nep-int New Economics Papers
on International Trade
Issue of 2020‒05‒18
28 papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Turning away from globalization? Trade wars and the rules of competition in global trade: Implications for the EU By Jan Jakub Michałek; Przemysław Woźniak
  2. International Trade of Essential Goods During a Pandemic By Fernando Leibovici; Ana Maria Santacreu
  3. The margin of importing sectors in the gains from trade By Laurence Wicht
  4. The Effect of Foreign Trade on Innovation: The Case of Brics-T Countries By Betul Gur
  5. Tariffs and Foreign Direct Investment in a North South Product Cycle Model By Tatsuro Iwaisako; Hitoshi Tanaka
  6. Trade Policy and the China Syndrome By Lorenzo Trimarchi
  7. Emerging Markets and the New Geography of Trade: The Effects of Rising Trade Barriers By Ricardo M. Reyes-Heroles; Sharon Trailberman; Eva Van Leemput
  8. Agro-processing, value chains, and regional integration in Southern Africa By Anthony Black; Lawrence Edwards; Ruth Gorven; Willard Mapulanga
  9. Emigration, tax on remittances and export quality By Ganguly, Shrimoyee; Acharyya, Rajat
  10. Turnin' it up a notch: How spillovers from foreign direct investment boost the complexity of South Africa's exports By Bjørn Bo Sørensen
  11. Do Vertical Spillovers Differ by Investors' Productivity? Theory and Evidence from Vietnam By Ni, Bin; Kato, Hayato
  12. Global value chains and exchange rate pass-through: the role of non-linearities By Jan Hagemejer; Aleksandra Hałka; Jacek Kotłowski
  13. China’s WTO accession and income inequality in European regions: External pressure and internal adjustments By Cseres-Gergely, Zsombor; Kvedaras, Virmantas
  14. Exchange rates and firm export performance in South Africa By Lawrence Edwards; Ayanda Hlatshwayo
  15. What Is Real and What Is Not in the Global FDI Network? By Jannick Damgaard; Thomas Elkjaer; Niels Johannesen
  16. Dynamic Trade, Education and Intergenerational Inequality By Yang, Han
  17. Trade liberalization and technology acquisition in the manufacturing sector: Evidence from Nigeria By Ayonrinde Folasade; Olayinka Ola
  18. The effect of restrictive measures on cross-border investment in the European Union By Gregori, Wildmer; Nardo, Michela
  19. Grey Zones in Global Finance: the Distorted Geography of Cross-Border Investments By Anne-Laure Delatte; Amélie Guillin; Vincent Vicard
  20. Are routine jobs moving south?: Evidence from changes in the occupational structure of employment in the USA and Mexico By Guido Matias Cortes; Diego M. Morris
  21. Formalising informal cross-border trade: Evidence from One-Stop-Border-Posts in Uganda By Jade Siu
  22. Local Governance Quality and the Environmental Cost of Forced Migration By Aksoy, Cevat Giray; Tumen, Semih
  23. Productivity, structural change, and skills dynamics: Evidence from a half-century analysis By Gunes Asik; Ulas Karakoc; Mohamed Ali Marouani; Michelle Marshalian
  24. Network Configuration as a Measure of Power in Global Production Networks By Panagiotis Iliopoulos; Giorgos Galanis; Ashok Kumar; Lilit Popoyan
  25. Evaluating foreign direct investment in Mozambique's natural gas industry: An economy-wide perspective By Silvana Mondlane; Dirk van Seventer
  26. Brexit and multilingualism in the European Union By Victor Ginsburgh; Juan D. Moreno-Ternero
  27. State Dependence and Unobserved Heterogeneity in the Extensive Margin of Trade By Julian Hinz; Amrei Stammann; Joschka Wanner
  28. Regional economic resilience in the European Union: a numerical general equilibrium analysis By Filippo Di Pietro; Patrizio Lecca; Simone Salotti

  1. By: Jan Jakub Michałek; Przemysław Woźniak
    Abstract: The trade war between the U.S. and China began in March 2018. The American side raised import duties on aluminum and steel from China, which were later extended to other countries, including Canada, Mexico and the EU member states. This drew a negative reaction from those countries and bilateral negotiations with the U.S. In June 2018 America, referring to Section 301 of its 1974 Trade Act, raised tariffs to 25% on 818 groups of products imported from China, arguing that the tariff increase was a response to years of theft of American intellectual property and dishonest trade practices, which has caused the U.S. trade deficit. Will this trade war mean the collapse of the multilateral trading system and a transition to bilateral relationships? What are the possibilities for increasing tariffs in light of World Trade Organization rules? Can the conflict be resolved using the WTO dispute-resolution mechanism? What are the consequences of the trade war for American consumers and producers, and for suppliers from other countries? How high will tariffs climb as a result of a global trade war? How far can trade volumes and GDP fall if the worst-case scenario comes to pass?
