Jesse Schreger (Columbia), "Geoeconomic Pressure"
Geoeconomic pressure—the use of existing economic relationships by governments to achieve geopolitical or economic goals—is a prominent feature of global power dynamics. This paper introduces a methodology using large language models (LLMs) to systematically identify the application of and response to geoeconomic pressure from large textual corpora. We classify which governments apply pressure to which foreign targets, using which instruments, firms, and products. We demonstrate that firms affected by tariffs respond primarily with price changes whereas firms affected by export controls respond disproportionately by investing in research and development. We document significant heterogeneity in how firms respond to pressure based on whether their home government is applying the pressure, whether their home country is the recipient of the pressure, or whether they are based in an affected third party country. Finally, we quantify the degree of measurement uncertainty generated by the LLM-based analysis by comparing the classifications across multiple open-weight models as well as considering a wide range of variations of our prompts.