nep-int New Economics Papers
on International Trade
Issue of 2019‒06‒10
24 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. How can Taiwan enlarge its role in the process of Asia-Pacific economic integration By Liu, Da-Nien
  2. Disentangling Global Value Chains By Alonso de Gortari
  3. The rise of populism and the crisis of globalisation: Brexit, Trump and beyond By Cox, Michael
  4. Trade Tensions, Global Value Chains, and Spillovers; Insights for Europe By Raju Huidrom; Nemanja Jovanovic; Carlos Mulas-Granados; Laura Papi; Faezeh Raei; Emil Stavrev; Philippe Wingender
  5. MANAGING TRADE: EVIDENCE FROM CHINA AND THE US By Nicholas Bloom; Kalina Manova; John Van Reenen; Stephen Teng Sun; Zhihong Yu
  6. How do organized crime and counterfeit interact in Italian trading firms? An empirical analysis of their effects on trade By Elton Beqiraj; Silvia Fedeli; Luisa Giuriato
  7. Cross-border knowledge flows through R&D FDI: Implications for low- and middle-income countries By Amendolagine, Vito; Chaminade, Cristina; Guimón, José; Rabellotti, Roberta
  8. Immigrants and Exports: Firm-level Evidence from Canada By Ananth Ramanarayanan
  9. Assessment of risks and benefits for the Russian economy from the conduct of various integration strategies in modern conditions By Knobel, Alexander (Кнобель, Александр); Kuznetsov, Dmitriy (Кузнецов, Дмитрий); Sedalischev, Vladimir (Седалищев, Владимир)
  10. The Crisis in World Trade By Akman, S.; Armstrong, S.; Braga, C.; Dadush, U.; Gonzalez, A.; Kimura, F.; Nagakawa, J.; Rashish, P.; Tamura, A.
  11. The Income Elasticity of Import Demand: A Meta-Survey By Makram El-Shagi; W. Charles Sawyer; Kiril Tochkov
  12. Terror Externalities and Trade: An Empirical Analysis By Bandyopadhyay, Subhayu; Doucouliagos, Hristos; Pham, Cong S.
  13. The escalating China-US trade dispute: economic and geopolitical implications for Sub-Saharan Africa By Uri Dadush
  14. Competing Gains From Trade By Clemens C. Struck; Adnan Velic
  15. Evaluating the Impact of Brexit on Natural Gas Trade between the UK and the EU – A Spatial Equilibrium Analysis By Yakubu Abdul-Salam
  16. Income redistribution and self-selection of immigrants By Corneo, Giacomo G.; Neidhöfer, Guido
  17. Export structure and economic growth in a developing country: case of Cote d’Ivoire By Coulibaly, Romaric; Akia, Sosthène Alban
  18. Modern forms of protectionism in the use of non-tariff measures: an assessment of their impact on the trade in agricultural goods and food in Russia By Aliev, Timur (Алиев, Тимур); Flegontova, Tatiana (Флегонтова, Татьяна); Baeva, Marina (Баева, Марина); Ponomareva, Olga (Пономарева, Ольга); Pyzhikov, Nikita (Пыжиков, Никита)
  19. Excessive Entry and Exit in Export Markets By Hiroyuki Kasahara; Heiwai Tang
  20. The US-China Trade Dispute: A Macro Perspective By Rod Tyers; Yixiao Zhou
  21. The Belt and Road Initiative: What is in it for China? By Lauren A. Johnston
  22. The effect of immigration on natives’ well-being in the European Union By O’Connor, Kelsey J.
  23. Who is in favor of immigration By Epstein, Gil S.; Katav-Herz, Shirit
  24. The Effect of Tax-Motivated Transfer Pricing on U.S. Aggregate Trade Statistics: Working Paper 2019-05 By Dorian Carloni; Daniel Fried; Molly Saunders-Scott

  1. By: Liu, Da-Nien
    Abstract: The forming of regional alliances has become a trend, and the number of FTAs has grown exponentially in recent years. Regionalism has become a trend that has not only affected functions of the WTO, but also severely impacted global trade, investment, and even industrial division of labor. From Taiwan's point of view, the vogue for large-scale FTAs in the past few years has had a major impact on Taiwan, which is heavily dependent on foreign trade, is closely tied up with global supply chains, and it has been able to sign only a handful of FTAs. On this basis, this paper mainly analyzes how Taiwan can assume a greater role and make breakthroughs in the trend of regional economic integration. We will first summarize global trends and latest developments in regional economic integration. The second part is to describe Taiwan's participation in regional economic integration and the difficulties that were encountered. The third explains how Taiwan should make adjustments in its industry and system to increase opportunities for breakthrough in regional integration, and also increase Taiwan's importance in the Asia-Pacific's regional economy.
