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on International Trade |
| By: | González, Javier; Latorre, María C.; Valverde, Gabriela Ortiz |
| Abstract: | After 20 years of negotiations, the European Union (EU27) and Mercosur (made up of Argentina, Brazil, Paraguay, and Uruguay) signed an "Association Agreement" that not only liberalizes trade in goods and services, but also expands into other aspects such as sustainability and respect for human rights. Thanks to its scope and the market size of its member economies, it is one of the largest trade agreements in the world. As far as trade in goods is concerned, the EU27 undertakes to liberalize 92% of imports coming from Mercosur over a period of up to 10 years. Concerning Mercosur members, they commit themselves to liberalize 91% of imports coming from the EU over a period of up to 15 years. Regarding services, the agreement comprises all modes of supply, including the liberalization of investment (establishment) both in the services sector and in other sectors. It also embodies the elimination of unnecessary technical barriers to trade (TBTs). The latter leads to creating a framework within which technical regulations and standards can converge. We employ a Computable General Equilibrium (CGE) methodology, namely, the static and dynamic setting of the Global Trade Analysis Project (GTAP) (Hertel and Tsigas, 1997; Corong et al., 2017; Aguiar et al., 2019a), using GEMPACK (General Equilibrium Modelling Package) software. The combination of both the static and the dynamic model allows to estimate the effect of the agreement in the short and long run. It also offers a way to explore the potential effects of capital flows related to the agreement (Ortiz-Valverde and Latorre, 2020). Moreover, it allows to better estimate the subsequent reduction in tariffs and the evolution of quotas, which are further liberalized as the years pass by. Dynamic estimations also constitute a novelty in the analysis of this agreement since most studies have focused on the outcomes after the agreement is fully implemented. |
| Keywords: | International Relations/Trade, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333391&r=int |
| By: | Bagci, Kenan; Diallo, Abdouramane; Terai, Anise |
| Abstract: | This study investigates the potential impacts of the African Continental Free Trade Agreement (AfCFTA) on production and trade in six selected African countries, namely Côte d’Ivoire, Egypt, Guinea, Mozambique, Tunisia and Uganda. In order to estimate the potential long-term effects of the agreement on these countries, the study uses the computable general equilibrium model developed by the Global Trade Analysis Project (GTAP) considering two alternative scenarios, full tariff elimination and partial liberalization. The total GDP of the six countries are expected to be affected at different rates. In terms of welfare impacts, Côte d’Ivoire is estimated to see the largest benefits from trade liberalization, followed by Egypt and Guinea. Mozambique may experience a negative welfare effect. At the sectoral level, the most significant transformation is expected in Guinea and Côte d’Ivoire after full trade liberalization. Overall, countries with a higher initial level of protection (Guinea and Côte d’Ivoire) tend to see a higher benefit from being part of a regional trade agreement due to the elimination of high barriers. Countries with more liberal trade regimes and greater openness tend to experience relatively lower welfare benefits resulting from the further liberalization of trade. Gains would be higher if supplemented with additional trade reforms, where trade facilitation and capital mobility would significantly boost the gains. However, structural adjustment costs and associated social tensions may be higher in countries with greater ex-ante protectionism. |
| Keywords: | International Relations/Trade, Labor and Human Capital |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333469&r=int |
| By: | Mold, Andrew; Munyegera, Kasim Ggombe; Mukwaya, Rodgers |
| Abstract: | Recent literature has stressed that it is not so much how much a country trades that matters, but rather both the degree of value-addition locally and the extent to which an economy is integrated into regional or global value chains. Yet, with a few exceptions Africa is relatively under-researched in this field. While over recent decades the continent has experienced substantial increases in the ratios of exports and imports to GDP and forged new partnerships with emerging markets, its degree of integration in regional and global value chains remains low, even after accounting for the generally lower levels of development (Allard et al., 2016). This gap is indicative of the region’s unexploited potential to tap into value chains in selected sectors like manufacturing, agriculture and agro-processing, tourism, transport and textiles.This paper examines the policy and non-policy determinants of domestic value-added embedded in the exports of African countries, applying country fixed-effects regression to UNCTAD-EORA data covering the period 1990-2018. The paper finds that the main determinants of domestic value-addition are economic size (GDP and its per capita counterpart), the average level of tariffs and population size. But the econometric results also highlight differences among countries by resource endowment, with oil-exporting countries leading and land-locked non-resource-intensive countries lagging in domestic value addition. After providing an overview of the extent of value-addition in trade on the continent, the paper then draws conclusions about its implications for the effective implementation of the AfCFTA. |
