nep-int New Economics Papers
on International Trade
Issue of 2022‒01‒03
twenty-two papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Three essays on international trade By Shin, Sangho
  2. International Trade with Heterogeneous Firms: Theory and Evidence By Alessandra Bonfiglioli; Rosario Crinò; Gino Gancia
  3. Currency Wars, Trade Wars and Global Demand By Jeanne, Olivier
  4. Trade policies have environmental implications By Li, Minghao; Zhang, Wendong
  5. Labor Unions and the Electoral Consequences of Trade Liberalization By Pedro Molina Ogeda; Emanuel Ornelas; Rodrigo R. Soares
  6. The importance of global value chains and regional capabilities for the economic complexity of EU-regions By F. Colozza; R. Boschma; A. Morrison; C. Pietrobelli
  8. Technological and Economic Decoupling in the Cyber Era By Rishi Goyal; Mr. Daniel Garcia-Macia
  9. A Primer on Trade and Inequality By Dani Rodrik
  10. The Effect of Immigration on Local Labor Markets: Lessons from the 1920s Border Closure By Ran Abramitzky; Philipp Ager; Leah Boustan; Elior Cohen; Casper Hansen
  11. Mis-Allocation within Firms: Internal Finance and International Trade By Sebastian Doerr; Dalia Marin; Davide Suverato; Thierry Verdier; Thierry Verdier
  12. Instrumental-Variable Estimation Of Exponential Regression Models With Two-Way Fixed Effects With An Application To Gravity Equations By Jochmans, Koen; Verardi, Vincenzo
  13. Agricultural Export, Growth and the Poor in Africa: A Meta Analysis By David Adeabah; Simplice A. Asongu
  14. Impact of Trade on Industry-Level Output By Arjad Abbas Khosa; Yoshinori Kurokawa; Zhengfei Yu
  15. Poor Substitutes? Counterfactual methods in IO and Trade compared By Keith Head; Thierry Mayer
  16. ultinational Enterprises, Technology Transfers and Robot Adoption By Leone, Fabrizio
  17. Environmental issues and export competitiveness in U.S. animal agriculture By Chen, Chen-Ti
  18. Bridging Africa’s Income Inequality Gap: How Relevant Is China’s Outward FDI to Africa? By Isaac K. Ofori; Toyo A. M. Dossou; Simplice A. Asongu; Mark K. Armah
  19. Macroprudential policies and Brexit: A welfare analysis By Margarita Rubio
  20. Inequality in economic shock exposures across the global firm-level supply network By Abhijit Chakraborty; Tobias Reisch; Christian Diem; Stefan Thurner
  21. Human security, national security and globalization By Jacques Fontanel
  22. Efecto de la globalización sobre la desigualdad. Un estudio global para 104 países usando regresiones cuantílicas By Cuesta, Lizeth; Ruiz, Yomara

  1. By: Shin, Sangho
    Abstract: This dissertation includes three chapters that cover topics on international trade. The first chapter focuses on various production strategies of multinational firms and presents a complex global sourcing model. Multinational firms have been the driving force of growing global production over the past decades. With multinational firms’ Foreign Direct Investment (FDI), international trade is engaged on the firm level, rather than on a country or industry level. However, their production strategies are not limited to FDI. One option would be arms’ length contracts, so-called outsourcing, even though firm productivity determines the sourcing strategies. In this paper, we extend the range of complex global sourcing strategies used by multinational firms, in which they utilize outsourcing as an additional strategy and connect it to the location choice. The analysis reveals that the equilibrium regime of firms is determined by industry characteristics such as the relative fixed costs and the outsourcing related parameter. Along with firm productivity, the results show the implications of self-selection into FDI versus outsourcing.The second chapter provides the welfare implication of heterogeneous multinational firms by using a general equilibrium simulation model. We extend the model presented in the first chapter to the general equilibrium and quantify the gains from trade, comparing them with the trade-only model. The gains from trade liberalization can be higher with both trade and multinational firms than with only trade. The income path induced by multinational firms is a significant factor in explaining the gap of gains across models. FDI by multinational firms can re-organize the foreign factor market that drives the welfare gains to respond more sensitively in our model than with the trade-only model. Additionally, our model implies that welfare responses differ, depending upon the production boundaries.In the last chapter, we discuss the recent Korea-Japan trade dispute in 2019. This work primarily focuses on quantifying the economic impacts of the dispute and how much it