nep-int New Economics Papers
on International Trade
Issue of 2017‒05‒14
28 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Policy landscape of trade in environmental goods and services By Jacob, Arun; Møller, Anders K
  3. Canada’s Trade Policy Options under Donald Trump: NAFTA’s rules of origin, Canada-U.S. security perimeter, and Canada’s geographical trade diversification opportunities By Patrick Georges
  4. Eurasian Economic Union: Asymmetries of Growth Factors By Khusainov, Bulat; Kireyeva, Anel; Sultanov, Ruslan
  5. Trade Reforms and Industry Wage Premium: Evidence from Argentina By Guillermo Falcone; Luciana Galeano
  6. Trade and Commodity Taxes as Environmental Instruments in an Open Economy By Onur A. Koska; Frank Stähler; Onur Yeni
  7. The Euro and the CFA Franc: Evidence of sectoral trade effects By Martínez-Zarzoso, Inmaculada
  8. Effects of Exchange Rate Volatility on Non-Traditional Exports in Ghana By Obeng, Camara Kwasi
  9. Openness and Productivity: a Model of Firm-Owners' Effort, with an Illustration from Mexican Microenterprises By Vitor Trindade;
  10. International effects of euro area versus US policy uncertainty: A FAVAR approach By Belke, Ansgar; Osowski, Thomas
  11. Convergence in pollution terms of trade By Honma, Satoshi; Yoshida, Yushi
  12. Global value chains and effective exchange rates at the country-sector level By Nikhil Patel; Zhi Wang; Shang-Jin Wei
  13. Functional Upgrading in China's Export Processing Sector By Van Assche, Ari; Van Biesebroeck, Johannes
  14. Transportation and Trade Interactions: A Trade Facilitation Perspective By Jerónimo Carballo; Georg Schaur; Christian Volpe Martincus
  15. U.S. Immigration Reform and the Dynamics of Mexican Migration By Khulan Altangerel; Jan C. van Ours
  16. Global value chains, innovation and firms’ performance during the crisis By Valentina Meliciani; Grzegorz Tchorek
  17. Trade in services related to the environment By Jehan Sauvage; Christina Timiliotis
  18. The Currency Union Effect: A PPML Re-assessment with High-Dimensional Fixed Effects By Larch, Mario; Wanner, Joschka; Yotov, Yoto; Zylkin, Thomas
  19. The Effects of Dominant Airlines on Open Skies Agreements By Roberto Alvarez; Aldo Gonzalez; Manuel Garcia
  20. Spatial price transmission and trade policies: new evidence for agricultural products from selected sub-Saharan African countries with high frequency data. By Susanne Fricke; Lodovico Muratori
  21. How to Make Immigration the Bridge to an Orderly and Timely Brexit By Jacob Funk Kirkegaard
  22. Multinational enterprises and inclusive development : harnessing national social dialogue institutions to address the governance gap By Pyke, F.
  24. Globalization and Executive Compensation By Wolfgang Keller; William W. Olney
  25. Is the effect of exchange rate volatility on export diversification symmetric or asymmetric? Evidence from Ghana By Obeng, Camara Kwasi
  26. Trade credit insurance and asymmentric information problem By Sokolovska, Olena
  27. The Payoff to America from Globalization: A Fresh Look with a Focus on Costs to Workers By Gary Clyde Hufbauer; Zhiyao (Lucy) Lu
  28. Inequality and globalization: A review essay By Martin Ravallion

  1. By: Jacob, Arun; Møller, Anders K
    Abstract: This paper analyses the trends in trade flows and trade policies in environmental goods (EGs) and related services, with a focus on the Asia-Pacific Economies. The paper finds that the region is a dominant player in both exports and imports of EGs in the world, contributing to 42% and 44%, respectively. Renewable energy related goods dominate both the export and import basket of EGs in the region. The paper warns that even though specific environmental goods in general face very low tariffs, many other goods that are however required for environmental projects still face high tariffs, especially in least developed countries. Hence, the paper calls for a ‘holistic approach’ for tariff liberalization. The paper highlights the role of services in environmental sectors. The paper estimates an augmented gravity model of trade flows that integrates non-tariff measures (NTMs) and services trade restrictions. The estimations find that while tariffs have had an insignificant impact on environmental goods trade, NTMs have a strong negative impact. The impact of NTMs is more strongly felt by exports from low income countries when compared with middle income and high-income ones. The services trade restrictions also have a significant negative impact on the EG trade. The results point to the need for integrating NTMs and service sector policies within the framework of environmental goods negotiations to expedite the process of liberalizing global trade in EG.
