nep-int New Economics Papers
on International Trade
Issue of 2018‒09‒24
forty-two papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. The Trade Effects of Anti-Dumping Duties: Firm-Level Evidence from China By Gabriel Felbermayr; Alexander-Nikolai Sandkamp
  2. Non-tariff measures and competitiveness By Giorgio Barba Navaretti; Giulia Felice; Emanuele Forlani; Paolo Garella
  3. The Role of Productive and Technological Capabilities on Export Dynamics in Developing Countries By Vergara, Sebastian
  5. The Impact of EU Pesticide Residue standards on African Fresh Produce Exports to the UK By Mwebaze, P.
  6. The political economy of protection in GVCs: Evidence from Chinese micro data By Anna Maria Mayda; Rodney D. Ludema; Miaojie Yu; Zhi Yu
  7. Chinese exports and non-tariff measures: testing for heterogeneous effects at the product level By Jacopo Timini; Marina Conesa
  8. Market openness and Lithuanian agrifood trade in the context of changing trade conditions By Jolanta Drozdz
  9. Why are Firms that Export Cleaner? International Trade, Abatement and Environmental Emissions By Toshihiro Okubo; Rikard Forslid; Karen Helene Ulltveit-Moe
  10. Market Size and Entry in International Trade: Product Versus Firm Fixed Costs By Walter Steingress
  11. Merger Policy in a Quantitative Model of International Trade By Holger Breinlichy; Volker Nockez; Nicolas Schutzx
  12. How well is the Russian wheat market functioning? A comparison with the corn market in the USA By Svanidze, Miranda; Götz, Linde
  13. Does corruption hampers inward FDI in South Africa from other African countries? a gravity model analysis By Mosikari, Teboho Jeremiah; Nthebe, Tselane Confidence; Eita, Joel Hinaunye
  14. New Imported Inputs, Wages and Worker Mobility By Italo Colantone; Alessia Matano; Paolo Naticchioni
  15. China’s “Great Migration”: The impact of the reduction in trade policy uncertainty By Anna Maria Mayda; Giovanni Facchini; Maggie Y. Liu; Minghai Zhou
  16. The Great Recession and a Missing Generation of Exporters By William F. Lincoln; Andrew H. McCallum; Michael Siemer
  17. North-South Trade and Uneven Development in a Classical Conventional Wage Share Growth Model By Sasaki, Hiroaki
  18. The Economic Effects of Brexit - Evidence from the Stock Market By Breinlich, Holger; Leromain, Elsa; Novy, Dennis; Sampson, Thomas; Usman, Ahmed
  19. The Economic Effects of Brexit - Evidence From the Stock Market By Holger Breinlich; Elsa Leromain; Dennis Novy; Thomas Sampson; Ahmed Usman
  20. Britain and Africa: heading for the Brexit rocks By Kohnert, Dirk
  21. Identifying Chinese Supply Shocks - Effects of Trade on Labor Markets By Fischer, Andreas M; Saure, Philip
  22. Leaving NAFTA:Implications for Inequality By Collin Rabe; Andrea Waddle
  23. Skill of the Immigrants and Vote of the Natives: Immigration and Nationalism in European Elections 2007-2016 By Simone Moriconi; Giowanni Peri; Riccardo Turati;
  24. Trade Liberalization, Technology Diffusion, and Productivity By Kishi, Keiichi; Okada, Keisuke
  25. Norms, Networks, Power and Control: Understanding Informal Payments and Brokerage in Cross-Border Trade in Sierra Leone By van den Boogaard, Vanessa; Jibao, Samuel; Prichard, Wilson
  26. The Political Impact of Immigration: Evidence from the United States By Anna Maria Mayda; Giovanni Peri; Walter Steingress
  27. Euro Area and U.S. External Adjustment: The Role of Commodity Prices and Emerging Market Shocks By Giovannini, Massimo; Hohberger, Stefan; Kollmann, Robert; Ratto, Marco; Roeger, Werner; Vogel, Lukas
  28. Country of Origin, Earnings Convergence, and Human Capital Investment: A New Method for the Analysis of U.S. Immigrant Economic Assimilation By Duleep, Harriet; Liu, Xingfei; Regets, Mark
  29. Ramsey Taxation in the Open Economy By Varadarajan Chari; Juan Pablo Nicolini; Pedro Teles
  30. The Economic E¤ects of Brexit - Evidence from the Stock Market By Breinlich, Holger; Leromain, Elsa; Novy, Dennis; Sampson, Thomas; Sampson, Thomas
  31. Agent Orange: Trump, Soft Power, and Exports By Rose, Andrew K
  32. Do Agricultural Raw Materials Imports Cause Agricultural Growth? Empirical Analysis from North Africa By Bakari, Sayef
  33. China’s Foreign Agriculture Investments By Gooch, Elizabeth; Gale, Fred
  34. Consumer Preferences for Country of Origin Labelling on Dairy Products By Norris, A.; Cranfield, J.
  35. The Double-Edged Sword of Global Integration: Robustness, Fragility \& Contagion in the International Firm Network By Everett Grant
  36. Commodity Trade Matters By Fally, Thibault; Sayre, James
  37. Is prohibiting child labour enough? Coffee certification and child schooling in Ethiopia and Uganda By Akoyi, K.T.; Mitiku, F.; Maertens, M.