creates trade diversion with their major trading partners. Using the GTAPinGAMS model calibrated to the latest GTAP 10 database, we consider the non-tariff barriers in our model—the export controls by the Japanese government and boycotts by Koreans. We control bilateral trade shocks to reflect the observed trade responses in the Korea Customs Service data. We analyze the impacts of the trade dispute on welfare, sectoral outputs, and trade patterns. Our results show that the trade dispute impacts Korea the most, and Japan is followed. The welfare impacts estimated in this study would be 0.14% ($1033.71 million) for Korea and 0.01% ($345.69 million) for Japan. Additionally, the trade dispute between the two countries creates slight trade diversion with their major trading partners, such as China, the United States, the EU, and Asian countries. Consequently, Japan loses by 2.46% of its trade flow to Korea while slightly increasing exports to other countries. On the other hand, Korea’s imports from Japan decrease moderately, but the trade flow with other countries increases, so that the total percent changes in imports would be 0.18%. Even though the dispute might be initiated and justified by the complicated historical and political reasons between two countries, the results in this work show that the economic impacts are not negligible, which have direct trade policy implications for understanding and restoring the relations.
    Date: 2021–01–01
  2. By: Alessandra Bonfiglioli; Rosario Crinò; Gino Gancia
    Abstract: International trade is dominated by a small number of very large firms. Models of trade with heterogeneous firms have been developed to study the causes and consequences of this observation. The canonical model of trade with heterogeneous firms shows that trade leads to between-firm reallocations and selection: it shifts employment towards firms with the best attributes and forces marginal firms to exit. The model also illustrates the role of heterogeneity, and its various sources, in explaining the volume of trade and the firm-level margins of adjustment. Consistent with the model, the empirical literature has documented that exporting is a rare activity, that exporting firms are larger and more productive than other firms, and that trade liberalization reallocates market shares towards the best-performing firms in various countries. Studies using transaction-level data have unveiled additional salient features of trade flows. First, sales by foreign firms are very heterogeneous and highly concentrated. Second, both the extensive margin (number of exporting firms) and the intensive margin (average export per firm) are important in explaining the level of exports and its changes over time. More heterogeneity in sales across firms is associated with a higher volume of trade along both margins. Third, increased foreign competition reallocates market shares towards top firms and hence can increase concentration from any country of origin. Numerous extensions of the benchmark model have been proposed to study other important aspects, such as the relevance of multi-product and multinational firms, the import behavior of firms, and the extent to which heterogeneity is endogenous to firms. choices, but some open challenges still remain.
    Keywords: firm heterogeneity, top firms, selection, reallocation, margins of trade
    JEL: E23 F12 F14 L11 R12
    Date: 2021
  3. By: Jeanne, Olivier (Johns Hopkins University, Department of Economics)
    Abstract: This paper presents a tractable model of a global economy in which countries can use a broad range of policy instruments---the nominal interest rate, taxes on imports and exports, taxes on capital flows or foreign exchange interventions. Low demand may lead to unemployment because of downward nominal wage stickiness. Markov perfect equilibria with and without international cooperation are characterized in closed form. The welfare costs of trade and currency wars crucially depend on the state of global demand and on the policy instruments that are used by national policymakers. Countries have more incentives to deviate from free trade when global demand is low. Trade wars lower employment if they involve tariffs on imports but raise employment if they involve export subsidies. Tariff wars can lead to self-fulfilling global liquidity traps.
    Keywords: Tariff, exchange rate, capital control
    Date: 2021–12–17
  4. By: Li, Minghao; Zhang, Wendong
    Abstract: US-China trade relations have implications for global nitrogen and phosphorus surpluses, and increasing blue water demand. The case shows that trade policy analysis needs to integrate environmental considerations.
