nep-int New Economics Papers
on International Trade
Issue of 2018‒12‒24
forty-one papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Quantifying Brexit: From Ex Post to Ex Ante Using Structural Gravity By Gabriel Felbermayr; Jasmin Katrin Gröschl; Marina Steininger
  3. The Impact of Trade Liberalisation on Economic Growth in Switzerland By Khobai, Hlalefang; Chitauro, Mishaelight
  4. FDI and International Collusion By Uday Bhanu Sinha
  5. Brexit Referendum and Business Investment in the UK By Lucyna Gornicka
  6. Anti-Migration as a Threat to Internationalization? A Review of the Migration-Internationalization Literature By Hatzigeorgiou, Andreas; Lodefalk, Magnus
  7. From Tatopani to Rasuwa: An analysis of Nepal-China trade after the earthquake By Paras Kharel
  8. Do Standards Improve the Quality of Traded Products? By Anne-Célia Disdier; Carl Gaigné; Cristina Herghelegiu
  9. The effects of non-tariff measures on agri-food trade: a review and meta-analysis of empirical evidence By Santeramo, Fabio Gaetano; Lamonaca, Emilia
  10. The Economics and Politics of Revoking NAFTA By Raphael A. Auer; Barthélémy Bonadio; Andrei A. Levchenko
  11. Economic history and contemporary challenges to globalization By O'Rourke, Kevin Hjortshøj
  12. On the Evolution of Trade and of Sanitary and Phytosanitary Standards: The Role of Trade Agreements By Santeramo, Fabio Gaetano; Guerrieri, Valentina; Lamonaca, Emilia
  13. Short-run and long-run food import elasticities with persistent trading habits By Niemi, Janne
  14. Agro-food trade, GVCs and agricultural development in ASEAN By Jared Greenville; Kentaro Kawasaki
  15. Venting Out: Exports During a Domestic Slump By Almunia, Miguel; Antràs, Pol; Lopez-Rodriguez, David; Morales, Eduardo
  16. A simple and accurate method to calculate domestic and foreign value-added in gross exports By Miroudot, Miroudot; Ye, Ming
  17. Let their Knowledge Flow: The Effect of Returning Refugees on Export Performance in the Former Yugoslavia By Dany Bahar; Andreas Hauptmann; Cem Özgüzel; Hillel Rapoport
  18. Firm R&D investment and export market exposure By Peters, Bettina; Roberts, Mark J.; Vuong, Van Anh
  19. Repercussions of International Trade on the Market Power of Firms in Different Market Structures. By Rashid, Muhammad Mustafa
  20. Barriers to trade in environmental goods: How Important they are and what should developing countries expect from their removal By de Melo, Jaime; Solleder, Jean-Marc
  21. The 2018 Trade War: Data and Nascent General Equilibrium Analysis By Minghao Li; Edward J. Balistreri; Wendong Zhang
  22. Trade Liberalization and the Agglomeration of Heterogeneous Entrepreneurs By Toshihiro Okubo; Rikard Forslid
  23. Aggregate statistics on trafficker-destination relations in the Atlantic slave trade By Franses, Ph.H.B.F.; van den Heuvel, W.
  24. Does persistence in internationalization and innovation influence firms’ performance? By Iandolo, Stefano; Ferragina, Anna Maria
  25. Globalization and Electoral Outcomes: Evidence from Italy By Mauro Caselli; Andrea Fracasso; Silvio Traverso
  26. Skill Transference and International Migration: A theoretical analysis on skilled migration to the Anglosphere By NAKAGAWA Mariko
  27. Identity Politics and Trade Policy By Grossman, Gene; Helpman, Elhanan
  28. Does financial sector development affect the growth gains from trade opennes? By Ramírez-Rondán, N. R.; Terrones, Marco E.; Vilchez, Andrea
  29. Adaptation to Shocks and The Role of Capital Structure: Danish Exporters During the Cartoon Crisis By Benjamin U. Friedrich; Michal Zator
  30. The Abolition of Immigration Restrictions and the Performance of Firms and Workers: Evidence from Switzerland By Andreas Beerli; Jan Ruffner; Michael Siegenthaler; Giovanni Peri
  31. The Contents and Features of Dispute Settlement under US-Jordan FTA: An Appraisal By Malkawi, Bashar H.
  32. Immigration, Skill Acquisition and Fiscal Redistribution in a Search-Equilibrium Model By Ikhenaode, Bright Isaac
  33. R&D offshoring and home industry productivity By Gaetan de Rassenfosse; Russell Thomson
  34. Who is NOT Voting for Brexit Anymore? By Eleonora Alabrese; Thiemo Fetzer
  35. Welfare Effects of Capital-Market Integration in the Presence of an International Duopoly By Panagiotis I. Karavitis; Michael S. Michael
  36. Green Growth and Trade in Environmental Goods and Services: A South Asian Perspective By Kshitiz Dahal; Posh Raj Pandey
  37. Re-examining the Foreign direct investment, Renewable energy consumption and Economic growth nexus: Evidence from a new Bootstrap ARDL test for Cointegration By Ghazouani, tarek
  38. Trade and Credit Reallocation: How Banks Help Shape Comparative Advantage By Keuschnigg, Christian; Kogler, Michael
  39. Born to be an entrepreneur? How cultural origin affects entrepreneurship By Katharina Erhardt; Simon Haenni
  40. Quantifying the Benefits of Labor Mobility in a Currency Union By Christopher L. House; Christian Proebsting; Linda L. Tesar
  41. The long-run impact of historical shocks on the decision to migrate: Evidence from the Irish Migration. By Narciso, Gaia; Severgnini, Battista; Vardanyan, Gayane

  1. By: Gabriel Felbermayr; Jasmin Katrin Gröschl; Marina Steininger
    Abstract: Exploiting changes in the geography of economic integration in Europe, this paper uses detailed bilateral trade data for 50 sectors to carry out an econometric ex post evaluation of the trade cost effects of the United Kingdom’s various arrangements with the European Union. The analysis reveals important heterogeneity across agreements, sectors, and within pairs. In particular, the EU’s eastward enlargement or the EU-Korea trade agreement have lowered the UK’s outward trade costs only relatively modestly. These asymmetries matter for the size and distribution of the welfare effects of Brexit – the withdrawal of the UK from EU agreements resulting into a return of trade costs to the situation quo ante. We make this point with the help of a modern multi-sector trade model that is able to capture inter- and intranational production networks. In line with other papers, the welfare costs of Brexit are higher in the UK than in most other EU countries. However, the considered asymmetries tend to attenuate overall costs while giving rise to substantial heterogeneity between EU27 members and sectors.