| Keywords: | International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333505&r=int |
| By: | Khan, Muhammad Omer; Khan, Muhammad Aamir |
| Abstract: | The policy of trade liberalization has been implemented by number of countries in form of various agreements. It is accepted that implementation of free trade policy consequently raises the economic growth in the engaging countries. UK has already implemented 38 trade agreements with 97 countries. The paper reveals that UK-Japan CEPA operates (with similar tariff rates as of EU-Japan EPA) to replace EU-Japan EPA after Brexit. It intends to tailor mesmerizing growth in Britain’s economy which would be impossible during EU-Japan EPA. This research concentrates on effects of UK – Japan CEPA; and scenario of bilateral 5% trade facilitation with FTA using CGE model. The potential trade facilitation scenario aids to reduce the trade cost established by NTBs. In GTAP model, the constrains and barriers are determined by ad-valorem equivalents (AVEs) and added into GTAP by AMS tools, which works to enhance the trade facilitation. The shock pretending 5% trade facilitation works in reducing the trade cost and constrains by the specific amount calculated as of AVEs. The outcome of UK-Japan CEPA and UK-Japan FTA with trade facilitation would have significant and luminous impact on both economies however, there exist disparity across some of the variables. The real GDP for both countries have a higher expectancy by implementation of UK- Japan CEPA + trade facilitation (UK grows by $1411M while Japan elevates by $924.5M). Similarly, the term of trade is also higher to ToT from UK – Japan CEPA. However, the real returns from factors reduced for both countries (in total) by UK – Japan CEPA + trade facilitation. Briefly, the fact behind the decrease is the excessive presence of factors like land and natural resources. The results reveals that if both countries step forwards to extend CEPA towards trade facilitation agreement then it would result in win–win scenario for both. Keeping the same tariff concession as proposed would result in a very luminous bright outcome. |
| Keywords: | International Relations/Trade, Research and Development/Tech Change/Emerging Technologies |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333446&r=int |
| By: | Nesongano, Talent |
| Abstract: | This paper examined the impact of trade liberalization on the Zimbabwean economy under the AfCFTA. A standard single country, static CGE (PEP-1-1) model with 2013 as the base period is presented and used to generate simulation results of removing tariffs. Given the generalization of the trade data, the results are necessarily representative of what could be the situation after liberalizing trade under the AfCFTA. The results show that trade liberalization causes import prices to decrease, with paper & paper products (-75.8%), rubber & plastic products (-14.5%), glass and glass products (-12.7%), machinery (-10.7%) and other grains (-10.6%) having notable decreases. The results also show that trade liberalization favours export-oriented sectors that use imported commodities intensively in their production. Consumers will experience low prices in the market due to the removal of tariffs on imported commodities. From the results, the products that have notable consumer price decreases are paper & paper products (-44.1%), machinery (-10.5%), and other livestock (-9.4%). The fall in prices affects domestic production and will cause the wage rates of the unskilled labour force to decrease by 1.7%, although the skilled labour force’s wage rates will increase by 0.3%. This could mean that sectors laying off workers are unskilled labour intensive, leading to a drop in the corresponding wages, while sectors that are hiring are skilled labour intensive, hence the increase in the wage rate. For example, the results show that demand for labour in smallholder farms will decrease, which could be causing the demand for unskilled labour to decrease. The revenue collected by the government from import duties and other taxes will fall by 10.6%. Thus, export-oriented sectors should be promoted to compensate for the revenue losses through an increase in production which will cause a rise in labour demand and ultimately wage rate increases as sectors compete for the available workforce. |