    Date: 2021–08–12
  5. By: Pedro Molina Ogeda; Emanuel Ornelas; Rodrigo R. Soares
    Abstract: We show that the Brazilian trade liberalization in the early 1990s led to a permanent relative decline in the vote share of left-wing presidential candidates in the regions more affected by the tariff cuts. This happened even though the shock, implemented by a right-wing party, induced a contraction in manufacturing and formal employment in the more affected regions, and despite the left’s identification with protectionist policies. To rationalize this response, we consider a new institutional channel for the political effects of trade shocks: the weakening of labor unions. We provide support for this mechanism in two steps. First, we show that union presence—proxied by the number of workers directly employed by unions, by union density, and by the number of union establishments—declined in regions that became more exposed to foreign competition. Second, we show that the negative effect of tariff reductions on the votes for the left was driven exclusively by political parties with historical links to unions. Furthermore, the impact of the trade liberalization on the vote share of these parties was significant only in regions that had unions operating before the reform. These findings are consistent with the hypothesis that tariff cuts reduced the vote share of the left partly through the weakening of labor unions. This institutional channel is fundamentally different from the individual-level responses, motivated by economic or identity concerns, that have been considered in the literature.
    Keywords: trade shocks, elections, unions, Brazil
    JEL: F13 D72 J51 F16 F14
    Date: 2021
  6. By: F. Colozza; R. Boschma; A. Morrison; C. Pietrobelli
    Abstract: This paper combines various literatures on Global Value Chains (GVC), Economic Complexity and Evolutionary Economic Geography. The objective is to assess the role of regional capabilities and GVC participation in fostering economic complexity in 236 NUTS2-regions in Europe. Our results suggest there is no such thing as a common path of economic upgrading across EU regions. Regions with high economic complexity tend to keep their advantageous positions, as they are capable of benefitting from both regional capabilities (as proxied by a high relatedness between local activities) and external linkages in terms of GVC participation. Conversely, low-complex regions do not benefit from GVC participation, unless their regional capabilities (in terms of relatedness density) are also stronger.
    Keywords: Economic Complexity, Evolutionary Economic Geography, Global Value Chains, Relatedness, Economic Upgrading, EU regions
    JEL: B52 F23 O19 O33 R10
    Date: 2021–12
  7. By: Jaan Masso; Priit Vahter
    Abstract: This paper investigates the productivity effects for domestic suppliers from joining and exiting the value chains of multinational enterprises (MNEs). The vast majority of prior literature has relied on sector-level input-output tables in estimating the effects of vertical linkages of FDI. Instead, our econometric analysis of the creation and destruction of backward linkages of MNEs is based on information on firm-to-firm transactions recorded in the valued added tax declarations data. Treatment analysis based on propensity score matching and panel data from Estonia suggests that starting to supply multinationals initially boosts the value added per employee of domestic firms, including effects on the scale of production and the capital-labour ratio. These first linkages to MNEs do not affect the total factor productivity (TFP) of domestic firms, suggesting that TFP effects take time to materialise. We further find that there are limits to the wider diffusion of the effects of linkages to MNEs. We find no significant positive effects on the second-tier suppliers: the positive effects are limited to the first-tier suppliers with direct links to MNEs. One novel result is the evidence that the productivity of suppliers does not fall, on average, after decreasing or ending supplier relationships with MNE customers.
    Keywords: FDI, supplier upgrading, global value chains, vertical spillovers, backward linkages
    Date: 2021
  8. By: Rishi Goyal; Mr. Daniel Garcia-Macia
    Abstract: The COVID-19 pandemic has accelerated the shift toward digital services. Meanwhile, the race for technological and economic leadership has heated up, with risks of decoupling that could set back trade and growth and hinder the recovery from the worst global recession since the Great Depression. This paper studies the conditions under which a country may seek to erect barriers—banning imports or exports of cyber technologies—and in effect promote decoupling or deglobalization. A well-known result is that banning imports may be optimal in monopolistic sectors, such as the digital sector. The novel result of this paper is that banning exports can also be optimal, and in some cases superior, as it prevents technological diffusion to a challenger that may eventually become the global supplier, capturing monopoly rents and posing cybersecurity risks. However, export or import bans would come at a deleterious cost to the global economy. The paper concludes that fostering international cooperation, including in the cyber domain, could be key to avoiding technological and economic decoupling and securing better livelihoods.