    Keywords: trade war, trade, globalization, China, USA, Europe
    JEL: F1 F4
    Date: 2020–03–27
  2. By: Fernando Leibovici; Ana Maria Santacreu
    Abstract: This paper studies the role of international trade of essential goods during a pandemic. We consider a multi-country multi-sector model with essential and non-essential goods. Essential goods provide utility relative to a reference consumption level, and a pandemic consists of an increase in this reference level. Each country produces domestic varieties of both types of goods using capital and labor subject to sectoral adjustment costs, and all varieties are traded internationally subject to trade barriers. We study the role of international trade of essential goods in mitigating or amplifying the impact of a pandemic. We find that the effects depend crucially on the countries' trade imbalances in essential goods. Net exporters can experience welfare gains during a pandemic, while net importers can be significantly hurt. The welfare losses of net importers are lower in a world with high trade barriers, while the reverse is the case for net exporters. Yet, once the pandemic arrives, net exporters of essential goods benefit from an increase in trade barriers, while net importers benefit from a decrease in them. These findings are consistent with preliminary evidence on changes in trade barriers across countries during the COVID-19 pandemic.
    Keywords: international trade; essential goods; pandemic; COVID-19; trade policy
    JEL: F1 F5 F6 F54
    Date: 2020–05–05
  3. By: Laurence Wicht
    Abstract: A common assumption in the quantitative Ricardian international trade literature is that within a country, import shares are equalized across sectors. This assumption is at odds with the data, which show within-country heterogeneity in sectoral import behavior. I build a multi-country, multi-sector general equilibrium Ricardian trade model, in which I include a new extensive and intensive international trade margin at the importing sector level. Counterfactual analysis shows that accounting for within-country sector-specific import behavior is significant for the level of welfare gains from trade. Calibrations based on two cross-country data sources show that a benchmark Ricardian model with equalized import shares across sectors underestimates welfare gains from trade by 13 to 24% on average compared to the model accounting for within-country sectoral import patterns. The benchmark model underestimates the productivity gains of sectors which account for most country-level imports and the spillovers of their productivity gains on other sectors through sectoral linkages.
    Keywords: Gains from trade, sectoral imports, proportionality assumption
    JEL: F10 F11 F14
    Date: 2020
  4. By: Betul Gur (Istanbul Commerce University, Department of Economics)
    Abstract: The power that makes countries superior to each other in global competition is their ability to be innovative. With Industry 4.0, today's industrial policies are being established on an innovation basis. The degree of countries' trade openness in the economy is very important for developing countries in terms of learning and developing information and technology and ultimately contributing to the improvement of their innovation capacities. This study aims to determine the effects of the main foreign trade indicators on innovation with respect to the developing countries group BRICS-T through panel cointegration analysis for the period 2007-2019. In terms of foreign trade, "export", "import", and "foreign direct investment" have been taken into account, and the "global innovation index" has been taken into consideration as the indicator of innovation. As a result of the cointegration analysis, it has been determined that the variables are related in the long run, exports have a positive effect on innovation, whereas imports and foreign direct investments adversely affect innovation. As a result of causality analysis, a two-way causality relationship has been found between export and innovation while a one-way causality has been detected with direct foreign investment and import.