    Keywords: Regional Economic Integration, Free Trade Agreement(FTA), Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), O
    Date: 2019–05
  2. By: Alonso de Gortari
    Abstract: The patterns of production underlying the recent rise of global value chains (GVCs) have become increasingly complex. NAFTA supply chains, for example, are now deeply integrated: Using Mexican customs data, I find that exports to the U.S. use a much higher share of American inputs than exports to other countries. However, the conventional framework used to measure GVCs ignores this heterogeneity since it assumes that all output uses the same input mix. I develop a new framework that combines input-output data with additional information on supply chain linkages in order to construct GVCs reflecting the use of inputs observed in the latter. Improving measurement matters quantitatively since it affects both value-added trade measures and counterfactual experiments: I show that incorporating Mexican customs data raises the estimated share of U.S. value in U.S. imported Mexican manufactures from 18% to 30% and amplifies the welfare cost of a NAFTA trade war.
    JEL: C6 F1
    Date: 2019–05
  3. By: Cox, Michael
    Abstract: This article is based on the author's keynote address at the annual conference of the International Affairs Standing Committee of the Royal Irish Academy, titled ‘Retreat from Globalisation? Brexit, Trump and the New Populism’, which took place at the Royal Irish Academy in Dublin on 31 May 2017
    Keywords: populism; globalization; liberalism; voting; Irish politics; free trade; international economics; economic globalization; Irish studies; political parties
    JEL: N0
    Date: 2017–10–25
  4. By: Raju Huidrom; Nemanja Jovanovic; Carlos Mulas-Granados; Laura Papi; Faezeh Raei; Emil Stavrev; Philippe Wingender
    Abstract: Europe is deeply integrated into global value chains and recent trade tensions raise the question of how European economies would be affected by the introduction of tariffs or other trade barriers. This paper estimates the impact of trade shocks and growth spillovers using value added measures to better gauge the associated costs across European countries.
    Keywords: Supply;Tariffs;Economic growth;Spillovers;Trade;Regional trade;Trade Tensions;Global value Chains;Supply Chains;Growth;Tariffs;Spillovers
  5. By: Nicholas Bloom; Kalina Manova; John Van Reenen; Stephen Teng Sun; Zhihong Yu
    Abstract: We present a heterogeneous-firm model in which management ability increases both production efficiency and product quality. Combining six micro-datasets on management practices, production and trade in Chinese and American firms, we find broad support for the model's predictions. First, better managed firms are more likely to export, sell more products to more destination countries, and earn higher export revenues and profits. Second, better managed exporters have higher prices, higher quality, and lower quality-adjusted prices. Finally, they also use a wider range of inputs, higher quality and more expensive inputs, and imported inputs from more advanced countries. The structural estimates indicate that management is important for improving production efficiency and product quality in both countries, but it matters more in China than in the US, especially for product quality. Panel analysis for the US and a randomized control trial in India suggest that management exerts causal effects on product quality, production efficiency, and exports. Poor management practices may thus hinder trade and growth, especially in developing countries.
    Date: 2019–05
  6. By: Elton Beqiraj; Silvia Fedeli; Luisa Giuriato
    Abstract: The impact of crime and counterfeiting on Italian trading firms has been rather neglected. Nevertheless, they are important drivers of trade in countries like Italy, whose economic activity is characterized by small/medium-sized firms, highly exposed to the risk of infringement of intellectual property rights by criminal activities of counterfeiting, and, at the same time, not averse to production/exchange of counterfeited goods. We employ a newly-built regional panel data set that includes both economic variables and indicators of counterfeiting activities and criminality during the period of deep economic crisis (2008-2013). Using a dynamic panel data model, we study how counterfeiting affects trade indicators of the Italian firms. We find that commercial exchanges increase when regions are hubs of production or transit points for fakes. The benefit on trade should not hide the consequences of counterfeiting in terms of loss of private investors’ confidence, limits to business innovation and destruction of competitiveness. We also show that profitable counterfeiting activities that target high-value, high-quality goods, and challenge business innovation and competitiveness of the export-oriented firms, have significant depressing impacts on both export and the degree of trade openness.