| Keywords: | International Relations/Trade, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333399&r=int |
| By: | Jeffrey H. Bergstrand (Department of Finance, Department of Economics, and Kellogg Institute for International Studies, University of Notre Dame, and CESifo Munich .); Stephen R. Cray (Department of Finance, University of Notre Dame); Antoine Gervais (Department of Economics, Université de Sherbrooke) |
| Abstract: | Two parameters are central to several modern quantitative models of bilateral international trade flows: the elasticity of substitution in consumption (sigma) and the inverse index of heterogeneity of firms' productivities (theta). However, structural parameter estimation applications using the seminal Feenstra econometric methodology typically focus on estimates of only sigma and a bilateral export supply elasticity - which we will term gamma. Separately, modern trade agreements are increasingly "deep", meaning they reduce fixed trade costs alongside variable trade costs (such as tariffs). Although Melitz models of international trade recognize both trade costs theoretically, very little is known quantitatively about their relative impacts on trade and welfare. In this paper, we offer three contributions. First, in the spirit of Arkolakis (2010), we extend the canonical Melitz model of trade to allow for increasing marginal market-penetration costs, alongside fixed marketing costs, to show theoretically the importance of accounting for increasing marginal costs (via gamma) - in the presence of firm heterogeneity - in understanding the relative impacts on trade, extensive margins, intensive margins, and welfare of reducing fixed trade costs and variable trade costs. Second, we provide a microeconomic foundation for estimating all three parameters using the Feenstra econometric methodology alongside a gravity equation. Third, we demonstrate the importance of increasing marginal costs using two counterfactual exercises. One illustrative quantitative implication for U.S. trade policy is that, under (empirically rejected) constant marginal costs, fixed trade costs would have to be reduced by 57 percent for a welfare-equivalent reduction in variable trade costs of 3 percent; by contrast, under (empirically supported) increasing marginal costs, fixed trade costs would have to be reduced by only 14 percent. |
| Keywords: | International trade, deep trade agreements, Melitz models, increasing marginal costs, gravity equations. |
| JEL: | F1 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:shr:wpaper:23-01&r=int |
| By: | Sahoo, Amarendra; Nechifor, Victor; Ferrari, Emanuele; Amany, Damit Serge Didier |
| Abstract: | Senegal’s port enjoys its strategical location to form Trans-Saharan trade rout boasting as one of the best infrastructure in the region. Country’s trade industry largely depends on its port. Over 70% of country’s mineral and forest production are exported, while around 15% of its agricultural products enters the export market. About 50% of the Senegal’s demand for agricultural products, including rice, come from the imports. Petroleum products and petrochemicals dominate the country’s import industry. However, the port capacity is increasingly facing pressures due to its infrastructural constraints, which could create iceberg types of trade costs, and also adversely affect the efficiencies of exports and imports. The infrastructural investment can potentially raise the port capacity and hence will increase the efficiencies of trade transactions, and will raise the preference for traded goods. A recursive dynamic computable general equilibrium model is used to evaluate potential outcome of increased preferences and efficiencies of exports and imports on the economic performances and wellbeing of the country. The model imitates the structure of the Senegal economy in the year 2017 and projected the business usual baseline to 2022. The simulated scenarios are contrasted against the baseline. It is expected that increase in trade, in general, would support increased food security and growth of the economy. However, the impacts of increase in efficiencies and preferences of exports and imports would bring a change in the structure of the domestic activities differently. |
| Keywords: | International Relations/Trade, Public Economics |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333420&r=int |
| By: | Döbeling, Tatjana |
