nep-int New Economics Papers
on International Trade
Issue of 2016‒11‒06
37 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. India’s Trade Partnership with East African Community: Exploratory Results from Trade Indices By Chakraborty, Debashis; Sahu, Manoj
  2. How trade facilitation measures influence export orientation? Empirical estimates with logistics performance index data By Chakraborty, Debashis; Mukherjee, Sacchidananda
  3. Do FDI Inflows influence Merchandise Exports? Causality Analysis on India over 1991-2016 By Chakraborty, Debashis; Mukherjee, Jaydeep; Lee, Jaewook
  4. Trade Liberalization and Child Labor in China By Zhao, Liqiu; Wang, Fei; Zhao, Zhong
  5. On the widely differing effects of free trade agreements: Lessons from twenty years of trade integration By Baier, Scott; Yotov, Yoto; Zylkin, Thomas
  6. On the Comparative advantage of U.S. Manufacturing: Evidence from the Shale Gas Revolution By Rabah Arezki; Thiemo Fetzer; Frank Pisch
  7. Potential Economic Effects of the Reduction in Agricultural and Nonagricultural Trade Barriers in the Transatlantic Trade and Investment Partnership By Caesar, Cororaton; David, Orden
  8. New evidence of environmental efficiency on the export performance By Sakamoto, Tomoyuki; Managi, Shunsuke
  9. Comment: Inferring Trade Costs from Trade Booms and Trade Busts By Guillaume Corlay; Stéphane Dupraz; Claire Labonne; Anne Muller; Guillaume Daudin
  10. Currency Unions and Regional Trade Agreements: EMU and EU Effects on Trade By Glick, Reuven
  11. Constructing a Myth that Ricardo Was the Father of the Ricardian Model of International Trade: A Reconsideration of Torrens f Principles of Comparative Advantage and Gain-from-trade By Taro Hisamatsu
  12. The good, the bad and the ugly: Chinese imports, EU anti-dumping measures and firm performance By Liza Jabbour; Enrico Vanino; Zhigang Tao; Yan Zhang
  13. How intermediates trade affects the formation of Free Trade Agreements: A study analyzing pairwise trade flows of 70 countries By Willert, Bianca
  14. The Gain from the Drain: Skill-biased Migration and Global Welfare By Biavaschi, Costanza; Burzyński, Michał; Elsner, Benjamin; Machado, Joel
  15. Financial globalization and foreign direct investment By Steven Poelhekke
  16. The effects of globalization on job choice and unemployment under labor search friction By Chihiro Inaba
  17. The Changing Pattern of China’s Economic Relations with Southeast Asia By Anne Booth
  18. A Spatial-Filtering Zero-Inflated Approach to the Estimation of the Gravity Model of Trade By R. Metulini; R. Patuelli; D. A. Griffith
  19. Has Trade Been Driving Global Economic Growth? By Leon Podkaminer
  20. International trade and risk aversion elasticities By Udo Broll; Soumyatanu Mukherjee
  21. Real Exchange Rate Persistence and Country Characteristics By Michael Curran; Adnan Velic
  22. Moving Up or Down? Immigration and the Selection of Natives across Occupations and Locations By Ortega, Javier; Verdugo, Gregory
  23. Heterogeneity in international value chains: The economic function of French brokers in the fresh fruit and vegetables import industry By Latouche, Karine; Rouvière, Elodie
  24. On the Geography of Global Value Chains By Alonso de Gortari; Pol Antras
  25. Consumption and Leisure: The Welfare Impact of Migration on Family Left Behind By Murard, Elie
  26. Firm Exports and Quality Standards: Evidence from French Food Industry By Disdier, Anne-Célia; Gaigné, Carl; Herghelegiu, Cristina
  27. Taxation, multinationals and foreign direct investment / Tributación, multinacionales e inversión extranjera directa / Tributació, multinacionals i inversió estrangera directa By Jordi Jofre-Monseny; Simon Loretz; Valeria Merlo; Daniel J. Wilson
  28. A Spatial-Filtering Zero-Inflated Approach to the Estimation of the Gravity Model of Trade By Rodolfo Metulini; Roberto Patuelli; Daniel A. Griffith
  29. All We Need is Love? Trade-Adjustment, Inequality, and the Role of the Partner By Katrin Huber; Erwin Winkler
  30. Editorial: Globalizacja i regionalizacja we współczesnym świecie - tom II By Gawlik, Remigiusz; Odrobina, Anna
  31. Soviet Foreign Trade Earnings Revisited By Kuboniwa, Masaaki; Tabata, Shinichiro; Nakamura, Yasushi
  32. Globalization Process in Emerging Capital Markets -- Lessons and Implications to China By Zichong Li; Pengyu Huang
  33. Innovation for inclusive value-chain development: Successes and challenges By Devaux, André; Torero, Maximo; Donovan, Jason; Horton, Douglas E.
