nep-int New Economics Papers
on International Trade
Issue of 2018‒02‒05
34 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The Effect of Agricultural Exports on Economic Growth in South-Eastern Europe: An Empirical Investigation Using Panel Data. By Bakari, Sayef; Mabrouki, Mohamed
  2. Does “America First” Help America? The Impact of Country Image on Exports and Welfare By Chang, Pao-Li; Fujii, Tomoki; Jin, Wei
  3. Preferential Trade Agreements and Antidumping Protection By Maurizio Zanardi; Chrysostomos Tabakis
  4. Cultural Preferences in International Trade: Evidence from the Globalization of Korean Pop Culture By Chang, Pao-Li; Lee, Iona Hyojung
  5. The GATT/WTO Welfare Effects: 1950-2015 By Chang, Pao-Li; Jin, Wei
  6. Financial Constraints, Institutions, and Foreign Ownership By Ron Alquist; Nicolas Berman; Rahul Mukherjee; Linda L. Tesar
  7. Tracing Value Added and Job Creation across Industries in the Slovak Republic By Ďurčová, Júlia; Mirdala, Rajmund
  8. Regional Integration and Informal Trade in Africa: Evidence from Benin's Borders By Cristina Mitaritonna; Sami Bensassi; Joachim Jarreau
  9. Breaking Away from Icebreakers: The Effect of Melting Distances on Trade and Welfare By Jules Hugot; Camilo Umana Dajud
  10. Trade and Employment. An Overview By Johannes Schwarzer
  11. The long-term economic implications of BREXIT for Scotland: an interregional analysis By Gioele Figus; Katerina Lisenkova; Peter G McGregor; Graeme Roy; J Kim Swales
  12. Exchange Rate Volatility and Exports in the run-up to the EMU accession By Łukasz Goczek; Dagmara Mycielska
  13. The Trade-Enhancing Effects of Non-Tariff Measures on Virgin Olive Oil By Ronen, Eyal
  14. On the Measurement of Upstreamness and Downstreamness in Global Value Chains By Antr�s, Pol; Chor, Davin
  15. Production Fragmentation and Factor Price Convergence By Hulya Saygili
  16. The Macroeconomic Effects of Trade Tariffs: Revisiting the Lerner Symmetry Result By Lind�, Jesper; Pescatori, Andrea
  17. Offshoring and Sequential Production Chains: A General Equilibrium Analysis By Philipp Harms; Jaewon Jung; Oliver Lorz
  18. China's "Great Migration'': The impact of the reduction in trade policy uncertainty By Facchini, Giovanni; Liu, Maggie Y.; Mayda, Anna Maria; Zhou, Minghai
  19. Measuring and Understanding Trade in Service Tasks By Daniel Chiquiar; Martín Tobal; Renato Yslas
  20. The gains from economic integration By Davod Comerford; Jose V Rodriguez Mora
  21. Hierarchy of Trade and Sequential Exporting By Vincent Boitier; Antoine Vatan
  22. Organizational Belief, Managerial Vision, and International Trade By Jaewon Jung
  23. Reconciled Trade Flow Estimates Using an FGLS Estimator By Thomas Baranga
  24. Endogenous growth and global divergence in a multi-country agent-based model By Giovanni Dosi; Andrea Roventini; Emanuele Russo
  25. Global Supply Chains: towards a CGE analysis By Prema-chandra Athukorala; Peter B. Dixon; Maureen T. Rimmer
  26. International Tax Reforms with Flexible Prices By Assaf Razin; Efraim Sadka
  27. International migration pressures in the long run By Rodolfo G. Campos
  28. Internalizing Global Value Chains: A Firm-Level Analysis By Laura Alfaro; Pol Antras; Davin Chor; Paola Conconi
  29. Trade bust, labor and wage policy in Bolivia: a CGE approach By Rolando Morales; Erick Gomez; Monica Cueto; Estefani Parisaca; Jazmin Illanes
  30. Do Subsidized Export Loans Increase Exports? By Y.Emre Akgunduz; S.Hilmi Kal; Huzeyfe Torun
  31. The role of China in the world economy: evidence from global VAR model By Anna Sznajderska
  32. Determinants of FDI in South Africa: Do macroeconomic variables matter? By Dondashe, Nandipha; Phiri, Andrew
  33. Investigating the Link Between Foreign direct investment, Energy consumption and Economic growth in Argentina By Mavikela, Nomahlubi; Khobai, Hlalefang
  34. Foreign Currency Borrowing, Exports and Firm Performance: Evidence from a Currency Crisis By Spiros Bougheas; Hosung Lim; Simona Mateut; Paul Mizen; Cihan Yalcin

  1. By: Bakari, Sayef; Mabrouki, Mohamed
    Abstract: The contribution of this paper is investigating the effect of agricultural exports on economic growth in South Eastern Europe Countries since it’s never been treated before. To attempt this aim annual data was collected from the World Bank for the period 2006 – 2016 and was tested by using correlation analysis and the static gravity model. Empirical analyses show that agricultural exports have a positive strong correlation with gross domestic product and have a positive effect on economic growth. These results appear that agricultural exports are a provenance of economic growth in South Eastern Europe Countries. For this reason, it is very important to refine investment in agricultural sector, and create more effective agricultural trade openness policies.