    Keywords: Trade openness; Export; Small firms; Criminality; Counterfeit
    JEL: E26 F14 F19
    Date: 2019–04
  7. By: Amendolagine, Vito (Università di Pavia); Chaminade, Cristina (Lund University); Guimón, José (Autonomous University of Madrid); Rabellotti, Roberta (Università di Pavia)
    Abstract: R&D related foreign direct investments represent a powerful mechanism for cross-border knowledge sharing that can stimulate the process of technological catch-up. However, low-income countries and smaller middle-income countries remain largely excluded from this kind of global flows of knowledge. In this chapter, we discuss the motivations and implications of this type of FDI for low and middle income countries, building on a critical review of the existing literature and analyse the trajectory of R&D FDI during the period 2003-2017 by region and industry. The data is used as a point of departure to discuss potential policies specially tailored for low and middle income countries and their capacity to attract and anchor R&D related FDI for technological catch up. The paper finalizes outlining a future research agenda.
    Keywords: Foreign Direct Investment; Technology driven FDI; International technology transfer; South-South FDI; Developing countries; Less developed countries; Emerging Economies; Innovation policy
    JEL: O19 O24 O32 O57
    Date: 2019–06–07
  8. By: Ananth Ramanarayanan (University of Western Ontario)
    Abstract: We examine how immigrant employment enhances trade at the firm level using unique administrative matched employer-employee data from Canada. We augment a standard model of firms’ export market entry and sales decisions with trade costs that depend on destination-specific immigrant employment at the firm level. We estimate simple structural equations derived from the model that relate destination-specific exporting decisions to immigrant employment. We develop a method to deal with the potential endogeneity of immigrant employment that exploits the optimality conditions associated with the firm’s employment decision. We find positive and statistically significant effects of firm level immigrant employment on exporting. These effects vary with product type and immigrant employee characteristics in ways consistent with the idea that immigrant employees alleviate information barriers to trade.
    Date: 2019
  9. By: Knobel, Alexander (Кнобель, Александр) (The Russian Presidential Academy of National Economy and Public Administration); Kuznetsov, Dmitriy (Кузнецов, Дмитрий) (The Russian Presidential Academy of National Economy and Public Administration); Sedalischev, Vladimir (Седалищев, Владимир) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: Assessment of risks and benefits for the Russian economy from various integration strategies in modern conditions To find the best ways for Russia to liberalize trade between EAEU and other countries of the world, taking into account the hostile actions of third parties (the sanctions confrontation with the EU and the USA, etc.), we used the GLOBE v1 computable general equilibrium model. We have limited ourselves to considering five integration sites, the formation of which, in our opinion, is most likely due to the current state of their negotiation progress: TPP without the USA, SCO, ASEAN, RCEP and TTIP. It was assumed that with each of these sites the EAEU may or may not create an FTA, which led us to consider 243 different scenarios. As shown by the calculations, the inaction of the EAEU has, as a rule, a weak positive effect on the countries of the EAEU both at the level of industries and at the level of the economy as a whole. At the same time, the participation of the EAEU countries in the integration processes can give noticeable gains in terms of GDP (up to 1.2% from Russia) and trade. Nevertheless, participation in these processes creates noticeable industry risks (decline in output to 1.9%) in some sectors.
    Date: 2019–04
  10. By: Akman, S.; Armstrong, S.; Braga, C.; Dadush, U.; Gonzalez, A.; Kimura, F.; Nagakawa, J.; Rashish, P.; Tamura, A.
    Abstract: The future of the world trading system depends critically on reinvigorating the WTO and policy change in the largest trading nations. To sustain multilateralism, urgent action is needed to avoid a disruption of global trade and its fragmentation into trading blocs where relations are based on relative power instead of rules. Smallest players whose trade is least covered by bilateral or regional agreements will be at the greatest disadvantage. All countries will incur enormous costs only to try and reinvent a system that is already in place today under the WTO.