    Keywords: digital economy;decoupling;corporate power;technological diffusion;WP;export ban;import ban;country b bans import;monopoly profits;laggard country; Imports; Exports; Trade liberalization; Trade balance; Global
    Date: 2020–11–20
  9. By: Dani Rodrik
    Abstract: In the public imagination globalization’s adverse effects have loomed large, contributing significantly to the backlash against the political mainstream and the rise of far-right populism. The literature on trade and inequality is in fact exceptionally rich, with important theoretical insights as well as extensive empirical findings that sheds light on this recent experience. Some of the key results of this literature, discussed here, are as follows: Redistribution is the flip side of the gains from trade, and it becomes larger relative to net gains from trade in the advanced stages of globalization. Compensation is difficult for both economic and political reasons. International trade often differs from other market exchanges, raising fairness concerns in ways that domestic markets do not. The economic benefits of deep integration are generally ambiguous. Dynamic or growth gains from trade are uncertain.
    JEL: F02 F16
    Date: 2021–11
  10. By: Ran Abramitzky; Philipp Ager; Leah Boustan; Elior Cohen; Casper Hansen
    Abstract: In the 1920s, the United States substantially reduced immigration by imposing country-specific entry quotas. We compare local labor markets differentially exposed to the quotas due to variation in the national origin mix of their immigrant populations. U.S.-born workers in areas losing immigrants did not gain in income score relative to workers in less exposed areas. Instead, in urban areas, European immigrants were replaced with internal migrants and immigrants from Mexico and Canada. By contrast, farmers shifted toward capital-intensive agriculture, and the immigrant-intensive mining industry contracted. These differences highlight the uneven effects of the quota system at the local level.
    Keywords: Immigration; Immigrants; Labor
    JEL: J61 N31 N32
    Date: 2021–09–30
  11. By: Sebastian Doerr; Dalia Marin; Davide Suverato; Thierry Verdier; Thierry Verdier
    Abstract: This paper develops a novel theory of capital mis-allocation within firms that stems from managers’ empire building and informational frictions within the organization. Introducing an internal capital market into a two-factor model of multi-segment firms, we show that international competition imposes discipline on managers and reduces capital mis-allocation across divisions, thereby lowering the conglomerate discount. The theory can explain why exporters exhibit a lower conglomerate discount than non-exporters (a new fact we establish). Testing the model’s predictions with data on US companies, results suggest that Chinese import competition significantly reduces managers' over-reporting of costs and improves the allocation of capital within firms.
    Keywords: multi-product firms, trade and organization, internal capital markets, conglomerate discount, China shock
    JEL: F12 G30 L22 D23
    Date: 2021
  12. By: Jochmans, Koen; Verardi, Vincenzo
    Abstract: This paper introduces instrumental-variable estimators for exponential-regression models that feature two-way fixed effects. These techniques allow us to develop a theory-consistent approach to the estimation of cross-sectional gravity equations that can accommodate the endogeneity of policy variables. We apply this approach to a data set in which the policy decision of interest is the engagement in a free trade agreement. We explore ways to exploit the transitivity observed in the formation of trade agreements to construct instrumental variables with considerable predictive ability. Within a bilateral model, the use of these instruments has strong theoretical foundations. We obtain point estimates of the partial effect of a preferential-trade agreement on trade volume that range between 20% and 30% and find no statistical evidence of endogeneity.
    Keywords: Bias correction; count data; differencing estimator; endogeneity; fixed effects;; gravity equation; instrumental variable; transitivity
    JEL: C23 C26 F14
    Date: 2021–11–30
  13. By: David Adeabah (Legon, Ghana); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: Over the past decade, a growing number of studies have examined the role of agricultural export in economic growth in Africa. The literature, however, provides conflicting results about the agricultural export-led growth hypothesis. In this study, we aim to examine the impact of agricultural export on economic growth by performing a meta-analysis. Our meta-analysis finds significant presence of negative publication bias in the literature. Using mixed-effect multilevel meta-regression, we find that after correction for publication bias, the average agricultural export elasticity to economic growth is 0.763 for the poor in Africa. Interestingly, agricultural export is growth for the rich in Africa, although the elasticity of GDP is 0.043. These results are consistent with the agricultural export-led growth hypothesis. The implication is that export promotion should be targeted at agricultural output in low-income and lower middle-income countries whereas upper middle-income countries in Africa may focus on non-agricultural export.