    Keywords: Agricultural Exports, Economic Growth, Correlation Analysis, Static Gravity Model, South Eastern Europe.
    JEL: F1 F11 F14 O47 O52 Q17 Q18
    Date: 2017–11
  2. By: Chang, Pao-Li (School of Economics, Singapore Management University); Fujii, Tomoki (School of Economics, Singapore Management University); Jin, Wei (School of Economics, Singapore Management University)
    Abstract: This paper estimates the effects of bilateral and time-varying preference bias on trade flows and welfare. We use a unique dataset from the BBC World Opinion Poll that surveys (annually during 2005-2017 with some gaps) the populations from a wide array of countries on their views of whether an evaluated country is having a mainly positive or negative influence in the world. We identify the effects on bilateral preference parameters due to shifts in these country image perceptions, and quantify their general equilibrium effects on bilateral exports and welfare (each time for an evaluated exporting country, assuming that the exporting country's own preference parameters have not changed). We consider fi ve important shifts in country image: the George W. Bush effect, the Donald Trump effect, the Senkaku Islands Dispute effect, the Brexit effect, and the Good-Boy Canadian effect. We fi nd that such changes in bilateral country image perceptions have quantitatively important trade and welfare effects. The negative impact of Donald Trump's "America First" campaign rhetorics on the US' country image might have cost the US as much as 4% of its total exports and gains from trade. In contrast, the consistent improvement of Canadian country image between 2010 and 2017 has amounted to more than 10% of its total welfare gains from trade.
    Keywords: Country image; Consumer preferences; Trade flows; Quantitative welfare analysis
    JEL: C23 C51 C54 F14 F50 N40
    Date: 2017–11–29
  3. By: Maurizio Zanardi; Chrysostomos Tabakis
    Abstract: Are preferential trade agreements (PTAs) stumbling blocks or building blocks towards multilateral trade liberalization? We address this question by investigating the effects of the negotiation and implementation of PTAs on the use of antidumping (AD) (i.e., the most common form of contingent trade protection) by member countries against non-members, as there has been a concurrent surge in regionalism and AD activity since the 1990s. Theoretically-derived empirical predictions are supported by the empirical analysis based on the 15 most intense users of AD. The results demonstrate that both the negotiation and the implementation of PTAs lead to fewer AD measures against non-member countries, except for members of customs-union agreements in force facing large import surges from non-members. Thus, our results highlight a building-block effect of PTAs on multilateral trade cooperation when it comes to AD protection.
    Keywords: Preferential trade agreements, antidumping, multilateral cooperation
    JEL: F13 F14 F15
    Date: 2018
  4. By: Chang, Pao-Li (School of Economics, Singapore Management University); Lee, Iona Hyojung (School of Economics, Singapore Management University)
    Abstract: The Korean pop culture (TV dramas and K-pop music) has grown immensely popular across the globe over the past two decades. This paper analyzes its impacts on international trade. We compile a cross-country panel dataset of South Korea's TV show exports to over 150 countries for the period of 1998-2014. These variations in exposure to Korean pop cultures are used to identify changes in consumer preferences for Korean merchandise across time, countries, and products (at the HS 4-digit level). First, we find that more Korean TV show exports significantly increase Korean exports of goods for women, while the effects are much smaller on men's merchandise. This strongly supports the demand-side preference mechanism, because supply-side factors can hardly generate such gender bias within the same product category. Second, we find that the TV show effect is much stronger for consumer goods than capital or intermediate goods. Third, we show that there exist significant and positive effects even for goods that are not actively advertised. Together, these findings provide evidence on the importance of cultural preferences and their diffusions in economic exchanges.
