990. Our findings demonstrate that geopolitical fragmentation substantially reshapes international trade patterns, though standard gravity approaches overstate the magnitude, with important implications for understanding current trends toward economic decoupling.

What determines the success or failure of economic sanctions? Theoretical research emphasizes the anticipated costs to both sender and receiver countries, but empirical findings remain inconclusive. This study introduces a novel measure of sanction costs by developing a bilateral reliance metric, which quantifies the welfare losses incurred when trade ties are severed. The metric is derived from an international trade model incorporating multiple sectors, sector-specific trade elasticities, and intermediate production networks. Results show that while the absolute magnitude of bilateral reliance depends on the complexity of the trade model, its changes over time remain stable. Empirically, I find little evidence that the economic costs to the receiver country influence sanction success. However, there is suggestive evidence that lower costs to the sender increase the likelihood of success, a finding that holds across different model specifications, samples, and databases.

Leveraging data on firms operating in the Gulf Cooperation Council (GCC) countries and a novel measure of family ties among firm executives, we show the quantitative importance of kinship ties for female executives in settings and industries characterized by low female representation. Our findings suggest that kinship ties may bring women into executive networks, what we call "the glass web," that make up the proverbial glass ceiling which has traditionally kept women out of business leadership. We combine our executive-level data with administrative employer–employee matched data for Saudi Arabia to show that greater representation of women among firm executives, with or without a kinship tie, is associated with more gender-equal outcomes at the firm, including greater female employee share and smaller gender wage gaps.

We combine theory with historical data to examine how hegemonic competition impacts third countries. We develop a bargaining model in which two competing hegemons use direct payments (carrots) and economic power (sticks) to influence third countries. To quantify the model, we use a measure of power derived from a quantitative model of international trade as well as newly collected data on U.S. and Soviet activities in non-aligned countries during the Cold War. We show that both carrots and sticks induce alignment with a hegemon. Consistent with the model, the data exhibits a hump-shape between carrots and sticks, so that non-aligned countries can benefit from hegemonic competition when the coercive power of both hegemons is matched evenly.