  34. New Economic Geography: history and debate By José M. Gaspar
  35. The impact of exporting on SME capital structure and debt maturity choices By Elisabeth Maes; Nico Dewaelheyns; Catherine Fuss; Cynthia Van Hulle
  36. Offshoring, Endogenous Skill Decision, and Labor Market Outcomes By Agnese, Pablo; Hromcová, Jana
  37. Offshoring and job polarisation between firms By Egger, Hartmut; Kreickemeier, Udo; Moser, Christoph; Wrona, Jens

  1. By: Chakraborty, Debashis; Sahu, Manoj
    Abstract: Since the initiation of economic reforms in 1991, India adopted an outward-oriented strategy for development. After inception of World Trade Organization (WTO) in 1995, the country initially relied on multilateral trade reforms for export growth, but slow progress of the Doha Round negotiations over the last decade caused it to explore the regional trade agreements (RTAs) route as well from 2003-04 onwards. While in the initial period India focused on deeper trade relationship with Asian partners, namely, Association of Southeast Asian Nations (ASEAN), Japan, South Korea etc. as preferential trade allies, the perceived need to diversify the export markets has led the country to focus on potential trade partners in Africa, Europe, North and Latin America as well in recent times. On the other hand, the economies of East Africa are also embracing the RTA route for their trade promotion and the growing Indian market offers an opportunity for them as well. The present analysis attempts to understand the trade potential between the five East African Community (EAC) countries and India in the sphere of merchandise and services trade by looking through various trade indices. The empirical results indicate that bilateral trade between the two regions have a strong potential, which can be aided further through policy reforms at both ends.
    Keywords: Trade Policy, International Trade Organizations, Economic Integration, India, East Africa
    JEL: F15 F19
    Date: 2016–10–29
  2. By: Chakraborty, Debashis; Mukherjee, Sacchidananda
    Abstract: With inception of a comprehensive WTO framework in 1995, while the tariff barriers across Member countries have declined, several procedural and policy-related hassles still continue to obstruct trade flows. To reduce the procedural hassles to export and import flows, from the Cancun Ministerial (2003) onwards, negotiations to reach an agreement on Trade Facilitation (TF) started, which was finally concluded at the Bali Ministerial (2013) meeting of the WTO. The current analysis explores the relationship between TF measures, as reflected from the World Bank Logistics Performance Index (LPI), and export orientation (export as percentage of GDP) during four years, namely 2007, 2010, 2012 and 2014. The empirical results underline the difference in the influence of TF on export orientation in higher-income and lower-income countries. It is concluded that there is need to continue the ‘Aid-for-Trade’ support measures to lower-income economies, for improving their TF scenario.
    Keywords: Trade Policy, Trade Facilitation, Exports, LPI, Empirical Estimate, Aid-for-Trade
    JEL: F13 F14
    Date: 2016–10–26
  3. By: Chakraborty, Debashis; Mukherjee, Jaydeep; Lee, Jaewook
    Abstract: The deepening waves of globalization since late eighties and the growth in the international integrated production networks (IPN) over the past decade have significantly increased both Foreign Direct Investment (FDI) and merchandise trade flows. India is no exception to this trend, whose share in global FDI inward stock and global merchandise exports have increased from 0.08 percent to 1.13 percent and 0.51 percent to 1.60 percent over 1989-2015 respectively. The current paper attempts to explain the influence of FDI inflows on India’s exports through a time series analysis with quarterly data over the period 1990-91 (Q1) to 2015-16 (Q4). The empirical analysis indicates that while exports influence FDI inflows, the reverse is not true in the Indian context. The result underlines the fact that FDI inflows in the country may primarily be targeting the growing domestic sector, rather than utilizing the domestic resources for reaching the world market. It also suggests that there exist further scope for better utilization of the India-centric trade and investment agreements.
    Keywords: International Capital Movements, India, exports, causality analysis, endogenous breaks
    JEL: F21 F31
    Date: 2016–11–01
  4. By: Zhao, Liqiu (Renmin University of China); Wang, Fei (Renmin University of China); Zhao, Zhong (Renmin University of China)
    Abstract: This paper exploits a quasi-natural experiment – the U.S. granting of Permanent Normal Trade Relations (PNTR) to China after China's accession to the World Trade Organization – to examine whether trade liberalization affects the incidence of child labor in China. PNTR permanently set U.S. duties on Chinese imports at low Normal Trade Relations (NTR) levels and removed the uncertainty associated with annual renewals of China's NTR status. We find that the PNTR was significantly associated with the rising incidence of child labor in China. A one percentage point decrease in average export tariffs raises the odds of child labor by a 1.3 percentage point. The effects are greater for girls, older children, rural children, and children with less-educated parents. The effect of trade liberalization on the incidence of child labor, however, disappears in the long run, because trade liberalization can induce exporters to upgrade technology and thus have less demand for unskilled workers.