    Keywords: Korean Wave; Trade; FDI; Gravity Equation; Cultural Preferences
    JEL: F14 F21 Z10
    Date: 2017–12–27
  5. By: Chang, Pao-Li (School of Economics, Singapore Management University); Jin, Wei (School of Economics, Singapore Management University)
    Abstract: This paper provides a comprehensive evaluation of the welfare impact of GATT/WTO in its entire history of 1950-2015 for 180 countries. The analysis embeds nonparametric matching methods in structural quantitative simulations. The results indicate substantial (but highly heterogeneous) welfare gains created by GATT/WTO at the global level and across more than six decades of its history. An extensive set of robustness checks with respect to model speci fications, parameter values, and matching estimations are provided. We also characterize the effects of GATT/WTO on global income disparity, its interaction with preferential trade agreements, and the effects of China's WTO entry.
    Keywords: Matching estimator; Quantitative analysis; Welfare; Fi rm entry; Income disparity
    JEL: F13 F14 F17
    Date: 2017–12–31
  6. By: Ron Alquist (AQR Capital Management); Nicolas Berman (Aix-Marseille University and CEPR); Rahul Mukherjee (Graduate Institute Geneva); Linda L. Tesar (University of Michigan and NBER)
    Abstract: This paper examines how external finance dependence, financial development, and institutions influence brownfield foreign direct investment (FDI). We develop a model of cross-border acquisitions in which the foreign acquirer's choice of ownership structure reflects a trade-off between easing target credit constraints and the costs of operating in an environment of low institutional quality. Using a dataset of cross-border acquisitions in emerging markets, we find evidence supporting the central predictions of the model that: (i) a foreign firm is more likely to fully acquire a target firm in sectors that are more reliant on external finance, or in countries with lower financial development/higher institutional quality; (ii) the level of foreign ownership in partially foreign-owned firms is insensitive to institutional factors and depends weakly on financial factors; (iii) the share of foreign acquisitions in all acquisition activity is also higher in external finance dependent sectors, or financially under-developed/high institutional quality countries; and (iv) sectoral external finance dependence accentuates the effect of country-level financial development and institutional quality. The theory and empirical evidence provide insight into the interaction between the financial, institutional and technological determinants of North-South brown field FDI.
    Keywords: Financial Constraints, Institutions, Foreign Ownership
    JEL: F21 F23 F36
    Date: 2018–01
  7. By: Ďurčová, Júlia; Mirdala, Rajmund
    Abstract: Increasing participation of the Slovak republic in the global value chains (GVCs) represents one of the key implications of the steadily growing position of important Slovak industries in both domestic and international terms. Slovak Republic is mainly positioned in the downstream activities of GVCs. However, his fact contributes to the relatively limited domestic value added creation. The aim of this article is to analyze whether the changes and the increasing participation of the Slovak republic in the GVCs influenced the position of important industries in term of value added creation and employment. We analyze the multipliers of production and value added using input-output model. The factors of skill structure of labor demand will be estimated using the system of cost share equations derived from translog cost function. The data covers period 2000-2014 and 1995-2009 for socio-economic analyses and come from World Input-Output Database (WIOD). The results for two analyzed industries show that their impact on total industrial production has decreased during the analyzed period. The results for employment analysis clearly revealed the differences between domestic and foreign orientated industry.
    Keywords: value added, employment, multipliers, GVCs, offshoring, labor demand, input-output model, translog cost function
    JEL: F14 F16 J31
    Date: 2017–06
  8. By: Cristina Mitaritonna; Sami Bensassi; Joachim Jarreau
    Abstract: Regional trade is low in sub-saharan Africa. But a large share of regional trade is informal, i.e. not recorded in offcial data. This paper studies the relationship between trade barriers and informality of trade. We use an original survey of informal transactions across Benin's land borders, which provides the first direct and comprehensive account of trade volumes and product coverage for this type of trade. We combine this data with official trade records and exploit variation across products and countries to measure the impact of tariff and non-tariff barriers to trade on informality. Increasing tariffs on a given product by 10% makes it about 12% more likely that this product is imported informally rather than formally. Non-tariff measures also increase informality. Our results also suggest that compliance costs, aside from tariffs and regulations, contribute to explain informality.
