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on International Trade |
| By: | Giancarlo Corsetti; Luca Dedola; Sylvain Leduc |
| Abstract: | This paper investigates the international transmission of productivity shocks in a sample of five G7 countries. For each country, using long-run restrictions, we identify shocks that increase permanently domestic labor productivity in manufacturing (our measure of tradables) relative to an aggregate of other industrial countries including the rest of the G7. We find that, consistent with standard theory, these shocks raise relative consumption, deteriorate net exports, and raise the relative price of nontradables --- in full accord with the Harrod-Balassa-Samuelson hypothesis. Moreover, the deterioration of the external account is fairly persistent, especially for the US. The response of the real exchange rate and (our proxy for) the terms of trade differs across countries: while both relative prices depreciate in Italy and the UK (smaller and more open economies), they appreciate in the US and Japan (the largest and least open economies in our sample); results are however inconclusive for Germany. These findings question a common view in the literature, that a country's terms of trade fall when its output grows, thus providing a mechanism to contain differences in national wealth when productivity levels do not converge. They enhance our understanding of important episodes such as the strong real appreciation of the dollar as the US productivity growth accelerated in the second half of the 1990s. They also provide an empirical contribution to the current debate on the adjustment of the US current account position. Contrary to widespread presumptions, productivity growth in the US tradable sector does not necessarily improve the US trade deficit, nor deteriorate the US terms of trade, at least in the short and medium run. |
| JEL: | F32 F41 F42 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12483&r=int |
| By: | Mika Wirgrén |
| Keywords: | comparative advantage, factor intensity, Baltic Sea region |
| JEL: | F10 F15 |
| Date: | 2006–09–06 |
| URL: | http://d.repec.org/n?u=RePEc:rif:dpaper:1034&r=int |
| By: | Martin Gassebner (Department of Management, Technology and Economics, ETH Zurich (Swiss Federal Institute of Technology), Switzerland); Alexander Keck (World Trade Organization (WTO). Economic Research and Statistics Division); Robert Teh (World Trade Organization (WTO). Economic Research and Statistics Division) |
| Abstract: | This paper examines the impact of major disasters on trade flows using a gravity model(170 countries, 1962-2004). As a conservative estimate, an additional disaster reduces imports on average by 0,2% and exports by 0.1%. Despite the apparent persistence of bilateral trade volumes, the impact of catastrophes depends on the democracy level and size of the affected country. In autocracies, exports and imports are significantly reduced: had Togo been struck by a major disaster in 2000, it would have lost 6.8% of its imports and 8.2% of its exports. Democratic countries' exports suffer modest decreases, while imports are hardly affected |
| Keywords: | International trade, disasters, gravity model, governance bounds analysis. |
| JEL: | F14 P52 P48 C23 |
| Date: | 2006–06 |
| URL: | http://d.repec.org/n?u=RePEc:kof:wpskof:06-139&r=int |
| By: | Linda Goldberg; Cedric Tille |
| Abstract: | The pattern of international trade adjustment is affected by the continuing international role of the dollar and related evidence on exchange rate pass-through to prices. This paper argues that a depreciation of the dollar would have asymmetric effects on flows between the United States and its trading partners. With low exchange rate pass-through to U.S. import prices and high exchange rate pass-through to the local prices of countries consuming U.S. exports, the effect of dollar depreciation on real trade flows is dominated by an adjustment in U.S. export quantities, which increase as U.S. goods become cheaper in the rest of the world. Real U.S. imports are affected less because U.S. prices are more insulated from exchange rate movements-pass-through is low and dollar invoicing is high. In relation to prices, the effects on the U.S. terms of trade are limited: U.S. exporters earn the same amount of dollars for each unit shipped abroad, and U.S. consumers do not encounter more expensive imports. Movements in dollar exchange rates also affect the international trade transactions of countries invoicing some of their trade in dollars, even when these countries are not transacting directly with the United States. |
| Keywords: | Foreign exchange rates ; Dollar, American ; Exports ; Imports - Prices ; International trade |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:255&r=int |
| By: | Linda S. Goldberg; Cédric Tille |
| Abstract: | The pattern of international trade adjustment is affected by the continuing international role of the dollar and related evidence on exchange rate pass-through into prices. This paper argues that a depreciation of the dollar would have asymmetric effects on flows between the United States and its trading partners. With low exchange rate pass-through to U.S. import prices and high exchange rate pass-through to the local prices of countries consuming U.S. exports, the effect of dollar depreciation on real trade flows is dominated by an adjustment in U.S. export quantities, which increase as U.S. goods become cheaper in the rest of the world. Real U.S. imports are affected less because U.S. prices are more insulated from exchange rate movements — pass-through is low and dollar invoicing is high. In relation to prices, the effects on the U.S. terms of trade are limited: U.S. exporters earn the same amount of dollars for each unit shipped abroad, and U.S. consumers do not encounter more expensive imports. Movements in dollar exchange rates also affect the international trade transactions of countries invoicing some of their trade in dollars, even when these countries are not transacting directly with the United States. |