    Keywords: child labor, trade liberalization, trade policy uncertainty, difference-in-differences, China
    JEL: F14 F16
    Date: 2016–10
  5. By: Baier, Scott (Clemson University); Yotov, Yoto (Drexel University); Zylkin, Thomas (National University of Singapore)
    Abstract: We develop a novel two-stage methodology that allows us to study the empirical determinants of the ex post effects of past free trade agreements (FTAs) as well as obtain ex ante predictions for the effects of future FTAs. We first identify 908 unique estimates of the effects of FTAs on different trading pairs for the years 1986-2006. We then employ these estimates as our dependent variable in a “second stage” characterizing the heterogeneity in these effects. Interestingly, most of this heterogeneity (~ 2/3) occurs within FTAs (rather than across different FTAs), with asymmetric effects within pairs (on exports vs imports) also playing a important role. We offer several intuitive explanations for these variations. Even with the same agreement, FTA effects are weaker for more distant pairs and for pairs with otherwise high levels of ex ante trade frictions. The effects of new FTAs are similarly weaker for pairs with existing agreements already in place. In addition, we are able to relate asymmetries in FTA effects to each country’s ability to influence the other’s terms of trade. Out-of-sample predictions incorporating these insights enable us to predict direction-specific effects of future FTAs between any pair of countries. A simulation of the general equilibrium effects of TTIP demonstrates the importance of our methods.
    Keywords: Free Trade Agreements; International Trade; Gravity
    JEL: F13 F14 F16
    Date: 2016–10–28
  6. By: Rabah Arezki; Thiemo Fetzer; Frank Pisch
    Abstract: This paper provides novel empirical evidence of the effects of a plausibly exogenous change in relative factor prices on United States manufacturing production and trade. The shale gas revolution has led to (very) large and persistent differences in the price of natural gas between the United States and the rest of the world reflecting differences in endowment of difficult-to-trade natural gas. Guided by economic theory, empirical tests on output, factor reallocation and international trade are conducted. Results show that U.S. manufacturing exports have grown by about 10 percent on account of their energy intensity since the onset of the shale revolution. We also document that the U.S. shale revolution is operating both at the intensive and extensive margins.
    Keywords: manufacturing, exports, energy prices, shale gas
    JEL: Q33 O13 N52 R11 L71
    Date: 2016–11
  7. By: Caesar, Cororaton; David, Orden
    Abstract: The objective of the paper is to provide a preliminary assessment of the potential economic effects in the U.S. and EU28 of a reduction in their bilateral trade barriers. Using a global CGE model the paper develops four trade barrier reduction scenarios and analyzed their impact on trade, production, factor prices, and welfare in the two economies for a 10-year period through 2024 compared to a baseline without reductions. The scenarios are: (i) 90% reduction in tariffs only; (ii) 90% and 20% reductions in tariffs and NTMs, respectively, for all sectors; (iii) 90% and 20% reductions in tariffs and NTMs in non-agriculture only; and (iv) 90% reduction in both tariffs and NTMs. Results indicate largest percentage increases in bilateral trade for agriculture/food sectors when liberalization includes these sectors, but that most of the gains are in non-agriculture due to its predominance in production and initial trade flows. Only the fourth scenario reverses the baseline downward trend through 2024 in U.S.-EU28 bilateral trade as a share of their global totals.
    Keywords: Transatlantic Trade and Investment Partnership (TTIP), Regional trade, United States, European Union 28, Global computable general equilibrium (CGE) model, Tariffs, Non-tariff measures (NTM)
    JEL: C68 D58 F15
    Date: 2016–04–10
  8. By: Sakamoto, Tomoyuki; Managi, Shunsuke
    Abstract: This article investigates the relationship between the environment-related efficiency and export performance according to the recent international trade theory which has offered to a theoretical model to quantify the Ricardian comparative advantage. We find that the energy and environmental efficiency can be a source of the comparative advantage in industries. The largest magnitude and the smallest of the efficiency on exporting are estimated to be NOx and energy efficiency, respectively. The empirical results further show that the efficiency has a smaller impact on export performance in relatively less footloose industries, and the impact of the efficiency is found to depend on industrial characteristics.
    Keywords: Comparative advantage, trade and environment, energy efficiency, pollution emissions per production
    JEL: Q40 Q53 Q56
    Date: 2016
  9. By: Guillaume Corlay (ENSAE, French National School of Statistics and Economic Administration); Stéphane Dupraz (Columbia University, 10025 New York NY, USA); Claire Labonne (Paris School of Economics / Université Paris 1 Panthéon Sorbonne – ACPR - Banque de France); Anne Muller (Sciences Po, Observatoire Français des Conjonctures Économiques (OFCE)); Guillaume Daudin (PSL, Université Paris-Dauphine, LEDa-DIAL UMR IRD 225)
    Abstract: Jacks et al. (2011) offer an alternative to price gaps to quantify trade costs. Implementing a method which consists in deducing international trade costs from trade flows, they argue that the reduction in trade costs was the main driving force of trade growth during the first globalization (1870-1913), whereas economic expansion was the main driving force during the second globalization (1950-2000). We argue that this important result is driven by the use of an ad hoc aggregation method. What Jacks et al. (2011) capture is the difference in the relative starting trade of dyads experiencing faster trade growth in the first and second globalization. More generally, we cast doubts on the possibility to reach conclusions of such nature with a method that infers trade costs from trade flows, and then uses these costs to explain trade flows. We argue that it can only rephrase the information already contained in openness ratios.
