We have prepared a new paper for the 2025 AEA Papers and Proceedings, “The Political Economy of Geoeconomic Power.” Great powers are increasingly using their economic and financial strength for geopolitical aims. This rise of "geoeconomics" has the potential to reshape the international trade and financial system. This paper examines the role of domestic political economy forces in determining a government's ability to project geoeconomic power abroad. We also discuss the role that persuading or coercing foreign governments plays in projecting geoeconomic power around the world.
Visit our research page to learn more.
Our paper “Internationalizing like China” is now forthcoming in the American Economic Review. We investigate the foreign holdings of Renminbi bonds and provide a theoretical framework to understand China's strategy to internationalize its currency. For more details, read the paper or a non-technical brief.
Selected media coverage: Bloomberg | The Economist | Business Insider | Bloomberg
Stanford Impact Labs (SIL) has announced a $2.5 million investment over five years to support GCAP’s data-driven, solutions-focused efforts to improve international economic policy. Learn more here.
Our review article “Global Capital Allocation” by Sergio Florez-Orrego, Matteo Maggiori, Jesse Schreger, Ziwen Sun, and Serdil Tinda has been published in the Annual Review of Economics, Volume 16, 2024.
Our paper “Corporate Debt Structure with Home and International Currency Bias” by Matteo Maggiori, Brent Neiman, and Jesse Schreger has been published in the IMF Economic Review, August 2024.
The agenda for the the 2nd Annual GCAP Conference is now available. It can be viewed here or on the GCAP conference event website.
“Jesse Schreger, an economist at Columbia Business School whose work Miran cites, said the concept of a new currency accord is difficult to reconcile with the punishment Trump has inflicted on Mexico and Canada…
‘There’s a fundamental coherence to this. There is a plan laid out here. And because everyone is grasping for what is Trump doing, this is the document people are reading,’ Schreger said. ‘But the problem is it’s not what the president is implementing. There’s nothing in there that says we should start by going after Canada and Mexico. Instead, the document emphasizes building a coalition to coordinate trade efforts against China.’”
“Indeed, this is probably the only sensible thing for most countries to do, according to the Global Capital Allocation Project (a research site on hegemonic economic power that is replete with handy charts showing which countries are most vulnerable to American and Chinese hegemonic power). Diversifying inputs, this notes, is crucial if countries are to increase “economic security” in a capricious world.”
”After all, as a new report from the Global Capital Allocation Project (a joint hub between Stanford, Chicago and Columbia universities) notes, it is China that actually has hegemonic power over global manufacturing, via its dominance of many supply chains.
Where America does have hegemonic power, however, is in finance, via the dollar-based system. Or, as the GCAP says: ‘Since the US-led coalition controls a dominant share of global financial services, often exceeding 80 or 90 per cent in many countries, this near-total control of the global financial system enables the US coalition to frequently use finance as a tool of coercion.’”
”`We estimate that US geoeconomic power relies on financial services, while Chinese power relies on manufacturing,’ says Matteo Maggiori, an economist, in a new paper he has co-written on these hegemonic power politics.”
“Making the yuan a global currency is at the center of Chinese President Xi Jinping's ambition to create a ‘modern financial system with Chinese characteristics.’ That goal has faced challenges, however, including capital controls in China and the currency's limited convertibility. Matteo Maggiori, Moghadam Family Professor of Finance at Stanford Graduate School of Business, and Bloomberg Intelligence Chief Asia FX and Rates Strategist Stephen Chiu speak on ‘Bloomberg: The China Show.’”
The ECB biennial report on financial integration and structure in the Euro Area uses GCAP’s research showing that integration has been lower and different than previously understood.
