nep-int New Economics Papers
on International Trade
Issue of 2014‒04‒11
34 papers chosen by
Luca Salvatici
Universita' di Roma 3

  1. Input-Trade Liberalization, Export Prices and Quality Upgrading By Maria Bas; Vanessa Strauss-Kahn
  2. Is Export Diversification good for Profitability? First Evidence for Manufacturing Enterprises in Germany By Wagner, Joachim
  3. A global view of cross-border migration By Julian di Giovanni; Andrei A. Levchenko; Francesc Ortega
  4. Together at Last: Trade Costs, Demand Structure, and Welfare By Peter Neary; Monika Mrazova
  5. Trade Patterns And Export Pricing Under Non-Ces Preferences By Sergey Kichko; Sergey Kokovin; Evgeny Zhelobodko
  6. Changes in Global Trade Patterns and Women's Employment in Manufacturing: An Analysis Over the Period of Asianization and De-industrialization By Burça Kýzýlýrmak; Emel Memiþ; Þirin Saracoðlu; Ebru Voyvoda
  7. Investigating the Role of Extensive Margin, Intensive Margin, Price and Quantity Components on Turkey’s Export Growth during 1998-2011 By Kemal Türkcan
  8. Estimating the effect of chemical safety standards on firm performance in Malaysia and Vietnam By Otsuki, Tsunehiro; Michida, Etsuyo; Nabeshima, Kaoru; Ueki, Yasushi
  9. “Task Trade and its determinants in Spain: a national and regional analysis” By José Ramón García; Fabio Manca; Jordi Suriñach
  10. Imported intermediate inputs and Egyptian exports: Exploring the links By María D. Parra; Inmaculada Martínez-Zarzoso
  11. Trade Liberalization, Inequality and Poverty in Brazilian States By Marta Castilho; Marta Menéndez; Aude Sztulman
  12. Does Finance Really Matter for the Participation of SMEs in International Trade? Evidence from 8,080 East Asian Firms By Jinjarak, Yothin; Mutuc, Paulo Jose; Wignaraja, Ganeshan
  13. Female Brain Drains and Women's Rights Gaps: A Gravity Model Analysis of Bilateral Migration Flows By Naghsh Nejad, Maryam; Young, Andrew
  14. The price and income elasticities of the top clothing exporters: Evidence from a panel data analysis By Donatella Baiardi; Carluccio Bianchi; Eleonora Lorenzini
  15. A Simple Model of Offshore Outsourcing, Technology Upgrading and Welfare By Jaewon Jung; Jean Mercenier
  16. Regional Economic Activity in Turkey: A New Economic Geography Approach By Mehmet Burak Turgut
  17. Immigrants and Firms' Productivity: Evidence from France By Mitaritonna, Cristina; Orefice, Gianluca; Peri, Giovanni
  18. Welfare and Trade Without Pareto By Keith Head; Thierry Mayer; Mathias Thoenig
  19. The Margins of Global Sourcing: Theory and Evidence from U.S. Firms By Pol Antràs; Teresa C. Fort; Felix Tintelnot
  20. A Short-Run Analysis of Exchange Rates and International Trade with an Application to Australia, New Zealand, and Japan By Anson, José; Boffa, Mauro; Helble, Matthias
  21. Foreign trade of the EU27 By Sabine Stephan; Jonas Löbbing
  22. Multi-product exporters, variable markups and exchange rate fluctuations By Mauro Caselli; Arpita Chatterjee; Alan Woodland
  23. Environmental provisions in Japanese regional trade agreements with developing countries By Yanai, Akiko
  24. The policy impact of product-related environmental regulations in Asia By Michida, Etsuyo
  25. Impact on Asian firms of product-related environmental regulations through global supply chains : a study of firms in Malaysia By Michida, Etsuyo; Ueki, Yasushi; Nabeshima, Kaoru
  26. Openness, Specialisation and Vulnerability of the Nordic Countries By Kaitila, Ville; Virkola, Tuomo
  27. Accounting for Skill Premium Patterns during the EU Accession: Productivity or Trade? By Sang-Wook (Stanley) Cho; Juliàn P. Dìaz
  28. Immigration and Manufacturing In Italy.Evidence from the 2000s By Giuseppe De Arcangelis; Edoardo Di Porto; Gianluca Santoni
  29. Impact of product-related environmental regulations in Asia : descriptive statistics from a survey of firms in Vietnam By Michida, Etsuyo; Nabeshima, Kaoru; Ueki, Yasushi
  30. Financing Higher Education when Students and Graduates are Internationally Mobile By Silke Übelmesser; Marcel Gérard
  31. Differential Impacts of Foreign Capital and Remittance Inflows on Domestic Savings in the Developing Countries: A Dynamic Heterogeneous Panel Analysis By Delwar Hossain
  32. Regulatory environment and firm performance in EU telecommunications services By Daniel Montolio; Francesc Trillas; Elisa Trujillo-Baute
  33. TPP, RCEP, and Japan's Agricultural Policy Reforms By Hiro Lee; Ken Itakura
  34. Do Immigrants Bring Good Health? By Giuntella, Osea; Mazzonna, Fabrizio

  1. By: Maria Bas (Centre d'Etudes Prospectives et d'Informations Internationales); Vanessa Strauss-Kahn
    Abstract: This paper explores the impact of input-trade liberalization on imported input and exported product prices. Using Chinese transaction data for 2000-2006, we capture causal effects between exogenous input tarif reductions and within firm changes in HS6 traded product prices. Identifcation is based on a quasi-natural experiment where some forms are exempt from paying tariffs and stand as a control group. Both imported input and export prices rise. The effect on export prices is specific to forms sourcing inputs from developed economies and exporting output to high-income countries. Results are consistent with a scenario within which forms exploit the input tariff cuts to access high-quality inputs in order to quality-upgrade their exports.