    Keywords: Trade costs, globalization, gravity model, aggregation, structure effect.
    JEL: F14 N70
    Date: 2016–08
  10. By: Glick, Reuven (Federal Reserve Bank of San Francisco)
    Abstract: The effects of the European Economic and Monetary Union (EMU) and European Union (EU) on trade are separately estimated using an empirical gravity model. Employing a panel approach with both time-varying country and dyadic fixed effects on a large span of data (across both countries and time), it is found that EMU and EU each significantly boosted exports. EMU expanded European trade by 40% for the original members, while the EU increased trade by almost 70%. Newer members have experienced even higher trade as a result of joining the EU, but more time is necessary to see the effects of their joining EMU.
    JEL: F15 F33
    Date: 2016–10–28
  11. By: Taro Hisamatsu (Graduate School of Economics, Kobe University)
    Abstract: Historians of economic thought have often pointed out that Ricardo fs famous England-Portugal model differs from the gRicardian model h presented in modern international economics textbooks. This paper argues that the erroneous belief that David Ricardo was the father of the Ricardian model might have arisen from Robert Torrens f own explanations of comparative advantage and his repeated claims. The principle of comparative advantage put forward by Torrens has much in common with the modern Ricardian model. In the early twentieth century, distinguished writers of international trade theory devoted their attention to a great controversy among famous economists in the authoritative The Economic Journal about who should be considered the true father of comparative advantage, Ricardo or Torrens, and concluded that Ricardo, in his text, proposed the same principles of comparative advantage as Torrens had presented.
    Date: 2016–09
  12. By: Liza Jabbour; Enrico Vanino; Zhigang Tao; Yan Zhang
    Abstract: Despite growing international trade flows, the last decades have been characterized by an increasing recurrence to protectionist measures, especially through the adoption of anti-dumping (AD) measures. Dumping strategies might reduce international competition although the literature has frequently questioned to what extent AD measures have to do with unfair trade. Increasing concerns have been raised about the possible protectionist abuse of this trade defence instrument, especially in developed countries which may use AD actions to defend their mature industries from the price-competition of emerging economies. This paper provides a comprehensive analysis of the European Union (EU) AD measures against Chinese imports, looking at the contrasting effect on the performance of Chinese exporters, European producers and European importers. Our results suggest that EU AD measures successfully reduced the number of Chinese exporters although this results in an increase in the productivity of those remaining. The same EU AD measures have a mixed impact on the performance of European firms, bringing temporary benefits for domestic producers, but negatively affecting importers, with a perverse long-run effect of a reduced productivity gap between Chinese exporters and European firms.
    Keywords: anti-dumping, difference-in-differences, China, European Union, trade policy, lobbying
    Date: 2016
  13. By: Willert, Bianca
    Abstract: International trade and fragmentation of production lead to increased trade in intermediate goods. Increased multi-stage production promotes the formation of free-trade agreements (FTA). In this paper, the relationship between intermediates trade and FTAs is examined with a two-step Pseudo Poisson Maximum Likelihood model. The analysis of a comprehensive dataset of pairwise trade-flow data of 70 countries from the years 1995-2011 shows a significant connection between trade in intermediates and the participation in free-trade agreements. A two-way relationship is identified: intermediates trade increases the probability to form a FTA and FTAs lead to an increase in intermediates trade.
    Keywords: free-trade agreements,international trade,intermediates trade,multi-stage production,fragmentation of production,vertical linkages,third-country effects,gravity equations,distance coefficients,border effects
    Date: 2016
  14. By: Biavaschi, Costanza (University of Reading); Burzyński, Michał (University of Luxembourg); Elsner, Benjamin (IZA); Machado, Joel (University of Luxembourg)
    Abstract: High-skilled workers are four times more likely to migrate than low-skilled workers. This skill bias in migration – often called brain drain – has been at the center of a heated debate about the welfare consequences of emigration from developing countries. In this paper, we provide a global perspective on the brain drain by jointly quantifying its impact on the sending and receiving countries. In a calibrated multi-country model, we compare the current world to a counterfactual with the same number of migrants, but those migrants are randomly selected from their country of origin. We find that the skill bias in migration significantly increases welfare in most receiving countries. Moreover, due to a more efficient global allocation of talent, the global welfare effect is positive, albeit some sending countries lose. Overall, our findings suggest that more – not less – high-skilled migration would increase world welfare.
