Events

Date: 29 May 2026   Time: 12:30 - 13:30

Location: MB-503

This paper provides a comprehensive macroeconomic assessment of how geopolitical friction and diplomatic cooperation shape international trade patterns. Utilizing high-frequency event data from the Integrated Crisis Early Warning System (ICEWS) within a theory-consistent structural gravity framework, we analyze global bilateral trade flows over the period 1995–2022. Our empirical design accounts for traditional trade barriers alongside structural sectoral complementarity via a Partner Similarity Index. The global empirical evidence reveals three profound systemic dynamics. First, we document a fundamental structural cleavage between sectors, demonstrating that while agricultural trade is highly sensitive to diplomatic words and rhetoric, industrial and non-agricultural manufacturing is historically driven by physical, material actions. Second, we identify the 2022 geopolitical crisis as an unprecedented structural break; while global industrial supply chains exhibited notable resilience against localized frictions prior to 2022, the recent trade collapse was paradoxically driven by a massive escalation in verbal hostility, pointing to a powerful anticipatory uncertainty effect that severed international commercial ties before physical disruptions could materialize. Third, a granular product-level analysis exposes significant masking effects, illustrating that aggregate sector estimates conceal extreme heterogeneity, particularly within infrastructure-dependent and technologically sensitive industries. Overall, the paper contributes a novel empirical narrative to the literature on geoeconomic fragmentation and global value chain vulnerabilities.