nep-int New Economics Papers
on International Trade
Issue of 2013‒07‒28
seven papers chosen by
Alessia A. Amighini
Universita' Amedeo Avogadro

  1. Exporting and Labor Demand: Micro-Level Evidence from Germany By Lichter, Andreas; Peichl, Andreas; Siegloch, Sebastian
  2. Export price adjustments under financial constraints. By Angelo Secchi; Federico Tamagni; Chiara Tomasi
  3. Trade and Insecure Resources: Implications for Welfare and Comparative Advantage By Garfinkel , Michelle; Skaperdas, Stergios; Syropoulos, Constantinos
  4. Competition, Markups, and the Gains from International Trade By Edmond, Chris; Midrigan, Virgiliu; Xu, Daniel Yi
  5. Preferential Trade Agreements and Welfare: General Equilibrium Analysis By Juyoung Cheong; Shino Takayama; Terence Yeo
  6. Protection for Sale, Monopolistic Competition and Variable Markups By Marvasi, Enrico
  7. Does Agricultural Productivity Growth Promote a Dynamic Comparative Advantage in the Manufacturing Sector? By Kamei, Keita

  1. By: Lichter, Andreas (IZA); Peichl, Andreas (IZA); Siegloch, Sebastian (IZA)
    Abstract: It is widely believed that globalization increases the volatility of employment and decreases the bargaining power of workers. One mechanism explaining this relationship is given by the long-standing Hicks-Marshall laws of derived demand: with international trade increasing competition and therefore the price elasticity of product demand, exporters are predicted to have higher labor demand elasticities. Our paper is the first to test this relationship empirically by analyzing the effects of exporting on firms' labor demand. Using rich, administrative linked employer-employee panel data from Germany, we explicitly control for issues of self-selection and endogeneity in the firms' decisions to export by providing fixed effects and instrumental variable estimates. Our results show that exporting indeed has a positive and significant effect on the own-wage elasticity of unconditional labor demand, due to higher price elasticities of product demand.
    Keywords: trade, export, labor demand, wage elasticity, microdata, Germany
    JEL: F16 J23
    Date: 2013–07
  2. By: Angelo Secchi (Centre d'Economie de la Sorbonne - Paris School of Economics and LEM Scuola Superiore Sant'Anna); Federico Tamagni (Institute of Economics, LEM Scuola Superiore Sant'Anna); Chiara Tomasi (Università di Trento and LEM Scuola Superiore Sant'Anna)
    Abstract: By exploring a rich dataset that links international trade transactions to a panel of Italian manufacturing firms, this paper provides new evidence on the role of financial constraints on price variations across exporting firms. After controlling for relevant firm characteristics and potential endogeneity of financial constraints, we find that constrained firms charge higher prices than unconstrained firms exporting in the same product-destination market. The positive price difference increases with the degree of horizontal differentiation of products, while it is smaller for vertically differentiated products, where there is more scope for quality adjustment. Our results are consistent with a scenario where constrained firms exploit demand rigidities to push up their prices to sustain revenues and keep operations going in the attempt to escape the constraints.
    Keywords: Financial constraints, export prices, horizontal and vertical differentiation, quality adjustment.
    JEL: F10 F14 F36 G20 G32 L25
    Date: 2013–07
  3. By: Garfinkel , Michelle (Department of Economics University of California-Irvine); Skaperdas, Stergios (Department of Economics University of California-Irvine); Syropoulos, Constantinos (Department of Economics & International Business LeBow College of Business Drexel University)
    Abstract: We augment the canonical neoclassical model of trade to allow for interstate disputes over land, oil, water, or other resources. Different trade regimes imply different costs of such disputes in terms of arming. Depending on world prices, free trade can intensify arming to such an extent that the additional security costs swamp the traditional gains from trade and thus render autarky more desirable for one or all rival states. Furthermore, contestation of resources can reverse a country's apparent comparative advantage relative to its comparative advantage in the absence of conflict. And, where such conflict is present, comparisons of autarkic prices to world prices could be inaccurate predictors of trade patterns.
    Keywords: trade openness; property rights; interstate disputes; conflict; security policies.
    JEL: D30 D70 D72 D73 F02 F10
    Date: 2012–07–08
  4. By: Edmond, Chris (Department of Economics, University of Melbourne, Australia); Midrigan, Virgiliu (Federal Reserve Bank of Minneapolis, USA and NBER); Xu, Daniel Yi (Department of Economics, Duke University, Durham, USA)