    Date: 2019–05
  11. By: Makram El-Shagi (Center for Financial Development and Stability at Henan University, and School of Economics at Henan University, Kaifeng, Henan); W. Charles Sawyer (Texas Christian University, Fort Worth, TX, US); Kiril Tochkov (Texas Christian University, Fort Worth, TX, US)
    Abstract: Import demand has been a major research topic in international economics for the past 80 years because of its importance for analyzing trade and evaluating trade policies. The goal of this paper is to survey the literature and conduct a meta-analysis of empirical studies on import demand with the intention of clarifying the effect of economic development on income elasticity. In particular, we test the hypothesis that higher income levels are associated with a more elastic import demand. We apply a combination of parametric and non-parametric methods on estimates from a sample of 152 papers published over the period 1975-2014 and find that this relationship is significant and robust. Specifically, kernel densities of income elasticity estimates for high-income countries in North America and Europe are shown to exceed those for poorer parts of the world. The results from quartile regressions confirm this pattern and establish its robustness when controlling for the effect of model specifications.
    Keywords: trade, import demand, income elasticity, meta-analysis, survey
    JEL: F10 F14
    Date: 2019–05
  12. By: Bandyopadhyay, Subhayu (Federal Reserve Bank of St. Louis); Doucouliagos, Hristos (Deakin University); Pham, Cong S. (Deakin University)
    Abstract: We report robust evidence of adverse cross-border externalities from terrorism on trade for over 160 countries from 1976 to 2014. Terrorism in one country spills over to reduce trade in neighboring nations. These externalities arise from higher trade costs due to trade delays and macroeconomic uncertainty.
    Keywords: Terrorism; Spillovers; Bilateral imports
    JEL: D74 F14 H56
    Date: 2019–05–29
  13. By: Uri Dadush
    Abstract: The trade tensions between the United States and China will cause only minor immediate damage to their giant economies. However, tariffs have important and diverse effects on individual sectors and cause heightened uncertainty. The main adverse effects on Sub-Saharan Africa will therefore be through global investor confidence, economic growth and commodity prices, and these effects could be severe if the dispute escalates further and endangers the rules-based trading system. The trade tensions are also a symptom of the growing rivalry between China and the United States, raising challenging questions for African development strategy and diplomacy.
    Date: 2019–05
  14. By: Clemens C. Struck; Adnan Velic
    Abstract: Differences in growth rates across countries imply a strong relation between factor proportions based trade and key aggregate economic outcomes. We construct two macro-trade datasets and illustrate that this relation is rather weak in the data. We propose a simple explanation: in the presence of intra- industry trade, pronounced trade specialization patterns culminate in a loss of varieties. In a dynamic two-country model, we illustrate that the introduction of intra-industry trade overwhelmingly subdues the inter-industry trade dynamics and realigns the behavior of standard models with the empirical evidence along various dimensions. We also provide empirical support for our mechanism: labor and capital intensive goods are traded between developed and developing countries in both directions and in similar proportions in overall trade.
    Keywords: Heckscher Ohlin; Armington trade; Factor proportion based trade; Comparative advantage; Dynamic two-country general equilibrium models; Feldstein-Horioka
    JEL: F11 F12 F32 F41 F43
    Date: 2019–03
  15. By: Yakubu Abdul-Salam (Centre for Energy Economics Research and Policy, Heriot-Watt University)
    Abstract: The United Kingdom (UK) and the European Union (EU) engage in significant natural gas trade through the Internal Energy Market (IEM). As the UK exits from the EU however, it is likely to also exit from the IEM given the seemingly intractable positions of both parties. Exit of the UK from the IEM would likely cause an increase in natural gas trade costs between the two. The increased trade costs result from a number of channels including (1) loss in trade efficiency arising from loss of EU financing previously aimed at improving efficiencies in trade between the two; (2) loss in trade efficiency arising from loss in the sophistication of financial instruments that are linked to the UK’s membership of the EU and the IEM; (3) rising costs of doing business in the UK for many EU energy companies due to the effects of possible regulatory divergence between the UK and the EU; etc. We use a spatial equilibrium model to examine the trade flow, price and welfare implications of these cost effects on global natural gas trade, with a focus on the UK and the EU. We find that cost increases in the UK-EU natural gas trade links would result significant trade flow changes, with the UK and the EU reducing overall exports and increasing internal trade. As a result, there would be significant underutilisation of existing pipelines linking both parties. The Republic of Ireland would also form a significant number of new trade links to compensate for its reduction in imports from the UK. Total welfare losses in the UK and the EU are in the order of $479million and $602million respectively, which is equivalent to about 3.69% and 0.59% of the total value of natural gas trade for the respective parties in 2017. In the UK, the producer welfare loss is significantly higher, highlighting the vulnerability of the UK natural gas industry to cost increases in trade with the EU.