    Keywords: Informal Trade;Regional Integration;Trade Facilitation;Evasion;Africa
    JEL: O17 F15 H26
    Date: 2017–12
  9. By: Jules Hugot; Camilo Umana Dajud
    Abstract: This article assesses the effect of the opening of Arctic shipping routes on world trade patterns and welfare. We begin by computing shortest bilateral maritime distances with and without Arctic routes. Then, we predict trade flows by combining counterfactual distances with distance elasticities of trade estimated using historical episodes that also affected maritime distances. Our general equilibrium exercise extends beyond by using a structural gravity model that allows trade reallocation across country pairs. As a result, all country pairs are now affected by the opening of Arctic routes, including those for which bilateral distance remains unchanged. In our preferred estimation, world trade is predicted to increase by 0.32% and welfare by 0.02%. The positive effects concentrate in Europe and Northeast Asia, while minor losses affect countries in the Caribbean, West Africa, the Mediterranean and the Indian Ocean.
    Keywords: Arctic Shipping;International Trade;Trade Costs;Distance Effect
    JEL: F14 F15
    Date: 2017–12
  10. By: Johannes Schwarzer (Council on Economic Policies)
    Abstract: The bulk of economic research on the impacts of trade has for a long time neglected aggregate effects on jobs. While research grants an important role of trade for employment, empirical studies often struggle to attribute employment outcomes to trade policies in the long run. In contrast, both traditional and modern theories of international trade have much more to say about the reallocation of jobs following trade liberalization in the short run. Empirical research has repeatedly identified labor churning and unemployment as more or less persistent characteristics of trade liberalization periods. At the same time, increased trade flows and trade liberalization are often associated with average productivity gains and higher average incomes that arise within industries and often extend to aggregate levels.
    Date: 2016–02
  11. By: Gioele Figus (Centre for Energy Policy, University of Strathclyde); Katerina Lisenkova (Department of Economics, University of Strathclyde); Peter G McGregor (Department of Economics, University of Strathclyde); Graeme Roy (Department of Economics, University of Strathclyde); J Kim Swales (Department of Economics, University of Strathclyde)
    Abstract: The analysis of this paper offers a cautionary tale about the economic cost of European disintegration. Scotland offers an interesting twist on that story as somewhere that voted to remain part of the EU but is now negatively affected, even though it is less directly exposed to EU trade than the UK, and even if it were to achieve a softer Brexit such as EEA or even full EU membership (as it has aspirations to do). The analysis includes potentially important lessons for the many nations and regions in which there exists pressures to move away from trade liberalisation and towards protectionism.
    Keywords: Scotland, BREXIT, CGE modelling, trade
    JEL: R13 C18 F15
    Date: 2017–11
  12. By: Łukasz Goczek (University of Warsaw); Dagmara Mycielska (University of Warsaw)
    Abstract: According to theory of monetary integration, lower exchange rate variability is believed to be the main positive effect of a common currency. However, empirical studies do not confirm this negative and significant impact of exchange rate volatility on trade. In this report, we analyze the relationship between the exchange rate volatility and the export performance of Central and Eastern European non-euro EU countries: Poland, Czechia, Hungary, and Romania. We use monthly frequency data on export flows to the euro area and the European Union. The sample covers the period from 2000M1 till 2015M6 and we control for the financial crisis of 2008-2009 when exchange rate variability increased considerably. We measure exchange rate volatility using traditional standard deviation approach and GARCH models. The main hypothesis is verified using both aggregated data and sectoral trade data. The effects of euro exchange rate volatility on Polish trade are explored with more focus by estimating a series of vector error correction models and by assessing impulse-response functions. For the panel data estimation, we employ second generation dynamic panel cointegration model with PMG estimator. The results suggest that the elimination of the exchange rate volatility through euro adoption will not necessarily increase the export performance of the countries integrating with the euro area.
    Keywords: exchange rate volatility, exports, EMU, GARCH, cointegration, PMG estimator
    JEL: F14 F15
    Date: 2017
  13. By: Ronen, Eyal
    Abstract: Over the last 15 years, the global trade of virgin olive oil (VOO) seems to face a stringent regulatory regime, mainly through the imposition of TBT and SPS measures. Such a development should have adversely impacted global levels of VOO trade. However, evidence shows that the world's imports of VOO have more than quadrupled in value since 2000. Alongside this trend, the share of VOO imports gradually shifts from traditional sources (mainly EU) to New World producing countries, such as Argentina, Australia, the USA, and Chile. By extracting data from hundreds of NTM regulations, as well as all possible registered bilateral trade flows between 2002 to 2014, this paper aims to empirically explore to what extent particular NTMs impact imports of VOO. The results indicate that while tariffs remain a stringent barrier, most NTMs have a positive impact on imports, rather than enhancing restrictiveness. The paper asserts that the majority of NTMs respond to consumers' demand for higher food safety standards and protection of human health, while increasing available information and transparency. That, in turn, leads to an expansion in the magnitude of imports of VOO products.