    Keywords: structural gravity, European trade integration, general equilibrium, quantitative trade models, Brexit
    JEL: F15 F17 N74
    Date: 2018
  2. By: Anastasia B. Likhacheva (National Research University Higher School of Economics); Hryhorii M. Kalachyhin (National Research University Higher School of Economics)
    Abstract: An idea of lagging Pivot, so that Russian Policy of Pivot to the East Asia cannot last successfully on a long-term basis keeping an extensive lag between political and economic dimensions of the Pivot, becomes widely spread in Russia and abroad. And one of the most inevitable and necessary conditions of bridging this gap together can be found among instruments of trade liberalization with FTAs ahead. Here we should shift our focus from Russian interests to Eurasian economic Union (EAEU) that has a privileged mandate on trade negotiations with third countries and blocs like ASEAN: Russia cannot sign any FTA on its own since 2015. However, this puzzle was relatively poorly studied both in Russia and abroad and this paper attempts to fill this gap. We briefly analyze the scope of trade between Russia and key Asian markets (which still remain mostly limited to North-East Asia) to define the most sensitive export markets for Russia, then we systematize existing barriers that could be potentially eliminated by international trade negotiations and compare them with existing international activity of the Eurasian Economic Commission (EEC). Results of our study clearly demonstrate an objective demand for more intensive EAEU activity on trade liberalization in Asia with a particular focus on non-tariff barriers.
    Keywords: Pivot to Asia, political economy, geoeconomics, FTA, integration, non-tariff barriers, Russia, North-East Asia, EAEU
    JEL: Z
    Date: 2018
  3. By: Khobai, Hlalefang; Chitauro, Mishaelight
    Abstract: The objective of this study is to analyse the effect of trade liberalization on economic growth in Switzerland using annual data from 1990 to 2014. In doing so, the study incorporated Foreign Direct Investment (FDI) and the Employment Rate (EMP) as additional variable to form a multivariate framework. The Auto-Regressive Distributive Lag (ARDL) test was used to test the existence of a long run relationship among the variables. The empirical findings indicated that Trade Openness had a positive and significant effect on economic growth in Switzerland. Thus, the study recommend that there is a need for the country to put strong initiative on adding value on her exports so as to compensate for imports.
    Keywords: Trade liberalisation, Economic growth, Auto-regression Distribution Lag Model (ARDL), Co-integration, Switzerland
    JEL: C1 F1 F10 F13
    Date: 2018–11–07
  4. By: Uday Bhanu Sinha (Department of Economics, Delhi School of Economics)
    Abstract: We develop a supergame model of collusion between price-setting oligopolists when the trade between countries involves per-unit trade cost and FDI requires a fixed cost of setting up a subsidiary in a foreign country. We demonstrate that cross hauling of FDI may facilitate collusion based on territorial allocation of markets. Whenever FDI is not helpful for sustaining collusion, the collusive arrangement involves no FDI at all. With asymmetric number of home firms or with different sizes of the markets, FDI may facilitate international collusion at lower levels of trade costs and thus our analysis also throws some light on the empirical puzzle regarding the trade liberalisation and FDI flows observed since the 1990s.
    Keywords: Foreign direct investment, collusion, multimarket contact, cross hauling of FDI, price competition, homogenous good.
    JEL: D43 F12 F15 F21 F23 L13 L41
    Date: 2018–12
  5. By: Lucyna Gornicka
    Abstract: In this paper I apply firm-level analysis to examine how the Brexit process has affected business investment in the UK. An interaction term of potential trade costs after exiting the EU and a measure of firms’ participation in global trade is used as a proxy for firm-level exposure to Brexit-related effects. The results suggest that potential trade costs have had a considerable and statistically significant negative impact on firm investment in the UK after the referendum. At the same time, the post-referendum sterling depreciation has likely contributed positively to investment expenditure by more foreign-oriented firms.
    Keywords: Europe;United Kingdom;Brexit referendum, firm investment, uncertainty, trade costs, General, Country and Industry Studies of Trade
    Date: 2018–11–21
  6. By: Hatzigeorgiou, Andreas; Lodefalk, Magnus
    Abstract: Does anti-migration sentiment threaten internationalization? One major pro-Brexit argument was that it would enable more control over immigration. The most recent US presidential election also focused on immigration. Anti-migration sentiment could be a threat to internationalization, given that migrants can help lower the costs of internationalization. Since trade contributes to economic growth, this could, in turn, impede economic development. Despite extensive literature on the migration-trade nexus, there are few examples of policymakers highlighting the role of migration for internationalization. One possible explanation is the absence of an accessible survey of the available theory and evidence on this relationship, and this article intends to bridge the gap. We review and discuss over 100 papers published on the subject, from pioneering country-level studies to nascent firm-level studies that utilize employer-employee data. To our knowledge, this is the first paper offering a wide-ranging review of the different strands of theory on the relationship between migration and internationalization, as well as new empirical findings. Although the evidence suggests that migration can facilitate internationalization we also note substantial gaps and inconsistencies in the extant literature. The aim of this article is to encourage future research and assist policymakers in their efforts to promote internationalization.