    Keywords: Brexit; Natural gas; Trade; Spatial equilibrium; Welfare
    JEL: F13 O24 P28
    Date: 2019–05
  16. By: Corneo, Giacomo G.; Neidhöfer, Guido
    Abstract: We analyze the effects of governmental redistribution of income on migration patterns,using an Italian administrative dataset that includes information on almost every Italian citizen living abroad. Since Italy takes a middle ground in terms of redistribution, both the welfare-magnet effect from more redistributive countries and the propensity of the high-skilled to settle in countries with lower taxes can be empirically studied. Our findings confirm the hypothesis that destination countries with more redistribution receive a negative selection of Italian migrants. This holds true after accounting for many individual and country level covariates, migration costs, and when testing for stochastic dominance of the skill distributions of migrants and stayers. Policy simulations are run in order to gauge the magnitude of these migration effects. Based on estimated elasticities, we find that sizable increases in the amount of redistribution in Italy have small effects on the skill composition of the resident population.
    Keywords: Roy-Model,Self-selection,Migration,Redistribution
    JEL: D31 F22 H23 J61 O15
    Date: 2019
  17. By: Coulibaly, Romaric; Akia, Sosthène Alban
    Abstract: The aim of this paper is to examine the interactions between export structure and economic growth in Côte d'Ivoire. To reach this goal, we used a modeling based on the ARDL Bounds test of Pesaran (2001). We arrive at the results on the export basket of Côte d'Ivoire and the index of diversification act negatively on the economic growth both in short and long term. But this diversification seems to be concentrated in some sectors. These results suggest a diversification in the export basket by including other sectors and also a structural transformation of the Ivorian economy.
    Keywords: Diversification, exports, economic growth, ARDL Bound Tests
    JEL: O1 O11 O13 O4 O55
    Date: 2019–05–24
  18. By: Aliev, Timur (Алиев, Тимур) (The Russian Presidential Academy of National Economy and Public Administration); Flegontova, Tatiana (Флегонтова, Татьяна) (The Russian Presidential Academy of National Economy and Public Administration); Baeva, Marina (Баева, Марина) (The Russian Presidential Academy of National Economy and Public Administration); Ponomareva, Olga (Пономарева, Ольга) (The Russian Presidential Academy of National Economy and Public Administration); Pyzhikov, Nikita (Пыжиков, Никита) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: This paper addresses the problem of increasing the number and complexity of non-tariff measures used in trade, in particular with regard to agricultural goods and food, as the groups that are most affected by them. Taking into account the fact that not all non-tariff measures act as barriers, authors form the methodology for their categorization in accordance with existing approaches created by international organizations and emerging types of non-tariff measures. Taking into account the fact that NTMs have the greatest impact on the trade in agricultural goods and food as well as Russia's high positions in the global markets of these goods, authors assess the impact of non-tariff measures on the trade of goods under consideration for the Russian side.
    Date: 2019–05
  19. By: Hiroyuki Kasahara; Heiwai Tang
    Abstract: Using transaction-level data for all Chinese firms exporting between 2000 and 2006, we find that on average 78% of exporters to a country in a given year are new exporters. Among these new exporters, an average of 60% stopped serving the same country the following year. These rates are higher if the destination country is a market with which Chinese firms are less familiar. We build a simple two-period model with imperfect information, in which beliefs about their foreign demand are determined by learning from neighbors. In the model, a high variance of the prior distribution of foreign demand induces firms to enter new markets. This is because the profit function is convex in perceived foreign demand due to the option of exiting, which insures against the risk of low demand realization. We then use our micro data to empirically examine several model predictions, and find evidence to support the hypothesis that firms' high entries and exits are outcomes of their rational self-discovery of demand in an unfamiliar market.