    Keywords: Non-Tariff Measures, Sanitary and phytosanitary, Technical Barriers to Trade, Virgin Olive Oil
    JEL: F13 F14 Q17 Q18
    Date: 2017–07
  14. By: Antr�s, Pol; Chor, Davin
    Abstract: This paper offers four contributions to the empirical literature on global value chains (GVCs). First, we provide a succinct overview of several measures developed to capture the upstreamness or downstreamness of industries and countries in GVCs. Second, we employ data from the World Input-Output Database (WIOD) to document the empirical evolution of these measures over the period 1995-2011; in doing so, we highlight salient patterns related to countries' GVC positioning - as well as some puzzling correlations - that emerge from the data. Third, we develop a theoretical framework - which builds on Caliendo and Parro's (2015) variant of the Eaton and Kortum (2002) model - that provides a structural interpretation of all the entries of the WIOD in a given year. Fourth, we resort to a calibrated version of the model to perform counterfactual exercises that: (i) sharpen our understanding of the independent effect of several factors in explaining the observed empirical patterns in the period 1995-2011; and (ii) provide guidance for how future changes in the world economy are likely to shape the positioning of countries in GVCs.
    Keywords: Downstreamness; global value chains; Input-Output Tables; Upstreamness
    JEL: D5 F1 F2
    Date: 2017–12
  15. By: Hulya Saygili
    Abstract: In this analysis, we empirically analyze if the nature of trade matters for international factor price convergence. In particular, we examine whether factor prices converge when country pairs involve with more bilateral production fragmentation arrangements. We apply panel fixed effect techniques using data for five EU countries. The analyses are controlled for alternative trade related indicators such as bilateral trade intensity and bilateral intra-industry trade as well as for industrial similarity variables. We find that bilateral production fragmentation plays a key role in labor cost converging effects of trade.
    Keywords: International factor price convergence, Production fragmentation, Trade
    JEL: J31 F14 F15 F41
    Date: 2017
  16. By: Lind�, Jesper; Pescatori, Andrea
    Abstract: We study the robustness of the Lerner symmetry result in an open economy New Keynesian model with price rigidities. While the Lerner symmetry result of no real effects of a combined change in import tariff and export subsidy holds up approximately for a number of alternative assumptions, we obtain quantitatively important long-term deviations under complete international asset markets. Direct pass-through of tariffs and subsidies to prices and slow exchange rate adjustment can also generate significant short-term deviations from Lerner. Deviations from symmetry, however, do not necessarily imply an impact on global output and are often limited to a redistribution of production and consumption across countries. Finally, we quantify the macroeconomic costs of a trade war and find that they can be substantial, with permanently lower income and trade volumes. However, a fully symmetric retaliation to a unilaterally imposed border adjustment tax can prevent any sizable adverse real or nominal effects.
    Keywords: Border Adjustment Tax; Import Tariffs and Export Subsidies; Lerner Condition; Incomplete and Complete Markets; New Keynesian open-economy model; Trade War
    JEL: E52 E58
    Date: 2017–12
  17. By: Philipp Harms; Jaewon Jung; Oliver Lorz (Université de Cergy-Pontoise, THEMA)
    Abstract: We present a two-region general equilibrium model in which firms exploit international wage differences by offshoring parts of the production process. Firms have to take into account that production steps follow a strict sequence and that transporting intermediate goods across borders is costly. We analyze how a change in transport costs and various properties of the production process affect offshoring patterns as well as factor prices, accounting for the general equilibrium effects of firms’ decisions. Interestingly, the influence of declining transport costs on the range of tasks offshored per firm may differ from the effect on the number of firms engaged in offshoring.
    Keywords: Offshoring, sequential production, global production chain, task trade.