    Keywords: Firm heterogeneity, imported inputs, trade liberatization, export prices, quality upgrade, mark-up,
    JEL: F10 F12 F13
    Date: 2013–09
  2. By: Wagner, Joachim (Leuphana University Lueneburg and CESIS, Stockholm)
    Abstract: This paper uses a tailor-made newly available data set for enterprises from manufacturing industries in Germany to investigate for the first time the links between export diversification over destination countries and goods on the one hand and the profitability of the exporting firms on the other hand. We find that profits tend to be larger in firms with less diversified export sales over goods and in firms with more diversified export sales over destination countries.
    Keywords: Exports; diversification; profitability; Germany
    JEL: F14
    Date: 2014–03–25
  3. By: Julian di Giovanni; Andrei A. Levchenko; Francesc Ortega
    Abstract: This paper evaluates the global welfare impact of observed levels of migration using a quantitative multi-sector model of the world economy calibrated to aggregate and firm-level data. Our framework features cross-country labor productivity differences, international trade, remittances, and a heterogeneous workforce. We compare welfare under the observed levels of migration to a no-migration counterfactual. In the long run, natives in countries that received a lot of migration -such as Canada or Australia- are better o due to greater product variety available in consumption and as intermediate inputs. In the short run the impact of migration on average welfare in these countries is close to zero, while the skilled and unskilled natives tend to experience welfare changes of opposite signs. The remaining natives in countries with large emigration flows -such as Jamaica or El Salvador- are also better off due to migration, but for a different reason: remittances. The welfare impact of observed levels of migration is substantial, at about 5 to 10% for the main receiving countries and about 10% in countries with large incoming remittances. Our results are robust to accounting for imperfect transferability of skills, selection into migration, and imperfect substitution between natives and immigrants.
    Keywords: Migration, Remittances, International Trade, Welfare
    JEL: F12 F15 F22 F24
    Date: 2014–03
  4. By: Peter Neary; Monika Mrazova
    Abstract: We show that relaxing the assumption of CES preferences in monopolistic competition has surprising implications when trade is restricted.� Integrated and segmented markets behave differently, the latter typically exhibiting reciprocal dumping.� Globalization and lower trade costs have different effects: the former reduces spending on all existing varieties, the latter switches spending from home to imported varieties; when demands are less convex than CES, globalization raises whereas lower trade costs reduce firm output.� Finally,calibrating gains from trade is harder.� Many more parameters are needed, while import demand elasticities typically overestimate the true elasticities, and so underestimate the gains from trade.
    Keywords: Additively Separable Preference, CES Preference, Iceberg Trade Costs, Quantifying Gains from Trade, Super- and Subconvexity of Demand, Super- and Subconcavity of Utility
    JEL: F12 F15 F17
    Date: 2014–01–20
  5. By: Sergey Kichko (National Research University Higher School of Economics); Sergey Kokovin (National Research University Higher School of Economics); Evgeny Zhelobodko (National Research University Higher School of Economics)
    Abstract: We develop a two-factor, two-sector trade model of monopolistic competition with variable elasticity of substitution. Firms' profits and sizes may increase or decrease with market integration depending on the degree of asymmetry between countries. The country in which capital is relatively abundant is a net exporter of the manufactured good, although both firm sizes and profits are lower in this country than in the country where capital is relatively scarce. The pricing policy adopted by firms neither depends on capital endowment nor country asymmetry. It is determined by the nature of preferences: when demand elasticity increases (decreases) with consumption, firms practice dumping (reverse-dumping)
    Keywords: international trade, monopolistic competition, capital asymmetry, variable markups
    JEL: F12 F13
    Date: 2014
  6. By: Burça Kýzýlýrmak (Ankara University); Emel Memiþ (Ankara University); Þirin Saracoðlu (Middle East Technical University); Ebru Voyvoda (Middle East Technical University)
    Abstract: The purpose of this study is to explore the employment effects of changes in manufacturing output resulting from changes in trade patterns over the period 1995-2006. For 30 countries (21 OECD and 9 non-OECD countries) we estimate the changes in embodied labor content due to trade using the factor-content analysis by breaking up the sources of these changes between the trade with the North, the South and China. We also decompose changes in employment into its components as changes within and across sectors. Our results present a net negative impact of trade on total employment in 30 countries over the period of analysis (despite employment gains in 17 countries). In all countries (except for Philippines and Republic of Korea) trade with China has a negative impact on total employment with a stronger negative effect on women’s employment. Employment losses in the South due to surge in imports from China are coupled with declining exports to the North as many countries in the North shift their imports to emerging economies in Asia. Decomposition results indicate that decline in the share of women’s employment is mainly due to shifts between sectors rather than within sector changes. Changes in women’s employment are stil highly dependent on the movements in ‘traditional’ manufacturing sectors including food, textiles and wearing apparel.