    Keywords: Migration,networks,information,trade,foreign direct investment
    JEL: D20 D80 F14 F16 F22 F23 J61
    Date: 2018
  7. By: Paras Kharel (South Asia Watch on Trade, Economics and Environment)
    Abstract: This paper analyses changes in Nepal"\u0027"s trade with China in the wake of the 2015 earthquake, which was followed by a blockade of the Nepal-India border. Using monthly trade data to obtain trade flows over subperiods of less than a year, it first shows how the blockade compounded the earthquake"\u0027"s blow to trade. It, then, dissects Nepal-China trade performance and patterns at the product level, customs point/route level and product-customs point/route level. With Tatopani-Zhangmu, the main commercial trading point on the Nepal-China border, shut after the earthquake and Rasuwagadhi-Kerung, a recently opened trading point with a barely motorable road, unable to fully absorb the diverted trade traffic, portions of Nepal"\u0027"s overland imports from China were forced to take a costly detour via sea. The share of overland imports from China fell from 24 per cent before the earthquake to 12 per cent two years after the quake. There was a general shift towards using both sea and air routes rather than just a single route for imports. The time cost imposed by the enforced sea detour for imports is equivalent to a tariff of 18 per cent to 62 per cent. The share of overland exports to China fell from 69 per cent to 43 per cent. While changes in routes were stark for imports, they were modest for exports that initially used Tatopani. The limited route changes for exports occurred overwhelmingly towards the air route rather than the sea route. The relative importanceof exports to China via air has increased, but total exports to China, as of the end of Fiscal Year 2016/17, were yet to be restored to pre-earthquake levels. The paper discusses likely issues in the future of NepalChina trade through the lens of transport and transit, including the emergence of the Rasuwagadhi-Kerung option. As a landlocked country, Nepal"\u0027"s strategy should be to diversify trade and transit routes, exploring all options. The temptation to make a cost-benefit analysis comparing trade costs along different routes, without factoring in the value of transit needs, must be avoided.
    Keywords: Nepal-China trade, Nepal-India relations, Nepal earthquake, Nepal-India border blockade, trade costs, transit, Tatopani-Zhangmu, Rasuwagadhi-Kerung, Nepal-China railway
    JEL: F13 F14 F15 Q54
    Date: 2018–06
  8. By: Anne-Célia Disdier; Carl Gaigné; Cristina Herghelegiu
    Abstract: Quality-focused non-tariff measures are increasingly adopted by policy makers to address market failures. This paper tests for their selection and quality effects in a context of information asymmetry regarding product attributes. Our theory reveals that the enforcement of quality standards (QSs) induces the exit of lowquality firms but also that of some high-quality ones. The overall quality effect is therefore ambiguous. Using French firm data, we find that the QSs imposed by destination countries increase the probability, volume and value of exports of high-productivity medium-quality firms at the expense of low-productivity highquality firms. QSs improve the average quality of exported consumption goods.
    Keywords: Firm exports; quality standards; information asymmetry; product quality
    Date: 2018–12
  9. By: Santeramo, Fabio Gaetano; Lamonaca, Emilia
    Abstract: The increasing policy interests and the vivid academic debate on non-tariff measures (NTMs) has stimulated a growing literature on how NTMs affect agri-food trade. The empirical literature provides contrasting and heterogeneous evidence, with some studies supporting the ‘standards as catalysts’ view, and others favouring the ‘standards as barriers’ explanation. To the extent that NTMs can influence trade, understanding the prevailing effect, and the motivations behind one effect or the other, is a pressing issue. We review a large body of empirical evidence on the effect of NTMs on agri-food trade and conduct a meta-analysis to disentangle potential determinants of heterogeneity in estimates. Our findings show the role played by the publication process and by study-specific assumptions. Some characteristics of the studies are correlated with positive significant estimates, others covary with negative significant estimates. Overall, we found that the effects of NTMs vary across types of NTMs, proxy for NTMs, and levels of details of studies. Not negligible is the influence of methodological issues and publication process.
    Keywords: Non-tariff measures; Trade barriers; Trade standards; Meta-analysis
    JEL: F13 F14 Q17 Q18
    Date: 2018–09
  10. By: Raphael A. Auer (Bank for International Settlements and CEPR); Barthélémy Bonadio (Bank for International Settlements and CEPR); Andrei A. Levchenko (University of Michigan, NBER, and CEPR)
    Abstract: We provide a quantitative assessment of both the aggregate and the distributional effects of revoking NAFTA using a multi-country, multi-sector, multi-factor model of world production and trade with global input-output linkages. Revoking NAFTA would reduce US welfare by about 0.2%, and Canadian and Mexican welfare by about 2%. The distributional impacts of revoking NAFTA across workers in different sectors are an order of magnitude larger in all three countries, ranging from -2.7 to 2.26% in the United States. We combine the quantitative results with information on the geographic distribution of sectoral employment, and compute average real wage changes in each US congressional district, Mexican state, and Canadian province. We then examine the political correlates of the economic effects. Congressional district-level real wage changes are negatively correlated with the Trump vote share in 2016: districts that voted more for Trump would on average experience greater real wage reductions if NAFTA is revoked.
