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on International Trade |
| By: | Raphael Auer; Barthélémy Bonadio; Andrei A Levchenko |
| Abstract: | In a world economy interconnected by global value chains (GVCs), domestic productivity depends on the availability of imported inputs and the vast majority of workers stands to lose from protectionism. To exemplify this, we provide a quantitative assessment of the aggregate and distributional effects of one hypothetical protectionist measure - the case of revoking the North American Free Trade Agreement (NAFTA). Using a multi-country, multi-sector, quantitative model of global production, we show that a full revocation extending to both tariffs and non-tariff trade barriers would result in a real annual GDP loss of US$ 37 billion in Canada, US$ 22 billion in Mexico, and US$ 40 billion in the USA. In contrast, annual combined losses would amount to less than US$ 5 billion if only tariff rates were to be increased. For both counterfactuals, the distributional impacts across sectors would be an order of magnitude larger than the aggregate effects. Combining these results with information on the geographic distribution of sectoral employment, we show that almost all regions in North America would record reductions in their average real wage. |
| Keywords: | NAFTA, quantitative trade models, distributional effects, protectionism |
| JEL: | F11 F13 F16 J62 R13 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:739&r=int |
| By: | Alonso de Gortari (Harvard University) |
| Abstract: | I present a new global value chain (GVC) framework in which intermediate input suppli- ers produce specialized inputs that are only compatible with specific downstream uses. This feature is confirmed by firm-level data and is at odds with the current GVC approach which assumes that all products within a given industry utilize the same inputs. For example, Mexican firm-level data shows that the manufacturing firms that export to the U.S. utilize relatively more U.S. inputs than those that export to other destinations. I show how the new GVC framework can combine bilateral trade data with firm-level data in order to obtain GVC flows that reflect the heterogeneity in the use of inputs observed in the latter. This reveals that 27% of the $118bn of Mexican final good exports to the U.S. is U.S. value-added returning home. In contrast, the current GVC approach yields a share of only 17% since it ignores the specialized inputs channel. This discrepancy has serious implications for the ongoing renegotiation of NAFTA as it suggests that the potential costs of supply chain disruption are being understated. Lastly, I show how to compute these counterfactuals with an extension of the influential sufficient statistics approach to specialized inputs models and highlight important areas for future data collection. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:139&r=int |
| By: | Eunhee Lee; Kei-Mu Yi |
| Abstract: | We assess the role of global value chains in transmitting global integration shocks to aggregate trade, as well as distributional outcomes. We develop a multi-country general equilibrium trade model that features multi-stage production, with different stages having different productivities and using factors (occupations) with different intensities. The model also features a Roy mechanism, in which heterogeneous workers endogenously choose their sector and occupation. Country- and worker-level comparative advantages interact. A reduction in trade costs leads to countries specializing in their comparative advantage sectors and production stages. This specialization changes labor demand, and also leads to more workers shifting to their comparative advantage sectors and occupations. We calibrate our model to the U.S., China, and the rest of the world in 2000 and we simulate a decline in China's trade costs with the U.S., designed to mimic China's entry into the WTO. Our simulation results imply an increase in the skill premium in both the U.S. and China, and the GVC, i.e., specialization across stages, is critical to this outcome. |
| JEL: | F1 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24884&r=int |
| By: | Ivan DESEATNICOV; Konstantin KUCHERYAVYY |
| Abstract: | To what extent do multinational firms consider past experience of exporting and future expectations of intra-firm trade when they engage in outward foreign direct investment (FDI) activities? How do trade costs affect these decisions? Recent literature has shown that FDI entry decisions depend on past export experience in a potential destination. In addition, due to the growth of global value chains, intra-firm trade in both directions (from parent company to affiliate, and from affiliate to parent company) has been shown to have an important effect on affiliate sales' patterns. In this paper, we examine how both mechanisms shape Japanese multinational enterprises' (MNEs) outward FDI activity. We use firm-level data from two basic surveys of Japanese companies: the Basic Survey of Japanese Business Structure and Activities and the Basic Survey on Overseas Business Activities for the period 1995-2015, and we look for evidence that FDI entry decision into a country is a function of past export experience and future expectations of intra-firm trade. We also consider firms' attributes, market attractiveness, barriers to entry, and other factors that can impact FDI entry decision. The results of our analysis have important implications for economic policy since they can shed light on alternative ways to promote inward and outward FDI activity by Japanese firms. |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:18051&r=int |
| By: | Kazunobu HAYAKAWA (Institute of Developing Economies); Jota ISHIKAWA (Faculty of Economics, Hitotsubashi University and the Research Institute of Economy, Trade and Industry); Nori TARUI (Department of Economics, University of Hawaii at Manoa and the University of Hawaii Economic Research Organization) |
| Abstract: | In international trade, transportation requires a round trip for which a transport firm has to commit to the shipping capacity to meet the maximum shipping volume. This may cause the “backhaul problem.†Trade theory suggests that facing the problem, transport firms with market power adjust their freight rates strategically when import tariffs change. As a consequence, a country reducing its import tariffs may experience an increase in exports as well as imports. Using worldwide data during 2000-2007, we find evidence that supports these predictions. These findings indicate a new mechanism through which import-tariff reductions lead to export expansions. |
| Keywords: | Transport firm, freight rates, tariffs, backhaul problem |
| JEL: | F12 F13 R40 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:hai:wpaper:201808&r=int |
| By: | Beckman, Jayson; Sands, Ronald D.; Riddle, Anne A.; Lee, Tani; Walloga, Jacob M. |
| Abstract: | Increasing global population and demand for food have led to rising agricultural production and demand for land; expanded agricultural land has often come from tropical deforestation. These forests support biodiverse ecosystems and further benefit the environment through carbon storage. This report analyzes patterns of deforestation in select countries to examine which commodities contribute most to “tropical” deforestation. ERS researchers use historical data on production and international trade patterns of four forest-risk commodities: palm oil, soybeans, beef, and forest products. Trade links for these commodities are quantified between the United States and six major exporting countries: Argentina, Brazil, Paraguay, Bolivia, Indonesia, and Malaysia. Deforestation in Argentina and Brazil is linked with production of beef and soybeans, while deforestation in Indonesia and Malaysia is linked with production of palm oil and timber. A global economic model is used to assess two potential policies that could affect tropical forest loss. Results indicate that removing tariffs on these forest-risk products could increase deforestation, while prohibiting exports of illegally logged wood could reduce deforestation. |
| Keywords: | Agricultural and Food Policy, Environmental Economics and Policy, International Relations/Trade, Resource /Energy Economics and Policy |
| Date: | 2017–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uersrr:262185&r=int |
| By: | McCorriston, Steve |