    Keywords: North-South trade; decomposition analysis; factor content analysis; gender bias.
    Date: 2014
  7. By: Kemal Türkcan (Akdeniz University)
    Abstract: Purpose: Recent empirical research in international trade emphasizes the role of the extensive and intensive margin to the export growth. This paper examines the sources of export growth in Turkey. For this purpose, the study decomposes Turkey’s export growth into extensive and intensive margins by using two methodologies, the count method and the decomposition method of export growth shares. The intensive margin into price and quantity components is further decomposed in order to evaluate the role of changes in price and changes in quantity. Detailed bilateral trade data, BACI, from CEPII are employed to analyze Turkey’s export statistics with 209 countries at the HS-6 level over the period 1998–2011. Additionally, these methods are employed for different categories of goods (final goods and intermediate goods exports). The results suggest that the extensive margin, particularly geographic diversification, plays the most important role in Turkey’s total goods export growth. Further, the growth in Turkey’s total goods exports is mainly explained by quantity rather than price growth. The results further point out that growth in Turkey’s final goods was driven by price growth, whereas growth in intermediate goods exports was mainly explained by quantity growth. Yet the results also suggested that product and geographic diversification of Turkey’s have not been fully realized and thus many more opportunities exist for Turkey to expand product range or expand into new markets, which in turn will bring significant benefits in the form of stable, sustainable economic growth.
    Keywords: Turkey, export margins
    Date: 2014
  8. By: Otsuki, Tsunehiro; Michida, Etsuyo; Nabeshima, Kaoru; Ueki, Yasushi
    Abstract: This paper uses firm-level data to examine the impact of chemical safety regulations imposed by importing countries such as RoHS and REACH on the production costs and export performance of firms in Malaysia and Vietnam. We find that in addition to the initial setup costs for compliance, EU RoHS and REACH implementation causes firms to incur additional variable production costs by requiring additional labor and capital expenditures of around 12% of the variable costs, respectively. We also find that compliance with RoHS and REACH significantly increases the probability of export. Furthermore, we find that compliance with EU RoHS and REACH helps firms to penetrate into a greater variety of countries. Also, we find that multinational enterprises and firms participating in global value chains generally exhibit better export performance and their costs rise less steeply.
    Keywords: Malaysia, Vietnam, Environmental protection, International trade, Environmental policy, Industrial standards, Costs, Trade, RoHS, REACH cost function, Market access
    JEL: F14 L15 O53
    Date: 2014–03
  9. By: José Ramón García (Faculty of Economics, University of Barcelona); Fabio Manca (IPTS- JRC European Commission and Faculty of Economics, University of Barcelona); Jordi Suriñach (Faculty of Economics, University of Barcelona)
    Abstract: Globalisation and technological advances have made possible to offshore specific productive tasks (that do not require physical proximity to the actual location of the work unit) to foreign countries where these are usually performed at lower costs. We analyse the effect of task trade (i.e. task offshorability) on Spanish regional and national employment levels correlating a newly built index of task-delocalisation index to key variables such as the region’s wealth, the worker’s age and level of education, the importance of the service sector and the technological level of the economic activities undertaken in that particular geographical area. We conclude that approximately 25% of Spanish occupations are potentially affected by task trade/offshoring and that this is likely to benefit Spanish economy (and the performance of specific regions, categories of workers and sectors) being Spain a potential recipient of tasks offshored from abroad. Also we obtain that Spain’s trade in tasks correlates strongly with the above variables, presenting significant regional differences.
    Keywords: task trade, offshore, occupations, national/regional offshoring, tasks. JEL classification: F14, F16, J23, J24, J62
    Date: 2014–04
  10. By: María D. Parra (Department of Economics, Universitat Jaume I, Castellón, Spain); Inmaculada Martínez-Zarzoso (Instituto de Economía Internacional, Universidad Jaume I, Castellón, Spain and Department of Economics, Georg-August Universitaet Goettingen, Göttingen, German)
    Abstract: This paper aims at exploring the links between firms’ exporting and importing activities in Egyptian firms. With this aim, a panel dataset of 554 Egyptian manufacturing firms that contains yearly data over the period from 2003 to 2007 is used to estimate the probability of exporting /importing. According to the related literature a complementarity gain is generated when firms are involved in both activities because then they are able to internalize the common fixed costs to access a given foreign market (e.g. Kashara and Lapham, 2013). Stylized facts indicate that firms that start exporting or importing are more likely to become two-traders. The purpose of our research is to better understand this relationship in Egypt, which is the most populated and economically influential country in the Middle East. The main results show a high degree of hysteresis on past international activity, where past experience still most important to determine the continuance in the same activity and we achieve that Egyptian firm’s face to higher sunk cost of imported intermediates than sunk cost faced to sell their products in foreign markets.