    Keywords: Innovation, Foreign Trade, Panel Cointegration Analysis
    JEL: O30 O57
    Date: 2020–05
  5. By: Tatsuro Iwaisako (Graduate School of Economics, Osaka University); Hitoshi Tanaka (FacultyofEconomics,Hokkai-GakuenUniversity)
    Abstract: This paper theoretically examines how import tariffs by a developed country(theNorth)and a developing country(theSouth)affect innovation,foreign direct investment(FDI),wages,and welfare using a North?South quality ladder model.We show that a Northern import tariff raises the relative wage of Northern labor to Southern labor,but impedes innovation and FDI.Because of the decrease in innovation and increased prices,this may worsen Northern welfare.By contrast,a Southern import tariff raises the relative wage of Southern labor to Northern labor and promotes innovation and FDI. As a result,it can improve Southern welfare.These results imply that the North has a weaker incentive than the South to impose an import tariff,and this is consistent with actual experience.
    Keywords: foreign directinvestment,innovation,intellectualpropertyrightsprotection
    JEL: F43 O33 O34
  6. By: Lorenzo Trimarchi (Université de Namur)
    Abstract: The recent backlash against free trade is partially motivated by the decline in manufacturing employment due to rising import competition from China. Previous studies about the “China syndrome†neglect the role of trade policy. This is surprising, given that politicians in high-income countries have extensively used antidumping (AD) measures to protect their economies from rising Chinese imports. In this paper, I estimate the causal effect of trade protection on imports and employment, by constructing a new instrument for AD measures based on industries’ importance in swing states and experience in filing AD petitions. I show that AD duties have reduced import competition, decreasing the annual growth rate of US imports from China by 0.40 percentage points on average. They have also helped contain the China syndrome, by increasing the annual growth rate of employment in protected industries by 0.07 percentage points. These results show that protectionist instruments allowed under GATT/WTO rules can be used to attenuate the effects of import competition on employment.
    Keywords: Antidumping, Import Competition, Manufacturing Jobs, US-China Trade Relations
    JEL: F13 F14 F16 J20
    Date: 2020–05
  7. By: Ricardo M. Reyes-Heroles; Sharon Trailberman; Eva Van Leemput
    Abstract: Protectionist sentiments have been rising globally in recent years. The consequences of a surge in protectionist measures present policy challenges for emerging markets (EMs), which have become increasingly exposed to global trade. This paper serves two main purposes. First, we collect several stylized facts that characterize EMs' role in the new geography of trade. We focus on differences between advanced economies (AEs) and EMs in trade linkages, production structures, and factor supplies. Second, we build a dynamic, general equilibrium, quantitative trade model featuring multiple countries, sectors and factors of production. The model is motivated by and geared to jointly match the facts we present. We use the model to estimate the long-run global impacts of rising trade barriers on EMs|both direct impacts and spillovers through third-country effects. Heterogeneity in openness, production structure, trade linkages, and factor supplies leads to large differences between the impacts on AEs versus EMs. We find that variations in both technological comparative advantage and factor supplies play key roles in shaping these differences.
    Keywords: Emerging market economies; Trade barriers; Comparative advantage; Dynamics
    JEL: E22 F10 F40 F62 O11
    Date: 2020–05–07
  8. By: Anthony Black; Lawrence Edwards; Ruth Gorven; Willard Mapulanga
    Abstract: Regional integration in Africa is underway but ongoing progress requires that the gains are widely spread. South Africa's huge regional trade surplus in manufactured goods is already leading to protectionist pressures in neighbouring countries. Agro-processing is a large sector, which is widely regarded as having significant potential, but the export performance of the region has been quite poor if South Africa is excluded. Intra-regional trade is dominated by South Africa's exports to the region. The share of processed goods in agricultural trade has increased but only modestly.
