nep-int New Economics Papers
on International Trade
Issue of 2015‒02‒16
thirty papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The economic impact of the Australia-United States free trade agreement By Shiro Armstrong
  2. The Impact of Services Trade Restrictiveness on Trade Flows: First Estimates By Hildegunn Kyvik Nordås; Dorothée Rouzet
  3. Firm Performance and Trade with Low-Income Countries: Evidence from China By Schmerer, Hans-Jörg; Wang, Luhang
  4. Trade in tasks, tariff policy and effective protection rates By Diakantoni, Antonia; Escaith, Hubert
  5. Strategic Corporate Social Responsibility by Multinational Enterprises By Constantine Manasakis; Evangelos Mitrokostas; Emmanuel Petrakis
  6. Trade Liberalization and Wage Inequality: New Insights from a Dynamic Trade Model with Heterogeneous Firms and Comparative Advantage By Wolfgang Lechthaler; Mariya Mileva
  7. Pass-through of Trade Costs to U.S. Import Prices By Hakan Yilmazkuday
  8. The macro-economic impact of e-commerce in the EU By Joseph Francois; Bertin Martens; Fan Yang
  9. World Trade Flows Characterization: Unit Values, Trade Types and Price Ranges By Charlotte Emlinger; Sophie Piton
  10. Technology and the dynamics of comparative advantage By Antonio Navas
  11. Do Borders Really Slash Trade? A Meta-Analysis By Tomas Havranek; Zuzana Irsova
  12. International Trade and MIgration: A Quantitative Framework By Sirries, Steffen; Larch, Mario
  13. Trade Policy Coordination and Food Price Volatility By Christophe Gouel
  14. Optimizing the Structure of Mongolian Foreign Trade and the Alternative Policy of Successful Transition By Byambasuren, Tsenguunjav; Gochoo, Munkh-Erdene
  15. The Meaning of Fair Trade By Steve Suranovic
  16. Trade, Integration and Interregional Inequality By Hirte, Georg; Leßmann, Christian
  17. Trade and Uncertainty By Novy, Dennis; Taylor, Alan
  18. Preferential Market Access, Foreign Aid and Economic Development By Sylvanus Kwaku Afesorgbor; Kaleb Girma Abreha
  19. Arbitration and Renegotiation in Trade Agreements By Mostafa Beshkar
  20. Agricultural Trade Policies and Food Security: Is there a Causal Relationship? By Emiliano Magrini; Pierluigi Montalbano; Silvia Nenci; Luca Salvatici
  21. International Agricultural Trade and Negotiations : Coping with a New Landscape By Jean-Christophe Bureau; Sébastien Jean
  22. Does foreign aid really attract foreign investors? New evidence from panel cointegration By Donaubauer, Julian
  23. On the effects of unilateral environmental policy on offshoring in multi-stage production processes By Schenker, Oliver; Koesler, Simon; Löschel, Andreas
  24. Multinational Firms and Business Cycle Transmission By Menno, Dominik
  25. The organization of knowledge in multinational firms By Gumpert, Anna
  26. Risk-Based Capital Requirements for Banks and International Trade By Michalski , Tomasz; Ors , Evren
  27. Trade and the Spatial Distribution of Transport Infrastructure By Tarasov, Alexander; Felbermayr, Gabriel
  28. Non-Tariff Measures when Alternative Regulatory Tools can be Chosen By Stéphan Marette
  29. Two-way models for gravity By Koen Jochmans
  30. Are Investment Promotion Agencies Doing the Thing Right? Evidence from China By Bin Ni

  1. By: Shiro Armstrong (East Asia Bureau of Economic Research)
    Abstract: The Australia–United States free trade agreement (AUSFTA) came into effect in 2005. It was the second preferential trade agreement that Australia signed, after its agreement with Singapore, and marked a departure from the primacy of Australia’s previous trade policy of unilateral and multilateral trade liberalisation towards preferential liberalisation. This paper assesses the economic effects of AUSFTA by applying the Productivity Commission’s gravity model of trade from its Bilateral and Regional Trade Agreements review. The evidence reveals AUSFTA resulted in a fall in Australian and US trade with the rest of the world — that the agreement led to trade diversion. Estimates also show that AUSFTA is associated with a reduction in trade between Australia and the United States.