| Abstract: | The UK’s decision to leave the European Union (Brexit) is a potential watershed for the UK economy. Economists are almost unanimous that this will lead to welfare losses, the extent being contingent on the specific form of UK trade relations post-Brexit. The purpose of this paper is two-fold: first, to review the insights from recent research quantifying the impact of Brexit and, drawing on this, what these models imply about the likely challenges in determining the UK’s trade relations in a post-Brexit context. Second, to consider the specific issues that will apply to the UK food and agricultural sectors. These issues will be complex: the UK relies considerably on the EU for food imports and as a destination for exports; tariffs are higher in this sector compared with other sectors; and the use of non-tariff barriers is particularly prevalent. As a consequence, Brexit will have a potentially significant impact on the food and agricultural sectors with the consequence of reduced trade and higher food prices. |
| Keywords: | Agricultural and Food Policy, International Relations/Trade |
| Date: | 2017–12–05 |
| URL: | http://d.repec.org/n?u=RePEc:ags:assa18:265729&r=int |
| By: | Knobel Alexander (Gaidar Institute for Economic Policy); Baeva Marina (Gaidar Institute for Economic Policy) |
| Abstract: | The Russian Federation acceded to the World Trade Organization (WTO) on August 22, 2012, and was therefore authorized to participate in the WTO trade dispute settlement system. The WTO dispute settlement system is in place pursuant to the Dispute Settlement Understanding (DSU)[1]. Hence the Russian Federation has been entitled since August 2012 to resort to the system to uphold its trade interests. |
| Keywords: | Russian economy, foreign trade, WTO, trade disputes |
| JEL: | F10 F13 F19 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:gai:ppaper:ppaper-2018-310&r=int |
| By: | Xiong, Bo; Beghin, John C. |
| Abstract: | A possible Trans-Atlantic Trade and Investment Partnership (TTIP) agreement will further integrate agricultural markets between the United States and the European Union. The elimination of tariffs and cooperation on Sanitary and Phytosanitary measures will promote cross-Atlantic trade. We empirically estimate the impacts of tariffs and Maximum Residue Limits (MRLs) on trade in plant products between the two partners. Furthermore, we simulate trade expansions under plausible negotiation outcomes. We find that a TTIP agreement promotes cross-Atlantic trade in plant products, in both directions, by over 60% if tariffs are removed and MRLs are mutually recognized or harmonized to Codex levels. |
| Keywords: | International Relations/Trade, Public Economics |
| Date: | 2017–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aare17:258682&r=int |
| By: | Sheldon, Ian M.; Chow, Daniel C.K.; McGuire, William |
| Abstract: | In this paper, two key questions are asked: why has the GATT/WTO worked in terms of multilateral tariff reduction and promotion of global trade, and to what extent will it act as a constraint on economic nationalism? To answer these two questions, three themes are laid out in the paper: first, the seminal economic model rationalizing the economic logic of the GATT/WTO is assessed; second, the perceived relevance of the GATT/WTO in a world of increasing regionalism is discussed; and third, the robustness of the GATT/WTO legal framework and dispute resolution mechanism is evaluated. The key conclusion of the paper is that the underlying economic logic of the GATT/WTO is still relevant, but that enforcement of the cooperative agreement will likely be placed under significant strain with threat of increased protection, and even a potential trade war. |
| Keywords: | Institutional and Behavioral Economics, International Relations/Trade |
| Date: | 2017–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:assa18:266305&r=int |
| By: | Facundo Piguillem (EIEF); Loris Rubini (University of New Hampshire) |
| Abstract: | We challenge the idea that trade liberalizations are detrimental to non-exporters: if they expect to export in the future, larger export profits increase their present value. To do this, we develop a model of international trade, where firm productivity follows a Geometric Brownian Motion, with a drift endogenously determined by innovation. Firms export when reaching a productivity threshold, after which they grow at a constant average rate, generating a firm distribution with Pareto upper tail. Non-exporters grow at an increasing rate, lower than that of exporters. We calibrate the model to US data. The anticipation of future export profits accounts for up to 10% of the value of non-exporters. Reducing trade costs increases export profits and reduces domestic ones. As a result, small non-exporters lose value driven by domestic profits, but larger ones gain because of the anticipation of future exports. This is consistent with empirical studies that find some non-exporters expand after liberalizations. A 1% reduction in trade costs reduces the value of non-exporters by 0.01% on average, but 59% of them actually gain, up to 0.13%, which is more than some exporters. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:132&r=int |
| By: | Santeramo, F G; Lamonaca, E; Nardone, G; Seccia, A |
| Abstract: | During the last decades there have been significant changes in trade regulations that are modifying the global trade of wine. The number of non-tariff measures (NTMs) adopted in the wine sector is relevant. Similarly, a large number of bilateral trade agreements have been adopted. Despite the regulation is heavy, the impact of these policy instruments on trade is not always clear, nor quantified at global scale. We investigate the effects that bilateral NTMs are showing on global imports of wine. In particular, we estimate a gravity model to explain how bilateral NTMs influence wine trade, and we disentangle these effects for different segments of the international market of wine. Our results suggest that bilateral NTMs tend to favour imports of wine. Differences emerge across market segments and types of regulations. In particular, the Technical Barriers to Trade favour (friction) bottled (bulk) wine; pre-shipment inspections enhance imports of bottled wine; the Sanitary and Phytosanitary Standards and the export-related measures are |
| Keywords: | Agricultural and Food Policy |
| Date: | 2018–07–21 |
| URL: | http://d.repec.org/n?u=RePEc:ags:aiea18:275644&r=int |
| By: | Eugenia Andreasen (Universidad de Santiago de Chile); Evangelina Dardati (Universidad Alberto Hurtado); Sofia Bauducco (Central Bank of Chile) |
| Abstract: | This paper studies the effects of the capital controls imposed by Chile between 1991 and 1998, i.e. the Chilean encaje, on firms’ production, investment and exporting decisions. We use a general equilibrium model with heterogeneous firms and financial constraints to illustrate the mechanism by which capital controls on inflows affect firm-level dynamics and international trade. We find that capital controls on inflows depress the local economy due to the credit restriction, reducing aggregate production, investment and domestic sales. This reduced level of domestic activity increases the firm’s incentives to export, increasing both the level of exports and the share of exporters. Most of these effects are exacerbated for firms in more capital-intensive sectors. Using data from the Chilean Encuesta Nacional Industrial Anual (ENIA) we empirically corroborate the conclusions and insights of the theoretical model. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:774&r=int |
| By: | Paul Grieco (Pennsylvania State University); Hongsong Zhang (University of Hong Kong); Shengyu Li (Durham University) |
| Abstract: | Input tariff liberalization encourages direct importing by lowering the relative price of directly imported intermediate inputs relative to domestic alternatives. In turn, the action of importing itself encourages productivity growth. We develop a dynamic structural model to illustrate how input tariff reduction affects trading decisions and firm performance. The model features firm heterogeneity in both input prices and productivity. We find a mild short-term effect of input tariff liberalization from China's accession to WTO in the paint industry. The effect is amplified in the long run by induced trade participation, resulting in even higher aggregate productivity and lower input prices. Overall, this effect increases the average present firm value by 2.3 percent. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:874&r=int |