    Keywords: NAFTA, quantitative trade models, distributional effects, protectionism, trade policy
    JEL: F11 F13 F16 J62 R13
    Date: 2018–12–12
  11. By: O'Rourke, Kevin Hjortshøj
    Abstract: The paper surveys three economic history literatures that can speak to contemporary challenges to globalization: the literature on the anti-globalization backlash of the nineteenth century, focused largely on trade and migration; the literature on the Great Depression, focused largely on capital flows, the gold standard, and protectionism; and the literature on trade and warfare.
    Keywords: deglobalization; Globalization
    JEL: F02 N70
    Date: 2018–12
  12. By: Santeramo, Fabio Gaetano; Guerrieri, Valentina; Lamonaca, Emilia
    Abstract: Trade agreements and trade measures are policy instruments aimed at favouring trade by providing a degree of harmonisation among members. We analyse how the agri-food trade and the incidence of Sanitary and Phytosanitary Standards (SPSs) have evolved for countries sharing agreements. We examine, through a regression discontinuity design, whether the approval of agreements affects the evolution of trade and SPSs and quantify the trade effects of SPSs. We also highlight the differences in trade flows due to the introduction of agreements. Findings show that trade agreements tend to increase trade and to reduce the number of policy measures among countries. Regulation inequalities exist across trade agreements covering different geo-economic areas: after the approval of agreements, the existence and the importance of SPSs become relevant among developing countries, whereas the pervasiveness of SPSs becomes less stringed between developed and developing countries. Our analyses prove that trade agreements and trade measures are trade-enhancing, with the cereals sector benefitting the most.
    Keywords: Agri-food trade; Non-tariff measure; Regional trade agreement; Policy.
    JEL: F13 F14 Q17 Q18
    Date: 2018–10
  13. By: Niemi, Janne
    Abstract: This paper provides estimates and explores the role of own price import demand (Armington) elasticities between different source countries for five agricultural commodities in a framework that incorporates temporal dimension formulated as trading habit persistence. The estimations employ FAO’s bilateral food commodity trade database, complemented with importer and exporter country characteristics from other data. The results support the hypothesis that trade patterns are persistent the adjustment following price changes takes effect with delays. Apart from the evidence for the presence of habit persistence and hence different short and long-term elasticities in general, significant differences between countries are also evidenced, in particular between high- and low-income countries and between main geographic areas. Consistently with the barriers for market entry considerations we also observe higher persistence downwards than upwards.
    Keywords: Armington elasticity, Trade, Habit persistence, Agricultural commodities, Business regulation and international economics, E71, F14, O19, Q17,
    Date: 2018
  14. By: Jared Greenville (OECD); Kentaro Kawasaki (OECD)
    Abstract: The countries that compromise the Association of Southeast Asian Nations (ASEAN) have expanded their involvement in global agro-food trade through strong regional production growth and increasing consumer demands from population growth and higher incomes. Regional and international agro-food markets have thus become an important source of income and food for the regions producers and consumers. However, growth in trade has lessened in recent years with projections suggesting a further slowing over the medium term. This study explores the role that agro-food trade and participation in agro-food global value chains (GVC) has had on regional agro-food sectors and current barriers that are holding the region back from unlocking the full benefits of further integration into regional and global agro-food markets. It finds that although GVC engagement has increased regional agro-food growth between 2004 and 2014, gaps remain in the level of regional integration. Results from the analysis suggest that reducing the remaining tariff and non tariff barriers, and creating an enabling environment to allow agricultural producers to better access service inputs, will help spur sector growth and agricultural incomes.
    Keywords: agricultural trade, Agriculture, ASEAN, regional integration
    JEL: F14 F15 Q17 Q18
    Date: 2018–12–17
  15. By: Almunia, Miguel; Antràs, Pol; Lopez-Rodriguez, David; Morales, Eduardo
    Abstract: We exploit plausibly exogenous geographical variation in the reduction in domestic demand caused by the Great Recession in Spain to document the existence of a robust, within-firm negative causal relationship between demand-driven changes in domestic sales and export flows. Spanish manufacturing firms whose domestic sales were reduced by more during the crisis observed a larger increase in their export flows, even after controlling for firms' supply determinants (such as labor costs). This negative relationship between demand-driven changes in domestic sales and changes in export flows illustrates the capacity of export markets to counteract the negative impact of local demand shocks. We rationalize our findings through a standard heterogeneous-firm model of exporting expanded to allow for non-constant marginal costs of production. Using a structurally estimated version of this model, we conclude that the firm-level responses to the slump in domestic demand in Spain could well have accounted for around one-half of the spectacular increase in Spanish goods exports (the so-called `Spanish export miracle') over the period 2009-13.
    Date: 2018–12
  16. By: Miroudot, Miroudot; Ye, Ming
    Abstract: In this paper, we propose a hypothetical extraction that provides a theoretically-funded measure of FVA in gross exports and we provide full expressions for a decomposition of gross exports into four terms: DVA, domestic double counting (DDC), FVA and foreign double counting (FDC). As in Los et al. (2016), the fact that we calculate a hypothetical GDP without the exports from a given country is the basis for validating the interpretation of the FVA term. Our DVA term is the same as Los et al. (2016).