| Abstract: | Complex tariff structures impose challenges to model-based policy analysis. Real-world tariff structures are rather complex, with not only ad valorem tariffs in place but also specific tariffs as well as tariff-rate quotas (TRQs). While ad valorem tariffs express the duty as a percentage share of the value (i.e. 7%), specific tariffs add an absolute value to be paid per volume, quantity, fat content, or other properties (i.e. 10€/ton). Tariff-rate quotas are two-tied systems that offer a reduced tariff for a certain contingent, i.e. 3000 tons of duty-free exports, while a higher tariff is applied to all imports beyond those first 3000 tons. Within model-based policy analysis, ad valorem equivalent tariffs (AVEs) are used to sum up the effects of different sorts of tariffs, which is then much easier to handle and aggregate in CGE models. As the effect of these tariffs on import quantities, welfare, and trade distortion can however differ and not all these differences are captured within the ad valorem equivalent tariff, modeling their precise mechanisms would be worthwhile. The matter becomes even more complex when TRQs, ad valorem tariffs, and specific tariffs interact. For instance, several empirical studies have shown that quantitative import restrictions cause a rise in import prices. Also theoretically, it could be shown why quantitative restrictions systematically give an advantage to more expensive commodities. The theoretical argumentation, however, depends on the sort of tariff that is to be paid outside the quota. We include an endogenous quota license allocation within a complex tariff structure, thereby allowing a projection of trade regimes in which quantitative restrictions and their trade-distorting effects, ad valorem tariffs, and specific tariffs are all included at once for the same group of commodities. We implement this in the CGEbox, a flexible, extendable, and modular code basis for CGE modeling in GAMS drawing on the GTAP database. |
| Keywords: | Environmental Economics and Policy, Agricultural and Food Policy |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333462&r=int |
| By: | Latorre, Maria C.; Yonezawa, Hidemichi; Olekseyuk, Zoryana |
| Abstract: | The EU-Mercosur agreement has raised a hot debate, particularly due to its potential environmental effects. We estimate its impact using a Computable General Equilibrium (CGE) model with 41 sectors-4 factors-6 region (EU27, Brazil, Argentina, Paraguay, Uruguay and ROW), which has three advanced features: 1) Climate of competition à la Melitz (2003) in various manufacturing sectors, which allows us to grasp productivity effects related to trade; 2) Foreign multinationals in advanced service sectors, operating à la Krugman (1980), which is suitable to grasp multinationals’ behavior; 3) CO2 emissions across sectors and regions. Our results point out that this agreement is a “win-win” for its signatories. Everyone wins, but the impact will be more visible in the Latin American side. Our analysis of the total imports of the EU27 shows that this agreement allows the Mercosur countries to export products in which they have a comparative advantage, while moving their export basket towards more complex products. It also allows the European side to improve its specialization in more complex sectors. For year 16, i.e., after 15 years of implementation, the agreement generates a small increase (0.14%) in CO2 emissions by the EU-Mercosur region which, however, translates into an improvement in the emissions/GDP ratio of the EU-Mercosur region (0, 17% GDP increase). The improvement in the emissions/GDP ratio also holds for the world as a whole.The impacts we derive are generally larger and more positive than the ones in the literature. This is firstly because our modeling includes components of the final agreement reached (Agreement in Principle of June 28, 2019) that, to our knowledge, have not yet been included in most previous studies, such as Foreign Direct Investment (FDI) in services and government procurement. |
| Keywords: | Environmental Economics and Policy, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333488&r=int |
| By: | Betarelli Junior, Admir Antonio; Domingues, Edson; Faria, Weslem; Magalhães, Aline; Proque, Andressa |
| Abstract: | In Brazil, the terminal handling charges (THC) or wharfage services at destination for import cargo occurs between the unloading of the goods in the national territory and the customs clearance. This rate inflates the customs value of imported products and the basis for charging all imports on Brazilian imports. Incompatible with the rules of the World Trade Organization (WTO), this practice distorts the competitive trends of Brazilian sectors in the domestic and foreign markets, whose concern is recurrent of the Brazilian commercial policy. Our study contributes to this debate in course and analyzes the economic impacts of THC in the calculation basis for the incidence of taxes. We estimated the annual average THC and simulate their removal in Brazilian import values from a SAM and R&D based computable general equilibrium (CGE) model. With policy change, the main findings indicate the Brazilian economy would become more industrialized and with greater technological intensity in the long run. Investment in physical capital and R&D would grow, while the export and foreign trade agenda would become more diversified in manufactured goods, even with the greater penetration of imports. The expansion of the private sector would ease future dependence on the public sector in the generation of knowledge and physical capital. |
| Keywords: | International Relations/Trade, Public Economics |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333481&r=int |