    Keywords: Regional integration, Agriculture, Agro-processing, supplier development, Exports, tariffs, Value chains
    Date: 2020
  9. By: Ganguly, Shrimoyee; Acharyya, Rajat
    Abstract: We examine implications of emigration of unskilled workers for quality of a skill-based good exported by a small open economy. This issue is relevant in the context of quality constraint faced by the developing countries like China and India, in promoting their exports, on the one hand, and significantly large emigrations of workers, particularly unskilled workers, that lower their productive capacities, on the other hand. We show that even though unskilled workers are not directly used in production of the quality-differentiated export good, their emigration would lower export quality when quality upgrading requires more intensive use of skilled workers relative to capital. This result follows from the complementarity between skilled and unskilled wages in a competitive general equilibrium model. A quality-content production subsidy in such a case can mitigate the adverse effect of emigration. Significantly large remittances received from unskilled emigrants create scope for taxing such remittances to finance the subsidy.
    Keywords: Emigration, Remittance Tax, Export Quality, Production Subsidy
    JEL: F11 F16 F22 F24
    Date: 2019–12–10
  10. By: Bjørn Bo Sørensen
    Abstract: Countries' economic complexity, and the associated diversification and sophistication of their exports, is a key determinant of economic growth. Understanding how South African firms learn to export more sophisticated products is, therefore, an important policy issue. Using administrative data covering the entire tax-paying population of firms in South Africa, we argue that foreign direct investment can stimulate export upgrading in manufacturing firms.
    Keywords: economic complexity, Foreign Direct Investment, FDI, Spillovers, export upgrading, Manufacturing, South Africa
    Date: 2020
  11. By: Ni, Bin; Kato, Hayato
    Abstract: Developing countries are eager to host foreign direct investment to receive positive technology spillovers to their local firms. However, what types of foreign firms are desirable for the host country to achieve spillovers best? We address this question using firm-level panel data from Vietnam to investigate whether foreign Asian investors in downstream sectors with different productivity affects the productivity of local Vietnamese firms in upstream sectors differently. Using endogenous structural breaks, we divide Asian investors into low-, middle-, and high-productivity groups. The results suggest that the presence of the middle group has the strongest positive spillover effect. The differential spillover effects can be explained by a simple model with vertical linkages and productivity-enhancing investment by local suppliers. The theoretical mechanism is also empirically confirmed.
    Keywords: FDI spillovers; Heterogeneous productivity; Firm-level data; Endogenous structural break; Vertical Cournot model
    JEL: D22 F21
    Date: 2020–03–27
  12. By: Jan Hagemejer (University of Warsaw); Aleksandra Hałka (Narodowy Bank Polski); Jacek Kotłowski (SGH Warsaw School of Economics)
    Abstract: We examine the relationship between development of global value chains and changes in the exchange rate pass-through to producer prices. In contrast to the existing research we assume that the decline in ERPT resulting from the enhanced participation in GVC may be nonlinear with respect to the country’s position in the global value chain, reflecting divergent firms’ market power at various stages of vertical specialization process. We investigate a panel of 43 advanced and emerging economies using a panel smooth transition regression (PSTR) model and WIOD data and find that growing backward GVC participation of the suppliers of imported intermediate input results in the reduction of the ERPT to producer prices. We also provide evidence that this effect is non-linear. The exchange rate pass-through for countries, whose suppliers are strongly involved in the production along the global value chains is significantly (four times) smaller than for economies with suppliers not participating in GVC. We document that the decline in the aggregate ERPT in recent years has been mainly due to changes in the exchange rate pass-through for the EU members states due to increased backward GVC participation of their major trading partners. For other countries, the ERPT remained roughly the same throughout the analyzed period.