    Abstract: We study the gains from trade in a model with endogenously variable markups. We show that the pro-competitive gains from trade are large if the economy is characterized by (i) extensive misallocation, i.e., large inefficiencies associated with markups, and (ii) a weak pattern of cross-country comparative advantage in individual sectors. We find strong evidence for both of these ingredients using producer-level data for Taiwanese manufacturing establishments. Parameterizations of the model consistent with this data thus predict large pro-competitive gains from trade, much larger than those in standard Ricardian models. In stark contrast to standard Ricardian models, data on changes in trade volume are not sufficient for determining the gains from trade.
    Keywords: Productivity, misallocation, comparative advantage, intra-industry trade
    JEL: F1 O4
    Date: 2013–07
  5. By: Juyoung Cheong (School of Economics, The University of Queensland); Shino Takayama (School of Economics, The University of Queensland); Terence Yeo (School of Economics, The University of Queensland)
    Abstract: This paper studies the welfare effects of a preferential trade agreement (PTA) within a general equilibrium framework following Eaton and Kortum (2002) and conducts a comparative statics analysis of the equilibrium. The paper provides a closed-form analysis with no assumption of balanced trade and analyzes how a PTA affects the price level, trade flows, and welfare of both member and nonmember countries. We show that a PTA decreases the price level of not only member but also nonmember countries. We also show that a positive coalition externality can arise in that a nonmember country can gain from the establishment of a PTA. Our analysis indicates that countries possessing a large nonmanufacturing sector relative to the economy or a high level of technology are more likely to gain from a coalition externality. Under no assumption of balanced trade, our analysis demonstrates that changes in tariff revenues and labor mobility between tradable and nontradable sectors are a key factor affecting welfare and, thus, countries’ incentives to join a PTA. Finally, using a calibrated model for 38 countries, we estimate price and welfare changes under several scenarios of the Trans-Pacific Partnership (TPP) and numerically demonstrate our theoretical results. equilibrium model to explore how a Trans-Pacific Partnership affects each country’s welfare and trade flows. We decompose the total change of trade flows from member countries into income effects and substitution effects, and investigate the factors that affect trade flows. We demonstrate that a positive coalition externality could exist in that some nonmember countries could gain more than member countries and further investigate under which circumstances it arises.
    Date: 2013–07–10
  6. By: Marvasi, Enrico
    Abstract: We extend the basic model of trade protection with special interest groups developed in Grossman and Helpman (1994) to include monopolistic competition with variable markups. We find the following results: (i) for sectors organized into lobbies the endogenous import tariff is always positive and inversely related to the degree of import penetration; (ii) for unorganized sectors the endogenous import policy may be a tariff or a subsidy, depending on the policy implemented by the partner country; (iii) the endogenous export policy consists in an export tax for unorganized sectors and in a subsidy for organized sector provided that goods are suffciently differentiated.
    Keywords: Endogenous Trade Policy; Protection for Sale; Monopolistic Competition; Variable Markups.
    JEL: F12 F13
    Date: 2013–06–24
  7. By: Kamei, Keita
    Abstract: This paper develops a dynamic Ricardian trade model with a supply of productive infrastructure in the manufacturing sector. We discuss the onset of trade liberalization when the home country has a (dynamic) comparative advantage in the manufacturing sector. Moreover, we compare over time the total welfare that adds welfare during autarkic periods (pre-industrialization periods) to that during specializing in manufacturing sector periods (industrialization periods) with one that exclusively specializes in the agricultural sector. From this setting, the following results are obtained: (1) an increase in agricultural productivity may hasten the onset of liberalization, (2) an improvement in labor efficiency in the public sector necessarily hastens the onset of the trade liberalization; and (3) the total welfare that adds the welfare during autarkic periods to that during specializing in manufacturing sector periods may be higher than that of the economy that exclusively specializes in the agricultural sector.
    Keywords: Productive infrastructure, Industrialization, Timing of trade liberalization, Agricultural productivity
    JEL: F10 F43 O14
    Date: 2013

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