| By: | Marta A. Santamaría; Jaume Ventura; Uğur Yeşilbayraktar |
| Abstract: | We use the new dataset of trade flows across 269 European regions in 24 countries constructed in Santamaría et al. (2020) to systematically explore for the first time trade patterns within and across country borders. We focus on the differences between home trade, country trade and foreign trade. We document the following facts: (i) European regional trade has a strong home and country bias, (ii) geographic distance and national borders are important determinants of regional trade, but cannot explain the strong regional home bias and (iii) the home bias is heterogeneous across regions and seems to be driven by political regional borders. |
| JEL: | F0 F14 F15 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31037&r=int |
| By: | Mahlkow, Hendrik; Wanner, Joschka |
| Abstract: | A large share of global carbon emissions arises in the production of goods that are consumed in a different country and from burning fossil fuels that have been extracted yet elsewhere. The flows of carbon embodied in trade are highly asymmetrical, decoupling territorial emissions (or what we will call production footprints) from consumption footprints and from what we call extraction or supply footprints. At the same time, trade is highly and persistently unbalanced in value terms, too, allowing this decoupling to be even more pronounced — with a priori ambiguous environmental consequences. Prominently, the two countries with the largest net ex- and imports of carbon (China and the US) have at the same time consistently been among the countries with the largest trade surplus and deficit, respectively, and many large fossil fuel exporters have been running persistent trade surpluses. We investigate the effects of global value trade imbalances on carbon emissions around the world. To this end, we build a Ricardian quantitative trade model including sectoral input-output linkages, trade imbalances, fossil fuel extraction, and carbon emissions from fossil fuel combustion. For every individual country, the emission effect of re- moving its trade imbalance depends on the carbon intensities of its production and consumption patterns, as well as on its fossil resource abundance. The simultaneous removal of all global trade imbalances is found to lower world carbon emissions by 0.62 percent or 184 million tons of carbon dioxide. Out of all individual countries’ imbalances, eliminating the Qatari trade surplus and the US trade deficit would lead to the largest environmental benefits in terms of lower global emissions. |
| Keywords: | Environmental Economics and Policy, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333482&r=int |
| By: | BIANCARDI Daniele (European Commission - JRC); BONNET Paolo (European Commission - JRC); MARTINEZ CILLERO Maria (European Commission - JRC); NARDO Michela (European Commission - JRC) |
| Abstract: | This note presents the latest trends in the investment behaviour of multinational enterprises focusing on non-EU (foreign) investors . It looks at merger and acquisition (M&A) deals and other equity investments of at least 10% of capital of the target company in the EU, as well as at greenfield projects. |
| Keywords: | FDI investments, Cross-border investment, Greenfields, Merger and Acquisitions |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc132467&r=int |
| By: | Fukushima, Hiroyuki; Abe, Masahiro; Shibasaki, Ryuichi; Alves, Lucas; Takada, Yuki; Onodera, Hitoshi; Furuichi, Masahiko |
| Abstract: | Africa, which is expected to develop rapidly as a sizeable world market, is attracting attention as an attractive investment destination in various fields such as infrastructure, agriculture, energy, ICT, and finance. In particular, the African Continental Free Trade Area (AfCFTA) is expected to stimulate African intra-region/international trade and further economic growth. On the other hand, there is concern that COVID-19 will impede the growth of African economies: real GDP growth in Sub-Saharan Africa was -2.4% in 2020, and even after 2021, it has been pointed out that the African economy may lag behind the rest of the world. Thus, it is important to comprehensively consider risks such as COVID-19 after 2020 and other opportunities such as AfCFTA and to eliminate bottlenecks in logistics infrastructure that could become obstacles to economic growth in Africa. With the aim of clarifying the future vision of the international trade in Africa, this study developed multiple future scenarios considering risks and opportunities in Africa after the expansion of COVID-19 infection and uses the GTAP-RD (Recursive Dynamic) model and the GLINS (Global intermodal Logistics Network Simulation) model. The analysis using the GTAP-RD model revealed the transition of Africa's international trade for each future scenario and revealed that the most desirable society in the world as a whole will improve Africa's trade balance the most. The GLINS model analysis showed the regional spread of logistics infrastructure development effects, indicating that the spread of logistics infrastructure development will accelerate the spread of effects throughout Africa. Finally, we estimated Africa's future exports and imports using the GTAP-RD model again, using the logistics cost reduction rate from the GLINS model as the "ams" variable in the GTAP-RD model and found that it would increase intra-African trade and also increase exports to the rest of the region. |