    Keywords: Global value chains, exchange rate pass-through, inflation, PSTR model
    JEL: C23 E31 F14 F62
    Date: 2020
  13. By: Cseres-Gergely, Zsombor (European Commission); Kvedaras, Virmantas (European Commission)
    Abstract: Exports from China have surged substantially since its accession to the World Trade Organization in 2001. We investigate how this expansion affected income inequality within European regions by separating the trade pressure experienced in external and domestic markets, as well as exploring the importance of several economic mechanisms. Despite some intermediate adjustments, softening the influence of Chinese pressure and even facilitating European exports, we establish a significant increase of inequality that is concentrated mostly in the lower part of regional income distributions. We determine a significant channeling of the trade pressure to income inequality through the shrinking manufacturing sector, the increasing unemployment rate, and the technological upgrade of manufacturing exports, together with an increasing demand for better-qualified labor
    Keywords: China, EU, globalization, income, inequality, regions, trade
    JEL: D31 D63 F16 F61
    Date: 2020–05
  14. By: Lawrence Edwards; Ayanda Hlatshwayo
    Abstract: This paper uses detailed firm transaction data on manufactured exports to analyse the dilution of the real exchange rate-export relationship in South Africa over the period 2010 to 2014. Our empirical results show that firms that are larger, have higher export shares in destination markets, and import are more likely to raise the domestic currency price of their exports in response to a depreciation, and consequently display weaker export quantity responses.
    Keywords: Exchange rate, pass-through, Exports, South Africa
    Date: 2020
  15. By: Jannick Damgaard (Danmarks Nationalbank); Thomas Elkjaer (International Monetary Fund); Niels Johannesen (CEBI, Department of Economics, University of Copenhagen)
    Abstract: Macro statistics on foreign direct investment (FDI) are blurred by offshore financial centers with enormous inward and outward investment positions. This paper uses new data sources, both macro and micro, to estimate the global FDI network while disentangling real investment and phantom investment and allocating real investment to ultimate investor economies. We find that Phantom FDI into corporate shells with no substance and no real links to the local economy accounts for around 40 percent of global FDI. Ignoring Phantom FDI and allocating Real FDI to ultimate investors increases the explanatory power of standard gravity variables by around 25 percent.
    Keywords: Global FDI Network, Special Purpose Entities, Phantom FDI, Real FDI
    JEL: F21 F23 F30
    Date: 2020–01–20
  16. By: Yang, Han
    Abstract: How does international trade affect transitional dynamics of the relative wage for unskilled workers when educational decisions and capital accumulation are considered? By including these channels in a dynamic quantitative trade model, I show that reduced trade costs increase the skill premium and educational attainment in the steady state. On the transitional path, capital accumulation and capital-skill complementarity cause a more drastic increase in the skill premium in the earlier transition. In the long run, education mitigates 65% of transitory trade-induced inequality on average. This result explains the observed transitional paths of the skill premium in recent trade liberalization episodes.
    Keywords: international trade, dynamic,education, inequality, skill premium
    JEL: F1 F4 F6
    Date: 2020–04
  17. By: Ayonrinde Folasade; Olayinka Ola (National Centre for Economic Management and Administration (NCEMA) Ibadan)
    Abstract: This study reports the impact of recent trade liberalization policies in Nigeria on the acquisition of technology by the Nigerian manufacturing sector. The report uses survey data from 94 manufacturing firms covering three sectors: textiles, chemicals and light engineering. The results suggest that the impact is limited. Some elements of trade liberalization such as the abolition of import licensing and lower tariffs increased the availability of competing goods and facilitated firms’ access to imports. However, the increasing competitive environment is yet to generate remarkable improvement in the technological activities of the firms. The respondents acknowledged that the rapid depreciation of the naira following the adoption of the liberalization policy has raised the cost of capital goods. Most of the firms agreed with the broad thrusts of government liberalization policies, hence it is important for the government to consolidate and maintain the credibility of these policies.