    Keywords: Green Trade, Environmental Goods, Trade and Environment
    JEL: Q2 Q27 Q28 Q5 Q56
    Date: 2017–04
  2. By: Jan Hanousek (CERGE-EI); Evzen Kocenda (Charles University, Institute of Economic Studies); Pavla Vozarova (Czech Technical University in Prague)
    Abstract: In this paper we provide a comprehensive analysis of the impact of the multinational enterprises (MNEs) and foreign direct investment (FDI) on domestic firms in Europe. We build on the theoretical model of Markusen and Venables (1999) and modify it to better reflect reality and to capture international industrial linkages. For empirical part we build a unique and large database that covers 30 European countries over 2001 - 2013. Rich data are combined from the Amadeus, UN Comtrade and BACI sources. Our results do not show evidence for a pure spillover effect when other channels are controlled for. However, on a more detailed level we show that MNE?s presence significantly affects domestic firms both in terms of changing market structure and productivity improvements. On other hand, change in sourcing patterns often results in that domestic firms are crowded-out. However, those domestic firms, that are able to withstand this double competition, receive additional benefits stemming from their interaction with downstream MNEs in form of productivity spillovers. We also document existence of trade (export) spillovers for both upstream and downstream levels. Despite that impact of the MNEs presence is not unambiguous the existence of positive production and trade spillovers is overwhelming.
    Keywords: multinational enterprise (MNE); foreign direct investment (FDI); European firms; spillovers; international trade
    JEL: F23 F15 F21
    Date: 2017–04
  3. By: Patrick Georges (Graduate School of Public and International Affairs, University of Ottawa, Ottawa, ON)
    Abstract: This paper analyses the trade policy options of Canada under Trump and reviews some arguments that have been made by economists and others in the current debate surrounding U.S. return to protectionism and mercantilism. For Canada, both imports and exports are vital, and trade with the U.S. and with the rest of the world is of key importance. The new mercantilist position of the U.S. administration under Trump requires Canada to reflect on how to communicate the Canada-U.S. trade relation in terms of win-win strategies. A good starting point for this exercise, however, is to emphasize that NAFTA, as a trade preferential arrangement, is not as valuable as it used to be in the 1990s because NAFTA margins of preferences are no more sufficiently attractive to offset the cost of complying with NAFTA Rules of Origins requirements. Second, Canada-U.S. border security measures introduced after the terrorist attacks of 2001 have also offset NAFTA’s tariff preferences. Finally, the paper discusses the benefits of diversifying Canada’s trade geographically in a world where North America has become a smaller share of the global pie.
    JEL: F10 F13 F14 F15 F16
    Date: 2017
  4. By: Khusainov, Bulat; Kireyeva, Anel; Sultanov, Ruslan
    Abstract: The aim of the study is to assess the asymmetry of influence of factors of economic growth of national economies, which are included in the integration. Unlike previous research, the scientific significance of the obtained results consists in the use of a new method of study – external demand as a factor of economic growth, disaggregated into two components. The first is net exports mutual trade in goods within integration associations. The second is net exports of foreign trade in goods outside the integration. By use of these methods we have evaluated the contribution of these factors on economic growth of the Customs Union and the Common Economic Space (CU/CES), as well as Kazakhstan, Russia and Belarus. In the conducted analysis of scientific research was based on the fact that the economies of the member (CU/CES) are very different in scale, economic potential and volume of foreign trade. Based on this research we conclude: integration is developing successfully and efficiently only with the rise of the national economies of the member countries; to enhance economic growth and competitiveness of the countries of the Eurasian integration it is necessary to increase the volume of mutual trade of member countries of this integration.