  38. Do tariffs generate stagflationary tendencies? By Mohammed, Mikidadu
  39. UK Competitiveness after Brexit By Christian H.M. Ketels; Michael E. Porter
  40. On the Enforcement of Trade Embargoes by the Merchant Guilds By Fehr, Nils-Henrik M. von der; Harbord, David
  41. The Welfare State besides Globalization Forces By Razin, Assaf; Sadka, Efraim
  42. Analysis of Export Structure of Ports Using Growth-Rate Differential Analysis By LEE KWANGBAE

  1. By: Gabriel Felbermayr; Alexander-Nikolai Sandkamp
    Abstract: This paper uses Chinese customs data to investigate the trade effects of anti-dumping (AD) policies. Merging firm-level exports to firm-specific AD duties, we exploit differences across firms within products. This reduces endogeneity concerns which have plagued earlier research. Based on a firm-level gravity model, we find that, in line with literature, AD duties reduce exports, induce firm exit but do not affect producer prices. However, our strategy yields substantially larger estimates which differ strongly across sectors. More interestingly, imports to the EU react differently compared to those to the US; a finding with obvious implications for the design of AD policies. Smaller exporters are more heavily affected than larger ones, suggesting important within-industry reallocation effects. Moreover, we find evidence for trade deflection as AD duties lead to market entry of Chinese firms into third countries.
    Keywords: anti-dumping, China, trade, firm heterogeneity
    JEL: F12 F13 F14 D22
    Date: 2018
  2. By: Giorgio Barba Navaretti (Università degli Studi di Milano and Centro Studi Luca d'Agliano); Giulia Felice (Politecnico di Milano and Centro Studi Luca d'Agliano); Emanuele Forlani (Università degli Studi di Bologna and Centro Studi Luca d'Agliano); Paolo Garella (Università degli Studi di Milano and Centro Studi Luca d'Agliano)
    Abstract: In this paper, we explore how tariff and standard-like Non-Tariff Measures (NTMs) introduced by the EU are related with market conditions in domestic EU markets. While Tariffs work as a pure tax on import, standard-like NTMs potentially affct costs of both domestic firms and foreign exporters. NTMs may not necessarily work as protectionist measures and even induce pro-competitive effects in the domestic market in the longer term, especially if we allow for firms mobility. The impact could be different for large and small firms. We extend the model by Melitz and Ottaviano (2008) to include Non-Tariff barriers. We derive some testable implications relating Non-Tariff barriers to the number of firms selling in the domestic market and average efficiency. The link between NTMs and domestic market conditions depends on whether they involve new standards and technical specifications imposed on both domestic and foreign firms or, rather, the extension to foreign firms of standards and technical specifications already adopted by domestic firms. In the first case, there is a decline in the number of firms and in average productivity; in the second case, NTMs induce pro-competitive effects: an increase in the number of firms and of average productivity. We then take the model to the data for a group of European countries and manufacturing industries. We combine Compnet data for 15 EU countries in 2001-2012, providing information on firms performance at the industry level and by size class, with the STC WTO-I-TIP database, with information on Specific Trade Concerns raised at the WTO on NTMs and with the Trains database with information on Tariffs. The NTMs that we consider have similar effects as in the second NTMs case in the theoretical model; the results for Tariff are in the same direction, albeit of a larger magnitude. These results are consistent with a theoretical framework allowing for firm mobility in the longer term.
    Keywords: Tariffs, Non-tariff Measures, Heterogeneous Firms, International Trade, EU
    JEL: F13 F14
    Date: 2018–09–12
  3. By: Vergara, Sebastian
    Abstract: Productive and technological capabilities matter. Several strains of the literature have emphasized them as major engines of export, growth and development. But how they matter is less clear. In fact, many open questions remain on how capabilities influence export dynamics at microeconomic level. This paper empirically investigates their role on export dynamics in 40 developing countries between 2002 and 2012. In doing so, the paper exploits a country-sector-year database containing exporter-level statistical information. The empirical analysis shows that, within sectors, there is a larger number of exporters in countries with more productive capacities, and the exporters are larger and have higher prices for their products, even after controlling for level of development, size of the economy, commodity-dependency and other variables. Also, the results confirm a positive relationship between technological capabilities and diversification: within sectors, exporters in countries with more capabilities tend to export a higher number of products and to more destination markets. Furthermore, capabilities in high-technology exporters seem to play a crucial role regarding market diversification. Thus, the paper shows that, even just comparing exporters' behaviour among the developing countries, stronger productive and technological capabilities are significantly related to the "extensive" and "intensive" margin of exports, the diversification across products and destinations, and the product quality, all relevant aspects of developing countries' insertion in global trade markets. Overall, the paper underscores the role of capabilities not only on developing countries' macroeconomic resilience to trade shocks, but also on their medium-term development prospects.
    Keywords: Capabilities, Export Dynamics, R&D Investments, Developing Countries
    JEL: F14 O3
    Date: 2018–09–07
  4. By: Abay Mulatu Mulatu (Coventry University)
    Abstract: With the rising elimination of trade and investment barriers the world over there has been a growing interest in the question of the role of differential environmental regulations in the location decisions of multinational enterprises (MNEs) and trade flows. A dominant hypothesis addressing this question is the pollution haven hypothesis (PHH) that purports that trade liberalization results in a relocation of dirty goods production to jurisdictions with lax environmental regulation. The PHH calls into question the efficacy of domestic environmental standards especially with respect to climate policy, because the location of emission of greenhouse gasses is irrelevant to the problem of climate change. More generally, the PHH is at the heart of the trade and environment debate. This paper examines whether UK?s outbound investment flows (FDI) is influenced by the host countries? environmental regulations. We employ a general empirical model of the determination of FDI flows that captures interactions between country and industry characteristics in determining industry location. We use data on UK based multinational activity in 64 countries and 23 industries over the period between 2002 and 2006. We find a statistically and economically significant effect of environmental policy on the pattern of UK outbound FDI ? a pollution haven effect.