| JEL: | F1 F3 F4 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12495&r=int |
| By: | Saubhik Deb (Department of Economics) |
| Abstract: | Over the last three decades, durations of recovery of output from contractionary currency crises have shown much variation both within and across countries. Using a dataset comprising of both developing and industrial countries, this paper examines the importance of economic fundamentals, international trade and liberalized capital account in determining the speed of recovery from such crises. We found that poor macroeconomic fundamentals and capital account liberalization have no significant effect on duration of recovery. However, all trade related variables were found to be significant. Our results indicate the preeminence of export led recovery. |
| Keywords: | Currency Crisis, Output Recovery, Duration Analysis |
| JEL: | F30 F41 C41 |
| Date: | 2006–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:rut:rutres:200607&r=int |
| By: | Subhayu Bandyopadhyay (Department of Economics, West Virginia University and IZA, Bonn); Howard Wall (Federal Reserve Bank of St. Louis) |
| Abstract: | With outsourcing comes a perceived tension between the competitive pressures faced by domestic firms and the effect that outsourcing has on domestic workers. To address this tension, we present a general-equilibrium model with an oligopolistic export sector and a competitive import-competeing sector. When there is a minimum wage, an outsourcing tax might be desirable and the usual profit-shifting objectives of an export subsidy are mitigated, perhaps completely, because it might lead to higher unemployment. Also, increased international competition has no effect on the level of outsourcing, but the direction of its effect on unemployment and national income depends on the relative factor intensities of the two sectors. Under wage flexibility, an outsourcing tax cannot be justified and the profit-shifting motive is the same as in a model without outsourcing. Further, if export subsidies are not possible due to WTO regulations, it is optimal to subsidize rather than to tax outsourcing. Finally, the effect of increased foreign competition on welfare depends on the relative factor intensities of the two sectors. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:wvu:wpaper:05-09&r=int |
| By: | Wim Suyker; Henri de Groot |
| Abstract: | China’s spectacular economic performance over the past few decades has had a positive net impact on the Dutch economy. Imports of cheap Chinese products have lowered Dutch inflation. Increasing Chinese exports to Europe have strengthened the role of the Netherlands as a key European distribution centre. Strongly increasing Chinese exports did not have a noticeable impact on the pace of restructuring in the Netherlands. Nor did this development lead to higher unemployment or did it cause a marked widening of Dutch income differentials. Concerning competition on world markets, Chinese export products are more complements than substitutes for Dutch export products. The Chinese economy is expected to continue its rapid expansion. Over the next five years, Chinese exports are likely to double. Increasing trade with China will continue and is expected to enhance Dutch welfare in the upcoming years and will continue to be associated with modest increases in competition and continued restructuring on some markets. |
| Keywords: | China; Dutch economy; globalisation; trade; scenario analysis; FDI |
| JEL: | F14 F23 F40 F47 J31 O40 O57 |
| Date: | 2006–09 |
| URL: | http://d.repec.org/n?u=RePEc:cpb:docmnt:127&r=int |
| By: | Subhayu Bandyopadhyay (Department of Economics, West Virginia University); Cletus C. Coughlin (Federal Reserve Bank of St. Louis); Howard J. Wall (Federal Reserve Bank of St. Louis) |
| Abstract: | This paper provides new estimates of the effects of ethnic network on U.S. exports. In line with recent research, our dataset is a panel of exports from U.S. states to 29 foreign countries. Our analysis departs from the literature in two ways, both of which show that previous estimates of the ethnic-network elasticity of trade are sensitive to the restrictions imposed on the estimated models. Our first departure is to control for unobserved heterogeneity with properly specified fixed effects, which we can do because our dataset contains a time dimension absent from previous studies. Our second departure is to remove the restriction that the network effect is the same for all ethnicities. We find that ethnic-network effects are much larger than has been estimated previously, although they are important only for a subset of countries. |
| Keywords: | Ethnic networks, state exports |
| JEL: | F10 R10 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:wvu:wpaper:05-15&r=int |
| By: | Nathan J. Ashby (Department of Economics, West Virginia University) |
| Abstract: | The effect that the components of the Economic Freedom of the World Index (Gwartney, Lawson, and Block, 2004) have on alternative measurements of well being is investigated. The objective is to observe the effect of trade policies and property rights on the quality of life using the Human Development Index (UNDP, 1995) and the Index of Human Progress (Emes and Hahn, 2001). Positive results are found with regard to the effect of property rights, free trade, and limited regulation on the quality of life. The results for property rights are robust. |
| JEL: | H10 F10 P00 O34 |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:wvu:wpaper:05-14&r=int |
| By: | Andersen, Torben M. (Department of Economics, Copenhagen Business School); Skaksen , Jan Rose (Department of Economics, Copenhagen Business School) |