    Keywords: Globalization; Integration; Economic Growth; External Demand; Domestic Demand; Net Exports Trade
    JEL: F1 F10 F13 F15
    Date: 2017–02
  5. By: Guillermo Falcone (CEDLAS-FCE-UNLP); Luciana Galeano (CEDLAS-FCE-UNLP)
    Abstract: This paper studies the impact of Argentina trade liberalization during the nineties on the industry wage premium structure. We find that accounting for unobserved timeinvariant industry characteristics is crucial. When we do not control for industry fixed effects, we find that workers in protected sectors receive lower wages. However, introducing industry fixed effects reverses the results; tariff protection creates sector specific rents that are in part translated to workers in terms of greater wages. Since Argentina’s tariff structure during this period protected relatively more sectors employing higher proportions of skilled workers, nineties trade policy may have had an adverse effect on Argentina’s income distribution
    Date: 2017–05
  6. By: Onur A. Koska (Department of Economics, Middle East Technical University, Ankara, Turkey); Frank Stähler (Department of Economics, University of Tübingen, Tübingen, Germany; Department of Economics, University of Adelaide, Adelaide, Australia; Center for Economic Studies, The Ifo Institute (CESifo), Munich, Germany); Onur Yeni (Department of Economics, Hacettepe University, Ankara, Turkey)
    Abstract: In a simple reciprocal dumping model of trade, this study scrutinizes the strategic role of trade and commodity taxes as environmental instruments when consumption of an imported product generates pollution. The results suggest that both trade and commodity taxes have important implications on countries’ integration through trade. For sufficiently small values of the marginal disutility from pollution, the country claiming responsibility for pollution prefers commodity taxes over import tariffs, and compared to the case of trade policies, free trade can be maintained for larger values of the marginal disutility from pollution when commodity taxes are used strategically as environmental instruments.
    Keywords: International trade; Consumption-generated pollution; Trade policy; Commodity taxes
    JEL: F12 F18
    Date: 2017–05
  7. By: Martínez-Zarzoso, Inmaculada
    Abstract: This paper estimates a gravity model of trade to evaluate the trade effects of the Euro on sectoral trade within the Euro Zone, the CFA Franc Zone and between the Eurozone and the CFA Franc Zone, when CFA countries acquired fixed rates against the non-francophone Eurozone members. The formation of the Eurozone provides a quasi-natural experiment to estimate the effects on trade of fixed exchange rates, since the change in exchange rate regime for CFA countries with all Eurozone countries but France was not trade related. This is tested using sectoral trade data for 128 countries over the period 1995-2009 and validated using a larger sample of 180 countries over the period 1973 -2013. The main departure from Frankel (2008), is the use of sectoral trade and the inclusion of bilateral-sectoral fixed effects as well as controls for multilateral resistance, namely time varying country-fixed-effects for exporters and importers, in the gravity model specification. The main results indicate that the introduction of the Euro is generally not associated with positive effects for average trade flows between the CFA Franc Zone and other Eurozone countries. However, the results differ by sector and we find that agricultural (homogeneous products) exports from CFA countries to Euro adopters increased by almost fifty (thirty) percent after the euro adoption.