    Keywords: pollution-haven, competitiveness, environmental-regulation, industry-location, FDI
    JEL: Q56 R11
    Date: 2018–06
  5. By: Mwebaze, P.
    Abstract: This paper estimates the impacts of pesticide maximum residue level (MRL) standards imposed by the European Union (EU) on trade-flows from African exporting countries to the United Kingdom (UK) using a fixed-effects gravity model specification with corrections for the zero trade-flows. We employ the Poison Pseudo Maximum Likelihood (PPML) estimation method to estimate the gravity model. Most variables have the expected signs and were statistically significant, consistent with the trade literature. The volume of trade increases with the GDP of the exporting countries and the UK. The volume of trade decreases with geographical distance. The variables describing cultural and economic proximity of countries, such as colonial relationships positively affect the volume of trade. Regarding the impact of MLRs on trade flows, the results were not completely consistent between the product groups. However, some commodities do exhibit sensitivity to changes in pesticide MRL standards imposed by the EU and hence applied in the UK.
    Keywords: Crop Production/Industries, International Relations/Trade
    Date: 2018–07
  6. By: Anna Maria Mayda (Department of Economics and SFS, Georgetown University); Rodney D. Ludema (Department of Economics and SFS, Georgetown University); Miaojie Yu (Peking University); Zhi Yu (Shanghai University of Finance and Economics,)
    Abstract: This paper explores the political economy of import protection in a setting where imports may contain a country’s own domestic value added (DVA) via domestically-produced inputs that get exported and used in foreign downstream production. We show that domestic upstream and downstream producers are generally allies in favor of protection, but this alliance may weaken as DVA increases, because a home tariff on finished goods decreases foreign demand for home inputs. Empirically, we examine detailed discriminatory trade policies of 27 countries plus the EU toward China and use Chinese transaction-level processing trade data to construct a measure of DVA. We also measure input customization. We find that both upstream and downstream political organization increase downstream protection, but the effect of the former is smaller when inputs are customized and DVA as a share of final imports from China is larger. Tariffs on products containing inputs that are neither customized nor politically organized appear to be unaffected by the DVA share.
    Keywords: Trade policy, lobbying, global value chains.
    JEL: F10 F13 F14
    Date: 2018–09–08
  7. By: Jacopo Timini (Banco de España); Marina Conesa (Banco de España)
    Abstract: Concerns about a possible turn of the global trade policy agenda are on the rise. Indeed, even if tariffs are at a historically low levels, non-tariff measures (NTMs) play an important – and growing – role in global trade policy. In this paper, using a recently released database on NTMs (UNCTAD), and relying on a gravity model, we focus on Chinese exports with two aims in mind: the first is to test for possible heterogeneous effects of different type of NTMs. The second is to verify empirically whether NTMs have larger negative effects for specific set of goods, i.e. final goods. We find that 1) technical NTMs tend to have positive effects on trade flows, whereas non-technical NTMs do not have clear effects at the aggregate level and 2) NTMs have heterogeneous effects at the product level: in the case of final goods, non-technical NTMs have negative and significant effects.
    Keywords: international trade, trade policy, non-tariff measures, gravity model, China.
    JEL: F13 F14
    Date: 2018–09
  8. By: Jolanta Drozdz (Vilnius University)
    Abstract: The multilateral trade liberalisation process has gradually transformed into regionalism where countries initiate bilateral, interregional agreements. Regional integration of separate countries, regions or groups of countries has also become stronger. Deeper economic integration of the countries has changed the conditions of international trade. Timely adaptation to the change in the international trade conditions is the essential condition of sustainable development of international trade linked to the more rapid economic growth of countries. The paper performs the Lithuanian agricultural and food sector in the changing international trade conditions during the period of 1999-2014. Analysis of the international trade of Lithuanian agricultural and food products divided into three phases. The first phase covers the period from 1999 to 2003 (before Lithuania's accession to the EU). The second phase covers the period from 2004 to 2008 (trade peak since joining the EU by 2008 the global economic crisis). In addition, the third stage includes the period from 2009 to 2014 (recovery after the crisis period). Market openness effect on agrifood trade of Lithuania measured by Open Trade Index (OTI). OTI formula adopted for agricultural sector performance analysis. The net effect of the EU membership evaluated. Suggested approach shows the complexity of the international trading system and specifies the further development of export direction.
    Keywords: market openness, trade liberalisation, agrifood trade, economic integration
    JEL: F15 F41 F43
    Date: 2018–06
  9. By: Toshihiro Okubo (Faculty of Economics, Keio University); Rikard Forslid (Department of Economics, Stockholm University); Karen Helene Ulltveit-Moe (Department of Economics , University of Oslo)
    Abstract: This paper proposes a detailed mechanism for why exporting rms may have a lower emission intensity when emissions are subject to an environmental tax. This mechanism of our model is supported by Swedish rm-level data. Our mechanism runs through rms' endogenous investments in abatement. Firms' abatement investments depend on their production volumes, since a larger scale allows them to spread the xed costs of abatement investment across more units. Production volumes increase in rm productivity and, as a consequence, rms' emission intensity is negatively related to rm productivity. Exporting also leads to higher production volumes and thereby to a lower emission intensity. Thus, trade has an eect on emissions independently of rm productivity. Trade therefore leads to higher but cleaner production. The overall eect of trade on emissions is neutral in our model. Trade liberalization does not aect aggregate emissions in our benchmark case of symmetric countries.