| Keywords: | International Relations/Trade, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333398&r=int |
| By: | Sall, Leysa Maty |
| Abstract: | Senegal is among the 42 countries that had ratified the African Continental Free Trade Area agreement (AfCFTA). The objective of this study is to i) evaluate the impact of the abolition of imports duties on the transformation of the Senegalese economy ; ii) assess the impact of NTMs removal on Senegal industrial transformation through trade and labor market impact ; iii) estimate the socio-economic impact of AfCFTA on different groups of households. For that purpose, the model is a single country static CGE model, adjusted based on the STAGE model (McDonald, 2009). The Senegal CGE model was calibrated for 2014 based on the Social Accounting Matrix (SAM) of Boulanger et al. (2017). . The calibration data is completed with the BACI database for Senegal bilateral trade and MAcMapHS6 for tariffs.Four scenarios of the AfCFTA have been simulated, from full to partial liberalization, with a Senegal multi-sector static CGE model based on the STAGE CGE model. . In addition, to have more accurate results, Ad valorem equivalent (AVE) for NTBs estimated by Nguyen et.al (2020) at disaggregated level are used as an additional shock. To assess the socio-economic impact, the latest nationally representative survey “Enquête Harmonisée sur les Conditions de Vie des Ménages” (EHCVM-2018-2019) will be used to calibrate the microsimulation model. Results suggest the choice of sensitive products to be excluded is critical and have several implications. The criteria based on tariff revenue may be closer to the optimum full liberalization scenario. Sectoral and macroeconomic results across scenarios show that improving market access in Senegal for African partners based on a sensitivity criteria of tariff revenue losses is close to a full trade liberalization scenario. Full liberalization has a positive impact on household consumption globally and affects the production structure with a higher impact on manufacturing sector. |
| Keywords: | International Relations/Trade, Agricultural and Food Policy |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333442&r=int |
| By: | Yuan, Wen Jin; Antonio, Katherine; Butcher, Arona |
| Abstract: | This paper applies a new GTAP Labor model (GTAP-LAB) developed by Peterson (2019) to analyze U.S.-EU trade liberalization scenarios. The paper finds that when job search frictions and unemployment are incorporated into the GTAP model, the model predicts changes in wages at the sectoral level. Simulated effects of a unilateral tariff elimination by the EU on U.S. exports of food and agricultural products show that while U.S. food and agricultural workers gain in wages, U.S. metals industry workers suffer from a wage decline. Simulated effects of U.S.-EU bilateral tariff removals show wage gains for U.S. workers in different industries, with the highest gains for U.S. food and agricultural workers, where the extent of the EU tariff liberalization is the biggest. The full U.S.-EU bilateral tariff removal scenario also leads to U.S. worker reallocation across industries, with the largest increase in employment in the services sectors, mainly due to an increase in overall household income, and a decline in U.S. employment in extraction, metals and other manufacturing industries. Finally, sensitivity analysis shows that the simulated effects are sensitive to the labor substitution elasticities used between existing and matched labor — the higher frictions to labor reallocation, the bigger the effect on sectoral wages. The wage results could be different not only in magnitude, but also in signs when using different labor substitution elasticities in the GTAP-LAB model. |
| Keywords: | International Relations/Trade, Labor and Human Capital |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333450&r=int |
| By: | Rusova, Tereza; Prendiville, Siobhan; Jones, Samuel |