    Keywords: imported intermediates, exporting activity, internationalization, Egypt
    JEL: F10
    Date: 2014
  11. By: Marta Castilho (Universidade Federal Fluminense - Universidade Federal Fluminense); Marta Menéndez (DIAL - Développement, institutions et analyses de long terme - Institut de recherche pour le développement [IRD], UP9 - Université Paris 9, Dauphine - Université Paris IX - Paris Dauphine, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA)); Aude Sztulman (LEDa - DIAL - Laboratoire d'Economie de Dauphine - Equipe Economie de la mondialisation et du développement - Université Paris IX - Paris Dauphine)
    Abstract: This paper studies the impact of globalization on household income inequality end poverty using detailed microdata across Brazilian states from 1987 to 2005. Results suggest that the Brazilian states more exposed to tariff cuts experienced smaller reductions in household poverty and inequality. Contrasting results emerge when we disaggregate into rural and uraban areas within states: trade liberalization contributes to growth in poverty and inequality in urban areas and may be linked to evidence indicating that state poverty and inequality in Brazil decrease with rising export exposure and increase with import penetration.
    Keywords: Trade Liberalization ; Poverty and inequality ; Latin America ; Brazilian states
    Date: 2014–03–28
  12. By: Jinjarak, Yothin (Asian Development Bank Institute); Mutuc, Paulo Jose (Asian Development Bank Institute); Wignaraja, Ganeshan (Asian Development Bank Institute)
    Abstract: This paper studies factors associated with firm participation in export markets, focusing primarily on firm size and access to credit, based on a survey sample comprising observations of 8,080 small and medium enterprises (SMEs) (with fewer than 100 employees) and non-SME firms in developing East Asian countries across sectors. The main findings suggest the interdependent relationships between export participation, firm size, and access to credit. SMEs participating in export markets tend to gain more access to credit, while potential scale economies (firm sizes) of SMEs are positively associated with participation in export markets. The estimation results also point to the supportive influences of foreign ownership, worker education, and production certification on export participation, and the positive effects of financial certification, managerial experience, and collateral/loan value on access to credit for SMEs.
    Keywords: small and medium enterprises; sme; international trade; export markets
    JEL: D22 E44 F14 L16 O14
    Date: 2014–03–31
  13. By: Naghsh Nejad, Maryam (IZA); Young, Andrew (West Virginia University)
    Abstract: In this paper we model the migration decisions of high-skilled women as a function of the benefits associated with moving from an origin with relatively low women's rights to a destination with a relatively high level of women's rights. However, the costs faced by women are decreasing in the level of women's rights provided. The model predicts a non-linear relationship between the relative levels of women's rights in destination versus origin countries (the women's rights gap) and the gender gap in high-skilled migration flows (the female brain drain ratio). In particular, starting from large values of the women's rights gap (where women's rights are very low in the origin) decreases in the gap may be associated with increases in the female brain drain ratio. However, starting from lower levels of the gap the relationship is positive: a greater gain in women's rights moving from origin to destination is, all else equal, associated with a greater likelihood of migration. Using a cross section of over 3,000 bilateral migration flows across OECD and non-OECD countries and the women's rights indices from the CIRI Human Rights Dataset, we report evidence consistent with the theory. A statistically significant and nonlinear relationship exists between women's rights gaps and female brain drain ratios. The evidence is particularly strong for the case of women's political rights.
    Keywords: female brain drain, high skilled female migration, bilateral migration flows, women's rights, institutional quality, gravity models
    JEL: F22 J11 J61 J16 O17 O43
    Date: 2014–03
  14. By: Donatella Baiardi (Department of Economics, Quantitative Methods and Business Strategies, University of Milano-Bicocca); Carluccio Bianchi (Department of Economics and Management, University of Pavia); Eleonora Lorenzini (Department of Economics and Management, University of Pavia)
    Abstract: This paper studies the main export function features of twelve top clothing exporters (China, Hong Kong, France, Germany, India, Indonesia, Italy, Netherlands, Spain, Turkey, UK and USA) in the period between 1992 and 2011. Price and income elasticities are estimated for each country using a panel data approach, after controlling for nonstationarity, cointegration and Granger causality. Rolling regressions are also performed, and show the existence of elasticities instability over time. The analysis suggests that most advanced countries, including Hong Kong, changed their position in the clothing global value chain towards an “organisational” role. China confirms its leadership in clothing exports although its rising price elasticity sounds a warning with regard to future prospects.
    Keywords: Clothing exports, Price and income elasticities, Parameter stability, Panel data analysis Quality, Panel Granger causality
    JEL: F14 C23 L67
    Date: 2014–03
  15. By: Jaewon Jung (THEMA - Théorie économique, modélisation et applications - CNRS : UMR8184 - Université de Cergy Pontoise); Jean Mercenier (ERMES - Equipe de recherche sur les marches, l'emploi et la simulation - CNRS : UMR7017 - Université Paris II - Panthéon-Assas)
    Abstract: We adapt Yeaple's (2005) heterogeneous agents framework to model firms in the North as making explicit offshore outsourcing decisions to cheap-labor economies. Globalization results from a lowering of the set-up costs incurred when engaging in offshore activities. We highlight how firms' technology transformations due to globalization will induce skill upgrading in the North, increase aggregate productivity, average wages and therefore total welfare at the cost of increased wage inequalities. We analytically derive mild conditions under which all consumers--including lower-skilled workers--will nevertheless gain from the surge of offshore outsourcing. A parameterized version of the model roughly calibrated on U.S. data is then numerically explored and confirms our positive welfare predictions.