    Keywords: CFA,Euro Effect,Bilateral Trade,Panel Data
    JEL: F10 F14
    Date: 2017
  8. By: Obeng, Camara Kwasi
    Abstract: Purpose – The government of Ghana has implemented a number of policies to strengthen the production and export of non-traditional products as a way of diversifying exports in Ghana with very little success. Foremost among these policies is the liberalisation of exchange rate. Meanwhile, the exchange rate has been very volatile. The study therefore examines the effects of exchange rate volatility on non-traditional exports in Ghana. Design/Methodology/ approach - This study employed Autoregressive Distributed Lag (ARDL) cointegration estimation technique for the investigation. Findings - The results indicate that exchange rate volatility negatively impacts Ghana’s non-traditional exports. Also, the effect is greater in the long run than it is in the short run. Other results also show that world income, growth rate of the economy and Treasury bill rate promote non-traditional exports but real effective exchange rate does not. Originality/ value – The value of the paper lies in the discussion of the short run and long run effects of exchange rate volatility on non-traditional exports in the Ghanaian context.
    Keywords: Exchange rate volatility, Non-Traditional Export, Autoregressive Distributed Lag, Ghana.
    JEL: F1 F31
    Date: 2017–05–08
  9. By: Vitor Trindade (University of Missouri, Department of Economics);
    Abstract: This paper asks two questions. First, when countries open up, what are the incentives of firm owners to invest in the productivity of their firms? And why do they wait until the country opens up to do so? To explore these questions, I set up a simple model in which firm owners choose the optimal mix of profits and leisure. The key insight is that openness drives a wedge between "productive" and "unproductive" firm owners, driving up the price of leisure, and therefore the incentives to innovate. The model is modified to consider one further insight: when countries open up, the real price of a consumption basket goes down because consumers enjoy more variety, which again changes the relative price of leisure. I illustrate the model implications with a survey of small firm owners in Mexico.
    Keywords: Import competition, productivity, firm-owner incentives
    JEL: F10 F14 F63
    Date: 2017–05–01
  10. By: Belke, Ansgar; Osowski, Thomas
    Abstract: Building on the growing evidence on the importance of large data sets for empirical macroeconomic modeling, we estimate a large-scale FAVAR model for 18 OECD member countries. We quantify the global effects of economic policy uncertainty shocks and check whether the signs, the magnitude, and the persistence profile are consistent with the literature on the real and financial sector effects of uncertainty. In that respect, we compare the impacts of a US and a Euro area uncertainty shock. According to our results, an increase in uncertainty has a strong negative impact on economic activity, consumer prices, equity prices, and interest rates. Uncertainty shocks cause deeper recessions in Continental Europe (except Germany) than in Anglo-Saxon countries. This pattern is compatible with the view that continental Europe still suffers from institutions which prevent flexible markets. And US uncertainty shocks have a bigger impact than their European counterparts. Uncertainty does not only impact that country where the shock originates but also has large cross-border effects. In that respect, Switzerland turns out to be the most affected non-Euro area European country. We also find a high degree of synchronization among the responses of national variables to a (foreign) uncertainty shock, indicating evidence of an international business cycle. With respect to the responses of national long-term interest rates to an uncertainty shock, our results reveal a strong "North-South" divide within EMU with rates decreasing less significantly in the South. Another important result is that uncertainty shocks emerging in one region quickly raise uncertainty outside the region of origin which appears to be an important transmission channel of uncertainty.
    Keywords: economic policy uncertainty,Europe,FAVAR analysis,large-scale econometric models,option value of waiting,uncertainty effects,international uncertainty spillovers,United States
    JEL: C32 F42 D80
    Date: 2017
  11. By: Honma, Satoshi; Yoshida, Yushi
    Abstract: By implementing the world input-output tables for 40-countries by 35-industries to account for intermediate trade, we constructed the pollution terms of trade (PTT) on the basis of CO2 emissions between 1995 and 2009. We examine whether the PTTs have converged among the 40 countries in the past 15 years. The empirical evidence supports PTT convergence; PTT growth is negatively related to its initial level, and this empirical result is robust to various control variables.