    Keywords: Trade accounting, input-output table, Value-added decomposition, Global value chains
    JEL: E01 F14
    Date: 2018–09–01
  17. By: Dany Bahar; Andreas Hauptmann; Cem Özgüzel; Hillel Rapoport
    Abstract: During the early 1990s Germany received over half a million Yugoslavian refugees fleeing war. By 2000, many of these refugees, who were under temporary protection, had been repatriated. We exploit this historical episode to provide causal evidence on the role that migrants play explaining export performance in global markets after returning to their home country. We find that the elasticity of exports to return migration is between 0.1 to 0.24 in industries where migrants were employed during their stay in Germany. In order to deal with endogeneity we use historic exogenous rules of allocation of asylum seekers across different German states to construct an instrumental variable for the treatment. The results are mostly driven by knowledge-intensive industries, and by workers in occupations intensive in analytical and managerial skills.
    Keywords: migration, refugees, knowledge diffusion, management, exports, productivity
    JEL: F14 F22 O33 D83
    Date: 2018
  18. By: Peters, Bettina; Roberts, Mark J.; Vuong, Van Anh
    Abstract: In this article we study differences in the returns to R&D investment between firms that sell in international markets and firms that only sell in the domestic market. We use German firm-level data from the high-tech manufacturing sector to estimate a dynamic structural model of a firm's decision to invest in R&D and use it to measure the difference in expected long-run benefit from R&D investment for exporting and domestic firms. The results show that R&D investment leads to a higher rate of product and process innovation among exporting firms and these innovations have a larger impact on productivity improvement in export market sales. As a result, exporting firms have a higher payoff from R&D investment, invest in R&D more frequently than firms that only sell in the domestic market, and, subsequently, have higher rates of productivity growth. The endogenous investment in R&D is an important mechanism that leads to a divergence in the long-run performance of firms that differ in their export market exposure. Simulating the introduction of trade tariffs we find a substantial reduction in firms' productivity growth and incentive to invest in R&D.
    Keywords: R&D choice,Export,Innovation,Productivity,Dynamic structural model
    JEL: F14 L25 O31 O32
    Date: 2018
  19. By: Rashid, Muhammad Mustafa
    Abstract: The purpose of this paper is to provide an introduction of market power in different market structures and how this market power diminishes because of international trade and the effects on welfare. A review of relevant literature from Pugel (2012), McConnel Bruce and Flynn (2012) and Bernheim and Winston (2014) provides the effects of international trade on the market power conditions in different market structures and the effects on welfare. Asprilla, Berman, Cadot and Jaud (2016), Devereux and Lee (2001) and Krugman (1994) serve to provide further evidence through PTM literature, bilateral exchange rate shocks and protectionism.
    Keywords: Market Power, Market Structures, International Trade and Policy.
    JEL: E6 F01 F1 F23 F4 F41 F42 F5 M16 M2
    Date: 2018–06–19
  20. By: de Melo, Jaime; Solleder, Jean-Marc
    Abstract: Few developing countries have participated in the environmental goods agreement (EGA) negotiations to reduce barriers on trade in Environmental Goods (EGs). Reasons for this reluctance are first reviewed along with a comprehensive description of barriers to trade (tariffs and NTBs) on two lists of EGs used in negotiations comprised mostly industrial products (The APEC and WTO lists), and a third, a list of Environmentally Preferable Products (EPPs) more representative of the perceived interests of developing countries. The paper then revisits and extends the literature on the estimation of barriers to trade in EGs for these lists. These estimates are carried out with a structural gravity model and new data: (i) on bilateral (rather than MFN) tariffs, and; (ii) with a measure of regulatory overlap in bilateral trade to capture the often-observed pattern of greater bilateral trade among countries that share similar regulatory regimes. Results show that tariffs generally reduce the intensity of bilateral trade, often with little difference in statistical significance between the EG and non-EG group for each list. Regulatory harmonization, as captured by an increase in regulatory overlap is also estimated to be conducive to more intense bilateral trade.
    Keywords: Environmental Goods; NTBs; tariffs
    JEL: F18
    Date: 2018–11
  21. By: Minghao Li (Center for Agricultural and Rural Development (CARD)); Edward J. Balistreri; Wendong Zhang (Center for Agricultural and Rural Development (CARD))
    Abstract: This study introduces a database of 2018 tariff increases resulting from the recent trade war and quantifies the impacts using the canonical GTAPinGAMS model calibrated to GTAP version 9 accounts. We report relatively modest economy-wide welfare impacts in this perfect-competition Armington model, with substantial impacts on the pattern of trade and output in important sectors. JEL codes: F11, F12, F17
    Date: 2018–12
  22. By: Toshihiro Okubo (faculty of economics, keio university); Rikard Forslid (Department of Economics, Stockholm University)
    Abstract: This paper introduces spatial sorting of heterogeneous entrepreneurs (firms) in the "foot-loose entrepreneur" trade and geography model. The model generates agglomeration from a uniform space contrary to the "footloose capital" model. The model also generates spatial sorting in reverse productivity order with the least productive entrepreneur being the first to relocate.
    Keywords: Agglomeration, Heterogeneous firms, Trade liberalization
    JEL: F12 F15 F21 R12
  23. By: Franses, Ph.H.B.F.; van den Heuvel, W.
    Abstract: The available aggregated data on the Atlantic slave trade in between 1519 and 1875 concern the numbers of slaves transported by a country and the numbers of slaves who arrived at various destinations (where one of the destinations is “deceased”). It is however unknown how many slaves, at an aggregate level, were transported to where and by whom, that is, we know the row and column totals, but we do not known the numbers in the cells of the matrix. In this paper we use a simple mathematical technique to fill in the void. It allows us to estimate the trends in the deceases per transporting country, and also to estimate the fraction of slaves who went to own colonies or to others. For example, we estimate that of all the slaves who were transported by the Dutch only about 7 percent went to Dutch colonies, whereas for the Portuguese this number is about 37 percent.