    Keywords: Firm heterogeneity, emissions, international trade, abatement cost
    JEL: F12 F14 F18 Q56
  10. By: Walter Steingress
    Abstract: This paper develops a theoretical framework to infer the nature of fixed costs from the relationship between entry patterns in international markets and destination market size. If fixed costs are at the firm level, firms take advantage of an intrafirm spillover by expanding firm-level product range (scope). Few firms enter with many products and dominate international trade. If fixed costs are at the product level, an interfirm spillover reduces the fixed costs to export for all firms producing the product. Using cross-country data on firm and product, I find empirical evidence consistent with product-level costs. More firms than products enter in larger markets, offering their consumers lower prices and a greater variety of goods within the product category.
    Keywords: Firm dynamics, International topics, Trade Integration
    JEL: F12 F14 F23
    Date: 2018
  11. By: Holger Breinlichy (University of Surrey, CEP and CEPR); Volker Nockez (University of Mannheim, NBER and CEPR); Nicolas Schutzx (University of Mannheim and CEPR)
    Abstract: In a two-country international trade model with oligopolistic competition, we study the conditions on market structure and trade costs under which a merger policy designed to bene t domestic consumers is too tough or too lenient from the viewpoint of the foreign country. We calibrate the model to match industry-level data in the U.S. and Canada. Our results suggest that at present levels of trade costs, merger policy is too tough in the vast majority of sectors. We also quantify the resulting externalities and study the impact of di erent regimes of coordinating merger policies at varying levels of trade costs.
    JEL: F12 F13 L13 L44
    Date: 2018–08
  12. By: Svanidze, Miranda; Götz, Linde
    Abstract: Given Russia’s leading position in the world wheat trade, how well its grain markets function becomes very important question to evaluate the state of future global food security. We use a threshold vector error correction model to explicitly account for the influence of trade costs on price relationships in the grain markets of Russia and the USA. In addition, we study impact of market characteristics on regional wheat market integration. Empirical evaluation shows that distance between markets, interregional trade flows, export orientation, export tax and export ban all have a significant impact on the magnitude of wheat market integration.
    Keywords: Agribusiness
    Date: 2017–08–28
  13. By: Mosikari, Teboho Jeremiah; Nthebe, Tselane Confidence; Eita, Joel Hinaunye
    Abstract: The purpose of this paper is to investigate the relationship between corruption and FDI inflows from other African countries to South Africa. The study uses gravity model and employs panel data econometric technique such as pooled, fixed and random effects model. The results indicate that there is a significant negative relationship between corruption and FDI inflows from other African countries to South Africa. This implies that policy makers in South Africa should implement measures to curb corruption. This will help in attracting FDI inflows from other African countries and encourage the creation of job opportunities.
    Keywords: Corruption, FDI inflows, Panel gravity model
    JEL: B40 C1 C10 F14 F2
    Date: 2018–05–20
  14. By: Italo Colantone; Alessia Matano; Paolo Naticchioni
    Abstract: We provide a comprehensive assessment of the effects of new imported inputs on wage dynamics, on the skill-composition of the labor force, on worker mobility, and on the efficiency of matching between firms and workers. We employ matched employer-employee data for Italy, over 1995-2007. We complement these data with information on the arrival of new imported inputs at the industry level. We find new imported inputs to have a positive effect on average wage growth at the firm level. This effect is driven by two factors: (1) an increase in the white-collar/blue-collar ratio; and (2) an increase in the average wage growth of blue-collar workers, while the wage growth of white collars is not significantly affected. The individual-level analysis reveals that the increase in the average wage of blue collars is driven by the displacement of the lowest paid workers, while continuously employed individuals are not affected. We estimate the unobserved skills of workers following Abowd et al. (1999). We find evidence that new imported inputs lead to a positive selection of higher-skilled workers, and to an improvement in positive assortative matching between firms and workers.
    Keywords: New imported inputs, wages, matched employer-employee data
    JEL: F14 F16
    Date: 2018
  15. By: Anna Maria Mayda (Department of Economics and SFS, Georgetown University); Giovanni Facchini (University of Nottingham); Maggie Y. Liu (Smith College); Minghai Zhou (University of Nottingham, Ningbo China)
    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: 2018–09–07
  16. By: William F. Lincoln; Andrew H. McCallum; Michael Siemer
    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.
    Keywords: entry, exit, business cycles, exports, firm dynamics, recession, financial crisis
    JEL: F10 F40 E32 E44 J2
    Date: 2018–08
  17. By: Sasaki, Hiroaki
    Abstract: This study presents a model of North-South trade and uneven development, and investigates the growth rates of both countries under the trade pattern such that the North specializes in investment goods while the South specializes in consumption goods. In contrast to existing studies, we close the model by fixing each countries' income distribution, specifically, the ratio of labor share to capital share. Using the model, we conduct the following two analyses. First, assuming that both countries already engage in international trade and that the North specializes in investment goods while the South specializes in consumption goods, we investigate the dynamics of both countries' growth rates and the terms of trade. Second, we investigate the condition under which such a trade pattern holds, and compare equilibrium variables under autarky and equilibrium values under free trade. From the first analysis, it follows that both countries grow at the same rate in the long run. From the second analysis, however, it follows that in the first place, the terms of trade must lie within the interval between the relative prices of both countries and that both countries' growth rates may not equalize as long as both countries engage in trade.