    Keywords: World input-output table; International trade; Pollution haven hypothesis; Pollution terms of trade
    JEL: F18
    Date: 2017–04–27
  12. By: Nikhil Patel; Zhi Wang; Shang-Jin Wei
    Abstract: The real effective exchange rate (REER) is one of the most cited statistical constructs in open-economy macroeconomics. We show that the models used to compute these numbers are not rich enough to allow for the rising importance of global value chains. Moreover, because different sectors within a country participate in international production sharing at different stages, sector level variations are also important for determining competitiveness. Incorporating these features, we develop a framework to compute REER at both the sector and country level and apply it on inter-country input-output tables to study the properties of the new measures of REER for 35 sectors in 40 countries.
    Keywords: global value chains, real effective exchange rate measurement
    JEL: F1 F3 F4 F6
    Date: 2017–05
  13. By: Van Assche, Ari; Van Biesebroeck, Johannes
    Abstract: Functional upgrading occurs when a firm acquires more sophisticated functions within an existing value chain that require a higher skill content. In this paper, we analyze if there is evidence of this type of upgrading in China's export processing regime by investigating dynamics in the relative prevalence of Import & Assembly (IA) versus Pure Assembly (PA) processing trade over the period 2000-2013. Firms in both regimes provide similar manufacturing services to foreign companies, but IA firms also conduct the sophisticated tasks of quality control, searching, financing and storing imported materials. Consistent with a trend of functional upgrading, we show that the share of IA trade in total processing trade has increased rapidly during the period 2000-2006, both overall and within product categories. Furthermore, we find that this trend has gone hand-in-hand with improvements in a sector's labor productivity and unit values. Against expectations, we find that this process has slowed down notably during the period 2006-2013.
    Keywords: global value chains; industrial development; Manufacturing
    JEL: D2 F1 L2 O1
    Date: 2017–04
  14. By: Jerónimo Carballo; Georg Schaur; Christian Volpe Martincus
    Abstract: Trade facilitation policies intend to simplify administrative processes and accelerate the handling of shipments across borders. Recent research shows that these policies have substantial effects on trade flows. In this chapter, we discuss what the existing evidence for trade implies for the provision of transportation services. In addition, we make use of a particular policy change, an upgrade to a new transit trade regime, to illustrate the many direct and indirect linkages between trade facilitation and transportation. These multiple connections imply that a well-functioning transportation sector is important to realize the full potential of trade facilitation policies. Our conceptual and empirical analyses show that, despite an increase in demand for transportation services, the effect of trade facilitation on freight rates and the underlying transportation sector is far from obvious. This calls for future research to examine equilibrium adjustment channels to trade facilitation policies in the transportation sector.
    Keywords: Transport Costs, Trade Policy, Export Performance, Customs Administration, Freight, Trading costs, Exporting Firm, Freight, freight, customs, Latin America, Trade Interactions
    JEL: F14 F13 F10
    Date: 2017–03
  15. By: Khulan Altangerel (Department of Economics and CentER, Tilburg University); Jan C. van Ours (Erasmus School of Economics, Erasmus University Rotterdam and Tinbergen Institute)
    Abstract: The 1986 US Immigration Reform and Control Act (IRCA) was directed at tackling the problem of growing unauthorized migration through legalization of unauthorized immigrants, increasing border security and sanctioning employers who hired unauthorized immigrants. Our paper investigates how the IRCA affected the migration dynamics of Mexican immigrants focusing on their age of onset of migration and the duration of their first trip. We find that the IRCA had a positive effect in reducing unauthorized migration to the US. Although primarily aiming at unauthorized immigration, the IRCA had substantial effects on legal migration through its legalization program.
    Keywords: Immigration policy, migrant behavior
    JEL: J61 J68
    Date: 2017–05
  16. By: Valentina Meliciani (University Luiss Guido Carli, Rome, Italy); Grzegorz Tchorek (Narodowy Bank Polski and University of Warsaw)
    Abstract: This paper studies the determinants of companies’ performance during the crisis based on their short-term (sales changes) and medium-term (exit) reaction, using firms’ data from the EFIGE survey and combining them with balance-sheet statistics. The results show that vulnerability to the crisis depended on a company’s position within a GVC and modes of international operation. While exporters were more affected than nonexporters during the first crisis, their survival rates were not lower five years later. Moreover, more sophisticated internationalization modes increased firms’ resilience in the first and second waves of the crisis. The paper also investigates the mediating role of intangible assets and financial constraints in the relationship between internationalization and companies’ response to the crisis. While intangible assets were very important for preventing a drop in sales for internationalized firms immediately after 2008, they amplified the probability of firms’ exit five years after the crisis in weaker European countries (Spain and Italy). At the same time, financial constraints increased companies’ probability of exit. Innovation prevented a drop in firms’ sales and firms’ exit.
