How to smooth US-China economic relations for the benefit of the global economy: A light model of global economic governance

Abstract

The U.S.-China conflict is threatening continued global economic prosperity and this has inspired a variety of predictions and prescriptions on the future global order. This paper proposes a light model of global governance not only to form international agreements across countries but also to smooth U.S.-China relations. There are two elements of the light model: 1) A transparency-enhancing process for domestic policy making and 2) A meta-regime for global order that only requires a minimal set of initial agreement among states for managing economic conflict while encouraging cooperation. There are two main reasons behind my proposal. First, in the economic domain there fewer global public goods than is widely believed. Second, international cooperation should be restricted to true beggar-thy-neighbor policies, rather than other kinds of cross-border spillovers.