    Keywords: Trade Liberalisation, AUSFTA, preferential trade agreements
    JEL: F13 F14
    Date: 2015–02
  2. By: Hildegunn Kyvik Nordås; Dorothée Rouzet
    Abstract: This paper uses newly released OECD data on services trade restrictions (STRI) to analyse the relationship between services trade restrictions, cross-border trade in services and trade in downstream manufactured goods. A standard gravity model is enhanced by the STRI indices in a cross-section regression analysis. Services trade restrictions are negatively associated with both imports and exports of services. The surprisingly strong effect on services exports is probably explained by a negative relationship between the STRIs and sector performance indices. Consequently, services suppliers are less competitive abroad. A negative relationship is also found between the STRI indices and exports, imports and intra-industry trade in manufactured goods. The statistical significance and the elasticities vary across services and goods sectors in ways that intuitively make sense.
    Keywords: trade in services, services trade restrictions, regulatory spillovers
    JEL: F13 F14
    Date: 2015–02–06
  3. By: Schmerer, Hans-Jörg; Wang, Luhang
    Abstract: Krugman's (1979, 1980) monoplistic competition model of trade showed that countries with more similar per-capita GDP trade more with each other. Does this mean that developing countries shift trade towards developed countries as a result of high economic growth? The results reported in this paper challenge the link between per-capita GDP and trade predicted by the force of gravity. The matched customs-manufacturing firm data used in this study reveal a rising low-income country trade share around and after China's accession to the World Trade Organization. Based on this stylized fact we analyze the link between firm performance and different export strategies. We find strong evidence for sequential sorting into different export-modes. i) only the most productive firms export to low-income countries, ii) export to low-income countries is coupled to export to high-income countries, iii) younger firms solely export to export markets with higher potential, and iv) low-income markets are served additionally by older firms. Moreover, we find that entry into simultaneous exports to low- and high-income destinations is associated with a higher productivity compared to the average productivity measured by incumbents' firm performance.
    JEL: F10 O11 F15
    Date: 2014
  4. By: Diakantoni, Antonia; Escaith, Hubert
    Abstract: Building on the results of the OECD-WTO Trade in Value-Added TiVA database, the paper analyses the evolution of effective protection in about 50 developed and developing countries from 1995 to 2008. The paper reviews also the role of preferential agreements on effective protection as well as the impact of tariffs on the production costs of services. A final chapter is dedicated to exploring the underlying patterns that may exist beyond the EPR profiles.
    Keywords: Tariff,Effective Protection,Trade in Value Added,International Outsourcing and Competitiveness
    JEL: C38 C67 D24 F13 F23 O19
    Date: 2014
  5. By: Constantine Manasakis (Department of Economics, University of Crete, Greece); Evangelos Mitrokostas (University of Portsmouth); Emmanuel Petrakis (Department of Economics, University of Crete, Greece)
    Abstract: We investigate the market and societal effects of a socially responsible multinational enterprise's entry in a host market through exports and through FDI, the determinants of the multinational's decision between exports and FDI, as well as the respective host country's policies. We find that the multinational enterprise, seeking for a competitive advantage in the host market, strategically engages in CSR activities and meets the corresponding demand by socially conscious consumers. The tariff charged by the host government increases with the social consciousness of this country's consumers. We also find that CSR activities are welfare enhancing for consumers and firms and thus, they should be encouraged.