| By: | Taguchi, Hiroyuki |
| Abstract: | This paper examines how the Chinese economy has been involved in global value chains from the perspective of domestic value creation, by using the OECD value-added-trade data (OECD TiVA database). This study contributes to the existing literature by decomposing the domestic value creation into a direct effect from export industries and an indirect effect from the other supporting industries. The empirical estimation first identified the “smile curve” in the “indirect” domestic value creation in total manufactures as the average pattern of the Asian GVCs development paths, in which the domestic value share to exports declines at the early development stage and regains itself at the later stage with the turning point being at 1,830 US dollars as per capita GDP. Then the analysis confirmed the position of Chinese economy, which has already passed the Asian average turning point and has entered the phase of regaining the domestic value share to exports. Finally, the analysis found that the domestic value creation in China has originated from the development of supporting industries, in particular, service industries, which might reflect the progress in basic infrastructure there. |
| Keywords: | Domestic value creation, Global value chains, China, Value-added-trade data, Manufactures, Supporting industries |
| JEL: | F14 L60 O53 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:88436&r=int |
| By: | Robert Z. Lawrence (Peterson Institute for International Economics) |
| Abstract: | The Trump administration’s willingness to violate trade rules to maximize its negotiating leverage is undermining its most important and most legitimate objective in international trade and investment: persuading China to reform its problematic economic system, in which foreign firms are discriminated against in high-tech projects. The administration could have dealt with the problems posed by China through measures that would have been consistent with preserving the rules-based trading system rather than threatening it with destruction. Instead of confronting China with unilateral actions, the administration should be working with its allies to put pressure on China to conform to World Trade Organization rules where these are applicable. But the administration’s actions, coupled with China’s retaliations, have so far been counterproductive. And overall they have weakened adherence to rules and norms that have contributed to the success of the global trading and investment system. |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb18-17&r=int |
| By: | Costas Hadjiyiannis; Doruk Iris; Chrysostomos Tabakis |
| Abstract: | We investigate the implications of consumer nationalism for multilateral trade cooperation. We develop a two-country, two-firm model, in which the firms produce horizontally differentiated products and act as Bertrand competitors. Assuming that there is asymmetry in consumer nationalism between countries, we show that the country with the (relatively more) nationalist consumers can sustain more liberal trade policies than its trade partner in a repeated-game setting. Moreover, its most cooperative equilibrium tariff is actually decreasing in the level of its consumers' nationalism, provided that countries are not too patient. On the other hand, asymmetric consumer nationalism across countries produces an anti-cooperation effect on the incentives of the country with the non-nationalist consumers. |
| Keywords: | Consumer nationalism; consumer ethnocentrism, multilateral cooperation |
| JEL: | F12 F13 F52 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:ucy:cypeua:10-2018&r=int |
| By: | Clemence Lenoir (CREST-ENSAE); Isabelle Mejean (CREST Ecole Polytechnique); Julien Martin (Université du Québec à Montréal) |
| Abstract: | We develop and estimate a model of search frictions in international good markets and study its implications for individual and aggregate trade flows. We introduce random meeting of buyers in an otherwise standard Eaton and Kortum (2002) (EK) framework. We show that search frictions impede aggregate exports but have a non-trivial impact on individual firms' trade. A reduction in these frictions increases sellers' exposure to foreign buyers but also reduces their chance to be the lowest cost supplier because of more competition among sellers. We build on this model to structurally estimate search frictions faced by French exporters using a generalized method of moments and firm-to-firm French export data. We document the magnitude of these frictions across sectors and destinations and show that their presence help; i) reconcile the EK framework with heterogeneity in firm-level export behaviours; and ii) quantify the relative role of search frictions and productivity heterogeneity in the selection of firms into export. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:878&r=int |
| By: | Daniel Goya |
| Abstract: | This paper studies how the number of product categories exported by countries is related to the level and the volatility of the exchange rate. In contrast with previous works studying bilateral export variety between countries, this paper looks at aggregate, country-level export variety. I find that export variety is positively related to a weaker exchange rate and negatively related to exchange rate volatility. These relationships seem to be stronger for goods with higher technological intensity. Using disaggregated trade data for a long panel of countries, this paper investigates these relationships by employing an econometric methodology that allows for heterogeneous coefficients across countries and discusses two sources of bias that are often overlooked. The findings suggest that previous studies might be understating the effect of the level of the exchange rate on export variety. The results are robust to using different samples, datasets, variable definitions and estimators (including more traditional fixed effects and dynamic GMM estimators). |
| Keywords: | Export diversification, export variety, exchange rate, exchange rate volatility, pooled mean group. |
| JEL: | F14 F40 O30 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:ucv:wpaper:2018-01&r=int |
| By: | Giovanni Maggi; Monika Mrázová; Peter Neary |
| Abstract: | Red-tape barriers (RTBs) are an important source of trade costs, but have received little scholarly attention to date. Here we examine the economic-political determinants of RTBs and their effects on trade. Because of their wasteful nature, RTBs have very different implications from those of more traditional trade barriers. In particular, RTBs have important impacts on the extensive margin of trade, and respond in non-standard ways to changes in tariffs and natural trade costs. We argue that taking into account the endogenous response of RTBs is crucial for understanding the effects of tariff liberalization and globalization on trade and welfare. |
| JEL: | D72 F13 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24739&r=int |
| By: | Bakari, Sayef; Mabrouki, Mohamed; Othmani, Abdelhafidh |
| Abstract: | The contribution of this study is to search the six linkages between Foreign Direct Investment, Domestic Investment, Exports, Imports, Labor Force and Economic Growth in Nigeria by using vector error correction model for the period 1981 – 2015. The empirical results indicate that there is no relationship between the six variables in the long run. In the short run imports cause economic growth and domestic investment; exports and FDI cause labor; and labor causes FDI. These findings present the critical situation of Nigeria, which requires an entry of urgent economic reforms. |
| Keywords: | Economic Growth, Domestic investment, FDI, Labor, Exports, Imports, VECM, Nigeria. |
| JEL: | E22 F14 J21 N77 O16 O47 O55 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:88259&r=int |
| By: | Stark, Oded; Zawojska, Ewa; Kohler, Wilhelm; Szczygielski, Krzysztof |
| Abstract: | Acknowledging individuals’ distaste for low relative income renders trade less appealing when trade is viewed as a technology that integrates economies by merging separate social spheres into one. We define a “trembling trade” as a situation in which gains from trade are overtaken by losses of relative income, with the result that global social welfare is reduced. A constructive example reveals that a “trembling trade” can arise even when trade is doubly gainful in that it increases the income of every individual and narrows the income gap between the trading populations. |