| Abstract: | This paper analyses the effect of past FTAs on non-tariff measures (NTMs) as well as the impact of individual FTAs (EU-Korea, US-Korea) on NTMs across individual GTAP65 sectors. NTM reductions are a key input for CGE modelling and they tend to drive the majority of CGE results. This is because tariff rates across the world are already relatively low, and FTAs therefore mostly target non-tariff measures. Despite their central role in CGE modelling, NTM reductions are notoriously difficult to estimate, especially on a disaggregated level (such as GTAP65) and per individual agreement. In many cases, modellers are left to assume blanket NTM reductions across aggregated sectors, which does not allow for heterogeneous impact of FTAs at a sectoral level. This paper follows the approach set out by Baier et al (2019) and contributes to the existing literature on NTMs in two ways. Using a new tariff dataset developed by the UK Department for International Trade, we estimate the gravity model on a sectoral level and secondly, we break down the traditional group of “trade costs” into tariff and NTMs by controlling for the impact of tariffs. We present the changes in NTMs by their corresponding GTAP65 sector. Our model shows that an ‘average FTA’ reduced NTMs in under a half of modelled sectors, mostly agriculture and manufacturing. Conversely, many service sectors have seen an NTM increase under the ‘average’ FTA scenario. We also find that trade in services has been more impacted by the ability of technology to enable remotely delivery, compared to goods sectors. The results connected to individual FTAs tend to be of higher magnitude and we find that fewer results are significant. This is likely due to lower number of observations connected to individual agreements. Despite this, the results of both individual FTAs we examine (EU-Korea and US-Korea) are mostly in line with what the FTAs were expected to deliver in sectors that were the focus of the agreements. |
| Keywords: | International Relations/Trade, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333439&r=int |
| By: | Chepeliev, Maksym; Corong, Erwin |
| Abstract: | Recently, Shapiro (2021) identified a new fact which shows an environmental bias of trade policies. This fact reveals that in most countries both import tariffs and non-tariff barriers are much lower on dirty than on clean goods—where “dirtiness” is defined as a commodity’s emission intensity measured in terms of CO2 emissions from fossil fuel combustion per dollar of that commodity’s value. In this paper, we revisit this fact by using a newly-developed environmentally-extended GTAP MRIO Data Base and extend an earlier analysis in several ways. Our preliminary results that rely on the emissions embodied into trade (EEBT) approach and consider import tariffs only (i.e. do not include NTBs) indicate that when looking at the global average indicators, the environmental regressivity/progressivity of trade policy substantially depends on the scope of emissions coverage. We find substantial evidence of environmental bias of trade policies when only CO2 emissions from fossil fuel combustion are considered. In contrast, when a broader set of GHG emissions is analyzed, an opposite relation is observed with more GHG-intensive commodities facing higher tariffs. The latter is largely driven by the fact that import tariffs are high for agricultural and food commodities (e.g. meat and rice) that are relatively clean as they combust less fossil-fuel related CO2 emissions, but are much more emission intensive, when non-CO2 GHGs are accounted for. Our preliminary results also indicate that in the case of fine particulate matter (PM2.5) emissions, one of the major cause of pre-mature mortality worldwide, a positive relation between import tariffs and emission intensities is observed. |
| Keywords: | Environmental Economics and Policy, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333478&r=int |
| By: | Eugenia Andreasen (University of Chile); Sofia Bauducco (University of Chile); Evangelina Dardati (Universidad Diego Portales); Enrique G. Mendoza (University of Pennsylvania and NBER) |
| Abstract: | We show that capital controls have large adverse effects on misallocation, exports and welfare using a dynamic Melitz-OLG model with heterogeneous firms, monopolistic competition, endogenous trade participation and collateral constraints. Static effects increase misallocation by reducing capital-labor ratios and rising firmprices, dynamic effects reduce it by incentivizing saving and delaying entry into export markets, and general equilibrium effects are ambiguous. Firms at the collateral constraint or at their optimal scale are barely affected but those in between are severely affected. Calibrated to the 1990s Chilean encaje, the model yields higher aggregate misallocation with larger effects on exporters and high-productivity firms. Social welfare falls and welfare of exporters falls significantly more. LTV regulation cuts credit by the same amount at sharply lower costs, because it spreads the burden of the cut more evenly. A panel data analysis of Chilean manufacturing firms yields strong evidence supporting the model’s predictions |
| Keywords: | Capital controls, welfare, misallocation, financial frictions, international trade |
| JEL: | F12 F38 F41 O47 |
| Date: | 2023–02–07 |
| URL: | http://d.repec.org/n?u=RePEc:pen:papers:23-005&r=int |
| By: | Lee, Kyu Yub (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Lee, Cheon-Kee (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Choi, Won Seok (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Eom, Jun-Hyun (KOREA INSTITUTE FOR INTERNATIONAL ECONOMIC POLICY (KIEP)); Whang, Unjung (Jeonbuk National University) |