    Keywords: Africa; export-led growth; agricultural export; meta-analysis
    JEL: C10 C40 I30 N50 O55
    Date: 2021–11
  14. By: Arjad Abbas Khosa; Yoshinori Kurokawa; Zhengfei Yu
    Abstract: Does a county’s trade significantly increase industry-level output? Are the impacts larger for differentiated industries than for homogenous industries? To empirically answer these questions, we extend in two ways the Frankel and Romer (1999) method, which uses the geographical component of trade as an instrument. First, while Frankel and Romer look at impacts on the country-level output, we look at those on the industry-level output. Second, we introduce the index of an industry’s differentiation based on Rauch (1999). Using a two-stage least square estimation and data for 20 manufacturing industries and 99 countries in 2015, we find that a country’s trade significantly positively affects industry-level output and output per worker and the impacts are larger for the more differentiated industries.
    Date: 2021–12
  15. By: Keith Head; Thierry Mayer
    Abstract: Constant elasticity of substitution (CES) demand for monopolistically competitive firm-varieties is a standard tool for models in international trade and macroeconomics. Inter-variety substitution in this model follows a simple share proportionality rule. In contrast, the standard toolkit in industrial organization (IO) estimates a demand system in which cross-elasticities depend on similarity in observable attributes. The gain in realism from the IO approach comes at the expense of requiring richer data and greater computational challenges. This paper uses the dataset of Berry et al. 1995, who established the modern IO method, to simulate counterfactual trade policy experiments. We use the CES model as an approximation of the more complex underlying demand system and market structure. Although the CES model omits key elements of the data generating process, the errors are offsetting, leading to reasonably accurate counterfactual predictions. For aggregate outcomes, it turns out that incorporating non-unitary pass-through matters more than fixing over-simplified substitution patterns. We do so by extending the commonly used methods of Exact Hat Algebra and tariff elasticity estimation to take into account oligopoly.
    Keywords: Constant Elasticity of Substitution;Industrial Organization;Oligopoly;Trade;Tariffs;Counterfactual analysis
    JEL: F1
    Date: 2021–12
  16. By: Leone, Fabrizio
    Abstract: Countries compete internationally to attract investment from multinational enterprises (MNEs). Policy-makers hope that they bring superior technology to the host country and boost domestic activity. Because technology is often factor-biased, there are distributional effects to consider beyond aggregate welfare. Measuring the technological content of foreign investment is critical when thinking about the distributional consequences of policies towards foreign investment. This paper shows that multinational enterprises spur industrial robot adoption, an increasingly important type of labour-replacing technology. Using detailed firm-level data for the Spanish manufacturing industry, I find that firms switching from domestic to foreign ownership are about 20% more likely to adopt industrial robots than domestic-owned producers. The reason is that industrial robots allow to reduce marginal costs and scale-up production. Their adoption is a key ingredient of new affiliates’ growth, and higher reliance on foreign technology drives this switch. A structural model of firm investment reveals that both robot adoption and foreign ownership increase TFP. However, robot adoption also fosters capital-biased technological change. A model-based decomposition reveals that an economy without robots and MNEs would have 10% lower aggregate TFP but about 30% higher labour share per year, on average. These findings shed new light on the aggregate and distributional consequences of foreign investment
    Keywords: Multinational Enterprises, Industrial Robots, Technology Transf
    Date: 2021–11
  17. By: Chen, Chen-Ti