  18. By: Gregori, Wildmer (European Commission – JRC); Nardo, Michela (European Commission – JRC)
    Abstract: This study sheds light on the effect of restrictive policies, such as screening mechanisms, on mergers and acquisitions (M&A) flows into EU Member States in the period 2011-2018, by implementing an augmented gravity model. The results show that different restrictive measures affect cross-border investments unequally, and that the presence of screening mechanisms per se does not negatively affect cross-border investments. When we perform the analysis by sector, results suggest that cross-border investments in manufacturing and non-financial services are negatively influenced by restrictive measures, such as restrictions on foreign personnel being employed in key positions, or restriction on the establishment of branches, land acquisition or profit and capital repatriations.
    Keywords: cross-border investment, M&A, EU, FDI, statutory restrictions, gravity model
    JEL: F15 F21 G34 K20
    Date: 2019–12
  19. By: Anne-Laure Delatte; Amélie Guillin; Vincent Vicard
    Abstract: Tax avoidance schemes generate artificially complex cross-border financial structures inflating measured international investment stocks in tax havens. Using a standard gravity framework, we estimate that about 40% of global assets (FDI, portfolio equity and debt) are `abnormal' – unexplained – stocks. Abnormal stocks are increasing over time and concentrated in a limited number of jurisdictions. Six jurisdictions including three European countries are the largest contributors: Cayman, Bermuda, Luxembourg, Hong Kong, Ireland and the Netherlands. Interestingly, the Luxleaks in 2014 do not appear to have diverted cross-border investments away.
    Keywords: Cross-Border Investments;Capital Openness;Tax Havens;Gravity Equation
    JEL: F23 G21 H22 H32
    Date: 2020–05
  20. By: Guido Matias Cortes; Diego M. Morris
    Abstract: The decline of employment in middle-wage, routine task intensive jobs has been well documented for the USA. Increased offshoring towards lower-income countries such as Mexico has been proposed as a potential driver of this decline. Our analysis provides a unique and new approach to address the question of whether trade and offshoring have impacted the occupational structure of employment in the USA by comparing the evolution of employment across 175 detailed occupational categories in both countries.
    Keywords: Employment, employment structure, routine employment, Trade, offshoring, Mexico
    Date: 2020
  21. By: Jade Siu (University of Birmingham)
    Abstract: Informal trade is pervasive between sub-Saharan African countries. This study examines the extent to which the value of informal trade changes as a result from a change in the costs of trade. More specifically, I exploit time and custom point variation in the introduction of border facilities, aimed at reducing border delays and corruption. I find that the ratio of informal to total trade values between Uganda and its neighbours is reduced only in the quarter when the border facilities are introduced. By using an original data set collected at two border towns between Kenya and Uganda, I examine whether this result can be explained by formalisation of cross-border traders. I find that few traders formalise despite the reduced costs associated with trading formally, and that trade costs and border crossing choices are not only associated with export restrictions, but are also gendered.
    Date: 2020–05
  22. By: Aksoy, Cevat Giray (European Bank for Reconstruction and Development); Tumen, Semih (TED University)
    Abstract: Can high-quality local governance alleviate the environmental impact of large-scale refugee migration? The recent surge in refugee flows has brought additional challenges to local governments in Europe, the Middle East and certain regions of Africa and Asia. In this paper, we focus on the case of Syrian refugees in Turkey and show that the quality of local governance plays a critical role in mitigating the environmental deterioration. We employ text analysis methods to construct a unique data set on local governance quality from the independent audit reports on municipalities. Using a quasi-experimental econometric strategy, we show that the Syrian refugee influx has worsened environmental outcomes along several dimensions in Turkey. Specifically, we find that the deterioration in environmental outcomes is almost entirely driven by provinces with poor-quality governance. Those provinces fail to invest sufficiently in waste management practices and environmental services in response to increased refugee settlements. We argue that good local governance practices can smooth out the refugee integration process and complement the efforts of central governments.