    Date: 2018–01–01
  24. By: Iandolo, Stefano; Ferragina, Anna Maria
    Abstract: In this paper, we analyze the joint effect of persistency in innovation and export on firms’ total factor productivity (measured in accordance with Levinsohn and Petrin, 2003). For this purpose, we use data on Italian manufacturing firms covering an eight-year time span (1998-2006) which allow us to measure the effect of different time activities, both in innovation and in export and the existence of different pathways linking them. We distinguish between persistent and temporary exporting firms as well as frequent and temporary innovators, to test (through OLS and a two-step system GMM) the existence of any combined learning-by-exporting and learning-by-doing effects. We find that persistent innovation efforts seem to be associated with a permanent presence in foreign markets since persistently innovative and exporting firms have better productivity results than persistently exporting (innovating) firms with no persistent innovation (export). Combining both strategies can be an opportunity to internalize knowledge flows coming from long-lasting exposure to foreign markets.
    Keywords: Export,Innovation,Firms,Productivity,GMM
    JEL: F14 F10 F23 O30 D24
    Date: 2018
  25. 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 associ- ated 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 compe- tition 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 e↵ects across local labor markets, we find that both immigration intensity and exposure to import competition from China have con- tributed positively to the electoral outcomes of far-right parties, whereas only the former has produced a positive e↵ect on the votes of right-wing and traditional- ist/authoritarian/nationalist parties. On the other hand, neither of them has had an e↵ect on far-left parties. Moreover, electoral turnout has responded negatively to an increased presence of migrants. While the above e↵ects 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.
    Keywords: voting, electoral outcomes, trade, import competition, immigration, local labor markets
    JEL: D72 F14
    Date: 2018
  26. By: NAKAGAWA Mariko
    Abstract: In this paper, we analyze how skill transference from an origin to destination country, captured by lower productivity at the destination caused by differences in language use, affects international migration by skilled workers, using a multi-country NEG model proposed by Gasper et al. (2017). Specifically, our interest is to explain how less frictional countries in terms of linguistic communication such as those in the Anglosphere (English-speaking countries) attract more highly-skilled international migrants. The analysis based on asymmetric skill transference among countries, in which the world is divided into two groups, Anglosphere (English-speaking countries) and non-Anglosphere (non-English-speaking countries), finds that countries in the Anglosphere are more likely to be the industrial core attracting all skilled (and imperfectly mobile) workers than countries in the non-Anglosphere. Also, we find that less frictional migration from the non-Anglosphere to the Anglosphere always accelerates industrial agglomeration in the Anglosphere core country, while both less frictional migration within the Anglosphere and expanding the Anglosphere (an increase in the number of countries constituting the Anglosphere) do not always accelerate industrial agglomeration in the Anglosphere due to the market crowding effect.
    Date: 2018–12
  27. By: Grossman, Gene; Helpman, Elhanan
    Abstract: We characterize trade policies that result from political competition when assessments of well-being include both material and psychosocial components. The material component reflects, as usual, satisfaction from consumption. Borrowing from social identity theory, we take the psychosocial component as combining the pride and self-esteem an individual draws from the status of groups with which she identifies and a dissonance cost she bears from identifying with those that are different from herself. In this framework, changes in social identification patterns that may result, for example, from increased income inequality or heightened racial and ethnic tensions, lead to pronounced changes in trade policy. We analyze the nature of these policy changes.
    Keywords: political economy; populism; protectionism; social identity; tariff formation
    JEL: D78 F13
    Date: 2018–12
  28. By: Ramírez-Rondán, N. R.; Terrones, Marco E.; Vilchez, Andrea
    Abstract: A sizeable literature suggests that financial sector development could be an important enabler of the growth benefits of trade openness. We provide a comprehensive analysis of how financial development can affect the relationship between trade openness and growth using a dynamic panel threshold model and an extensive dataset for a large sample of countries for the 1970-2015 period. We find that there is a financial development threshold in which trade openness has a positive and significant effect on economic growth. We also find that when splitting the sample into industrialized and non-industrialized countries, the financial development threshold that enables the growth benefits of trade is higher in the former group of countries than in the latter. This finding is consistent with the fact that the export composition of industrialized countries is tilted towards more capital-intensive finance-constrained goods.
    Keywords: Trade openness, economic growth, threshold model, panel data.
    JEL: C33 E51 F43 O41
    Date: 2018–11
  29. By: Benjamin U. Friedrich (Northwestern University, Kellogg School of Management); Michal Zator (Northwestern University, Kellogg School of Management)
    Abstract: How do firms’ responses to an unexpected demand shock vary with their capital structure? We study the boycott of Danish products in Muslim countries in response to a Danish newspaper publishing caricatures of prophet Muhammad. Using detailed firm data on financial statements, trade flows, product innovation, and outsourcing activities of Danish exporters, we exploit variation in their capital structure and exposure to Muslim countries to analyze the effect of leverage on their response to the boycott in input and output markets. We find that firms with low leverage compensate for lost demand by increasing investment, introducing new products and redirecting their sales elsewhere. In contrast, high leverage firms reduce sales, employment and investment and substitute employees with outsourcing and owning assets with leasing. This focus on short-term cost savings is consistent with indirect costs of financial distress borne away from bankruptcy in the form of constrained adjustment to changing demand.