| Keywords: | Financial Economics, International Relations/Trade |
| Date: | 2018–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:ags:ubzefd:273147&r=int |
| By: | Axelle Ferriere (European University Institute); Gaston Navarro (Federal Reserve Board); Ricardo Reyes-Heroles (Federal Reserve Board) |
| Abstract: | While trade openness generates aggregate welfare gains, it can have unequal effects on the wage of skilled relative to unskilled workers. In this paper, we ask how heterogeneous the welfare gains of trade openness can be in the short and the long-run. To do so, we build a dynamic heterogeneous-household life-cycle model of international trade with incomplete credit markets. The model incorporates an endogenous costly skill acquisition, which allows unskilled workers to invest in education and escape the short-run losses of trade openness. We calibrate the model to match trends in trade openness in the United States between the late 1980s and 2010. We find that poor households take the longest to acquire skills and are therefore the last to experience positive gains from trade openness, which in some cases may not realize within a life-time. We also argue that welfare for all workers increases in the long-run, and that physical capital accumulation is essential for this result. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:1248&r=int |
| By: | Perekhozhuk, Oleksandr; Glauben, Thomas |
| Abstract: | This study analyses the impact of the Russian food and agricultural import ban on import of meat, the structural changes of trade pattern and reallocation of import flows of meat and meat products, and the price development in the import market and its impact on producers and consumers market for cattle, pork and poultry meat in the Russian Federation (RF). There is empirical evidence that the collapse of meat exports to Russia and, hence, the increase of meat prices happened even long before the import ban was introduced. The structure of Russian import market for meat has significantly changed. Brazil became the largest meat exporter in the Russian meat import market achieving market share in the total meat import of the RF almost 50% in 2015-2016. The structural changes of the Russian import market suggests that the beef and pork exporters are not price-takers on the one hand. On the other hand, they may be able to discriminate prices in the Russian import markets. |
| Keywords: | Demand and Price Analysis, International Relations/Trade |
| Date: | 2017–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:iamodp:269555&r=int |
| By: | William Lincoln (Claremont McKenna College); Andrew McCallum (Federal Reserve Board); Michael Siemer (Federal Reserve System Board of Governor) |
| Abstract: | The collapse of international trade surrounding the Great Recession has garnered significant attention. This paper studies firm entry and exit in foreign markets and their role in the post-recession recovery of U.S. exports using confidential microdata from the U.S. Census Bureau. We find that incumbent exporters account for the vast majority of the decline in export volumes during the crisis. The recession also induced a missing generation of exporters, with large increases in exits and a substantial decline in entries into foreign markets. New exporters during these years tended to have larger export volumes, however, compensating for the decline in the number of exporting firms. Thus, while entry and exit were important for determining the variety of U.S. goods that were exported, they were less important for the trajectory of aggregate foreign sales. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:558&r=int |
| By: | Sihao Chen (Hong Kong Univ of Science and Technology) |
| Abstract: | We use the production network approaches to show that the shocks on U.S. sectoral financing cost propagate through international trade linkages and drive the business cycles of Mexico. We take three steps to reach this conclusion. First, using a simple three-sector two-country model, we analytically show that U.S. financial shocks influence Mexican sectoral value-added by two channels. The price effect propagates through Mexican import network while the demand effect propagates through Mexican export network. Both effects transmit further via Mexican domestic production network. Secondly, utilizing a multiple-industry two-country model, we conduct structural factor model analysis and find that external financial shocks account for around 19% of the volatility of Mexico domestic output. Illustrated by impulse response functions, the demand effect dominates in the short run. Thirdly, employing the methodology in Acemoglu, Akcigit and Kerr (2016) to construct the "network effect" of shocks, we empirically test the role of trade linkages. The evidence on demand effect is prevalent but the evidence on price effect is mixed. More importantly, the interest-rate-driven demand effect not only propagate through Mexico export network but also transmit upward in Mexican domestic supply chain. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:91&r=int |
| By: | Lidia Smitkova (University of Cambridge) |
| Abstract: | This paper develops a novel framework to assess the contribution of openness and trade to structural change. I develop an identity-based decomposition to study the evolution of the share of manufacturing value added at country level, and apply it to a sample of 20 large manufacturing exporters relying on sectoral data from the World Input-Output Database for the years 1995-2007. The analysis features two new mechanisms of structural change, arising from changes in sectoral competitiveness in international markets, and changes in the size of the foreign market. The average contribution of these channels to structural change is 33 and 34 percent, respectively. This suggests that, by omitting trade, closed economy analyses may be severely limited. To investigate the driving forces underlying structural change, I rely on a quantitative model building on Eaton and Kortum (2002) and simulate the effects of shocks to trade costs and trade deficits on the manufacturing value added shares of China, Germany, the United Kingdom and the United States. I find that shocks to trade costs and trade imbalances play a key role as drivers of structural change. They explain most of the change in the manufacturing value added shares in China and the United States. They contribute significantly, alongside shocks to sectoral productivity levels, in Germany and the United Kingdom. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:257&r=int |
| By: | Paul Piveteau (Johns Hopkins University); gabriel smagghue (uc3m) |
| Abstract: | We investigate the impact of Chinese competition faced by French exporters in their destination markets. We document that French firms with low prices are significantly more affected by the rise of China in international markets. To rationalize this finding, we propose a random coefficient, discrete choice model of demand in which consumers have heterogeneous preferences regarding product characteristics and prices. This heterogeneity in preferences implies more realistic substitution patterns across producers relative to existing trade models. In particular, it allows for French varieties located at the bottom of the price distribution to be closer substitutes to Chinese goods, due to their proximity in the product space. Using firm-level trade data, we estimate the model and quantify the unequal effect of China across French exporters in the footwear industry, between 1997 and 2010. We find substantial differences across firms: the rise in Chinese exports implied losses in market shares five times larger at the bottom of the price distribution relative to the top. Moreover, we show that allowing French firms to adjust their product quality does little to help them escape Chinese competition. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:509&r=int |
| By: | Heerman, Kari E.R.; Zahniser, Steven |