    Keywords: Offshore outsourcing ; Globalization ; Skill upgrading, Technology upgrading ; Firm heterogeneity
    Date: 2014–03–28
  16. By: Mehmet Burak Turgut (University of Warsaw)
    Abstract: This paper studies the spatial economic activity in Turkey and estimates the correlation between wages and consumer demand across NUTS1 regions of Turkey. First, I estimate simple market potential function to test whether closeness to larger markets has impact on wages. Second, I estimate Krugman (1993) economic geography model to see the agglomeration forces in Turkey. The results suggest that wages are higher in the regions close to larger markets and low trade costs and high share of expenditure on manufactured goods are the forces of agglomeration in Turkey.
    Keywords: Regional economic activity, Turkey, economic geography model
    Date: 2014
  17. By: Mitaritonna, Cristina (CEPII, Paris); Orefice, Gianluca (CEPII, Paris); Peri, Giovanni (University of California, Davis)
    Abstract: Immigrants may complement native workers, increase productivity, allow specialization by skill in the firm and lower costs. These effects could be beneficial for the firm and increase its productivity and profits. However not all firms use immigrants. Allowing firms to have differential fixed cost in hiring immigrants we analyze the impact of an increase in local supply of immigrants on firms' immigrant employment and firm's productivity. Using micro-level data on French firms, we show that a supply-driven increase in foreign born workers in a department (location) increases the productivity of firms in that department. We also find that this effect is significantly stronger for firms with initially zero level of foreign employment. Those are also the firms whose share of immigrants increases the most. We also find that the positive productivity effect of immigrants is associated with faster growth of capital and improved export performances of the firms. Finally we find a positive effect of immigration on wages of natives and on specialization of natives in complex occupations, that is common to all firms in the department.
    Keywords: immigrants, firms, productivity, heterogeneity, fixed costs of hiring
    JEL: F22 E25 J61
    Date: 2014–03
  18. By: Keith Head (Sauder School of Business [British Columbia]); Thierry Mayer (Département d'économie); Mathias Thoenig (Centre Universitaire d'Informatique)
    Abstract: This paper investigates the consequences of replacing the assumption of Pareto heterogeneity with log-normal heterogeneity. This case is interesting because it (a) maintains some desirable analytic features of Pareto, (b) ts the complete distribution of rm sales rather than just approximating the right tail, and (c) can be generated under equally plausible processes (see online appendix). The log-normal is reasonably tractable but its use sacrices some \scale-free" properties conveyed by the Pareto distribution. Aspects of the the calibration that do not matter under Pareto lead to important dierences in the gains from trade under log-normal.
    Date: 2014–01
  19. By: Pol Antràs; Teresa C. Fort; Felix Tintelnot
    Abstract: This paper studies the extensive and intensive margins of firms' global sourcing decisions. First, it presents three new facts on U.S. firms' import behavior that highlight the importance of the extensive margin in explaining cross-sectional variation in U.S. import volumes. These facts motivate the development of a quantifiable multi-country global sourcing model with heterogeneous firms, in which firms self-select into importing based on their productivity and country-specific variables (wages, trade costs, and technology). The model delivers a simple closed-form solution for firm profits as a function of the number and characteristics of the set of countries from which a firm has invested in being able to import. A key feature of this derived profit function is that the marginal increase in profits from adding a country to the firm's set of potential sourcing locations depends on the number and characteristics of other countries in the set. This makes the analysis of the extensive margin of sourcing more complicated than in models of exporting, where entry is typically assumed to be independent across markets. Under plausible parametric restrictions, however, selection into importing features complementarity across markets. In this case, we can use standard monotone comparative statics techniques to show that the sourcing strategies of firms follow a strict hierarchical structure, as in exporting models. In our empirical implementation of the model, we also exploit these complementarities to develop an algorithm, similar to Jia (2008), to feasibly estimate the fixed costs of sourcing from different countries.
    Date: 2014–01
  20. By: Anson, José (Asian Development Bank Institute); Boffa, Mauro (Asian Development Bank Institute); Helble, Matthias (Asian Development Bank Institute)
    Abstract: The information and communication technology (ICT) revolution of the past 3 decades has transformed the world into an integrated marketplace. Today, producers and consumers alike are able to compare the prices of local businesses and worldwide sellers. For an increasing number of tradable goods, they can take advantage of arbitrage opportunities between online and offline transactions. One of the key exogenous elements behind this arbitrage is exchange rate movements. The existing literature on exchange rates has concluded that nominal prices can be assumed to be rigid, which thus opens the door to short-term international arbitrage. However, empirical evidence of international short-term arbitrage has so far been lacking due to data constraints. In this paper, we first present a new dataset that holds records on daily international exchanges of goods, namely those sent through the international postal logistics network. We then combine this data set with daily data on international exchange rate movements to test the hypothesis of international arbitrage. Applying different econometric techniques, we show that in an environment of floating exchange rates, almost instantaneous short-term international arbitrage is indeed occurring and that it has a persistent effect. The effect seems to be particularly pronounced in the developed countries of Asia and the Pacific.