    JEL: D24 F10 F23 L23
    Date: 2017
  18. By: Facchini, Giovanni; Liu, Maggie Y.; Mayda, Anna Maria; Zhou, Minghai
    Abstract: We analyze the effect of China's integration into the world economy on workers in the country and show that one important channel of impact has been internal migration. Specifically, we study the changes in internal migration rates triggered by the reduction in trade policy uncertainty faced by Chinese exporters in the U.S. This reduction is characterized by plausibly exogenous variation across sectors, which we use to construct a local measure of treatment, at the level of a Chinese prefecture, following Bartik (1991). This allows us to estimate a difference-in-difference empirical specification based on variation across Chinese prefectures before and after 2001. We find that prefectures facing the average decline in trade policy uncertainty experience an 18 percent increase in their internal in-migration rate -- this result is driven by migrants who are ``non-hukou", skilled, and in their prime working age. Finally, in those prefectures, working hours of ``native'' unskilled workers significantly increase -- while the employment rates of neither native workers nor internal migrants change.
    Keywords: Hukou; Immigration; internal migration; Trade policy uncertainty
    JEL: F22 J61 O15
    Date: 2018–01
  19. By: Daniel Chiquiar (Banco de México); Martín Tobal (Banco de México); Renato Yslas (Banco de México)
    Abstract: Improvements in Information and Communication Technologies (ICT) have had differential impacts on the costs of offshoring service tasks. As a result, services with stronger tradability characteristics are at a higher risk of being offshored. This has increased the need for coming up with proper measures of service tradability and to better understand the labor market implications of service offshoring. This paper reviews a literature that has proposed measures of service tradability, investigated the causal effects of service offshoring and developed theoretical models to rationalize the associated stylized facts. The review suggests that skill-intensity and tradability are key determinants of wage and employment effects. Nonetheless, the lack of widely accepted definitions and measures of tradability, the absence of high quality data on service trade flows and the difficulty of measuring import competition at higher disaggregation levels pose difficulties to attain further empirical progress. The theoretical literature must produce a new generation of models that could rationalize the stylized facts.
    Date: 2016–05
  20. By: Davod Comerford (Department of Economics, University of Strathclyde); Jose V Rodriguez Mora (University of Edinburgh, School of Economics)
    Abstract: This paper measures the effect of political integration, such as sharing a national state or economic union, on the degree of trade integration. Consistently with previous work, we find large border effects. However, such estimates may be biased and overestimate the effects of borders because of endogeneity: selection into sharing a political space is correlated with affinities for trade. We propose a method to address this and to estimate a causal effect. We then conduct speculative exercises showing the costs and benefits of the changing levels of integration associated with: the independence of Scotland, Catalonia and the Basque Country from the UK and Spain (but remaining within the European Union); the UK's exit from the EU; the break-up of the EU itself; and the achievement of frictions between members of the EU similar to those expected between regions of a single country. We find that the border effect between countries is an order of magnitude larger than the border effect associated with the European Union.
    Keywords: Border effect, trade, independence
    JEL: F15 R13
    Date: 2017–11
  21. By: Vincent Boitier; Antoine Vatan
    Abstract: Export destination baskets of exporting firms do not seem to follow the hierarchy predicted by heterogeneous firms models. Existing literature reconciles theory and data by incorporating additional components of heterogeneity. We first show that we do not need these components to bridge the gap between data and theory. We highlight a strong correlation between the respect of hierarchy and the age of the firm. Without taking into account the age of firms, what we observe in the data is not a drawback but a snapshot of the convergence toward theory's prediction. Second, we develop a simple dynamic model that features this convergence. Our theoretical argument is based upon sequential exporting (choosing one destination at a time) and upon a baseline trade-off between attractiveness and competition.
    Keywords: Export Choice;Dispersion in Strategies;Experience as Exporter;Sequential Exporting
    JEL: F1
    Date: 2017–12
  22. By: Jaewon Jung (Université de Cergy-Pontoise, THEMA)
    Abstract: In this paper, we develop a simple general-equilibrium trade model in which heterogeneous workers make an investment decision in acquiring advanced managerial skills and choose their optimal effort level based on their own individual organizational beliefs and CEO’s managerial vision. In doing so, we show how trade liberalization and/or changes in managerial vision of CEO may lead to non-monotonic income changes within firms due to the interaction between workers’ beliefs and CEO’s managerial vision. Whether a stronger (or weaker) CEO’s managerial vision benefits the firm or not depends on its extent relative to workers’ overall beliefs, and may involve some winners and losers within firms.
    Keywords: Organizational belief, Managerial vision, Organizational change, International trade.
    JEL: F16
    Date: 2017
  23. By: Thomas Baranga
    Abstract: This paper proposes a new method to reconcile countries' reports of their bilateral trade, extracting the optimal amount of information from noisy reports. Reconciled estimates are a weighted average of exporter and importer reports, with weights chosen to minimise the variance of the error in the reconciliation estimate. Reports of countries that appear to report their trade more precisely are given more weight, but non-zero weight is (optimally) given even to relatively noisy reporters.