| Abstract: | We explore several scenarios under which NAFTA preferences for agriculture are rolled back using a systematic heterogeneity general equilibrium (GE) gravity model. In the systematic heterogeneity model, the distribution of productivity within the agricultural sector is linked to land and climate characteristics. The set of agricultural products in which a country is likely to have comparative advantage is then influenced by these characteristics. A country’s production and bilateral trade response to changes in a competitor’s trade costs is thus larger (smaller) for competitors that are more (less) likely to have comparative advantage in a similar set of products. We find that rolling back NAFTA agricultural preferences depresses North America consumer demand for agricultural products and decreases producer competitiveness, both within and outside North America. As a consequence, NAFTA members’ exports decline in North America and globally. |
| Keywords: | Agricultural and Food Policy, International Relations/Trade, Productivity Analysis |
| Date: | 2017–11–27 |
| URL: | http://d.repec.org/n?u=RePEc:ags:assa18:265401&r=int |
| By: | De Sousa, José; Disdier, Anne-Célia; Gaigné, Carl |
| Abstract: | Using firm and industry data, we unveil two empirical regularities: (i) Demand uncertainty not only reduces export probabilities but also decreases export quantities and increases export prices; (ii) The most productive exporters are more affected by higher industry-wide expenditure volatility than are the least productive exporters. We rationalize these regularities by developing a new firm-based trade model wherein managers are risk averse. Higher volatility induces the reallocation of export shares from the most to the least productive incumbents. Greater skewness of the demand distribution and/or higher trade costs weaken this effect. Our results hold for a large class of consumer utility functions. |
| Keywords: | International Relations/Trade |
| Date: | 2017–12–11 |
| URL: | http://d.repec.org/n?u=RePEc:ags:inrasl:265728&r=int |
| By: | Chatellier Vincent |
| Abstract: | At the international level, the dairy sector is favored by a growing demand, mainly from Asian countries, where dairy consumption per capita remains much lower than that observed in the European Union (EU) and North America. Over the last fifteen years (2000-2015), New Zealand, the country that has most benefited from the growth of international trade in dairy products, especially under the influence of whole milk powdered Chinese imports was far ahead of the USA and the EU. Despite an increase in imports, especially of cheese and butter, France has regularly improved its trade balance which reached €3.75 billion in 2015. This performance was due mainly to the dynamics of trade with the United Kingdom and China. Since 2010, the trade balance of France with non-European countries has been improving while the internal competition with the EU is becoming more difficult. For the European dairy producers, the slight decline in demand for dairy products in the EU and the rapid increase in milk production in several Member States since the abolition of milk quotas in 2015 is a real threat. This should be an additional incentive to, firstly, increase exports abroad and, secondly, better sell the wide variety of dairy products on the domestic market. |
| Keywords: | Agricultural and Food Policy, International Relations/Trade, Livestock Production/Industries |
| Date: | 2017–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:ags:inrasl:258070&r=int |
| By: | Beckman, Jayson; Dyck, John; Heerman, Kari |
| Abstract: | Global agricultural trade, about $1 trillion in 2014, has been rising about 3.6 percent per year for the last two decades, facilitated by technological change and productivity gains, as well as trade liberalization. In addition, trade patterns have shifted and trade policy has evolved. The largest importers and exporters of agricultural products are largely unchanged over the last 20 years, but five countries—Brazil, Russia, India, Indonesia, and China—account for much of the increase in trade. The landscape of policies affecting trade is increasingly complex, and agricultural trade is facing obstacles that may restrict future growth. Despite trade rules such as in the World Trade Organization, countries impose trade barriers. High tariffs are permitted for many products in many countries. Rising domestic support in some countries could undermine a level playing field for agricultural trade. Moreover, sanitary and phytosanitary barriers and other technical barriers to trade are growing, with disagreements about the scientific basis for rejecting products becoming particularly contentious. This report surveys 20 years (1995-2014) of trends in world agricultural trade (1995-2016 for some measures of U.S. agricultural trade) and summarizes key policy issues that will confront decision makers and shape agricultural trade in the coming years. |
| Keywords: | Agricultural and Food Policy, International Relations/Trade |
| Date: | 2017–11–13 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uersib:265270&r=int |
| By: | Jan De Loecker; Jan Eeckhout |
| Abstract: | To date, little is known about the evolution of market power for the economies around the world. We extract data from the financial statements of over 70,000 firms in 134 countries, and we analyze and document the evolution of markups over the last four decades. We show that the average global markup has gone up from close to 1.1 in 1980 to around 1.6 in 2016. Markups have risen most in North America and Europe, and least in emerging economies in Latin America and Asia. We discuss the distributional implications of the rise in global market power for the labor share and for the profit share. |
| JEL: | E0 K0 L0 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24768&r=int |
| By: | Bhattacharya, Anindya; Sen, Debapriya |
| Abstract: | This paper revisits the "race to the bottom" phenomenon in a simple game theoretic framework. We consider two countries and one multinational firm, which requires two inputs that are imperfect substitutes. In the benchmark model the labour of each country specializes in a distinct input. Seeking to maximize their labour incomes, countries simultaneously announce wages following which the firm chooses its labour employment in each country. We show that "race to the bottom" (countries setting minimum possible wages) is never an equilibrium. Moreover there are equilibria with ``race to the top", that is, countries set maximum possible wages. This result is robust in an extended model where prior to competing in wages, each country can make input-specific investments to make its labour available for one or both inputs. Provided the production function of the firm is not asymmetrically intensive in either one of the two inputs, there are equilibria of the extended game with specialization (that is, countries invest in distinct inputs) as well as "race to the top". |
| Keywords: | race to the bottom; race to the top; labour policy; multinational; CES (constant elasticity of substitution) |
| JEL: | J42 O12 |
| Date: | 2018–07–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:87858&r=int |
| By: | Michal Burzynski (University of Luxembourg); Fre´de´ric Docquier (Universite Catholique de Louvain); Hillel Rapoport (Paris School of Economics) |
| Abstract: | We investigate the welfare implications of two pre-crisis immigration waves (1991– 2000 and 2001–2010) and of the post-crisis wave (2011–2015) for OECD native citizens. To do so, we develop a general equilibrium model that accounts for the main channels of transmission of immigration shocks – the employment and wage effects, the fiscal effect, and the market size effect – and for the interactions between them. We parameterize our model for 20 selected OECD member states. We find that the three waves induce positive effects on the real income of natives, however the size of these gains varies considerably across countries and across skill groups. In relative terms, the post-crisis wave induces smaller welfare gains compared to the previous ones. This is due to the changing origin mix of immigrants, which translates into lower levels of human capital and smaller fiscal gains. However, differences across cohorts explain a tiny fraction of the highly persistent, cross-country heterogeneity in the economic benefits from immigration. |
| Keywords: | immigration, welfare, crisis, Inequality, general equilibrium |
| JEL: | C68 F22 J24 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:hka:wpaper:2018-057&r=int |
| By: | Mauro Caselli; Andrea Fracasso; Silvio Traverso |