    Keywords: price stickiness; international arbitrage; international trade; exchange rates
    JEL: F14 F31
    Date: 2014–04–04
  21. By: Sabine Stephan; Jonas Löbbing
    Abstract: Between 1999 and 2012 the EU intensified its trade relations with countries outside the European Union (third countries). However, the major part (about 60 %) of the EU member states' external trade consists of trade with each other (intra-trade). In past years, the EU has benefited from the catching-up process of the emerging economies - especially China and Russia - and the associated strong demand for capital goods and production facilities. Consequently, China and Russia became more important trading partners for the EU, whereas the US and Japan declined in importance. Unlike EU's foreign trade with countries outside the EU, the foreign trade among EU member states has not yet recovered from the massive slump due to the economic and financial crisis 2008/2009. This is mainly due to the fact that many European countries have followed a strict austerity policy which has severely depressed domestic demand. While it may have longer-run impacts, in the short run the proposed Transatlantic Free Trade Agreement will do little to reverse the relative decline in EU-US trade, much less can it be expected to serve as a stimulus for economic recovery.
    Date: 2013
  22. By: Mauro Caselli (School of Economics, Australian School of Business, the University of New South Wales); Arpita Chatterjee (School of Economics, Australian School of Business, the University of New South Wales); Alan Woodland (School of Economics, Australian School of Business, the University of New South Wales)
    Abstract: In this paper we investigate how firms adjust markups across products in response to fluctuations in the real exchange rate. In a theoretical framework, we show that firms increase their markup and producer prices following a real depreciation and that this increase is greater for products with higher productivity, a consequence of local distribution costs. We estimate markups at the market-product-plant level using detailed panel production and cost data from Mexican manufacturing between 1994 and 2007. Exploiting variation in the real exchange rate in the aftermath of the peso crisis in December 1994, we provide robust empirical evidence that plants increase their markups and producer prices in response to a real depreciation and that within-firm heterogeneity is a key determinant of plants' response to exchange rate shocks. We also provide some evidence in favour of a local distribution cost channel of incomplete exchange rate pass-through.
    Keywords: multi-product, variable markup, exchange rate pass-through, local distribution cost, Mexico
    JEL: D22 D24 F12 F14 F41 L11
    Date: 2014–03
  23. By: Yanai, Akiko
    Abstract: With the growing interest in environmental issues in the global community, recently concluded regional trade agreements (RTAs) have introduced environmental provisions. These RTAs will help achieve sustainable development at the intersection of trade liberalization and ever-increasing environmental concerns. However, environmental provisions are not incorporated into all RTAs. For example, Japanese RTAs often incorporate environmental issues only in the preamble or relevant articles. As the first step in examining the environmental provisions in RTAs, this paper focuses on the RTAs that Japan has concluded with developing countries. The main characteristic of environmental provisions in Japanese RTAs is that there are very few relevant provisions. All Japanese RTAs has neither environmental chapters nor side agreements. However, the attitude toward the environment in Japanese RTAs has gradually changed since the signing of the Japan-Chile EPA in 2007, in which a joint environmental statement was adopted. Although Japanese RTAs have environmental provisions, environmental problems originating from the RTAs may occur. One of the possible causes is a lack of environmental impact assessment. Japanese RTAs need to incorporate an environmental impact assessment system in order to identify environmental problems resulting from its RTAs, and to enable the country to take appropriate measures at the appropriate time.
    Keywords: Developing countries, Japan, Environmental protection, International trade, FTA, International agreements, Sustainable development, Regional trade agreement, Environmental provisions, Trade and the environment, RoHS, REACH
    JEL: F18
    Date: 2014–03
  24. By: Michida, Etsuyo
    Abstract: This paper focuses on EU chemical regulations, RoHS and REACH, and shows these EU regulations have driven Asian countries to introduce regulations that are similar yet modified versions to the EU regulations. Asia as the world manufacturing center has extensive production networks where parts and components of a final good are traded across borders. We discuss how product-related environmental regulations could impact on firms' activities then show that if Asian countries with complex supply chains introduce different product related chemical regulations without coordinating with neighboring countries, it could work as trade barrier for manufacturing activities in the region.
    Keywords: Asia, Europe, Environmental protection, Manufacturing industries, Industrial standards, Environmental policy, International trade, Product-related environmental regulation, Trade, RoHS, REACH
    JEL: F18 O2
    Date: 2014–03
  25. By: Michida, Etsuyo; Ueki, Yasushi; Nabeshima, Kaoru
    Abstract: This paper sheds light on the important role played by global supply chains in the adaptation to product-related environmental regulations imposed by importing countries, with a focus on chemicals management. By utilizing a unique data collected in Penang, Malaysia, we depict the supply chain structures and how differences among firms in participation to global supply chain link to differences in chemical management. We found that firms belonging to a supply chain are in a better position to comply with these regulations because information and requirements are transmitted through global supply chains. In contrast, those firms that are neither exporters nor a part of a global supply chain lack the knowledge and information channels relevant to chemical management in a product.