    Keywords: migration, brain drain, global welfare
    JEL: F22 O15 J61
    Date: 2016–10
  15. By: Steven Poelhekke
    Abstract: This chapter provides a broad overview of the upward trends in financial globalization and foreign direct investment and asks whether and how financial globalization is linked with the foreign direct investment decisions of non-financial multinational enterprises. Several potential links and their empirical support in the recent literature are discussed: the elements of foreign direct investment that require (global) financial services; the role of trade credit; and the question whether banks follow their customers abroad. Finally, the effect of the recent financial crisis is discussed. It finds that financial globalization provides a reduction in broadly defined transaction costs which can boost both trade and foreign direct investment, at the costs of more exposure of the real economy to financial shocks.
    Keywords: foreign direct investment; financial globalization; banks
    JEL: F23 F36 F43 O40
    Date: 2016–10
  16. By: Chihiro Inaba (Graduate School of Economics, Kobe University)
    Abstract: Trade liberalization increases the import of foreign goods and makes local markets more competitive. To survive the severe competition, local firms must improve the quality of production factor, and employ more highly skilled workers than unskilled workers. An increase in the demand for skilled workers encourages workers to pursue higher education. However, the recent employment of highly educated workers is stagnant globally. Although trade liberalization enhances the demand for skilled workers, it may not contribute to increasing their employment. I analyze how trade liberalization affects the local employment of skilled workers, occupational choice, and wage inequality. Firms can always produce low-quality goods by using only unskilled labor. If a firm succeeds in employing an appropriately skilled worker, it can improve the quality of the goods it produces. However, due to are search friction, matches are not always successful. If firms and workers fail to match appropriately, the unmatched skilled workers remain unemployed and the unmatched firms continue to produce low-quality goods. With this knowledge, workers choose their occupations: and either remain to be unskilled or lean skills. Trade liberalization raises the skilled wage rate and the successful probability of matching, which encourages unskilled workers to learn skill but increase the number of the skilled workers after trade liberalization. Therefore, the unemployment rate of skilled workers may increase after globalization.
    Date: 2016–09
  17. By: Anne Booth (Department of Economics, SOAS, University of London, UK)
    Abstract: This paper examines the debates which have arisen in the ten countries of ASEAN about the impact of growing trade and investment ties with China, both before and after the full implementation of the ASEAN-China Free Trade Agreement in 2010. It examines the changes which have taken place in the country composition of trade and investment flows within the ASEAN countries, and between the ASEAN countries, China, and the rest of the world. The evidence indicates that while merchandise trade values have increased between China and ASEAN since 2010, the increase has not been as rapid as some predicted. But China is now running a substantial trade surplus with the ASEAN countries; the value of exports from China to ASEAN exceed the value of imports to China from the ASEAN countries. This surplus could lead to frictions in the future. Investment flows from China to ASEAN are still small in relation to flows into ASEAN from the rest of the world.
    Keywords: ASEAN, China, Trade, Investment, Migration
    JEL: F55
    Date: 2016–10
  18. By: R. Metulini; R. Patuelli; D. A. Griffith
    Abstract: Nonlinear estimation of the gravity model with Poisson/negative binomial methods has become popular to model international trade flows, because it permits a better accounting for zero flows and extreme values in the distribution tail. Nevertheless, as trade flows are not independent from each other due to spatial autocorrelation, these methods may lead to biased parameter estimates. To overcome this problem, eigenvector spatial filtering variants of the Poisson/negative binomial specification have been proposed in the literature of gravity modelling of trade. However, no specific treatment has been developed for cases in which many zero flows are present. This paper contributes to the literature in two ways. First, by employing a stepwise selection criterion for spatial filters that is based on robust (sandwich) p-values and does not require likelihood-based indicators. In this respect, we develop an ad hoc backward stepwise function in R. Second, using this function, we select a reduced set of spatial filters that properly accounts for importer-side and exporter-side specific spatial effects, both at the count and the logit processes of zero-inflated methods. Applying this estimation strategy to a cross-section of bilateral trade flows between a set of worldwide countries for the year 2000, we find that our specification outperforms the benchmark models in terms of model fitting, both considering the AIC and in predicting zero (and small) flows.
    JEL: C14 C21 F10
    Date: 2016–10
  19. By: Leon Podkaminer (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Abstract The last 50 years have produced a series of revolutionary technological changes. These decades have also witnessed a truly revolutionary systemic change at the global level. The change started with step-wise internal liberalisations and deregulations in the major industrialised countries. The internal systemic changes have been synchronised with the consecutive waves of liberalisation of international economic relations. Trade liberalisations (cuts in tariff levels, progressive removal of many non-tariff barriers to trade) were followed by consecutive waves of liberalisation of capital flows to a large degree completing the process of globalisation. Advancing globalisation seems to have been paralleled by the global economic growth becoming progressively slower and unstable. Using the standard tools of time series econometrics (VEC, Granger non-causality testing, ARDL) the paper suggests that trade has not been driving global economic growth (or even that expanding trade may have slowed down global output growth). Large and persistent trade imbalances which have become typical since the mid-1970s are just one possible reason for trade no longer playing the positive role assigned to it in the trade theories. The second reason relates to the ‘race-to-the-bottom’ tendencies with respect to the wage rate which have developed under globalisation. These tendencies may have been responsible for the persistent shortage of aggregate demand at the global level and – consequently – weakening global output growth.