    Keywords: Corporate social responsibility; Multinational enterprises; Foreign direct investment; Exports; Import tariffs
    JEL: D43 F13 F23
    Date: 2015–01–16
  6. By: Wolfgang Lechthaler; Mariya Mileva
    Abstract: We develop a dynamic general equilibrium trade model with comparative advantage, heterogeneous firms, heterogeneous workers and endogenous firm entry to study wage inequality during the adjustment after trade liberalization. We find that trade liberalization increases wage inequality both in the short run and in the long run. In the short run, inter-sectoral wage inequality is high but then recedes. The skill premium does not change much in the short run but increases substantially in the medium and long run. Incorporating worker training in the model considerably reduces the effects of trade liberalization on wage inequality. The effects on wage inequality are much more adverse when trade liberalization is unilateral instead of bilateral or restricted to specific sectors instead of including all sectors.
    Keywords: trade libaralization; wage inequality, adjustment dynamics
    JEL: E24 F11 F16 J31 J62
    Date: 2015–01
  7. By: Hakan Yilmazkuday (Department of Economics, Florida International University)
    Abstract: This paper measures the pass-through of trade costs into U.S. import prices by using actual data on duties/tariffs and freight-related costs. The key innovation is to decompose the indirect effects of trade costs (on prices) into the effects on markups, quality and productivity while measuring/interpreting the pass-through of trade costs into welfare. Robust to the consideration of variable versus constant markups, there is evidence for incomplete pass-through, mostly due to the negative indirect effects of trade costs on marginal costs, suggesting that lower trade costs are associated with imports that have higher marginal costs; markups are affected relatively less. When the effects of trade costs on marginal costs are further decomposed into their components, the positive contribution of quality dominates in all cases, followed by the negative effects of productivity, suggesting that lower trade costs are associated with higher-quality imports that have been produced with lower productivity.
    Keywords: Pass-through, Trade Costs, Variable Markups, Quality, Productivity.
    JEL: F12 F13 F14
    Date: 2015–01
  8. By: Joseph Francois (World Trade Institute); Bertin Martens (European Commission – JRC - IPTS); Fan Yang (Hohenheim University)
    Abstract: We use data on cross-border e-commerce between EU Member States to estimate the implied cross-border trade cost reduction when consumers move from offline to online consumption. We plug this trade cost estimate into a macro-sector multi-country CGE model to estimate the impact of online retailing on consumers as well as producers. We find that cross-border e-commerce increases real household consumption. However, the domestic spill-over effect squeezes price margins in the retail sector and has a negative output effect for that sector. The resulting retail sector efficiency gains have a positive effect on production in other sectors. The combined macro-economic effect of these transmission channels is generally positive for EU Member States, ranging between 0.07 and 0.25 per cent of GDP. As such, this paper adds an innovative macro-perspective to existing micro-economic estimates of the impact of e-commerce on consumer welfare.
    Keywords: e-commerce, online trade, cross-border trade, international trade, EU digital single market, CGE model, non-tariff barriers
    JEL: F14 C54
    Date: 2014–09
  9. By: Charlotte Emlinger; Sophie Piton
    Abstract: We provide a systematic decomposition of world trade using a new database built on an harmonized version of Trade Unit Values, CEPII's database providing a world trade matrix of unit values for more than 230 countries and 5 100 products over the period 2000-2012. The decomposition allows to associate each flow with a trade type (one-way trade, intra-industry trade in similar products or in differentiated products) and a price range (low, middle or high range). We show that world trade is still mainly inter-industry and concerns more and more middle-market products.
    Keywords: Unit Values;Trade Prices;Trade Types;Price Ranges
    JEL: F1
    Date: 2014–12
  10. By: Antonio Navas (Department of Economics, University of Sheffield)
    Abstract: This paper explores how trade openness affects both product and process innovation in a factor proportions model of trade and firm heterogeneity. Trade openness expands the profit opportunities of the most productive firms and expels the less efficient firms out of the market, making process innovation more attractive for the most productive firms in both industries. Incentives, however, are larger in the industry in which the country has the comparative advantage. Trade also increases the profits of prospective entrants leading to an increase in product innovation in the comparative advantage industry. In addition, I obtain a non-monotonic relationship between trade costs and a country's trade pattern: When the level of trade costs are high, a reduction in trade costs leads to an increase in process innovation in both industries, being stronger in the comparative advantage one; when the trade costs are low the effect is stronger in the comparative disadvantage one. This final result could rationalize recent empirical findings suggesting that in the last half century the Ricardian comparative advantage has become weaker over time.