    Keywords: Malaysia, Environmental protection, International trade, Industrial standards, Foreign investments, Global supply chain, FDI, Product-related environmental regulation, REACH, RoHS
    JEL: F18 O14
    Date: 2014–03
  26. By: Kaitila, Ville; Virkola, Tuomo
    Abstract: In this paper we analyse to what extent the Nordic economies are vulnerable to external shocks. Specifi cally, we assess the conventional wisdom that the Nordic countries are small open economies that are sig nificantly engaged in international trade, specialised in only few specific industries and, as a consequence, extremely dependent on the competiveness of their tradable sector and exposed to external shocks. To study this conventional wisdom, we employ a comprehensive set of indicators about trade openness, specialisation and vulnerability. While we do find that the Nordic countries are open economies, though not to an exceptional degree, we also find significant heterogeneity across these countries with respect to their vulnerability.
    Keywords: international trade, small open economy, Nordic countries, specialisation, vulnerability
    JEL: F14 L00
    Date: 2014–03–27
  27. By: Sang-Wook (Stanley) Cho (School of Economics, Australian School of Business, the University of New South Wales); Juliàn P. Dìaz (Department of Economics, Quinlan School of Business, Loyola University)
    Abstract: In this article, we disentangle the relationship between the skill premium, trade liberalization and productivity changes in accounting for the skill premium patterns of transition economies that joined the European Union (EU) in 2004. To conduct our analysis, we construct an applied general equilibrium model with skilled and unskilled labor, and combining Social Accounting Matrices, Household Budget Surveys and the EU KLEMS Growth and Productivity Accounts database, we calibrate it to match Hungarian data, a transition economy wherethe skill premium consistently increased between 1995 and 2005. We then assess the role of the multiple factors that affected the patterns of the skill premium: trade liberalization reforms, factor and sector bias of technical change and capital deepening, and find that all the factors can jointly account for approximately 87% of the actual change in skill premium between 1995 and 2005. Individually, capital deepening accounts for the largest share of the rise in the skill premium, whereas trade liberalization accounts for a small portion of that increase. While productivity changes account for only a small fraction of the skill premium increases during 1995 and 2000, they significantly offset the impact of the capital deepening on the skill premium in the period between 2000 and 2005.
    Keywords: Transition Economies, Skill Premium, Trade Liberalization, Skill-biased Technical Change, Capital-skill complementarity
    JEL: D58 F16 O33
    Date: 2014–03
  28. By: Giuseppe De Arcangelis (Dipartimento di Scienze Sociali ed Economiche, Sapienza University of Rome); Edoardo Di Porto (DISES, University of Naples Federico II); Gianluca Santoni (Institute of Economics, Scuola Superiore Sant'Anna, Pisa, Italy)
    Abstract: This tests the effect of an increase in the migration presence (over population) on manufacturing firms' performance at the local level. The model is estimated for the Ital- ian economy during the recent years of rapid and varied migration (a threefold increase in the 1995-2006 and the presence of 189 nationalities). Firm's performance is mea- sured with common indexes (sales per worker, production per worker and value added per worker) by aggregating individual firm data at different levels. In particular, we construct measures for both a representative (average) province-sector firm and a representative (average) province firm. By means of the sector data we are able to estimate the impact of migrants on high- and low-skill sectors, both in the level and in relative terms. We also consider two dimensions of migrants heterogeneity (in terms of characteristics of nationalities) in order to approximate the effect of high- and low-skill migrants. Our results show that migrants' presence in the province positively affects firm's performance: a doubling of the migration ratio to provincial population raises by about 10 per cent sales per worker and production per worker on average. However, this increase is unevenly distributed and favors low-skill versus high-skill sectors: sectors like Food and Beverages and Furniture show an increase between 13% and 15% when the migration rate doubles. Moreover, on the labor supply side, an increase in proxied relatively low-skill migrants favors low-skill sectors.
    Keywords: Sector Analysis, Rybczynski Effect, International Migration.
    JEL: F22 C25
    Date: 2014–03
  29. By: Michida, Etsuyo; Nabeshima, Kaoru; Ueki, Yasushi
    Abstract: This paper summarizes the main results of a unique firm survey conducted in Vietnam in 2011 on product-related environmental regulations (PRERs). The results of this survey are compared with the results of a corresponding survey of firms in Penang, Malaysia (Michida, et al. 2014b). The major findings are as follows. First, adaptation to PRERs involves changes in input procurement and results in market diversification, which potentially alters the structure of supply chains. This finding is consistent with the Malaysian survey result. Second, connections to global supply chains are key to compliance, but this requires firms to meet more stringent customer requirements. Third, government policy can play an important role in assisting firms to comply with PRERs.