| Abstract: | We study whether and to what extent the electoral dynamics in Italy over the 1994-2008 period can be explained by the development of economic factors associated with globalization. To measure the level of exposure to globalization for local labor markets, our main unit of analysis, we use the intensity of import competition from China and the presence of immigrants. Looking at parties’ political positions and employing an estimation strategy that accounts for endogeneity and time-invariant unobserved effects across local labor markets, we find that both immigration intensity and exposure to import competition from China have contributed positively to the electoral outcomes of far-right parties, whereas only the former has produced a positive effect on the votes of right-wing and traditionalist/authoritarian/nationalist parties. On the other hand, neither of them has had an effect on far-left parties. Moreover, electoral turnout has responded negatively to an increased presence of migrants. While the above effects seem to work through the mediation of labor markets, the results suggest that other mechanisms at the level of local communities are also at play. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:ces:econwp:_10&r=int |
| By: | Pauline Debanes (FFJ - Fondation France-Japon de l'EHESS - EHESS - École des hautes études en sciences sociales) |
| Abstract: | While the slowdown of accumulation has been at the center of the financialization literature since the 2000s, not much has been written on the investment behavior of firms beyond the US and Europe neither in the case of non-leading firms. This article addresses this gap by testing if the "low growth, low investment" track of the Korean economy since the Asian crisis can be explained by the modalities of firms' insertion into global value chains (GVCs), defined according to the activity of firms, the governance of the chain they are part of, and their possibility of upgrading. Empirical evidence derived from a cluster analysis using micro and sectoral data of manufacturing firms, confirm that modalities of insertion into GVCs are a source of heterogeneity of firms' investment behavior. The original methodology developed in this paper enriches the understanding of the complexity and heterogeneity of governance intra-value chains and intra-firms. |
| Keywords: | Firm-Level Evidence,Korea,Global Value Chains,Heterogeneity,Investment Behaviour |
| Date: | 2018–04 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:halshs-01849224&r=int |
| By: | Wang, Limin (World Bank); Kanji, Shireen (University of Birmingham); Jha, Shikha (Asian Development Bank); Meurs, Mieke E. (American University) |
| Abstract: | Global supply chain (GSC) trade has been a driving force underlying economic transformation, urbanization, and social change in the People’s Republic of China (PRC). Female migrants account for a large share of the labor force in the country’s GSC production base. Using province-level panel data, this study employs regression analysis to examine how the country’s rapid integration into the supply chain has affected women’s welfare outcomes captured by occupational status. The analysis shows mixed results. On the one hand, global integration through trade expansion improved the concentration of men and women equally in professional and skilled occupations and in management positions. On the other hand, female employment in manufacturing for GSC trade increased faster than male employment. This trend decreased in turn the male–female sex ratio among those aged 0–4 years. This finding is consistent with other studies on the PRC that confirm the beneficial effect of a relative rise in women’s income in reducing the sex imbalance. Gender-specific policies should support female migrants in moving up the job ladder in GSC trade through higher education and skills training for professional and leadership positions. This should be complemented with incentives for the private sector—the biggest source of employment in the PRC—to promote gender equality by harnessing the advancement in technology and opportunities offered by the rapid growth of GSC trade. |
| Keywords: | global supply chain; People’s Republic of China; trade; women |
| JEL: | F16 J16 |
| Date: | 2017–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0514&r=int |
| By: | Thibault Fally (University of California Berkeley); James Sayre (UC Berkeley ARE) |
| Abstract: | Primary commodities account for approximately 16 percent of world trade, yet they are used extensively as intermediate inputs into many production processes. We show that ignoring several key features of trade in commodities leads to a large understatement of aggregate gains from trade despite their relatively small share of world trade. We quantify the welfare gains from international trade when we account for specific characteristics of most primary commodities: i) a low price elasticity of demand as a result of difficulty in finding substitutes, ii) a low price elasticity of supply, and iii) a high concentration of natural resources and production among a few countries. For instance, copper is difficult to replace in the electronic equipment industry, the supply and demand for copper vary only slightly with changes in prices, a large share of its supply comes from Chile and copper accounts for half of Chilean total export revenues. We explicitly account for these features in a general-equilibrium model of consumption, production, and input-output linkages. In our simulations, we confirm that ignoring these specific features of commodities leads to a wide understatement of the aggregate gains from trade. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:172&r=int |
| By: | Bredahl, Maury E. |
| Keywords: | Agricultural and Food Policy |
| URL: | http://d.repec.org/n?u=RePEc:ags:umcowp:256553&r=int |
| By: | Beckman, Jayson; Gopinath, Munisamy; Tsigas, Marinos |
| Abstract: | Estimates of tax reform’s impacts usually provide an economy-wide assessment, but attention at the industry or sectoral level is often limited. Our study uses a computable general equilibrium (CGE) model to estimate the disaggregated impacts of tax reform. Focusing on agriculture, we use survey data to calculate the tax rates faced by primary agriculture producers; and IRS data to capture tax rates for all other producers. Conducting a tax reform scenario that lowers taxes for individuals and corporations, we find that impacts on investment weigh heavily on model results. That is, firms that are attractive to domestic and foreign investment have gains in demand for their products; while other sectors, such as primary agriculture, experience decreases in production. These results highlight the demand saturation for products, especially for food, in the United States. As such, we provide an extension of the tax reform scenario, equalizing tariffs faced by U.S. agricultural producers with global tariffs. Those results indicate that foreign market access, coupled with tax reform, provides benefits to the entire economy, especially agriculture. |
| Keywords: | Agricultural Finance, International Relations/Trade |
| Date: | 2017–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:ags:assa18:266295&r=int |
| By: | Lorenzo Caliendo (Yale University); Aleh Tsyvinski (Yale University); Fernando Parro (Johns Hopkins University) |
| Abstract: | We develop a model of the world economy as input-output relationships subject to distortions. The base units of our analysis are the country-sectors demanding and supplying output across and within countries. The input-output matrix is endogenous – the expenditure and consumption shares depend on prices and change with the distortions. We then derive a closed-form solution of the elasticities of each entry in the world input-output matrix to distortions. In addition, we derive simple closed-form sufficient statistics for distortions and for sectoral TFPs as the functions of directly observable sectoral input expenditure shares and the final goods consumption shares. We discuss the assumptions under which we can identify changes in distortions and TFPs, and their levels. We apply a 41 country 35 sector version of our model and compute a total of more than half a million internal distortions and TFPs and document their significant heterogeneity. The elasticity to changes in internal distortions is an order of magnitude larger than that of the external distortions. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:168&r=int |
| By: | Norris, Pippa (Harvard U) |