    JEL: D8 F1 F2
    Date: 2019–05
  20. By: Rod Tyers (Business School, University of Western Australia and Research School of Economics, Centre for Applied Macroeconomic Analysis (CAMA), Australian National University); Yixiao Zhou (School of Economics, Finance and Property, Curtin Business School, Curtin University)
    Abstract: With the recent rise of populism and authoritarian politics multilateral agreements have been resisted and there are increasing trade disputes, the US-China conflict being a case in point. This paper uses a calibrated global macro model to assess the potential economic consequences of this conflict under explicit assumptions about monetary and fiscal policy. US unilateral protection emerges as “beggar thy neighbor” policy, by most if new tariff revenue affords capital tax relief. China’s proportional losses are large, little mitigated by its retaliation, which nonetheless constrains US net gains. Avoiding leakage by protecting against all sources causes large losses in third regions trading with China and the US.
    Keywords: Trade disputes, China, macroeconomic policy, general equilibrium analysis, numerical theory
    JEL: F13 F41 F47
    Date: 2019
  21. By: Lauren A. Johnston
    Abstract: China's outbound investment exceeded inbound investment for the first time in 2015. In years leading up this transition, a maturing demographic transition alongside slowing internal migration and diminishing returns to physical capital investment, all had a role in China's diminished competitiveness in low†wage manufactured exports and the fading of the related growth model. In that context, the 2013 launch of the Belt and Road Initiative (BRI) took place in two stages in two developing countries, Kazakhstan and Indonesia. These launch choices, and the BRI in general are herein elaborated in terms of economic history, geography, and demography. The BRI in turn is considered to be aiming to foster the ongoing development of China, and in doing so also seeks to instigate new era development opportunity for other developing countries. One facilitation channel for the latter is China's concept of “patient capital,†essentially concessional capital, or foreign aid. For China that offers a means via which to internationalise the financial sector and also the Renminbi. Lessons from China's own use of foreign aid and economic development hence serve as an important reference for ongoing scoping of the shape and trajectory of the BRI. To that end, this article sheds light on what is in the BRI for China.
    Keywords: Belt and Road Initiative, China, development, economic demography, RMB internationalisation
    Date: 2019–01–22
  22. By: O’Connor, Kelsey J.
    Abstract: Immigration is one of the most debated topics in Europe today, yet little is known about the overall effect of its multiple impacts. The analysis suggests natives need not worry. Increasing immigrant population shares have no statistically significant effects on natives’ well-being in 28 European Union countries over the years 1990- 2017 (EU12) and 2005-2017 (new member states) using macro data aggregated from Eurobarometer surveys. Immigration does not statistically affect natives’ well-being across all scenarios, such as: when observing the raw data or accounting for reverse causality and omitted variables using instrumental variable methods; accounting for whether or not immigrants are from the EU; and for population subgroups, notably the poorly educated and elderly. Refugees also do not statistically affect the well-being of natives. Any negative relations that are observed are not statistically significant and exhibit small magnitudes.
    Keywords: migration,refugees,life satisfaction,happiness,Eurobarometer
    JEL: I31 J11 O15
    Date: 2019
  23. By: Epstein, Gil S.; Katav-Herz, Shirit
    Abstract: Population ageing affects most countries, especially developed ones. The elderly have increased in number as a result of increased longevity and a parallel decline in fertility. This phenomenon is placing an increasing burden on the young to finance intergenerational transfers to the old, which is creating a threat to the stability of the pension system and the long-run viability of society as a whole. One possible solution is to permit more immigration, which will both increase the labor force and broaden the tax base. Increasing immigration has a variety of effects on the local population, which vary according to age and wealth. One of these is the threat to local social norms and culture since immigrants tend to maintain the culture of their country of origin. This effect increases with the number of immigrants and reduces the attractiveness of immigration as a solution to population ageing. This paper examines immigration as a solution to the problem of ageing population, while considering the implication of immigration on social norms.
    Keywords: Immigration,Social norms,Population ageing,Intergenerational transfers,Attitude toward immigrants
    JEL: J11 J15 J61
    Date: 2019
  24. By: Dorian Carloni; Daniel Fried; Molly Saunders-Scott
    Abstract: The prices that multinational corporations set for transactions among international affiliates—referred to as transfer prices—play an important role in determining where income is taxed. Many factors affect how multinationals set their transfer prices, including tax considerations. If tax considerations affect transfer prices, then those changes in transfer prices may distort aggregate trade and income statistics. In this paper, we analyze how corporate income tax rates affect trade flows between the affiliates of multinationals—known as related-party trade—to examine
    JEL: H25 H26 F23
    Date: 2019–05–31

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