    Keywords: North-South trade; Uneven development; Conventional wage share; Comparative advantage
    JEL: F10 F43 O33 O41
    Date: 2018–08–24
  18. By: Breinlich, Holger; Leromain, Elsa; Novy, Dennis; Sampson, Thomas; Usman, Ahmed
    Abstract: We study stock market reactions to the Brexit referendum on 23 June 2016 in order to assess investors' expectations about the effects of leaving the European Union on the UK economy. Our results suggest that initial stock price movements were driven by fears of a cyclical downturn and by the sterling depreciation following the referendum. We also find tentative evidence that market reactions to two subsequent speeches by Theresa May (her Conservative Party conference and Lancaster House speeches) were more closely correlated with potential changes to tariffs and non-tariff barriers on UK-EU trade, indicating that investors may have updated their expectations in light of the possibility of a `hard Brexit'. We do not find a correlation between the share of EU migrants in different industries and stock market returns.
    Keywords: Brexit; depreciation; event study; Recession; Stock market; tariffs
    JEL: F15 F23 G14
    Date: 2018–08
  19. By: Holger Breinlich; Elsa Leromain; Dennis Novy; Thomas Sampson; Ahmed Usman
    Abstract: We study stock market reactions to the Brexit referendum on 23 June 2016 in order to assess investors' expectations about the effects of leaving the European Union on the UK economy. Our results suggest that initial stock price movements were driven by fears of a cyclical downturn and by the sterling depreciation following the referendum. We also find tentative evidence that market reactions to two subsequent speeches by Theresa May (her Conservative Party conference and Lancaster House speeches) were more closely correlated with potential changes to tariffs and non-tariff barriers on UK-EU trade, indicating that investors may have updated their expectations in light of the possibility of a hard Brexit. We do not find a correlation between the share of EU migrants in different industries and stock market returns.
    Keywords: Brexit, depreciation, event study, recession, stock market, tariffs
    JEL: F15 F23 G14
    Date: 2018–09
  20. By: Kohnert, Dirk
    Abstract: High-flying illusions on the part of the proponents and grim predictions of the sceptics characterize the controversy about Brexit. The article analyses five issues at stake for the Post-Brexit relationships between Britain, the EU and Africa with a focus on the Commonwealth Sub-Saharan Africa: market access, FDI, aid, security and partnership . The British government’s vision of a ‘Global Britain’ relies heavily on a reinforced co-operation with Commonwealth nations. However, most likely this would be possible only at the expense of the poor in Africa and elsewhere. Concerning security cooperation with Africa, London apparently exaggerated its defence input in order to enhance its bargaining position with the EU. It will be crucial for both the EU and UK to find post-Brexit agreements to stem irregular migration and the growth of jihadist groups and terrorism. In a nutshell, the analysis of these different policy field shows that expectations of Brexiteers and African politicians alike concerning an enhanced, partner-like Post-Brexit Commonwealth relationship are largely unfounded.
    Keywords: UK, Brexit, EU, Africa, international trade, tariffs, aid, security, partnership
    JEL: F13 F2 F3 F35 G15 G2 H26 N47 N77 O17 P16 Z1
    Date: 2018–08–20
  21. By: Fischer, Andreas M; Saure, Philip
    Abstract: In a highly influential study, Autor, Dorn and Hanson (2013) analyze the effect of Chinese exports on the U.S. labor market. To identify causality, Chinese exports to the United States are instrumented with Chinese exports to other advanced economies, an identification strategy that relies on the absence of common demand shocks to all advanced economies. Our paper questions this identification assumption. We document that in the period between 1991 and 2007, sector-level exports from China grew parallel to those from other emerging market economies. This positive correlation is stronger for countries with a comparative advantage close to China's. We argue that these patterns are inconsistent with the view that China-speci c supply shocks dominated China's export growth. Adjusting the identification strategy in ADH, we find that the qualitative results from ADH survive but are smaller in magnitude.
    Keywords: employment; Instrumental Variable; International Trade
    JEL: F10
    Date: 2018–08
  22. By: Collin Rabe (University of Richmond); Andrea Waddle (University of Richmond)
    Abstract: Abstract We explore the impact that the renegotiation of NAFTA would have on both high- and low-skilled workers in the United States. We build a multi-country general equilibrium trade model with vertically integrated supply chains and trade in both intermediate goods and the technologies necessary to produce them. The technologies used to produce intermediate goods are assumed to be non-rivalrous and skill-augmenting. We find the freer trade generally increases inequality through increased investment in the skill-augmenting technology, but a reduction in trade with Mexico does little to offset the existing inequality in the United States.
    Date: 2018
  23. By: Simone Moriconi (IÉSEG School of Management); Giowanni Peri (University of California, Davis); Riccardo Turati (IRES, Université Catholique de Louvain);
    Abstract: In this paper we document the impact of immigration at the regional level on Europeans’ political preferences as expressed by voting behavior in parliamentary or presidential elections between 2007 and 2016. We combine individual data on party voting with a classification of each party’s political agenda on a scale of their "nationalistic" attitudes over 28 elections across 126 parties in 12 countries. To reduce immigrant selection and omitted variable bias, we use immigrant settlements in 2005 and the skill compo- sition of recent immigrant flows as instruments. OLS and IV estimates show that larger inflows of highly educated immigrants were associated with a change in the vote of citizens away from nationalism. How- ever the inflow of less educated immigrants was positively associated with a vote shift towards nationalist positions. These effects were stronger for non-tertiary educated voters and in response to non-European immigrants. We also show that they are consistent with the impact of immigration on individual political preferences, which we estimate using longitudinal data, and on opinions about immigrants. Conversely, immigration did not affect electoral turnout. Simulations based on the estimated coefficients show that immigration policies balancing the number of high-skilled and low-skilled immigrants from outside the EU would be associated with a shift in votes away from nationalist parties in almost all European regions.