    JEL: D22 F14 G32 J21 L23 L25
    Date: 2018–12–12
  30. By: Andreas Beerli; Jan Ruffner; Michael Siegenthaler; Giovanni Peri
    Abstract: We study a reform that granted European cross-border workers free access to the Swiss labor market. Our Differences-in-Differences estimations leverage the fact that regions close to the border were affected more intensely and earlier. The greater availability of cross-border workers increased their employment but also wages and possibly employment of highly educated native workers although the new cross-border workers were also highly educated. The reason is a simultaneous increase in labor demand in skill-intensive firms: the reform increased the size, productivity, innovation performance of some incumbent firms, attracted new firms, and created opportunities for natives to pursue managerial jobs.
    JEL: F22 J22 J24 J61
    Date: 2018–11
  31. By: Malkawi, Bashar H.
    Abstract: In the area of dispute resolution, the U.S. FTAs with Arab countries share some commonalities. However, the US – JO FTA clearly differs from other U.S. FTAs with Arab countries. Areas of difference include treatment of perishable goods, appeal, panel report, and implementation of panel report. The dispute settlement mechanism in the US – JO FTA can be improved in several concrete ways.
    Keywords: Arab countries, Jordan, WTO, dispute settlement
    JEL: F15
    Date: 2018–09–12
  32. By: Ikhenaode, Bright Isaac
    Abstract: Focusing on a selected group of 19 OECD countries, we analyze the effects of immigration on natives welfare, labor market outcomes and fiscal redistribution. To this end, we build and simulate a search and matching model that allows for endogenous natives skill acquisition and intergenerational transfers. The obtained results are then compared with different variations of our benchmark model, allowing us to assess to what extent natives skill adjustment and age composition affect the impact of immigration. Our comparative statics analysis suggests that when natives adjust their skill in response to immigration, they successfully avoid, under most scenarios, any potential displacement effect in the labor market. Moreover, taking into account age composition plays a key role in assessing the fiscal impact of immigration, which turns out to be positive when we include retired workers that receive intergenerational transfers. Finally, we find that, under any scenario, our model yields more optimistic welfare effects than a standard search model that abstracts from skill decision and intergenerational redistribution. These welfare effects are found to be overall particularly positive when the migration flows comprise high-skilled workers.
    Keywords: Immigration, Welfare, Unemployment, Skill Acquisition, Fiscal Redistribution.
    JEL: F22 J24 J61 J64
    Date: 2018–11–08
  33. By: Gaetan de Rassenfosse (Ecole polytechnique federale de Lausanne); Russell Thomson (Swinburne University of Technology)
    Abstract: Offshoring R&D commonly invokes concerns regarding the loss of high value jobs and a hollowing out of technological capabilities, but it can also benefit domestic firms by enabling them to tap into the global technological frontier. We study the effect of R&D offshoring on industrial productivity in the home country using industry-level data for 18 OECD countries over a 26-year period. Simultaneity between productivity and R&D offshoring is addressed by using foreign tax policy as an instrument for offshored R&D. We show that R&D offshoring contributes positively to productivity in the home country, irrespective of the host country destination.
    Keywords: R&D offshoring, globalization, productivity, foreign R&D
    JEL: F23 O25 O33 O47 L6
    Date: 2018–12
  34. By: Eleonora Alabrese; Thiemo Fetzer
    Abstract: Using estimates of support for Leave across UK local authority areas constructed from a comprehensive 20,000 strong survey, we show that both the level and the geographic variation capturing differential degrees of support for Leave have changed significantly since the 2016 EU referendum. A lot of area characteristics, many of which were previously associated with higher levels of support for Leave, are now significant correlates capturing a swing towards Remain. They include, for example, the degree to which local authorities receive transfers from the EU or the extent to which their economies rely on trade with the EU, along with past electoral support for UKIP (and the BNP) and exposure to immigration from Eastern Europe. Lastly, exposure to austerity since 2010 is among the strongest individual correlates weakening the support for Leave. The evidence is consistent with the argument that the small margin of victory of Leave in 2016 was, to a significant extent, carried by protest voters, who used the EU referendum to voice their discontent with domestic social and economic developments, particularly, austerity. Lastly, we present some evidence suggesting that the UK public, even in Leave supporting areas, would be much more willing to make compromises on free movement and aspects of single market membership compared to what appears to be the UK governments negotiation objective.
    Keywords: Brexit, protest voting, globalization, European Union
    JEL: D72 F50 H30 H50
    Date: 2018
  35. By: Panagiotis I. Karavitis; Michael S. Michael
    Abstract: We build a two-country model with an international duopoly and capital-market integration. We examine how the convergence of the cost of capital, due to its mobility, affects the welfare of each country and their joint welfare. We find that international capital mobility, which equalizes the return to capital between the two countries, reduces their joint welfare. The welfare of the host country improves for sufficiently large market size and high level of capital-market integration, while the welfare of the source country improves only in a very restrictive case with a very small market size and small differences in their initial marginal cost of capital.