| Abstract: | In this paper, we set up a two-country general equilibrium model where trade unions have wage bargaining power. We show that a decrease in trade distortions inducing further product market integration gives rise to specialization gains as well as a labour market reform effect. The implications of the specialization gains are similar to an increase in labour productivity, whereas the labour market reform effect is similar to an increase in the degree of competition in the labour market. Wages, employment and welfare increase as a result of further product market integration. It is interesting to note that the labour market reform effect of product market integration is achieved despite an increase in the wage level. |
| Keywords: | Trade frictions; wage formation; employment; welfare |
| JEL: | F15 J30 J50 |
| Date: | 2006–09–07 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cbsnow:2004_008&r=int |
| By: | Stryszowski,Piotr (Tilburg University, Center for Economic Research) |
| Abstract: | I present a model that combines the key features of a Schumpeterian growth model without scale effects and a North - South model of trade. All open economies converge to parallel growth paths because of costly technological transfer. I study the e¤ects of intellectual property rights (IPR) regimes and trade policies on the growth rate, as well as on a given country's economic performance. The requirement that trade be balanced neutralizes all potential effects of the tariff policy on the world's growth rate, and on the performance of a single country. By contrast, an improvement of a given country's IPR regime is growth neutral but improves a country's position in the world's productivity rank. These findings are shown te be consistent with observedempirical relationships. |
| Keywords: | Intellectual Property Rights;Economic growth;International Trade |
| JEL: | F1 O3 O4 |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubcen:200676&r=int |
| By: | T.Huw Edwards (Dept of Economics, Loughborough University) |
| Abstract: | This paper examines the implications of increasing globalisation of stock market ownership on the economics of protection. Current data on European stock exchanges indicate that over 30 per cent of the stock market is foreign-owned in most cases, a large increase on a couple of decades ago.This degree of foreign share-ownership is likely to change qualitatively the nature of the response of governments to FDI and support for 'domestic' firms. In particular, two worked examples, based upon duopoly theory, suggest that the level of foreign share-ownership is sufficient to render protection unattractive. |
| Keywords: | Trade, Oligopoly, Capital Ownership. |
| JEL: | F10 F12 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2006_15&r=int |
| By: | Andrew B. Bernard; J. Bradford Jensen; Peter K. Schott |
| Abstract: | This paper examines how prices set by multinational firms vary across arm's-length and related-party customers. Comparing prices within firms, products, destination countries, modes of transport and month, we find that the prices U.S. exporters set for their arm's-length customers are substantially larger than the prices recorded for related-parties. This price wedge is smaller for commodities than for differentiated goods, is increasing in firm size and firm export share, and is greater for goods sent to countries with lower corporate tax rates and higher tariffs. We also find that changes in exchange rates have differential effects on arm's-length and related-party prices; an appreciation of the dollar reduces the difference between the prices. |
| JEL: | F14 F23 H25 H26 H32 |
| Date: | 2006–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:12493&r=int |
| By: | Donato De Rosa |
| Abstract: | This paper examines the exporting behaviour of Russian manufacturers by considering the effects of firm characteristics and external conditions. Two measures of export behaviour are considered: the decision to export and the share of exports to developed markets. I find that specific exporting experience is the main determinant of both export status and destination. Contrary to studies for other countries, firm features, with the exception of firm size, are irrelevant for export status, while labour productivity is important in determining the intensity of exports to developed markets. There is also evidence that spillover effects from agglomeration have an effect on exporting. At the same time, a lower degree of regulatory capture and a less corrupt judiciary matter for orientation towards more developed markets, while regional resource dependence does not hinder manufacturing exporting. |
| Date: | 2006 |
| URL: | http://d.repec.org/n?u=RePEc:pse:psecon:2006-22&r=int |
| By: | Subhayu Bandyopadhyay (Department of Economics, West Virginia University and IZA, Bonn); Howard Wall (Federal Reserve Bank of St. Louis) |
| Abstract: | This paper analyzes the issues of immigration and outsourcing in a general-equilibrium model of international factor mobility. In our mode, legal immigration is controled through a quota, while outsourcing is determined both by the firms (in response to market conditions) and through policy-imposed barriers. A loosening of the immigration quota reduces outsourcing, enriches capitalists, leads to lossing for native workers, and raises national income. If the nation targets an exogenously determined immigration level, the second-best outsourcing tax can be either positive or negative. If in addition to the immigration target there is a wage target (arising out of income distribution concerns), an outsourcing subsidy is required. The analysis is extended to consider illigal immigration and enforcement policy. A higher legal immigration quota will lead to more illegal immigration if skilled and unskilled labor are complements in production. If the two kinds of labor are complements (substitutes), netional income increases (decreases) monotonically with the level of legal immigration. |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:wvu:wpaper:05-08&r=int |