    Keywords: Immigration, Nationalism, Elections, Europe
    Date: 2018–09
  24. By: Kishi, Keiichi; Okada, Keisuke
    Abstract: This study develops the international trade theory of technology diffusion with heterogeneous firms. Each new entrant randomly searches for and meets incumbents and then adopts their existing technology. As in previous international trade models based on firm heterogeneity, trade liberalization induces the least productive firms to exit, and then the resources can be reallocated toward more productive firms. However, we show that this resource reallocation effect is mitigated by the entry of low-productive firms. Trade liberalization facilitates the diffusion of existing low-productive technologies to new entrants, which shifts the weight in the productivity distribution from the upper tail area to the area around the least productivity. Thus, some resources can be reallocated toward low-productive firms. In addition, trade liberalization reduces domestically produced varieties. Consequently, we show the non-monotonic relationship between trade liberalization and aggregate productivity.
    Keywords: International trade; Innovation; Productivity distribution
    JEL: F12 L11 O33
    Date: 2018–08
  25. By: van den Boogaard, Vanessa; Jibao, Samuel; Prichard, Wilson
    Abstract: Recent research has cast light on the variety of informal payments and practices that govern the day-to-day interactions between traders and customs agents at border posts in low-income countries. Building on this literature, this paper draws on survey and qualitative evidence in an effort to explore which groups are most advantaged and disadvantaged by the largely informal processes and norms governing cross-border trade. We find that variation in strategies and outcomes across traders can only be effectively understood with reference to the importance of norms, networks, power, and the logic of control.
    Keywords: Governance,
    Date: 2018
  26. By: Anna Maria Mayda (Department of Economics and SFS, Georgetown University); Giovanni Peri (University of California, Davis); Walter Steingress (Bank of Canada - Banque du Canada)
    Abstract: In this paper we study the impact of immigration to the United States on the vote for the Republican Party by analyzing county-level data on election outcomes between 1990 and 2010. Our main contribution is to separate the effect of high-skilled and low-skilled immigrants, by exploiting the different geography and timing of the inflows of these two groups of immigrants. We find that an increase in the first type of immigrants decreases the share of the Republican vote, while an inflow of the second type increases it. These effects are mainly due to the local impact of immigrants on votes of U.S. citizens and they seem independent of the country of origin of immigrants. We also find that the pro-Republican impact of low-skilled immigrants is stronger in low-skilled and non-urban counties. This is consistent with citizens’ political preferences shifting towards the Republican Party in places where low-skilled immigrants are more likely to be perceived as competition in the labor market and for public resources.
    Keywords: Immigration, Republican Party, Electoral Effects, Economic and Fiscal Channels.
    JEL: F22 J61
    Date: 2018–09–10
  27. By: Giovannini, Massimo; Hohberger, Stefan; Kollmann, Robert; Ratto, Marco; Roeger, Werner; Vogel, Lukas
    Abstract: The trade balances of the Euro Area (EA) and of the US have improved markedly after the Global Financial Crisis. This paper quantifies the drivers of EA and US economic fluctuations and external adjustment, using an estimated (1999-2017) three-region (US, EA, rest of world) DSGE model with trade in manufactured goods and in commodities. In the model, commodity prices reflect global demand and supply conditions. The paper highlights the key contribution of the post-crisis collapse in commodity prices for the EA and US trade balance reversal. Aggregate demand shocks originating in Emerging Markets too had a significant impact on EA and US trade balances. The broader lesson of this paper is that Emerging Markets and commodity shocks are major drivers of advanced countries’ trade balances and terms of trade.
    Keywords: Euro Area and US external adjustment, commodity markets, emerging markets
    JEL: F2 F3 F4
    Date: 2018–08–06
  28. By: Duleep, Harriet; Liu, Xingfei; Regets, Mark
    Abstract: The initial earnings of U.S. immigrants vary enormously by country of origin. Via three interrelated analyses, we show earnings convergence across source countries with time in the United States. Human-capital theory plausibly explains the inverse relationship between initial earnings and earnings growth rates: the good fit between data and theory suggests that variation in initial skill transferability—not variation in the “quality” of human capital—underlies variation in initial earnings. A new method of testing for emigration bias confirms that selective emigration does not cause the convergence. Functional form and sample selections embedded in most recent analyses of immigrant economic assimilation bias downwards the earnings growth of post-1965 U.S. immigrants. When both functional-form and sample-selection constraints are lifted, a dramatically different picture of the economic assimilation of U.S. immigrants emerges.
    Keywords: immigrant economic assimilation,human capital investment,country of origin,immigrant earnings convergence,earnings growth,unbiased estimation
    JEL: J1 J2 J3 C1
    Date: 2018
  29. By: Varadarajan Chari (University of Minneapolis); Juan Pablo Nicolini (Minneapolis Fed); Pedro Teles (Banco de Portugal, Univ Catolica Portugu)
    Abstract: We study cooperative optimal Ramsey equilibria in the open economy addressing classic policy questions: Should there be restrictions to free trade and capital mobility? Should capital income be taxed? Should goods be taxed based on origin or destination? What are desirable border adjustments? Can a Ramsey allocation be implemented with residence based taxes on assets? We characterize optimal wedges and analyze alternative policy implementations.