    Keywords: Vietnam, Environmental protection, Industrial standards, Foreign investments, International trade, Statistics, Global supply chain, FDI, PRERs (Product-related environmental regulations), REACH, RoHS
    JEL: F18 O14
    Date: 2014–03
  30. By: Silke Übelmesser (School of Economics and Business Administration, Friedrich-Schiller-University Jena); Marcel Gérard (CESifo, Munich)
    Abstract: This paper aims at linking cross border mobility of students and graduates with the financing of higher education. Against the background of institutional features and empirical evidence of the European Union and Northern America, a theoretical framework is developed. This allows analyzing the optimal financing regimes for different migration scenarios, comparing them with the regimes in place and discussing possible remedies. In particular, the (optimal) sharing of education costs between students / graduates and tax-payers is studied as well as the (optimal) sharing of the tax-payers' part between the various countries involved: the country which provides higher education (the host country), the country of previous education (the origin country) and possibly the countries which benefit from the improved skills of the workers. Alternative designs exhibiting potentially desirable properties are developed and policy recommendations derived.
    Keywords: Mobility of students, Mobility of graduates, Financing of higher education
    JEL: F22 H52 I23
    Date: 2014–03–31
  31. By: Delwar Hossain
    Abstract: The study examines the role of foreign capital and remittance inflows in the domestic savings of 63 developing countries for 1971-2010, paying attention to likely differential effects of FDI, portfolio investment, foreign aid and remittance. The conventional homogeneous panel estimates suggest that foreign aid and remittance flows have a significant negative impact on domestic savings. However, these techniques ignore cross section dependence and parameter heterogeneity properties and thus yield biased and inconsistent estimates. When we allow for parameter heterogeneity and cross sectional dependence by employing the Pesaran’s (2006) Common Correlated Effects Mean Group estimator technique, only remittances crowd-out savings.
    Keywords: Domestic savings, Foreign capital inflows, Foreign Aid. Models with panel data
    JEL: C23 E21 E22 F21 F35
    Date: 2014
  32. By: Daniel Montolio (Universitat de Barcelona & IEB); Francesc Trillas (Autonomous University of Barcelona, PPSRC-Iese & IEB); Elisa Trujillo-Baute (Universitat de Barcelona & IEB)
    Abstract: We empirically estimate the effects of regulated access prices and firms’ multinational status on firm performance by using firm, corporate group, and country level information for the European broadband market between 2002 and 2010. Three measures of firm performance are used, namely: market share, turnover and productivity. Special attention is paid to differences in the impact on the performance measures depending on a firm’s position as either a market incumbent or entrant. We find that while access prices have a negative effect on entrants’ market share and turnover, the effect on incumbents’ market share, turnover and productivity is positive. Further, we find that multinational entrants perform better than national entrants in terms of their market share but worse in terms of their turnover and productivity. The opposite is true of incumbent multinationals which perform better than nationals in terms of their turnover and productivity but worse in terms of their market share. This confirms that a firm’s multinational status has a significant impact on its performance, and that this impact differs for incumbents and entrants. Finally, when evaluating the impact of access prices on firm performance at the mean performance of national and multinational firms, we find that the impact of access prices is lower for multinational than for national firms.
    Keywords: Regulation, firm performance, telecommunications, multinational firms
    JEL: L51 L25 L96 F23
    Date: 2014
  33. By: Hiro Lee (Osaka School of International Public Policy, Osaka University); Ken Itakura (Graduate School of Economics, Nagoya City University)
    Abstract: In this paper we compare welfare effects and the extent of sectoral adjustments under the proposed Trans-Pacific Partnership (TPP) agreement and the Regional Comprehensive Economic Partnership (RCEP) accords using a dynamic computable general equilibrium (CGE) model from the perspective of Japan. The ambitious goals of both organizations, as well as overlapping membership, make comparisons of different scenarios particularly intriguing. Another objective of this paper is to examine the effects of Japan's agricultural policy reforms on its agricultural output. If agricultural reforms, such as phasing out gentan and consolidation of agricultural land, lead to an improvement in productivity of agricultural sectors, then the extent of output contraction of agricultural and processed food sectors in Japan would be reduced significantly except for dairy products. This suggests the importance of carrying out agricultural reforms in Japan for region-wide trade accords.
    Keywords: TPP, RCEP, CGE model, Japan, agricultural policy reform
    JEL: F15 F17
    Date: 2014–03
  34. By: Giuntella, Osea (University of Oxford); Mazzonna, Fabrizio (University of Lugano)
    Abstract: This paper studies the effects of immigration on health. We merge information on individual characteristics from the German Socio-Economic Panel with detailed local labor market characteristics for the period 1984 to 2009. We exploit the longitudinal component of the data to analyze how immigration affects the health of both immigrants and natives over time. Immigrants are shown to be healthier than natives upon their arrival ("healthy immigrant effect"), but their health deteriorates over time spent in Germany. We show that the convergence in health is heterogeneous across immigrants and faster among those working in more physically demanding jobs. Immigrants are significantly more likely to work in strenuous occupations. In light of these facts, we investigate whether changes in the spatial concentration of immigrants affect natives' health. Our results suggest that immigration reduces residents' likelihood to report negative health outcomes by improving their working conditions and reducing the average workload. We show that these effects are concentrated in blue-collar occupations and are larger among low educated natives and previous cohorts of immigrants.
    Keywords: immigration, health
    JEL: F22 I10 J15 J61
    Date: 2014–03

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