    Keywords: Syrian refugees, environment, waste management, local governance, text analysis
    JEL: F22 H76 Q53
    Date: 2020–04
  23. By: Gunes Asik; Ulas Karakoc; Mohamed Ali Marouani; Michelle Marshalian
    Abstract: This paper explores the contribution of structural change and the skill upgrading of the labour force to productivity. Our growth decomposition based on an original database we built for Tunisia and Turkey shows that productivity is mainly explained by intra-industry changes during the import substitution period. Second, we show that this productivity increase has been driven by the reallocation of higher-educated labour between sectors rather than the absorption of highly educated workers within sectors.
    Keywords: MENA, Productivity, Skills, structural change, Tunisia, Turkey
    Date: 2020
  24. By: Panagiotis Iliopoulos; Giorgos Galanis; Ashok Kumar; Lilit Popoyan
    Abstract: Power is one of the key components in understanding and analyzing global production and is central to the analytical frameworks of both GVCs and GPNs. By focusing on firms' power within GPNs, we are able to draw a novel analytical link between the governance structures of GVCs and network configuration presented in recent versions of GPNs. Using global input-output data, we show that the network structure of global production helps determine the distribution of power among firms in different economic sectors and, consequently, it influences the governance structures of supply networks. More specifically, we find a very high correlation between the distribution of profits and a sector's position in global production, captured by its (total strength) centrality. Based on this, we are able to provide a quantitative measure of power within global production and its governance structures.
    Keywords: Global production networks; global value chains; power relations; network theory.
    Date: 2020–05–16
  25. By: Silvana Mondlane; Dirk van Seventer
    Abstract: The recent discovery of large fields of natural gas in Mozambique has led to great international interest and expectations of future gains. However, many resource-rich countries have struggled to achieve long-term sustainable growth, whether because of poor management, unequal outcomes, or political conflict. Many authors argue that this 'resource curse' can be avoided with the right management tools and incentives for other sectors of the economy. We examine selected economy-wide impacts of such tools and incentives in Mozambique, using a computable general equilibrium model.
    Keywords: Social Accounting Matrix, Trade, Computable general equilibrium, Structure of production, economy-wide, natural-resource-dependent economies
    Date: 2019
  26. By: Victor Ginsburgh; Juan D. Moreno-Ternero
    Abstract: The EU spends more than one billion euros per year, translating and interpreting, to preserve multilingualism. We examine how this budget should be fairly allocated, taking into account linguistic and economic realities of each member country. Our analysis helps to estimate the value of keeping English as a procedural language (in fact, almost a lingua franca) in the post-Brexit EU, where just about one percent of its population will have it as native language.
    Keywords: Multilingualism; European Union; budget sharing; lexical distances; Brexit
    JEL: D63 Z13
    Date: 2020–05
  27. By: Julian Hinz; Amrei Stammann; Joschka Wanner
    Abstract: We study the role and drivers of persistence in the extensive margin of bilateral trade. Motivated by a stylized heterogeneous firms model of international trade with market entry costs, we propose new bias-corrected dynamic binary choice estimators with three sets of high-dimensional fixed effects. Monte Carlo simulations confirm their desirable statistical properties. A reassessment of the most commonly studied determinants of the extensive margin of trade demonstrates that both true state dependence and unobserved heterogeneity contribute strongly to trade persistence and that taking this persistence into account matters significantly in identifying the effects of trade policies on the extensive margin.
    Date: 2020–04
  28. By: Filippo Di Pietro (Universidad de Sevilla); Patrizio Lecca (European Commission - JRC); Simone Salotti (European Commission - JRC)
    Abstract: Using a spatial general equilibrium model, this paper investigates the resilience of EU regions under three alternative recessionary shocks, each of them activating different economic adjustments and mechanisms. We measure the vulnerability, resistance, and recoverability of regions and we identify key regional features affecting the ability of regions to withstand to and recover from unexpected external shocks. The analysis reveals that the response of regions varies according to the nature of the external disturbance and to the pre-shock regional characteristics. Finally, it seems that resilience also depends on factors' mobility.
    Keywords: Rhomolo, Region, Growth, computable general equilibrium model, regional economic resilience, economic shocks.
    JEL: C68 R13 R15
    Date: 2020–04

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