    Keywords: global value chains, crisis, intangible assets, financial constraints
    JEL: O3 E22 G01
    Date: 2017
  17. By: Jehan Sauvage; Christina Timiliotis
    Abstract: This paper discusses the nature and scope of international trade in environmentally related services, and analyses the implications that services trade restrictions have on the provisions of these services domestically and abroad. Numerous services appear crucial to the delivery and proper functioning of environmental goods and equipment be they a wastewater-treatment facility or a renewable power plant. By helping lower the costs of these services and improving access to world-class suppliers, trade policy can contribute alongside energy and environmental policy to the prevention and abatement of greenhouse-gas emissions and pollution in all its forms. Besides clarifying the role and scope of services related to the environment, the analysis undertaken in this paper suggests that the restrictions that countries impose on services trade may have a detrimental effect on the provision of environmental activities through the establishment by specialised firms of a commercial presence abroad, i.e. through mode 3 trade in services.
    Keywords: climate change, Environmental services, services trade restrictions, trade in services, trade policy
    JEL: F14 F18 F64 L84 L97 Q56
    Date: 2017–05–09
  18. By: Larch, Mario (University of Bayreuth); Wanner, Joschka (University of Bayreuth); Yotov, Yoto (School of Economics Drexel University); Zylkin, Thomas (National University of Singapore)
    Abstract: Recent work on the effects of currency unions (CUs) on trade stresses the importance of using many countries and years in order to obtain reliable estimates. However, for large samples, computational issues limit choice of estimator, leaving an important methodological gap. To address this gap, we unveil an iterative PPML estimator, which flexibly accounts for multilateral resistance, pair-specific heterogeneity, and correlated errors across countries and time. When applied to a comprehensive sample with more than 200 countries trading over 65 years, these innovations flip the conclusions of an otherwise rigorously-specified linear model. Our estimates for both the overall CU effect and the Euro effect specifically are economically small and statistically insignificant. The effect of non-Euro CUs, however, is large and significant. Notably, linear and PPML estimates of the Euro effect increasingly diverge as the sample size grows.
    Keywords: Currency Unions; PPML; High-dimensional Fixed Effects
    JEL: C13 C21 F10 F15 F33
    Date: 2017–04–29
  19. By: Roberto Alvarez; Aldo Gonzalez; Manuel Garcia
    Abstract: We investigate the determinants of open skies agreements among Latin-American countries, focusing on the impact of having a dominant airline on the willingness of countries to sign agreements with others. We find that, overall, the likelihood of signing agreements increases with trade volume, passenger traffic, and distance. In relation to our main question, we find that a having a dominant airline decreases the probability that third countries concede open skies agreement.
    Date: 2017–03
  20. By: Susanne Fricke (Friedrich Schiller University Jena, Germany.); Lodovico Muratori (Department of Economics and Social Sciences, Sapienza University of Rome (IT).)