    Keywords: Innovation, Firm Heterogeneity, Comparative Advantage.
    JEL: F12 F43
    Date: 2015–01
  11. By: Tomas Havranek; Zuzana Irsova
    Abstract: National borders reduce trade, but most estimates of the border effect seem puzzlingly large. We show that major methodological innovations of the last decade combine to shrink the border effect to a mere 28% reduction in international trade ows worldwide. The border effect varies across regions: it is large in emerging countries, but close to zero in OECD countries. For the computation we collect 1,271 estimates of the border effect reported in 61 studies, codify 32 aspects of study design that may in uence the estimates, and use Bayesian model averaging to take into account model uncertainty. Our results suggest that methods systematically affect the estimated border effects. Especially important is the level of aggregation, measurement of internal and external distance, control for multilateral resistance, and treatment of zero trade flows. We find no evidence of publication bias.
    Keywords: Bayesian model averaging, bilateral trade, borders, gravity, metaanalysis, publication selection bias
    JEL: F14 F15
    Date: 2015–12–01
  12. By: Sirries, Steffen; Larch, Mario
    Abstract: Goods trade and international mobility of labor are typically analyzed separately. While there is excellent research in both fields, far less is known about the interrelationships between international migration and international trade. This paper provides a first structurally estimable model of international trade with endogenous international migration choices of workers which can be used for model-based counterfactual predictions. Using bilateral trade and migration data for 33 OECD countries we find that quantitative welfare predictions vastly change: investigating reasonable changes in the costs of factor and goods mobility across borders in this unified framework almost doubles the predicted welfare effects compared to established models. Our results sensitize policy makers who seek ex-ante evaluations of international trade agreements and migration policies.
    JEL: F11 F22 F13
    Date: 2014
  13. By: Christophe Gouel
    Abstract: Many countries adjust their trade policies counter cyclically with foodprices,to the extent that the use by numerous foodexporters of export restrictions has occasionally threatened the foodsecurity of food importing countries.These tradepolicies are inconsistent with the terms-of-trade motivation often retained to characterize the pay-off frontier of self-enforcing trade agreements,as they can worsen the terms of trade of the countries that apply them.This paper analyzes trade policy coordination when trade policies are driven by terms-of-trade effects and a desire to reduce domestic food price volatility. This frame work implies that importing and exporting countries have incentives to deviate from cooperation at different periods:the latter when prices are high and the former when prices are low. Since staplefood prices tend to have asymmetric distributions,with more prices below than above the mean but with occasional spikes,a self-enforcing agreement generates asymmetric outcomes.Without cooperation,an importing country uses more frequently its trade policy because of the concentration of prices below the mean,but an exporting country has a greater incentive to deviate from a cooperative trade policy because positive deviations from the mean price are larger than negative ones.Thus,the asymmetry of the distribution of commodity prices can make it more difficult to discipline export taxes than tariffs in trade agreements.
    JEL: F13 Q17 Q18
  14. By: Byambasuren, Tsenguunjav; Gochoo, Munkh-Erdene
    Abstract: This paper aims to make an alternative development policy which can encourage the foreign trade efficiency. In order to make the policy, the current situation of Mongolian Foreign Trade has been determined and invented the product sectors that have a chance to be developed for the further. In this paper, several methods such as Revealed Comparative Advantage (RCA) method, Product Space Analysis or Monkey and Tree Model, Opportunity Index, and Gravity Model have been used to make analysis. The paper illustrates that firstly, Mongolian Foreign Trade has been becoming more dependent from a single country, a single product and there is no structural shift. In other words, the most part of Mongolian export goods consist of the products that have low sophistication level and low value added, and based on natural resources. Also, the diversification of export goods basket is poor and even no unique products are included in the basket. Therefore, this paper suggests an alternative development policy based on Hidalgo, Ricardo Hausmann, and Bailey Klinger’s policy recommendations and foreign trade policy experience of China whose economic performance was the best in the world last 30 years.