| Abstract: | This study considers the evidence for 'demand-side' theories seeking to explain the outcome of the Brexit referendum and subsequent divisions in UK politics. Economic theories suggest that the Leave decision was driven mainly by the 'left-behinds' in jobs or wages, such as those living in struggling communities in the North of England, the Midlands, and Wales. By contrast cultural accounts emphasize political attitudes and values, including long-term British suspicion about the European Union project, public disgust with the political class at Westminster, anxiety about the effects of the refugee crisis and migration from other EU countries, and opposition to the government's austerity cuts. These theories can also be regarded as complimentary rather than rivals, for example if economic deprivation catalyzed resentment about immigrants and the rejection of open borders. To examine these issues, Part I sets out the electoral context and historical background in the run up to Brexit--and its implications for party competition in the UK. Drawing upon a larger book-length study, Part II sets out the arguments based on economic and cultural theories about the British electorate. Part III describes the evidence from the British Election Study panel surveys, which allows us to examine the factors dividing supporters in the Leave and Remain camps in the 2016 Brexit referendum, as well as those predicting support for UKIP from 2015-17. Part IV examines the impact of demographic control factors like age and sex, indicators of economic grievances, and the cultural profile of voters in their authoritarian and populist values, as well as their attitudes towards the Europe Union, immigration, and left-right ideology. The conclusion in Part V considers developments since Brexit and their implications for the future of populism in the UK. The main advocate of Brexit, UKIP, succeeded in attaining this goal, but then failed to achieve a decisive break through as a parliamentary party. Yet authoritarian-populism remains alive and well in post-Brexit Britain, absorbed into the bloodstream of the body politic, disrupting and dividing both major parties. |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:ecl:harjfk:rwp18-021&r=int |
| By: | Volovik Nadezhda (Gaidar Institute for Economic Policy); Balandina Galina (Gaidar Institute for Economic Policy) |
| Abstract: | In 2016, the growth rates of world economy hit the all-time low since the global financial crisis and constituted 3.2 percent. However, the global economy is experiencing a broad-based cyclical upturn started in mid-2016 is gaining momentum. In this context, international financial organizations have adjusted their short-and medium-term forecasts to the upside. |
| Keywords: | Russian economy, foreign trade, terms of trade, regional pattern |
| JEL: | F10 F13 F19 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:gai:ppaper:ppaper-2018-309&r=int |
| By: | Naufal, George S (Texas A&M University); Malit, Jr., Froilan T. (Cornell University) |
| Abstract: | The Gulf Cooperation Council (GCC) countries host at least 2.4 million foreign domestic workers, who are legally excluded from national labor laws and regulations, thus placing them in precarious social, legal, and economic conditions in the GCC labor markets. Despite the recent growth of academic scholarship on domestic work in the GCC and beyond, little attention has been paid to absconding foreign domestic workers and the complex role abuse plays in determining their future decision to migrate. This paper examines the likelihood that Filipina domestic workers will migrate after absconding from their previous employer. Applying a unique dataset of absconding Filipina domestic workers collected at the Philippine Labor Office (POLO) in Qatar between 2013 - 2015, we find that abuse and poor working conditions do not act as deterrents for future migration. Paradoxically, absconding domestic workers who have been financially abused are more likely to want to return and seek employment abroad. This study offers empirical and theoretical insights into the connection between migrant exploitation and domestic workers' desire to migrate once again. |
| Keywords: | migration, absconding, domestic workers, GCC countries, abuse, mobility |
| JEL: | J61 J68 O15 |
| Date: | 2018–07 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp11677&r=int |
| By: | Rafael Dix-Carneiro (Duke University); Ricardo Reyes-Heroles (Federal Reserve Board); Sharon Traiberman (NYU) |
| Abstract: | Why should we care about trade deficits? According to prominent theories of trade imbalances, trade deficits are a mechanism through which nations insure against negative shocks and smooth consumption over time; indeed, in these models the deficit has no bearing on the actual implications of trade shocks. This research argues that in more realistic settings with slow and imperfect reallocation of resources across sectors, trade deficits can have important implications for the adjustment process in response to trade shocks (such as trade liberalization or the emergence of China as a major global player). Concretely, maintaining large trade deficits for extended periods of time can substantially prolong the pain of trade-displaced workers, magnifying the unequal effects of trade on workers. If the government's objective function penalizes inequality, this magnification effect of can have important trade policy implications. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:890&r=int |
| By: | Shrestha, Rashesh; Coxhead, Ian |
| Abstract: | In Indonesia, an export boom and sustained, rapid GDP growth in the decade after 2000 was accompanied by real earnings that were flat on average, and even declining for many workers. Conventional models of growth and trade predict that labor productivity rises as an economy develops; that this should not be observed during a period of high GDP growth is a puzzle that merits careful investigation. In this paper we explore these seemingly paradoxical trends using several waves of a panel of individual employment data. Economic growth is rarely balanced in a sectoral sense, and the nature of the structural change experienced by Indonesia is also strongly associated with lower competitiveness in sectors where formal employment rates are high, causing some degree of involuntary labor movement from formal to informal modes of employment. We explore this econometrically and find that the earnings of workers displaced from formal to informal jobs are significantly lower relative to workers who remain in the formal market. The fact of this displacement, and its implications for individual earnings, undercuts conventional thinking about the welfare gains from a sustained growth experience. Our findings add, perhaps for the first time, a developing-country dimension to the existing job displacement literature. They also shed some light on the causes of Indonesia's unprecedented increase in inequality during the same growth epoch. |
| Keywords: | Displacement, Formal, Informal, Earnings, Indonesia |
| JEL: | E24 F16 J23 J63 O17 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hitcei:2018-6&r=int |
| By: | Tandon, Sharad; Landes, Maurice; Christensen, Cheryl; LeGrand, Steven; Broussard, Nzinga; Farrin, Katie; Thome, Karen |
| Abstract: | The United States leads efforts to improve global food security, providing about half of global food aid. Global food security has improved over the past 15 years, but challenges and opportunities remain. ERS researchers analyze the roles of trade, agricultural productivity, safety nets, and better data and measurement in achieving these gains. |
| Keywords: | Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, International Development |
| Date: | 2017–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:ags:uersib:262131&r=int |
| By: | D\'ora Gr\'eta Petr\'oczy; Mark Francis Rogers; L\'aszl\'o \'A. K\'oczy |
| Abstract: | Debates on an EU-leaving referendum arose in several member states after Brexit. We want to highlight how the exit of an additional country affects the power distribution in the Council of the European Union. We inspect the power indices of the member states both with and without the country which might leave the union. Our results show a pattern connected to a change in the threshold of the number of member states required for a decision. An exit that modifies this threshold benefits the countries with high population, while an exit that does not cause such a change benefits the small member states. According to our calculations, the threat of Brexit would have worked differently before the entry of Croatia. |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1808.05142&r=int |