    Abstract: We assess the conjunctural impact of price insulating policies on spatial price transmission of maize, rice and wheat in Cameroon, Kenya and Tanzania in the period 2005-2015. We therefore separately estimate the impact of trade policies within two regimes of behaviour of the domestic price series: the first regime with an increasing trend of domestic prices and the second regime with a decreasing trend. We find a significant impact of trade policies in both price regimes. This is however much larger if prices are increasing. Our results show that trade policies were able to insulate the three analyzed countries from the price shocks on international markets during the food price spike crisis 2007/2008. Although the impact of these policy instruments proved to be relevant as a counter-cyclical measure during the food price spike crisis, these policies cannot be regarded as structural long-term solutions. This paper extends the existing literature on spatial price transmission in agricultural markets by estimating the impact of tariff and non-tariff trade policies using monthly data. Employing monthly data allows for a more precise assessment of short-lived movements in the analysed series, which could disappear due to a time aggregation bias at lower yearly frequencies. While monthly price series are provided in the GIEWS database, we obtain monthly ad-valorem equivalent tariff rates by a time disaggregation of the yearly effectively applied weighted average tariff rate from the WITS/UNCTAD-TRAINS database through the monthly trade policies from the FAO-FADPA. By presenting high frequency analyses and techniques that are able to detect non-linearities in the Data Generating Process (DGP), this study provides results which differ from what is stated in the standard literature (Anderson and Nelgen, 2012a) (Anderson and Nelgen, 2012b) (Anderson and Nelgen, 2012c).
    Keywords: spatial price transmission, staple crops, trade barriers, food price spikes.
    JEL: F14 O24 Q11 Q17
    Date: 2017–04
  21. By: Jacob Funk Kirkegaard (Peterson Institute for International Economics)
    Abstract: In March, UK Prime Minister Theresa May formally initiated a two-year negotiation period for the United Kingdom to leave the European Union under the EU Treaty’s Article 50. Since the June 2016 Brexit referendum, she has missed several good opportunities to generate the necessary political goodwill across the EU-27 and is now running out of time as the EU-27 impose their priorities on the Article 50 negotiations, one of which is settling the UK immigration status of EU workers. One way the prime minister could generate goodwill would be to unilaterally announce that her government will grant all EU citizens living in the United Kingdom full UK citizenship, except voting rights. Such a status would be a UK equivalent of a US green card. Under such a step, EU-27 citizens would acquire all the essential auxiliary rights already possessed by UK citizens, including work and residency permissions and family-based migration. The EU-27 will almost certainly reciprocate such a British gesture, smoothing the way for successful Brexit negotiations.
    Date: 2017–05
  22. By: Pyke, F.
    Keywords: multinational enterprise, multinational bargaining, social dialogue, governance
    Date: 2016
  23. By: Tatiana Polonyankina (University of Economics, Prague)
    Abstract: The gravity model is an interesting adaptation of Newton's law of gravitation, in which the effect of gravity is used to describe the spatial interactions between economic units. The force of interaction is supposed to be positively influenced by the size of the units (the push factor) and negatively by the distance between them (the pull factor). The model is used to estimate the dependence of migration on the GDP, as well as the distance between European countries. Based on the gravity model, the GWP of both (source and host) countries, is expected to be a push factor and the distance is expected to be a pull factor. However, in economic theory, the impact of the GDP of a source country is expected to be negative, the opposite to the gravity model. The goal of the paper is to test which of the two is valid for eight European countries from 2011 to 2014.
    Keywords: gravity model, spatial dependence, migration, model selection, random effects, panel data
    JEL: F22 C23 C52
    Date: 2017–04
  24. By: Wolfgang Keller (University of Colorado); William W. Olney (Williams College)
    Abstract: This paper examines the role of globalization in the rapid increase in top incomes. Using a com- prehensive data set of thousands of executives at U.S. firms from 1993-2013, we find that exports, along with technology and firm size, have contributed to rising executive compensation. Isolating changes in exports that are unrelated to the executive’s talent and actions, we show that global- ization has affected executive pay not only through market channels but also through non-market channels. Furthermore, exogenous export shocks raise executive compensation mostly through bonus payments in poor-governance settings, in line with the hypothesis that globalization has en- hanced the executive’s rent capture opportunities. Overall, these results indicate that globalization has played a more central role in the rapid growth of executive compensation and U.S. inequality than previously thought, and that rent capture is an important part of this story.