    Keywords: capital-market integration, imperfect competition, international duopoly
    JEL: F12 F15 H21
    Date: 2018
  36. By: Kshitiz Dahal (South Asia Watch on Trade, Economics and Environment); Posh Raj Pandey (South Asia Watch on Trade, Economics and Environment)
    Abstract: This paper looks at the patterns, trends, and existing barriers in the trade of environmental goods and services (EGS) in South Asia. It also looks at the state of green growth in the region, with particular emphasis on carbon dioxide emission and energy supply and consumption pattern, to deduce whether the trade of EGS has been happening at a level conducive to promoting green growth. Although the trade of environmental goods has been exhibiting an increasing trend, the increase is almost exclusively the result of increasing imports. The lackluster export performance of environmental goods by South Asian countries, except for India, is indicative of a dismal state of environment industry in South Asia region. The most visible benefits of outcome of the liberalization of environmental goods would thus be increased imports. However, we did not find strong relation between import of environmental goods and level of green growth. The proximate reasons for such relation are the environmentally hazardous energy mix - coal and oil still dominate the primary energy supply, energy consumption, and electricity generation, implying unsustainable modes of consumption and production - and hence the perpetually increasing greenhouse gas emissions for all the South Asian countries. A strong commitment to green economy through legislations, policy, governing bodies as well as behavioral changes are needed to dissociate economic growth from environmental impacts. Analysis of tariffs on environmental goods in South Asia suggests some tariff barriers are present alongside non-tariff barriers. There is a lack of data to analyze the trade of environmental services in South Asia but evidence suggests that significant barriers for liberalization of environmental services are firmly in place.
    Keywords: Green Growth, Environmental Goods, Environmental Services, OECD List, APEC List, Friends List, Greenhouse Gases, List Approach, Project Approach, Integrated Approach, Request and Offer methodology, Hybrid Approach, Carbon dioxide emission, Total Primary Energy Supply Mix (TPES), Total Energy Consumption Mix, Electricity Generation Mix
    JEL: F1 O0 Q2 Q3 Q4
    Date: 2018–05
  37. By: Ghazouani, tarek
    Abstract: This study re-examines the long-run relationship among foreign direct investment (FDI), renewable energy consumption (RE) and economic growth (GDP) for 9 Middle East and North Africa (MENA) countries over the period 1990–2015 using a newly developed cointegration test by McNown et al. (2018), the bootstrap autoregressive distributed lag (ARDL) which allows us to generate critical values for ARDL tests that are valid and appropriate for the specific data sets used and allow for endogeneity and feedback that may exist among the variables. In the long run analysis, we found evidence of cointegraion: (i) for Algeria, Armenia, Mauritania, and Tunisia when GDP is the dependant variable; (ii) for Egypt, Iran, Israel, Tunisia and Turkey when FDI is the dependent variable; and (iii) only for Iran, Morocco, and Tunisia when RE is the dependent variable. The short run Granger-causality analysis reveals varied nature of direction of causality between all variables and that is different among countries. This confirms that uniform policy recommendation relating to the causality between these variables may not work for these selected MENA countries.
    Keywords: FDI; Renewable energy consumption; Economic growth; Bootstrap ARDL; MENA
    JEL: C15 F21 O11 Q43
    Date: 2018–11–11
  38. By: Keuschnigg, Christian; Kogler, Michael
    Abstract: Trade and innovation cause structural change. Productive factors must flow from declining to growing industries. Banks play a major role in cutting credit to non-viable firms in downsizing sectors and in providing new credit to finance investment in expanding, innovative sectors. Structural parameters of a country's banking system thus influence comparative advantage and trade, and can magnify the gains from trade liberalization. The analysis shows how insolvency laws, minimum capital standards, and cost of bank equity determine credit reallocation, sectoral expansion and trade patterns.
    Keywords: Banking; capital reallocation; comparative advantage; Trade
    JEL: F10 G21 G28
    Date: 2018–12
  39. By: Katharina Erhardt; Simon Haenni
    Abstract: Persistent differences in entrepreneurial activity between regions and countries remain unexplained. This paper argues that cultural heritage is an important determinant. We exploit a quasi-experimental setting comparing entrepreneurial activities of individuals with different cultural ancestry from within Switzerland but who live in the same municipality today and are hence exposed to the same economic and institutional environment. We find that individuals with cultural origin on the German-speaking side of the Swiss language border found 20% more firms than their counterparts with cultural origin on the French-speaking side ─ no matter if they currently live in the German-speaking or French-speaking region. These newly founded firms are identical in terms of survival rate, industry composition, legal form, and firm size, independent of the cultural origin of firm founders. A model of entrepreneurial choice suggests that the empirical patterns of firm entry and performance are more likely driven by differences in risk aversion or preferences for entrepreneurship rather than by skill.
    Keywords: Culture, entrepreneurship, natural experiment
    JEL: D22 L26 Z10
    Date: 2018–12
  40. By: Christopher L. House; Christian Proebsting; Linda L. Tesar
    Abstract: Unemployment differentials are bigger in Europe than in the United States. Migration responds to unemployment differentials, though the response is smaller in Europe. Mundell (1961) argued that factor mobility is a precondition for a successful currency union. We use a multi-country DSGE model with cross-border migration and search frictions to quantify the benefits of increased labor mobility in Europe and compare this outcome to a case of fully flexible exchange rates. Labor mobility and flexible exchange rates both work to reduce unemployment and per capita GDP differentials across countries provided that monetary policy is sufficiently responsive to national output.
    JEL: E24 E42 E52 E58 F15 F16 F22 F33
    Date: 2018–12
  41. By: Narciso, Gaia; Severgnini, Battista; Vardanyan, Gayane
    Abstract: This study investigates how negative historical shocks can explain migration in the long-run. We construct a unique dataset based on the early 20th century Irish Census data and a selection of the Ellis Island Administrative Records which allow us to test whether the Great Irish Famine (1845-1850), one of the most lethal starvation in history, has shaped the decision of migrating to the USA in the following 70 years. We control for several set of individual and geographical characteristics and we find that the Irish Famine was an important significant driver of individuals’ migration choices. Instrumental variable analysis based on the exogenous spread of the potato blight provides consistent results.
    Keywords: Mass migration,negative shock,long-run impact,Great Famine
    JEL: F22 N33 N93
    Date: 2018

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