| By: | Mai, Thang Chien; Shakur, Shamim; Cassells, Sue |
| Abstract: | The research evaluates the price transmission between export and farmgate prices for Vietnam’s Robusta coffee. Our findings suggest that minor asymmetry price transmission exists for export prices in the long-run and for farm prices in the short-run when thresholds are considered. Besides, the daily speed of adjustment is so high as to lead one to conclude that the price transmission is symmetric. Some possible explanations include the low concentration of local exporters, Robusta’s low quality, and coffee oversupply. Given the recent downward trend in global coffee bean prices, this result also implies that liberalisation current policies are inadequate to ensuring coffee farmers’ welfare. |
| Keywords: | Agricultural and Food Policy, Crop Production/Industries, International Relations/Trade |
| Date: | 2016–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:ags:nzar16:260807&r=int |
| By: | Gentile, Elisabetta (Asian Development Bank) |
| Abstract: | The paper addresses the question of whether expanded and strengthened protection of intellectual property (IP) fosters technology transfer to developing countries. Cross-sectional analysis of a representative sample of firms operating in 42 developing economies indicates that going from no IP protection to maximum IP protection is associated with a 65% increase in the predicted probability of licensing foreign technology for the subpopulation of affiliated firms, whereas the predicted probability is not significantly different from zero for unaffiliated firms. We also find evidence that the environment in which a firm operates moderates the relationship of IP protection and firm-level technology licensing: while going from no IP protection to maximum IP protection is associated with a 47% increase in the predicted probability of licensing foreign technology for firms operating in upper-middle-income countries, there is at best no significant correlation for firms operating in lower-middle-income and lowincome countries. |
| Keywords: | developing countries; intellectual property rights; technology licensing; TRIPS Agreement |
| JEL: | L24 O14 O19 O34 |
| Date: | 2017–07–31 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0515&r=int |
| By: | Nida Cakir Melek (Federal Reserve Bank of Kansas City) |
| Abstract: | This paper examines the effects of the U.S. shale oil boom in a two-country DSGE model where countries produce crude oil, refined oil products, and a non-oil good. The model incorporates different types of crude oil that are imperfect substitutes for each other as inputs into the refining sector. The model is calibrated to match oil market and macroeconomic data for the U.S. and the rest of the world (ROW). We investigate the implications of a significant increase in U.S. light crude oil production similar to the shale oil boom. Consistent with the data, our model predicts that light oil prices decline, U.S. imports of light oil fall dramatically, and light oil crowds out the use of medium crude by U.S. refiners. In addition, fuel prices fall and U.S. GDP rises. We then use our model to examine the potential implications of the former U.S. crude oil export ban. The model predicts that the ban was a binding constraint in 2013 through 2015. We find that the distortions introduced by the policy are greatest in the refining sector. Light oil prices become artificially low in the U.S., and U.S. refineries produce inefficiently high amount of refined products, but the impact on refined product prices and GDP are negligible. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:26&r=int |
| By: | Christopher House (University of Michigan); Christian Proebsting (EPFL); Linda Tesar (University of Michigan) |
| Abstract: | Cyclical unemployment rates differ substantially more between countries in the euro area than between states in the United States. We find that net migration is responsive to unemployment differentials, but the response is smaller in Europe relative to the U.S. This paper explores to what extent the lack of labor mobility in Europe makes it more difficult for the euro area to adjust to shocks. We develop a multi-country DSGE model of a currency union with cross-border migration and search frictions in the labor market. The model is calibrated to the 50-state U.S. economy and to the 31-country European economy and replicates, for each region, the relationship between net migration and unemployment differentials. The model allows us to quantify the benefits if Europe had enjoyed levels of labor mobility as high as those in the U.S. during the most recent crisis. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:876&r=int |
| By: | Siming Liu (Indiana University) |
| Abstract: | We consider a dynamic general equilibrium model of international trade and structural transformation to explore the implications of lower trade costs for structural change in the United States. Changes in trade costs lead to structuops than during normal times. To rationalize this, I build a two-sector model with the collateral constraint on external debt. During recession, an adverse international shock reduces consumption and undermines the value of collateral. The collapsing asset price in turn tightens the financial constraint, deteriorates the real absorption, and sets-in a fully-blown debt-deflation mechanism in spirit of Mendoza's 2010. In this context, an increase in government purchase exerts a counteracting force by raising asset prices and stimulating real activities. More importantly, if the government can commit certain paths of spending in the future, the expected real appreciations further relax the financial constraint today. Lastly, I use a calibrated model to explore the multiplier effect under different exchange rate regimes, the asymmetric multipliers, and the multipliers for different shock persistence. |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed018:1027&r=int |
| By: | Marcin Kacperczyk; Savitar Sundaresan; Tianyu Wang |
| Abstract: | We study the impact of foreign institutional investors on global capital allocation and welfare using novel firm-level international data. Using MSCI index inclusion as an exogenous shock to foreign ownership, we show that greater foreign ownership leads to more informative stock prices and this effect arises more from increased price efficiency than from improved firm governance. We further show that the impact of capital flows on price efficiency is due to real efficiency gains, as opposed to better information disclosure. Finally, we show that foreign ownership increases market liquidity, reduces firms' cost of equity, and leads to subsequent growth in their real investments, thus improving overall welfare. |
| JEL: | G11 G12 G14 G15 |
| Date: | 2018–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24765&r=int |
| By: | Ainhoa Aparicio Fenoll; Zoe Kuehn |
| Abstract: | We estimate the causal effects of immigrant networks on individuals' remittance sending behavior for migrants from many different countries residing in Spain. Our methodology addresses typical issues that arise when estimating network effects: reverse causality, common unobserved factors, and self-selection. In particular, we instrument the size of networks by predicting the number of migrants in each lo- cation using the location's accessibility by distinct methods of transportation and information about how migrants from each country arrived in Spain. Our findings show that immigrants from above-average remitting countries remit more if they live in larger networks. Testing for mechanisms of network e ects, we also find that these migrants are more likely to send remittances via bank transfers, which sug- gests that large networks of individuals who remit a lot might be better at sharing information about cheaper remittance channels (bank transfers compared to money orders in post offices or agencies). In line with this hypothesis, we find that due to network effects migrants shy away from the most expensive remittance channels, potentially freeing resources for additional remittances. Furthermore, cost spreads between the most expensive and cheapest providers are lower for countries charac- terized by high remittances and stronger networks, suggesting that network effects might be competition-enhancing. |
| Keywords: | immigrant networks, remittances, migration, Spain |
| JEL: | F24 J61 F22 O15 A14 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:cca:wpaper:497&r=int |