    Date: 2018
  30. By: Breinlich, Holger (University of Surrey, CEP and CEPR); Leromain, Elsa (London School of Economics); Novy, Dennis (University of Warwick, CEP and CEPR); Sampson, Thomas (London School of Economics, CEP and CEPR); Sampson, Thomas (CFCM, University of Nottingham)
    Abstract: We study stock market reactions to the Brexit referendum on 23 June 2016 in order to assess investors ?expectations about the effects of leaving the European Union on the UK economy. Our results suggest that initial stock price movements were driven by fears of a cyclical downturn and by the sterling depreciation following the referendum. We also fi?nd tentative evidence that market reactions to two subsequent speeches by Theresa May (her Conservative Party conference and Lancaster House speeches) were more closely correlated with potential changes to tariffs and non-tariff barriers on UK-EU trade, indicating that investors may have updated their expectations in light of the possibility of a ?hard Brexit?. We do not ?nd a correlation between the share of EU migrants in different industries and stock market returns.
    Keywords: Brexit, Depreciation ; Event Study ; Recession ; Stock Market ; Tariffs JEL Classification: F15 ; F23 ; G14
    Date: 2018
  31. By: Rose, Andrew K
    Abstract: A country's exports rise when its leadership is approved by other countries. I show this using a standard gravity model of bilateral exports, a panel of data from 2006 through 2017, and an annual Gallup survey which asks people in up to 157 countries about whether they approve of the job performance of the leadership of China, Germany, Russia, the United Kingdom and the United States. Holding other things constant, a country's exports are higher if its leadership is approved by the importer, since; 'soft power' promotes exports. The Gallup effect is statistically and economically significant; a one percent increase in leadership approval raises exports by around .66 percent. This effect is reasonably robust and different measures of soft power deliver similar results. I conservatively estimate that the >20 percentage point decline in foreign approval of American leadership between 2016 (Obama's last year) and 2017 (Trump's first year) lowered American exports by at least .2% or >$3 billion.
    Keywords: approval; data; empirical; Gallup; Gravity; international; leadership; panel; positive
    JEL: F14 F59
    Date: 2018–08
  32. By: Bakari, Sayef
    Abstract: The aim of this paper is to study empirically the impact of agricultural raw materials imports on agricultural growth since it never done before. We have made this study in the context of three countries from North Africa (Tunisia, Morocco and Egypt) for the period 1965 – 2016. By using cointegration analysis and vector error correction model, empirical analysis proves that agricultural raw materials imports produce a positive effect on agricultural growth in the long run for all the three countries and cause agricultural growth in the short run in the case of Tunisia and Egypt. It is seen that agricultural raw materials imports are a source of economic growth in the agricultural sector. For this reason, countries of North Africa should adopt to integrate foreign technology imports and not technological innovation to stimulate agricultural sector.
    Keywords: Agricultural Raw Materials Imports, Agricultural Growth, VECM, North Africa.
    JEL: F11 F13 F14 F15 L66 O47 O55 Q16 Q17 Q18
    Date: 2018–08
  33. By: Gooch, Elizabeth; Gale, Fred
    Abstract: Chinese companies are increasing their investments in foreign agricultural and food assets. Their broad aims are to gain profits for Chinese investors while achieving national food security and projecting China’s influence abroad. While the United States is the largest supplier of China’s agricultural imports, it has not been a major target of Chinese agricultural investment. Chinese investors tend to enter less-developed countries where there are few competitors, potential to raise productivity using Chinese technology, and potential to diversify suppliers of Chinese imports. A few companies with access to financing from Chinese banks are pursuing mergers, acquisitions, and partnerships with companies in more developed markets. These investments reflect changes in China’s demand for food and its need for upgrades in technology and management, but most ventures have modest impacts on agricultural trade.
    Keywords: Financial Economics
  34. By: Norris, A.; Cranfield, J.
    Abstract: CETA means that the Canadian marketplace for dairy products will begin to see an increased presence of dairy products imported from the EU. Activity related to TPP and NAFTA also means there is potential for increased imports of dairy products from the TPP member states and NAFTA partners. In light of this, it is important to understand how Canadian consumers will respond to the increased presence of dairy products. We develop a discrete choice experiment to explore what trade-offs Canadian consumers make across different dairy product attributes. These attributes include price, country-of-origin (COO), the method of production (i.e., conventional versus organic), nature of the brand (national, regional, or store), and traceability. We apply the analysis to two types of cheese (Gouda and cheddar), ice cream, and yogurt. Results indicate there are statistically significant premiums and discounts associated with COO, and which vary with the dairy product. What is more, we find large premiums for the presence of traceability programs for all four of the respective dairy products, suggesting that the absence of assurances related to traceability may mute actual market penetration arising from increased access to the Canadian dairy market.
    Keywords: Farm Management, International Development, Livestock Production/Industries
    Date: 2018–07
  35. By: Everett Grant (Federal Reserve Bank of Dallas)
    Abstract: We use daily equity returns to estimate global inter-firm networks across all major industries from 1981-2016 and test whether the network is robust or fragile, relating multinational firms' overall health with global integration. More connected firms are less likely to be in distress and have higher profit growth and equity returns, but are also more exposed to direct contagion from distressed neighboring firms and network level crises. Our machine learning analysis reveals the centrality of finance in the international firm network and increased globalization over time, with greater potential for crises to spread globally when they do occur.
    Date: 2018
  36. By: Fally, Thibault; Sayre, James
    Abstract: Primary commodities are used as inputs into all production processes, yet they account for approximately 16 percent of world trade. Despite their share in trade, we show that the aggregate gains from trade are largely understated if we ignore key features of commodities: low price elasticities of demand (difficulty in finding substitutes), low price elasticities of supply, and high dispersion of natural resources across countries. We develop a general-equilibrium model of consumption, production, and input-output linkages that explicitly accounts for these features. Our simulations confirm that the gains from trade are significantly larger, especially when considering large trade cost changes.