    Keywords: Trade, asymmetries, measurement
    JEL: C82 F10 F17
    Date: 2018–01
  24. By: Giovanni Dosi (Scuola Superiore Sant'Anna Pisa Italy); Andrea Roventini (Scuola Superiore Sant'Anna Pisa Italy also OFCE Sciences Po Paris); Emanuele Russo (Superiore Sant'Anna,Pisa Italy & OFCE Sciences Po Paris France)
    Abstract: In this paper we present a multi-country, multi-industry agent-based model investigating the different growth patterns of interdependent economies. Each country features a Schumpeterian engine of endogenous technical change which interacts with Keyneasian/Kaldorian demand generation mechanisms. National growth trajectories are driven by firms’ accumulation of technological knowledge, which in turn also leads to emergent specialization patterns in different industries. Interactions among economies occur via trade flows, stemming from the competition of firms in international markets. Simulation results show the emergence of persistent income divergence among countries leading to polarization and club formation. Moreover, each country experiences a structural transformation of its productive structure during the development process. Such dynamics results from firm-level virtuous (or vicious) cycles between knowledge accumulation, trade performances, and growth dynamics. The model accounts for a rich ensemble of empirical regularities at macro, meso and micro levels of aggregation.
    Keywords: Endogenous growth, structural change, technology-gaps, global divergence, absolute advantages, agent based models
    JEL: F41 F43 O4 O3
    Date: 2018–01–15
  25. By: Prema-chandra Athukorala; Peter B. Dixon; Maureen T. Rimmer
    Abstract: Economists have analysed global supply chains (GSC) using pure theory, case studies, econometrics and input-output calculations. We now need a new type of computable general equilibrium (CGE) model to show how GSC trade affects welfare and its distribution between and within nations. The new model must recognize: fragmentation of production; scale economies; intermediate inputs that cross national borders multiple times embodied in products at different stages of completion; and decision-making by global agents. We describe a prototype that incorporates these features and gives interpretable results not attainable with a standard CGE model. We discuss steps to move from the prototype to a policy-relevant model.
    JEL: F12 C68 C67
    Date: 2017–12
  26. By: Assaf Razin; Efraim Sadka
    Abstract: The growing spread of globalization creates a genuine need for international tax reforms. In this we establish the neutrality of border-tax adjustments of the income tax; the welfare dominance of residence-based over source-based income taxation, albeit at the cost of a larger trade deficit; and the ineffectiveness of non-transitory border taxes as a means for reducing the trade deficit.
    JEL: F0 G20 H2
    Date: 2018–01
  27. By: Rodolfo G. Campos (Banco de España)
    Abstract: Using an empirical gravity model, I estimate the contribution of changes in relative labor supply to bilateral migration in the 2000s and apply the resulting estimates to project future bilateral flows based on population forecasts by the United Nations. I extend the work of Hanson and McIntosh (2016) by including non-OECD destinations and project international migration flows for the whole world. In contrast to their findings, and despite of the slowdown of population growth in Latin America, the US will face sustained immigration pressures because of strong population growth in other regions of the world, leading to a projected immigrant stock that grows for decades to come. For the world as a whole, international migrants are projected to increase from 2.8% of total world population in 2010 to 3.5% in 2050, with a substantial increase of migrants originating from India and Sub-Saharan Africa.
    Keywords: international migration, gravity model, population growth
    JEL: F22 J61
    Date: 2017–10
  28. By: Laura Alfaro; Pol Antras; Davin Chor; Paola Conconi
    Date: 2018
  29. By: Rolando Morales; Erick Gomez; Monica Cueto; Estefani Parisaca; Jazmin Illanes
    Abstract: In this paper, we evaluate the possible impact of the labor and wage policy in Bolivia’s economy in the event of a reduction in the price of exports. For this analysis, we use a CGE model with a 2012 SAM. The Bolivian labor policy is characterized by compulsory increments in the private formal wage and an expanding labor force in the public services. A labor supply function allows migration between formality and informality and a reservation wage curve differentiates the nature of unemployment in the formal and the informal sector. The labor and wage policy does three things: 1) it promotes household consumption but reduces the GDP, decreases investment and growth, 2) it increases the rate of formality only at the expense of higher unemployment, and 3) it swells the primary sector to the detriment of the secondary sector. In the face of a decrease in commodity prices, Bolivia needs to make a correction of course in the labor and wage policy.