    Keywords: world income, world trade, globalisation, wage-led growth, VEC, Granger causality
    JEL: F43 F15 F16 O47 O49
    Date: 2016–10
  20. By: Udo Broll; Soumyatanu Mukherjee
    Abstract: This paper analyses, for the first time, risk-taking behaviour (under no-hedging possibilities) using two-moment model for a firm linked to both domestic and foreign markets simultaneously – in the first case, the firm is simultaneously serving both domestic and foreign markets; while in the second case, it is serving the domestic market, using the imported intermediate products as inputs. Uncertainties in the spot exchange rates impart production decisions of the firm in either case. In sum, the firm’s elasticity of risk aversion with respect to the standard deviation (or the mean) of the firm’s end-period random profit determines the direction of the impact of exchange rate volatilities on trade. This simple framework can be helpful to answer the seemingly non-intuitive empirical results.
    Keywords: Two-moment model; exports; imported intermediate inputs; exchange rate risk; elasticities of risk aversion
    Date: 2016
  21. By: Michael Curran (Department of Economics, Villanova School of Business, Villanova University); Adnan Velic (Dublin Institute of Technology)
    Abstract: This paper examines the persistence of real exchange rates across the world post Bretton Woods. We employ univariate time series techniques on a country-by-country basis allowing for deterministic structural breaks and nonlinearities in the adjustment process. Our findings suggest that bilateral exchange rates and industrial countries display the highest rates of persistence. Analyzing the variation in cross-country persistence estimates, we retrieve evidence indicating that higher in ation, nominal exchange rate volatility, trade openness and proximity to reference country are associated with faster rates of real exchange rate convergence. Conversely, international nancial integration is only found to be a significant factor at the country group level, with differential effects across cohorts.
    Keywords: Real Exchange Rate; Parity Deviations; Cross-Country Persistence Differences; Structural Determinants
    JEL: F31 F41
    Date: 2016–10
  22. By: Ortega, Javier (City University London); Verdugo, Gregory (Université Paris 1 Panthéon-Sorbonne)
    Abstract: Exploiting a large French panel for 1976-2007, we examine the impact of low-educated immigration on the labour market outcomes of blue-collar natives initially in jobs where immigrants became overrepresented in the last decades. Immigrant inflows generate substantial reallocations of natives across locations and occupations. Location movers are negatively selected while occupation movers are positively selected and move towards better paid-jobs characterised by less routine tasks. As a result, controlling for composition effects has an important quantitative impact on the estimated effects of immigration. Low-educated immigration generally lowers the wages of blue-collar workers, but its impact is heterogeneous across sectors.
    Keywords: immigration, wages, employment
    JEL: J15 J31
    Date: 2016–10
  23. By: Latouche, Karine; Rouvière, Elodie
    Abstract: Using very original data in the import industry of fruits and vegetables, we consider the activity of trade intermediaries in an active way. To stick to recent developments of international economics literature and using the definitions provided by organizational economics, we argue that it worth considering brokers might have heterogeneous activities. Accounting for their heterogeneity we identify that differentiated value chains co-exist at the border point of the European Union market. We also highlight that French importers implement different safety strategies.
    Keywords: International Relations/Trade,
    Date: 2016
  24. By: Alonso de Gortari (Harvard University); Pol Antras (Harvard University)
    Abstract: This paper studies the optimal location of production for the different stages in a sequential global value chain. We develop a general-equilibrium model featuring a proximity-concentration tradeoff: slicing global value chains across countries allows to better exploit agglomeration economies, but such fragmentation comes at the cost of increased transportation costs. We show that, other things equal, it is optimal to locate relatively downstream stages of production in relatively central or well-connected locations, while upstream stages of production are optimally assigned to more remote locations. We illustrate this result by working out the optimal location of production for a few basic topologies featuring a low number of countries and stages. Exact solutions to the problem for a larger number of countries and stages are computationally complex, but can be obtained using combinatorial optimization tools. We apply the model to study the optimal specialization within chains in eleven countries in Factory Asia.
    Date: 2016
  25. By: Murard, Elie (IZA)
    Abstract: This paper examines the effect of international migration on the welfare of family members left behind at the origin. Previous literature has produced inconclusive evidence, with some studies suggesting that migration reduces income poverty while others show that non-migrants bear a larger work burden to compensate for the loss of migrants' earnings. This paper provides a new unified framework that generates testable predictions of whether migration increases non-migrants' welfare in terms of both consumption and leisure time. Drawing on household panel data in rural Mexico, I find that migration increases non-migrants' consumption, but that this consumption gain cannot be explained by labor supply adjustments. Migration improves left-behinds' welfare through two different channels: (i) migrants' remittances exceed their forgone income contribution to the origin household; and (ii) the out-migration of a farmer increases the marginal productivity of agricultural labor for those left behind in the farm.