    Keywords: Revealed Comparative Advantage (RCA), Product space model, Structural transformation
    JEL: F14 F42
    Date: 2015–02–02
  15. By: Steve Suranovic (Department of Economics/Institute for International Economic Policy, George Washington University)
    Keywords: Fair Trade, Market Ethics, Inequality
    JEL: F1
  16. By: Hirte, Georg; Leßmann, Christian
    Abstract: We study the effect of international trade and freeness of trade on interregional inequality within countries. We estimate a model derived from a structural economic geography approach where interregional inequality depends on weighted trade shares and trade costs and where we can derive an aggregate freeness of trade measure. These measures are instrumented based on constructed trade shares and trade costs tted from a gravity model of bilateral trade, which covers 208 countries for the period 1948{2006. We analyze a cross country data set of regional inequality within countries, which covers 110 countries (1569 sub-national regions) for the year 2005, and a panel data set, which covers 56 countries (835 sub-national regions) for the period 1980{2009. IV and dynamic panel regressions show that trade increases inter-regional inequality within countries but an increase in freeness of trade is probably neutral. Because the latter is an indicator for integration in the world markets, we conclude that more integration neutralizes the negative interregional distribution e ects of the increase in trade.
    JEL: F15 R10 R12
    Date: 2014
  17. By: Novy, Dennis; Taylor, Alan
    Abstract: We offer a new explanation as to why international trade is so volatile in response to economic shocks. Our approach combines the uncertainty shock idea of Bloom (2009) with a model of trade, extending the idea to the open economy. Firms import intermediate inputs from home or foreign suppliers, but with higher costs in the latter case. Due to fixed costs of ordering firms hold an inventory of intermediates. In response to an uncertainty shock firms optimally adjust their inventory by cutting orders of foreign intermediates disproportionately strongly. In the aggregate, this leads to a bigger contraction in international trade flows than in domestic activity. We confront the model with newly-compiled U.S. import data and industrial production data going back to 1962, and also with disaggregated data back to 1989. Our results suggest a tight link between uncertainty and fluctuations in international trade.
    JEL: F10 E30 F40
    Date: 2014
  18. By: Sylvanus Kwaku Afesorgbor (Department of Economics and Business, Aarhus University, Denmark); Kaleb Girma Abreha (Department of Economics and Business, Aarhus University, Denmark)
    Abstract: Several studies highlight that exporters in developing countries face substantial trade costs. To reduce these costs, a few developed countries mainly Canada, the EU, Japan and the USA granted preferential market access to these exporters. We assess whether these preferential accesses have contributed to the economic development of the beneficiary countries. Focusing on the ACP countries over the period 1970-2009, we show that only the EU preferential scheme is effective in promoting exports and that market access plays a significant and economically large role in the development of beneficiary countries. This effect is more pronounced for high-aid receiving countries.
    Keywords: Preferential market access, foreign aid, economic development, gravity model, ACP countries
    JEL: F15 O10 R10
    Date: 2015–01–27
  19. By: Mostafa Beshkar (Indiana University)
    Keywords: Arbitration, Liability Rule, Property Rule, Safeguards, WTO
    JEL: F13 K33
    Date: 2014–11
  20. By: Emiliano Magrini; Pierluigi Montalbano; Silvia Nenci; Luca Salvatici
    Abstract: The aim of this paper is to assess the causal impact of trade policy distortions on food security.The added value of this work is twofold:i)its use of an on-parametric matching technique with continuous treatment,namely the Generalised Propensity Score(GPS)to address the self selection bias;ii)its analys is of heterogeneity in treatment(by commodities)as well as inoutcome(i.e.different dimensions of food security).The results of our estimates clearly show that trade policy distortions are,overall,significantly correlated with the various dimensions of food security analysed. Both discrimination against agriculture and 'excessive' support lead to poor performances in all dimensions of foodsecurity (availability,access,utilisation and stability).