    Keywords: Formal and Informal Sectors, Simulation Modeling
    JEL: O17 C68 F16
    Date: 2017
  30. By: Y.Emre Akgunduz; S.Hilmi Kal; Huzeyfe Torun
    Abstract: Turkey's export rediscount credit programme provides credit to exporting firms that is both easy to acquire and is offered at a low interest rate. We follow the performance of firms that first received the credit in 2012 when the amount of credit provided went up dramatically in 2012. We use propensity score mathing to construct a control group of firms with which we compare the credit-receiving firms before and after 2012 in a difference-in-differences framework. These firms have increased their exports substantially in the following years compared to the matched firms with similar propensities to receive the rediscount credit. We find that firms that received the rediscount credit increased their exports by 65% and total sales by 19% compared to matched firms. We find no statistically significant effects on domestic sales and profits. We also find suggestive evidence that the effects fade away after a certain amount of credits.
    Keywords: Subsidized credits, Exporting firms, Central banking, Propensity score matching
    JEL: F13 F14 L25 O24 E58
    Date: 2017
  31. By: Anna Sznajderska (Warsaw School of Economics, Narodowy Bank Polski)
    Abstract: Since the 1980’s China has experienced very high economic growth and its share in global trade has increased rapidly. Nowadays, however, the Chinese economy is rebalancing and its growth is slowing. The paper investigates the spillover effects of a negative demand shock and negative stock price shock in the Chinese economy on other countries. We apply a GVAR model, that enables us to model international linkages between countries. Our results show that a one percent negative China GDP shock reduces global growth by 0.22% in the short run. We find that GDP shock affects emerging economies more strongly than advanced economies. We also show that stock prices shock affects only emerging economies and does not affect advanced economies.
    Keywords: global VAR, China’s slowdown, spillovers
    JEL: C32 E32 F10 O53
    Date: 2017
  32. By: Dondashe, Nandipha; Phiri, Andrew
    Abstract: In this study we examine the macroeconomic determinants of FDI for the South African economy using data collected between 1994 and 2016 using the ARDL model for cointegration. The specific macroeconomic determinants which are used in the study are per capita GDP, the inflation rate, government size, real interest rate variable, and terms of trade. With the exception of inflation the remaining macroeconomic determinants employed in the study are positively and significantly related with FDI. However, in the short-run all variables are positively and significantly correlated with FDI. Collectively, these results have important implications for policymakers.
    Keywords: FDI; ARDL cointegration; Financial crisis; South Africa.
    JEL: C13 C22 C51 C52 F21
    Date: 2018–01–04
  33. By: Mavikela, Nomahlubi; Khobai, Hlalefang
    Abstract: This paper investigates the relationship between energy consumption, foreign direct investment and economic growth in Argentina employing annual data covering the period from 1970 to 2016. To determine the long run relationship and the direction of causality among the variables, the Autoregressive Distributed Lag (ARDL) bounds testing approach and Vector Error Correction Model (VECM) technique are applied, respectively. The ARDL bounds tests suggested an existence of a long run relationship between energy consumption, foreign direct investments, economic growth and capital. More specifically, it was established that a 1% increase in foreign direct investments lead to a 0.013% increase in energy consumption, while a 1% increase in economic growth boots energy consumption by 0.35% in the long run. The VECM Granger-causality results suggested a unidirectional causality flowing from foreign direct investments and capital to energy consumption. A bidirectional causality flowing between energy consumption and economic growth was also established. This study brings a fresh perspective for the energy policy makers in Argentina
    Keywords: Energy consumption, Foreign direct investment; Economic growth; ARDL
    JEL: D60 F13
    Date: 2018–01–18
  34. By: Spiros Bougheas; Hosung Lim; Simona Mateut; Paul Mizen; Cihan Yalcin
    Abstract: This paper develops a simple signalling model of foreign currency borrowing that yields predictions about firm survival and performance during a currency crisis. Using a large panel of firm level data for South Korea we offer empirical support for the predictions of our model. It demonstrates that although firms that borrow in foreign currency are more likely to exit after the currency collapses, those that survive perform better. Among them, the best performers are exporters whose foreign sales are now more competitive.
    Keywords: Currency crisis, Exports, Foreign currency borrowing
    JEL: F34 F41 G21 L25
    Date: 2018

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