    Abstract: United States’ animal agriculture experienced dramatic structural changes over the last three decades. As technology advances, the industry has featured the growing prevalence of concentrated animal feeding operations (CAFOs) that can keep animals in confined spaces and feed them at a lower cost than historical practices. Higher productivity and lower operating costs also help the U.S. livestock sector enhance its competitiveness in international markets. However, concentrated feeding also concentrates pollution externalities. Manure, a byproduct of CAFOs, contains high nutrient contents and is a major source of water pollution. In addition, recent trade disputes have created significant challenges for U.S. livestock producers.This dissertation contains three essays studying these two pressing issues confronting U.S. animal agriculture: (1) the environmental externalities from industrialized animal farms and the effectiveness of environmental regulations on CAFOs; and (2) the competitiveness of the U.S. livestock sector in the international markets.Chapters 1 and 2 provide the general introduction to the dissertation, and the background on environmental regulations in U.S. animal agriculture and the development of the industry.Chapters 3 and 4 together examine the effectiveness of the Clean Water Act (CWA) regulations, administered by the Environmental Protection Agency (EPA), on CAFOs. In 2003, EPA significantly increased the stringency of its CWA regulations of animal operations above a certain size threshold, and thus designated as CAFOs. However, empirical evidence has documented that such size-based regulations incentivize operations to downsize to the regulatory threshold to avoid compliance, raising concerns about the effectiveness of the regulations.Chapter 3 proposes a theoretical framework adapted from Garicano et al. (2016) to study the effects of size-based CWA regulations on CAFOs. The model highlights an important adverse consequence of size-based regulations: less productive operations may be better off reducing their operational sizes to legally avoid compliance obligations. Downsizing leads to output losses that increase in compliance costs. This result suggests that both the cost-effectiveness and environmental benefits of the CAFO regulations may be overestimated by the EPA.Chapter 4 empirically investigates whether water quality around CAFOs has improved since the EPA updated the regulations in 2003. Using data from Iowa, the chapter studies water quality impacts of the CWA updates on CAFOs. Estimates show that ammonia-nitrogen concentration, a key surface water pollutant from animal agriculture, downstream of a hog CAFO decreases 4 to 6 percentage points on average after the regulation updates. The effects are the largest during high precipitation months, providing suggestive evidence the regulations reduce onsite spillage and over-application of manure to nearby fields.Chapter 5 shifts the focus to trade issues in the U.S. livestock industry. The chapter examines the long-run impacts of trade shocks on U.S. beef competitiveness, using the export bans imposed on U.S. beef exports following the outbreak of bovine spongiform encephalopathy (BSE) in December 2003 in the U.S. Results show that the U.S.’s comparative advantage in beef has not recovered to its pre-outbreak level, and that the U.S. would have maintained its comparative advantage had the BSE event not occurred. This study sheds light on the implications of recent trade disputes for U.S. farmers.Chapter 6 summarizes the previous sections and discusses future research moving forward.
    Date: 2021–01–01
  18. By: Isaac K. Ofori (University of Insubria, Varese, Italy); Toyo A. M. Dossou (Chengdu, China.); Simplice A. Asongu (Yaoundé, Cameroon); Mark K. Armah (University of Cape Coast, Cape Coast, Ghana)
    Abstract: In line with the SDG 10 and Aspiration 1 of Africa’s Agenda 2063, this study examines whether: (i) the remarkable inflow of Chinese FDI to Africa matters for bridging the continent’s marked income inequality gap, (ii) Africa’s institutional fabric is effective in propelling Chinese FDI towards the equalisation of incomes in Africa, and (iii) there exist relevant threshold levels required for the various governance dynamics to cause Chinese FDI to equalise incomes in Africa. Our results, which are based on the dynamic GMM estimator for the period 1996 – 2020, reveal that though: (1) Chinese FDI contributes to equitable income distribution in Africa, the effect is weak, and (2) Africa’s institutional fabric matters for propelling Chinese FDI towards the equalisation of incomes across the continent, governance mechanisms for ensuring political stability, low corruption, and voice and accountability are keys. Finally, critical masses required for these three key governance dynamics to propel Chinese FDI to reduce income inequality are 0.8, 0.5 and 0.1, respectively. These critical masses are thresholds at which governance is a necessary but no longer a sufficient condition to complement Chinese FDI in order to mitigate income inequality. Hence, at the attendant thresholds, complementary policies are worthwhile. Policy recommendations are provided in the end.