    Keywords: migration, remittances, welfare, labor supply, consumption, Mexico
    JEL: J22 F22
    Date: 2016–10
  26. By: Disdier, Anne-Célia; Gaigné, Carl; Herghelegiu, Cristina
    Keywords: Agricultural Finance, Farm Management,
    Date: 2016
  27. By: Jordi Jofre-Monseny (Universitat de Barcelona & IEB); Simon Loretz; Valeria Merlo; Daniel J. Wilson
    Date: 2016
  28. By: Rodolfo Metulini (Department of Economics and Management, University of Brescia, Italy); Roberto Patuelli (Department of Economics, University of Bologna, Italy; The Rimini Centre for Economic Analysis, Italy); Daniel A. Griffith (School of Economic, Political & Policy Sciences, The University of Texas at Dallas, USA)
    Abstract: Nonlinear estimation of the gravity model with Poisson/negative binomial methods has become popular to model international trade flows, because it permits a better accounting for zero flows and extreme values in the distribution tail. Nevertheless, as trade flows are not independent from each other due to spatial autocorrelation, these methods may lead to biased parameter estimates. To overcome this problem, eigenvector spatial filtering variants of the Poisson/negative binomial specification have been proposed in the literature of gravity modelling of trade. However, no specific treatment has been developed for cases in which many zero flows are present. This paper contributes to the literature in two ways. First, by employing a stepwise selection criterion for spatial filters that is based on robust (sandwich) p-values and does not require likelihood-based indicators. In this respect, we develop an ad hoc backward stepwise function in R. Second, using this function, we select a reduced set of spatial filters that properly accounts for importer-side and exporter-side specific spatial effects, both at the count and the logit processes of zero-inflated methods. Applying this estimation strategy to a cross-section of bilateral trade flows between a set of worldwide countries for the year 2000, we find that our specification outperforms the benchmark models in terms of model fitting, both considering the AIC and in predicting zero (and small) flows.
    Keywords: bilateral trade; unconstrained gravity model; eigenvector spatial filtering; zero flows; backward stepwise; zero-inflation
    JEL: C14 C21 F10
    Date: 2016–10
  29. By: Katrin Huber; Erwin Winkler
    Abstract: We examine the distributional effect of Germany’s trade integration with China and Eastern Europe and show that there are considerable differences between the household level and the individual level impact. The trade shock increased inequality of individual earnings. At the household level, however, about 40% of this distributional effect is reduced by a simple insurance effect that occurs if partners within married and unmarried couples are differently affected by the trade shock. The insurance effect is substantial since the trade shock had a large variation across industries and 80% of individuals within couples are employed in different industries. Our analysis also reveals that many workers who individually benefit from the trade shock turn into ’losers’ at the household level because they have a partner who experiences a strong negative impact. All in all, this paper suggests that a household level perspective is essential in order to understand the exact distributional consequences of globalization.
    Keywords: Earnings inequality, international trade, household, insurance
    JEL: J31 F16
    Date: 2016
  30. By: Gawlik, Remigiusz; Odrobina, Anna
    Abstract: Today's international economy is subject to dynamic changes and interactions. This is due to globalization processes that provide new features to international networks of economic relations. Globalization covers more and more spheres of human activity on international, national, regional and local levels. Such a turbulent environment creates the need for constant research on the nature of these relations.
    Keywords: globalization, regionalization
    JEL: F00
    Date: 2016
  31. By: Kuboniwa, Masaaki; Tabata, Shinichiro; Nakamura, Yasushi
    Abstract: Soviet statistics authorities attempted to incorporate foreign trade earnings into national income, based on a unique formula. First, we clarify that they must have applied the so called Burge-Geary system for trading gain or terms of trade to their specific accounting in a different context. Then we prove that this Soviet practice should have been corrected. Second, demonstrating our estimate of Soviet foreign trade earnings by using Soviet official data on foreign trade and input-output tables, we explore implications of our estimate. We further look at how present Russia has succeeded to the Soviet statistical and institutional legacies of foreign trade earnings in the national accounting.
    Keywords: Soviet Union, special foreign trade earnings, foreign trade tax, national accounting, input-output table
    JEL: E01 P33 P51
    Date: 2016–10
  32. By: Zichong Li; Pengyu Huang
    Abstract: Since 2002 when China first introduced QFII (Qualified Foreign Institutional Investors) system, QFII has been developing in China for 14 years, during when RQFII, Shanghai-Hongkong Stock Connect Program, Shanghai-London Stock Connect Program furthur broadened the avenue for foreign capital to invest in Chinese Security Market. As FTA (Free Trade Area) Financial Reform Program emerged, RMB (CNY) Capital Project is likely to make the currency exchangeable. With the success in QFII, RQFII and Shanghai-Hongkong Stock Connect Program, China's long term advantage in interest rate, and the relatively low stock index value after the recent stock market crashes in mid 2015 and early 2016, foreign capitals' demand for Chinese market to loosen its restrictions continually increases. This article picks the three most representative emerging capital markets in the world, namely Taiwan, Korea and India, by comparing and analyzing their paths of globalization, attempts to shed light on China's next steps regarding globalization.