    JEL: C21 F14 Q17
  21. By: Jean-Christophe Bureau; Sébastien Jean
    Abstract: Trade is a key element in food security but international cooperation is necessary for trade to help coping with supply shocks, to spread variations in crop yield and to dampen price volatility. While multilateral trade agreements have provided the foundations for a rule-based system, multilateralism has stalled. New economic and political conditions, in particular the new weight of emerging countries, have complicated the negotiations of a Doha agreement under the WTO. Agriculture plays a special role in the global negotiating game. Developed countries have given up many of their bargaining chips in the previous rounds of negotiation and concessions in agriculture are not sufficient for extracting concessions from emerging countries on services, procurement, and intellectual property that would make a multilateral agreement possible. Non-cooperative policies such as export restrictions are gaining momentum and distorting support is on the rise in emerging countries. With the development of bilateral agreements, there is a genuine risk of a more fragmented trading system that is unable to help coping with food insecurity. A series of research issues are listed that may help to revitalize the Doha negotiation agenda.
    JEL: Q18 O24
  22. By: Donaubauer, Julian
    Abstract: This paper examines whether foreign aid contributes to attracting foreign direct investment (FDI) in aid receiving countries. Using both homogeneous and heterogeneous panel cointegration techniques, I find that the effect of foreign aid on FDI is negative. This is in contrast to previous studies that usually found a positive association between aid and FDI.
    JEL: O10 O11 O00
    Date: 2014
  23. By: Schenker, Oliver; Koesler, Simon; Löschel, Andreas
    Abstract: In the last decades supply chains emerged that stretch across many countries. This has been explained with decreasing trade and communication costs. We extend the literature by analyzing if and how unilateral environmental regulation induces offshoring to unregulated jurisdictions. We first apply an analytical partial-equilibrium model of a two-stage production process that can be distributed between two countries and investigate unilateral emission pricing and its supplementation with border carbon taxes. To get a more comprehensive picture, we subsequently apply a computable general equilibrium model that includes a better representation of international supply chains. We find heterogeneous, but mostly positive effects of a unilateral carbon emission reduction by the European Union on the degree of vertical specialisation of European industries and explain these differences by heterogeneity in the emission-intensity and pre-policy vertical specialisation of sectors. Border taxes are successful in protecting upstream industries, but with negative side effects for downstream industries.
    Keywords: Unilateral Climate Policy,Border Carbon Taxes,Vertical Specialisation,Offshoring,Outsourcing,Computable General Equilibrium
    JEL: C68 F12 F18 Q58
    Date: 2014
  24. By: Menno, Dominik
    Abstract: This paper studies the effect of foreign direct investment (FDI) on the transmission of international business cycles. I document for the G7 countries between 1991 and 2006 that increases in bilateral FDI linkages are associated with more synchronized investment cycles. I also find that the relation between FDI integration and synchronization of gross domestic product (GDP) is \-- yet positive \-- statistically insignificant after controlling for time fixed effects. I then study a model of international business cycles with an essential role for FDI and shocks to multinational activity. In the model, more FDI openness unambiguously increases investment synchronization while the effect on GDP synchronization is ambivalent. Due to mismeasurement of intangible capital in national accounts, the actual elasticity of output synchronization with respect to FDI integration is underestimated. The effects measured in the data are quantitatively consistent with the model predictions. Finally, I show that more FDI increases households' welfare by reducing aggregate risk on the production side; this effect,however, is partially mitigated by multinational specific shocks.
    JEL: E32 F23 F44
    Date: 2014
  25. By: Gumpert, Anna
    Abstract: Employees must learn about firm technologies to use them in production. Within multinational firms, knowledge can be acquired centrally, by managers at headquarters, or locally, by production workers. Local knowledge acquisition increases with the bilateral communication costs with central management, and decreases with local knowledge acquisition costs. This mechanism explains why multinationals foreign sales and their probability of entry decrease in the distance of a country from the multinationals home country, and why multinationals pay higher wages than comparable domestic firms. The selection into foreign destinations and the foreign productivity distribution of German multinationals are consistent with the models predictions.