    Keywords: Gains from trade; Multi-stage Production; Primary commodities
    JEL: F10 O13
    Date: 2018–08
  37. By: Akoyi, K.T.; Mitiku, F.; Maertens, M.
    Abstract: Private sustainability standards are spreading rapidly in global agri-food value chains as a means of communicating important aspects of safety, ethics and environmental attributes of food production, to consumers. A cross-cutting requirement for most standards is the prohibition of child labour intended to improve child welfare. In this paper, we investigate the child schooling implications in the coffee sector in Ethiopia and Uganda. We use cross-sectional household survey data and probit, tobit, propensity score matching and difference-in-difference techniques to estimate the impact of certification on schooling. We find that FT certification increases the likelihood of children to be enrolled in secondary school by 25% and, primary and secondary schooling efficiency by 10% and 16%, respectively. We find that RA certification has no impact on both school enrolment and schooling efficiency. The results imply that prohibition of child labour alone is not sufficient to improve schooling outcomes and that FT keeps its child welfare promises in South Western Ethiopia and Eastern Uganda.
    Keywords: Agricultural and Food Policy, International Development, International Relations/Trade
    Date: 2018–07
  38. By: Mohammed, Mikidadu
    Abstract: Stagflation, a simultaneous increase in inflation and unemployment, is generally thought to result from exogenous oil shocks. In this paper, we investigate another potential source of stagflation focusing on tariffs. Relying on the estimation of structural VAR model with sign restrictions over the period 1989- 2017 for the US economy, we found strong evidence of stagflationary tendencies following tariff shocks. In particular, tariff shocks on vital intermediate input, such as steel, trigger short-run rise in inflation and unemployment.
    Keywords: tariff shocks,steel,stagflation,structural VAR
    JEL: F1 F14 C3
    Date: 2018
  39. By: Christian H.M. Ketels (Harvard Business School); Michael E. Porter (Harvard Business School, Strategy Unit)
    Abstract: On June 23rd, 2016 52% of UK voters opted to put their country on the path to leave the European Union by March 29, 2019. This result was a surprise to many, and went against the advice of the vast majority of economic experts and business leaders. Two years later, and after a remarkable period in UK politics, key questions about the future relationship between the UK and the EU remain unresolved. Various models have been proposed; the latest one by Prime Minister May triggered the resignation of a number of key ministers. All of them struggle to deal with a fundamental tension: how to square barrier-free trade between the UK and the EU, especially across the border between Ireland and Northern Ireland, with both full policy sovereignty for the UK and adherence to the 'four freedoms' at the heart of the EUs Single Market. A 'no deal' Brexit by default remains an option, despite the costs to UK businesses and the wider UK economy.
    Date: 2018–09
  40. By: Fehr, Nils-Henrik M. von der; Harbord, David
    Abstract: Compensation from rulers of trading centres to merchants whose property rights had been violated was a notable feature of early European international trade. We demonstrate in a repeated-game model that demands for compensation made threats by merchant guilds to impose trade boycotts self-enforcing for individual merchants, thus removing incentives for embargo breaking that could otherwise have rendered guilds powerless. Long-distance merchants were thus protected from predation by medieval city rulers, possibly providing a foundation for the trade expansion of the `Commercial Revolution'. We also address the frequently neglected issue of whether the guilds and cities would have agreed on the level of trade which they wished to support.
    Keywords: International trade, institutions, noncooperative games, merchant guilds
    JEL: C72 D02 N43
    Date: 2018–07–10
  41. By: Razin, Assaf; Sadka, Efraim
    Abstract: Globalization - a widespread contemporaneous phenomenon - generates international tax competition. The consequent erosion in the tax base, especially on capital, is a blow to the finances of the welfare state, with far-reaching implications for the redistribution of income by the welfare state. Low skill migration attracted to the welfare state may put additional strain on it. An aging welfare state - a common contemporary phenomenon in many industrial countries - calls in for young and high skill immigrants for its survival. This review is about how economists should think about the connection between globalization and the welfare state, with strong motivating historical examples and empirical facts, and non-technical analytics.
    JEL: F00 H00
    Date: 2018–08
  42. By: LEE KWANGBAE (Sunchon National University)
    Abstract: Shift-share analysis is a decomposition technique widely used in regional studies to identify sectoral growth effects of economic variables. As globalization progresses rapidly, much attention has been paid to the extension of shift-share analysis, but the most important phenomenon is to extend the traditional shift-share analysis to international trade. Henderson (1962) developed a regional growth rate differential analysis that shows growth contribution by sector.This paper analyzed the export fluctuation by factors of 10 major export items of Gwangyang Port and Incheon Port by applying shift-share analysis and growth rate differential analysis. This paper differs from the previous studies in two respects. First, it applies the shift-share analysis and the regional growth rate differential analysis so that each technique can complement each other. Second, the export weight is analyzed instead of the export amount which focuses on the existing research.In the case of Gwangyang Port, the regional allocation effect of nine items out of 10 items has a positive sign, but in the growth rate differential analysis, the competitive factors of most items have negative signs, and the analysis shows opposite results. In the case of Incheon port, the shift-share analysis shows that the industrial structure effect and regional allocation effect have positive signs in three items. However, in the regional growth rate differential analysis, both weighting factor and competitiveness factor have no positive sign. This analysis implies that both techniques should be applied together in order to accurately resolve and evaluate port export structure and competitiveness.
    Keywords: growth rate differential analysis, shift-share analysis, industry-mix effect, regional competitive effect, rate component, weight component
    JEL: A10
    Date: 2018–06

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