    Date: 2016–11
  33. By: Devaux, André; Torero, Maximo; Donovan, Jason; Horton, Douglas E.
    Keywords: trade; market access; smallholders; producer organizations; transport; wholesale marketing; retail marketing; farmers organizations; value chains; food processors
    Date: 2016
  34. By: José M. Gaspar (Rua Dr. Roberto Frias, 4200-464 Porto PORTUGAL)
    Abstract: This paper aims to synthesize the main conceptual and ontological discussion around the field of New Economic Geography. It starts out by laying down the fundamental reasons and motivations that led to the surge of New Economic Geography and provides the background in adjacent fields of economic theory which made this possible. I then provide an overall assessment of the state of the art in NEG and track the intellectual evolution of the field since the nineties up to the present, focusing on the intrinsic criticism that it has been subject to throughout its history. This criticism has its roots in the different ontological conceptions of geography (space) and history (time), as well on the methodological differences, between economists and geographers. Another concern of this paper is to analyze the evolution of the debate and communication between geographical economists and economic geographers.
    Keywords: economic geography; geography and history; ontological debate;
    JEL: N7 N9 R12
    Date: 2016–10
  35. By: Elisabeth Maes (KULeuven, Faculty of Economics and Business, Department of Accountancy, Finance and Insurance); Nico Dewaelheyns (KULeuven, Faculty of Economics and Business, Department of Accountancy, Department of Financial Management); Catherine Fuss (Economics and Research Department, National Bank of Belgium); Cynthia Van Hulle (KULeuven, Faculty of Economics and Business, Department of Accountancy, Finance and Insurance)
    Abstract: Using a longitudinal dataset comprising of detailed financial and exporting data from Belgian small and medium-sized enterprises (SME) between 1998 and 2013, this article examines the manner in which firms manage to finance their export activities and the resulting impact on corporate capital structure. We find that exporters have to finance relatively more working capital as compared to their non-exporting peers and that they resolve this financing need by carrying more short-term debt. In addition, we evidence that the relationship between pledgeable short-term assets, such as working capital, and short-term debt financing is more pronounced for exporters. In particular, we show that the ties between pledgeable short-term assets and short-term debt financing are stronger for export-intensive firms and firms that serve distant and risky export destinations. Overall, what our empirical findings seem to suggest is that developing tools that facilitate the pledging of assets is likely to boost SME export activities by widening access to bank financing and reducing financial constraints.
    Keywords: SMEs, capital structure, debt maturity, export, collateral, working capital
    JEL: F10 F14 F42 G3 G32
    Date: 2016–10
  36. By: Agnese, Pablo (UIC Barcelona); Hromcová, Jana (Universitat Autònoma de Barcelona)
    Abstract: We discuss the effects of low-skill offshoring on the endogenous schooling decision of workers along with the potential changes in the labor market. The analysis is performed in the context of a matching model with different possible equilibria. Our exercise suggests that the endogenous adjustment of low-skill workers can only partially offset the welfare-deteriorating effects of offshoring. As a result, we aim at restoring welfare by increasing the opportunity cost of staying low-skill. In addition to this, we also consider labor flexibility as an effective policy to deal with the adverse welfare effects of offshoring that befall those in the lowest end of the skill ladder.
    Keywords: offshoring, welfare, skills, education, flexibility
    JEL: F66 I25 J64
    Date: 2016–10
  37. By: Egger, Hartmut; Kreickemeier, Udo; Moser, Christoph; Wrona, Jens
    Abstract: We set up a general equilibrium model, in which offshoring to a low-wage country can lead to job polarisation in the high-wage country. Job polarisation is the result of a reallocation of labour across firms that differ in productivity and pay wages that are positively linked to their profits by a rent-sharing mechanism. Offshoring involves fixed and task-specific variable costs, and as a consequence it is chosen only by the most productive firms, and only for those tasks with the lowest variable offshoring costs. A reduction in those variable costs increases offshoring at the intensive and at the extensive margin, with domestic employment shifted from the newly offshoring firms in the middle of the productivity distribution to firms at the tails of this distribution, paying either very low or very high wages. We also study how the reallocation of labour across firms affects economy-wide unemployment. Offshoring reduces unemployment when it is confined to high-productivity firms, while this outcome is not guaranteed when offshoring is also chosen by low-productivity firms.
    Keywords: Offshoring,Job Polarisation,Heterogeneous Firms,Unemployment
    JEL: F12 F16 F23
    Date: 2016

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