nep-int New Economics Papers
on International Trade
Issue of 2008‒07‒14
eight papers chosen by
Alessia A. Amighini
University Amedeo Avogadro

  1. Skill Upgrading and the Real Exchange Rate By Roberto Alvarez; Ricardo Lopez
  2. Exports and exchange rate : a firm-level investigation By Sarah Guillou
  3. Europe and Globalization, 1870-1914 By Guillaume Daudin; Matthias Morys; Kevin H. O’Rourke
  4. Testing Creative Destruction in an Opening Economy : the Case of the South African Manufacturing Inudstries By Philippe Aghion; Johannes Fedderke; Peter Howitt; Chandana Kularatne; Nicola Viegi
  5. Trade and Empire, 1700-1870 By Guillaume Daudin; Kevin H. O’Rourke; Leandro Prados de la Escosura
  6. Civil Wars and International Trade By Philippe Martin; Thierry Mayer; Mathias Thoenig
  7. Trade as a Wage Disciplining Device By Damiaan Persyn
  8. Trade and quality: theoretical and empirical evidence for the euro zone By Massimiliano Serati

  1. By: Roberto Alvarez (Central Bank of Chile); Ricardo Lopez (Indiana University Bloomington)
    Abstract: This paper examines the effect of changes in the real exchange rate on skill upgrading in the case of Chile. Using plant-level data from the manufacturing sector we find that a real depreciation increases the share of skilled workers in the total wage bill in exporters but not in non-exporters. This result suggests that depreciations or, more generally, increases in export profitability, may induce exporters to adopt more skilled-intensive technologies. This finding gives support to recent models of trade that highlight the possible effect of the real exchange rate on skill upgrading and wage inequality. This paper also finds that real depreciations increase the probability of exporting and the export intensity of plants that export, suggesting that these two channels may explain why changes in the real exchange rate may affect wages.
    JEL: F14 F16 O30 O54
    Date: 2008–07
  2. By: Sarah Guillou (Observatoire Français des Conjonctures Économiques)
    Date: 2008
  3. By: Guillaume Daudin (Observatoire Français des Conjonctures Économiques); Matthias Morys (University of Oxford); Kevin H. O’Rourke (Trinity College Dublin)
    Date: 2008
  4. By: Philippe Aghion; Johannes Fedderke; Peter Howitt; Chandana Kularatne; Nicola Viegi
    Date: 2008
  5. By: Guillaume Daudin (Observatoire Français des Conjonctures Économiques); Kevin H. O’Rourke (Trinity College Dublin); Leandro Prados de la Escosura (Universidad Carlos III de Madrid)
    Date: 2008
  6. By: Philippe Martin (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I); Thierry Mayer (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Mathias Thoenig (Université de Genève - Université de Genève)
    Abstract: This article analyzes empirically the relationship between civil wars and international trade. We first show that trade destruction due to civil wars is very large and persistent and increases with the severity of the conflict. We then identify two effects that trade can have on the risk of civil conflicts: It may act as a deterrent if trade gains are put at risk during civil wars, but it may also act as an insurance if international trade provides a substitute to internal trade during civil wars. We find support for the presence of these two mechanisms and conclude that trade openness may deter the most severe civil wars (those that destroy the largest amount of trade) but may increase the risk of lower-scale conflicts.
    Date: 2008–04
  7. By: Damiaan Persyn
    Abstract: We estimate the relationship between wages, labour productivity and foreign wages using long sector-level time series for a selection of EU member states. Our aim is to determine how trade liberalisation has affected the scope for union wage demands. It is shown that as trade costs decline, wages become more responsive to labour productivity but -maybe counterintuitively- less responsive to foreign wages. We show this observations are as expected when wages are set by a monopoly union with a preference for wages relative to employment. Trade liberalisation then leads to more wage discipline, forcing unions to moderate wage demands and setting wages more in line with labour productivity. Foreign wages simultaneously become less relevant to the optimal union wage demand.
    Keywords: Unions, globalisation, economic geography, factor price equalisation
    JEL: J50 J31 F16
    Date: 2008
  8. By: Massimiliano Serati (Cattaneo University (LIUC))
    Abstract: Since the contribution of Linder (1961) product quality is considered as a factor potentially boosting exports, especially for the most industrialized countries. However, being quality difficult to be measured, the macro-econometric studies on its role are not numerous and have not produced clear-cut results. In this paper we shed some light on the theoretical and empirical impact of product quality on the export performance of the EU-12 area. To avoid problems of mis-specification and endogeneity usual in the empirical literature on trade equations, we model exports as jointly endogenous with GDP, inflation and exchange rate. For this purpose we modify and enlarge a New Keynesian open economy model à la Clarida, Galì and Gertler (2001) to adapt it to a large open economy. Sign restrictions, based on theoretical impact multipliers, enable the identification of quality as one of the structural shocks of the corresponding Bayesian VAR, avoiding drawbacks connected to the choice of an incomplete, partial or biased proxy of the phenomenon. The empirical evidence shows that a quality upgrade might reinforce the EU competitiveness leading to an improvement of the current account, without any unfavourable effect on terms of trade.
    Date: 2008–02

This nep-int issue is ©2008 by Alessia A. Amighini. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.