    Keywords: Africa, Agenda 2063, China, Corruption, Governance, FDI, Income Inequality
    JEL: F6 F15 O43 O55 R58
    Date: 2021–01
  19. By: Margarita Rubio
    Abstract: Brexit will bring many economic and institutional consequences. Among other, Brexit will have implications on financial stability and the implementation of macroprudential policies. One immediate effect of Brexit is the fact that the United Kingdom (UK) will no longer be subject to the jurisdiction of the European Supervisory Authorities (ESAs) nor the European Systemic Risk Board (ESRB). This paper studies the welfare implications of this change of regime, both for the UK and the European Union (EU). By means of a Dynamic Stochastic General Equilibrium model (DSGE), I compare the pre-Brexit scenario with the new one, in which the UK sets macroprudential policy independently. I find that, after Brexit, the UK is better off by setting its own macroprudential policy without taking into account Europe's welfare as a whole. Given the small relative size of the UK, this implies just slight welfare loss in the EU.
    Keywords: Brexit, macroprudential policy, DSGE, welfare
    Date: 2021
  20. By: Abhijit Chakraborty; Tobias Reisch; Christian Diem; Stefan Thurner
    Abstract: For centuries, national economies created wealth by engaging in international trade and production. The resulting international supply networks not only increase wealth for countries, but also create systemic risk: economic shocks, triggered by company failures in one country, may propagate to other countries. Using global supply network data on the firm-level, we present a method to estimate a country's exposure to direct and indirect economic losses caused by the failure of a company in another country. We show the network of systemic risk-flows across the world. We find that rich countries expose poor countries much more to systemic risk than the other way round. We demonstrate that higher systemic risk levels are not compensated with a risk premium in GDP, nor do they correlate with economic growth. Systemic risk around the globe appears to be distributed more unequally than wealth. These findings put the often praised benefits for developing countries from globalized production in a new light, since they relate them to the involved risks in the production processes. Exposure risks present a new dimension of global inequality, that most affects the poor in supply shock crises. It becomes fully quantifiable with the proposed method.
    Date: 2021–12
  21. By: Jacques Fontanel (CESICE - Centre d'études sur la sécurité internationale et les coopérations européennes - UPMF - Université Pierre Mendès France - Grenoble 2 - IEPG - Sciences Po Grenoble - Institut d'études politiques de Grenoble)
    Abstract: The Covid-19 pandemic has clearly highlighted the dangers of an economic globalization that has little respect for environmental standards and is always threatened by the belligerent actions of the great powers in the never-ending race for economic, strategic and political power. In this context, the Thucydides trap of world leadership between the United States and China cannot fail to worry the citizens of the world. At the same time, the threats of "rogue states" and terrorism have not disappeared. What then are the new forms of state power, but also what are the greatest threats shaking the world in the 21st century? Environmental and economic conflicts will be dangerous. The ecological and economic catastrophes (global warming, rare earths, transformation of production methods, excessive inequalities) are underway, close to the tipping point. The liberal economic system is not able to solve it, with the individual interest priority.
    Keywords: International security,global warning,inequalities,globalization,state power
    Date: 2021–11–09
  22. By: Cuesta, Lizeth; Ruiz, Yomara
    Abstract: Inequality is a problem that has been raising over time, generating high economic and social costs. In this sense, the present investigation evaluated the nexus between globalization and inequality for 104 countries classified by their income level using a Econometric study during 1995-2018. For a broader analysis, variables of control that symbolized the economic, demographic, institutional and fiscal effect. Your data were compiled from KOF (2020); World Bank (2020); Heritaje (2020) and SWIID (2020). I know used econometric techniques of panel data, such as the GLS model that allowed correcting autocorrelation and heteroscedasticity, as well as quantile regressions to identify the impact in the population distribution. The result was a negative relationship between said variables at all income levels, although in the MHIC and MLIC, in the long term. The Public spending and urbanization reduced inequality by significant amounts for certain groups of countries, while government integrity and fiscal burden showed minimal positive effects. Likewise, it was identified that, at a global level and, in the SCI, the Globalization reduced inequality in all deciles. In the rest of the groups of countries, before changes in the other variables, positive and negative impacts were generated, where, the first and last decile were the most sensitive. Policies should focus on evaluating measures of globalization in relation to the economic structure, as well as the increase in public spending, local development and establishment of solid regulatory frameworks, as well as the articulation of the system financial, technological and commercial.
    Keywords: Globalization; Inequality; Panel data; GLS; Quantile regressions.
    JEL: C2 C21 C23 D63 F6
    Date: 2021–09–17

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