    JEL: F21 F23 D21
    Date: 2014
  26. By: Michalski , Tomasz; Ors , Evren
    Abstract: The authors provide the first evidence that changes in risk-based capital requirements for banks affect the real economy through international trade. Using a natural experiment – mandatory Basel II adoption in its Standardized Approach by all banks in Turkey on July 1, 2012 – they investigate the impact of new risk-weights applied to commercial letters of credit (CLC) on that country’s exports to 174 countries. The authors estimate the resulting payment-term-cost elasticity of CLC-financed trade to be between -0.5 and -1 while the overall trade elasticity to be between -0.032 and -0.179. Calculations suggest that both CLC-related bank pricing and rationing channels are involved.
    Keywords: commercial letters of credit; international trade finance; exports; risk-weights; Basel II
    JEL: F14 G21 G28
    Date: 2014–10–28
  27. By: Tarasov, Alexander; Felbermayr, Gabriel
    Abstract: This paper endogenizes the spatial distribution of infrastructure investment and transportation costs. Transportation costs between two addresses depend on cumulative infrastructure investment. In a continuous space setting with several independent countries or regions, consumers demand domestic and foreign goods, while central planners care only about welfare of their own constituencies. The equilibrium of the game between countries features under-investment and excessive spatial variation. The distribution of infrastructure is skewed towards central regions, rationalizing the non-linear trade-impeding role of distance in empirical gravity models and the so called border puzzle. We find that the endogenous allocation of infrastructure investment magnifies small discrete border frictions and creates `border regions' within countries. Privatizing infrastructure provision does not solve the problem. French data on transportation costs and an empirical gravity model for trade between US states motivate and corroborate our theory.
    JEL: F11 R42 R13
    Date: 2014
  28. By: Stéphan Marette
    Abstract: This paper analyzes whether or not different non-tariff measures (NTM) like a standard or a mandatory label can be considered as protectionist in presence of market imperfections. From a welfare-based approach, protectionism occurs when the instrument maximizing domestic welfare is different from the alternative instrument maximizing international welfare inclusive of foreign profits. A framework taking into account different tools shows the complexity for characterizing protectionism related to different NTM. When the standard impacts variable costs, the mandatory label can be protectionist. When the standard impacts sunk costs, the standard can be protectionist. The framework is also useful for empirically characterizing the impact of NTM related to a specific product. An application to shrimp trade illustrates the feasibility of the welfare measure, for an ex ante evaluation of possible environmental regulations that could be implemented in the future. This application confirms that the tool maximizing domestic welfare does not systematically correspond to the tool maximizing international welfare.
    JEL: F13 D61 Q17
  29. By: Koen Jochmans (Département d'économie)
    Abstract: Empirical models for panel data frequently feature fixed effects in both directions of the panel. Settings where this is prevalent include student-teacher interaction, the allocation of workers to firms, and the import-export flows between countries. Estimation of such fixed-effect models is difficult. We derive moment conditions for models with multiplicative unobservables and fixed effects and use them to set up generalized method of moments estimators that have good statistical properties. We estimate a gravity equation with multilateral resistance terms as an application of our methods.
    Date: 2015–02
  30. By: Bin Ni (PhD Candidate, Graduate School of Economics, Osaka University)
    Abstract: This paper tries to verify how the establishment of investment promotion agencies (IPAs) affects the decisions of foreign firms regarding their subsequent investment by combining firm-level data from the World Bankfs Enterprise Survey with city-level information on (IPAs) in China. After correcting for potential endogeneity problems, the result confirms the IPAsf role in promoting incremental foreign direct investment (FDI) into China. Furthermore, it is shown that Hong Kong, Macau, and Taiwan (HMT) firms are less sensitive to IPAsf efforts in making further investment than are non-HMT foreign firms. In addition, IPAs are found to be more successful in enhancing foreign firmsf investment in high-tech than in low-tech industries.
    Keywords: China, investment promotion agency, firm-level data, sample selection
    JEL: F21 F23
    Date: 2013–04

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