    Keywords: Inequality, Executive Compensation, Globalization, Exports
    JEL: F16 F14 F66 M12 J31
    Date: 2017–04
  25. By: Obeng, Camara Kwasi
    Abstract: Exchange rate volatility has been identified as one of the drivers of export diversification. Previous studies have assumed a symmetric relationship between the two variables. However, because volatility could be positive or negative and economic agents react to these changes differently, recent studies have argued for the adoption of an asymmetric approach to the study of the relationship between the two variables. This study employed the partial sum process to create two variables to replace exchange rate volatility (Positive and negative variables) and utilized the Linear Autoregressive Distributed Lag (ARDL) and Nonlinear Autoregressive Distributed Lag (NARDL) techniques to investigate asymmetric effects of exchange rate volatility on export diversification in Ghana for the period 1983 to 2015. The results indicate that exchange rate volatility has asymmetric relationship with export diversification in Ghana. Other drivers of export diversification in Ghana are income, investment, infrastructure, openness and inflation. The paper recommends that the Central Bank should strengthen its efforts at stabilizing the exchange value of the cedi.
    Keywords: Export diversification, Symmetric, Asymmetric, Linear Autoregressive Distributed Lag, Nonlinear Autoregressive Distributed Lag, Ghana
    JEL: F10 F31
    Date: 2017–05–08
  26. By: Sokolovska, Olena
    Abstract: The presence of different risk factors in international trade gives evidence of the necessity of support in gaps that may affect exporters’ activity. To maximize the trade volumes and in the same time to minimize the exporters’ risks the stakeholders use trade credit insurance. The paper provides analysis of conceptual background of the trade credit insurance in the world. We analyzed briefly the problems, arising in insurance markets due to asymmetric information, such as adverse selection and moral hazard. Also we discuss the main stages of development of trade credit insurance in countries worldwide. Using comparative and graphical analysis we provide a brief evaluation of the dynamics of claims and recoveries for different forms of trade credit insurance. We found that the claims related to the commercial risk for medium and long trade credits in recent years exceed the recoveries, while with the political risk the reverse trend holds. And we originally consider these findings in terms of information asymmetry in the trade credit insurance differentiated by type of risk.
    Keywords: trade credit insurance, export credit, international trade, international finance
    JEL: F10 F39 G22
    Date: 2017–03
  27. By: Gary Clyde Hufbauer (Peterson Institute for International Economics); Zhiyao (Lucy) Lu (Peterson Institute for International Economics)
    Abstract: Hufbauer and Lu, updating a landmark PIIE study made in 2005, calculate the payoff to the United States from trade expansion from 1950 to 2016 at $2.1 trillion. The payoff has stemmed from trade expansion resulting from policy liberalization and improved transportation and communications technology. The sum translates into an increase of $7,014 in GDP per capita and $18,131 in GDP per household. The potential gains from future policy liberalization could be as large as $540 billion for the United States by the year 2025, or an increase of $1,670 in GDP per capita and $4,400 in GDP per household. On the other hand, 156,250 manufacturing sector jobs were lost annually over the past 13 years, representing less than a percent of the number of people involuntary separated from their jobs each year. A more generous unemployment insurance program and expanded tax credits would help displaced workers adjust, the authors argue, while preserving the large gains resulting from trade expansion.
    Date: 2017–05
  28. By: Martin Ravallion (Georgetown University, U.S.A.)
    Abstract: As normally measured, “global inequality” is the relative inequality of incomes found among all people in the world no matter where they live. Francois Bourguignon and Branko Milanovic have written insightful and timely books on global inequality, emphasizing the role of globalization. The books are complementary; Milanovic provides an ambitious broad-brush picture, with some intriguing hypotheses on the processes at work; Bourguignon provides a deep and suitably qualified, economic analysis. The paper questions the thesis of both books that globalization has been a major driving force of inequality between or within countries. The paper also questions the robustness of the evidence for declining global inequality, and notes some conceptual limitations of standard measures in capturing the concerns of many observers in the ongoing debates about globalization and the policy responses.
    Date: 2017–04

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