| Abstract: | We use the Trade Agreements Provisions on Electronic Commerce and Data and their corresponding texts to undertake network and text analysis on trade agreements with digital trade chapters to identify which countries are important in the network and how similar or different their texts of digital trade chapters are. centrality values reflect which countries are influential in the network, while values of similarity assess the level of similarity between the texts of digital trade chapters concluded by these countries. Centrality and similarity are complementary in assessing the relative positions of countries in the network, where the number of linkages between countries is significant in centrality and the quality of digital trade chapters is critical in similarity. We interpret this to mean that a country with a high degree of centrality is likely to be a rule-promoter in the network, whereas a country with a high degree of similarity is likely to be a rule-maker. The brief highlights three key findings from network and text analysis of digital trade agreements: (1) The U.S. has been the best rule-maker but not the best rule-promoter, whereas Singapore has been the best rule-promoter but not the best rule-maker. (2) China is a rule-maker, but to a weaker extent than the U.S., and Korea is a rule-promoter, although it is less active than Singapore. (3) Japan and Australia have served as both rule-makers and rule-promoters. Identification of countries’ relative positions in the network of digital trade agreements would be useful at the start of talks on digital trade policy. |
| Keywords: | Digital Trade Agreement; Network Analysis; Text Analysis |
| Date: | 2023–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:ris:kiepwe:2023_003&r=int |
| By: | Helge Zille (German Institute for Development Evaluation) |
| Abstract: | The question about the relationship between violent conflicts and international trade has a long tradition, and empirical research in the 1990s and early 2000s has established that violent interstate conflicts do harm international trade. While most of this literature dates back at least 10 to 20 years, the effect of interstate conflicts on trade with thirdparty countries has been neglected for most of the time in the literature. In this paper, I attempt to fill this gap. A period of 46 years is covered in the analysis, using more than 500 thousand dyad-year observations. The third-party country dimension is derived from a triadic data set, which covers all possible country-triad combinations for the studied period. I find that violent interstate conflicts reduce trade with third-party countries, and that they cause a shift in trade towards allied countries and away from the enemy’s allies. Countries increase imports from members of the same security alliance by between 1 and 4 percent, and trade more with countries that have the same enemies by between 5 and 7 percent. They reduce trade with the formal allies of their enemies by between 9 and 14 percent. This negative trade shifting effect is further amplified by the size of the respective conflict country. This paper contributes to the literature on conflict and trade in two ways: First, by adding to the scarce literature introducing a third-country dimension into standard gravity models and into the literature on conflict and trade. And second, by showing the importance of a spatially dynamic perspective on interstate conflicts |
| Keywords: | traditional and improved varieties, crop revenue, risk premium, multinomial switching regression, Ethiopia |
| JEL: | F14 F51 |
| Date: | 2023–03–31 |
| URL: | http://d.repec.org/n?u=RePEc:kud:kuderg:2322&r=int |
| By: | Mogendi, Justine; Nganga, Tabitha Kiriti; Osoro, Kennedy |
| Abstract: | The main objective of this project was to analyze the effects of the Coronavirus (COVID-19) pandemic on international trade and recommend post-recovery strategies in Kenya taking into consideration the opportunities offered by the African Continental Free Trade Area. Many sectors have been affected in one way or another, some of them adversely since the reporting of the first COVID-19 case in Kenya on 12 March 2021 and especially more by the measures the Government of Kenya took to contain the spread of the pandemic. Other trading partners also took measures to control the spread of the virus across the borders. However, these measures turned into non-tariff barriers, which became trade restrictive. These restrictions were in the form of quotas, embargoes, sanitary measures, import licensing, conditions, or specific market requirements that made exportation or importation services and goods difficult or costly. The measures led to disruptions in the supply chains of essential commodities such as testing kits, private protective equipment (PPEs), and other medical equipment. They also disrupted trade not only in the East African region but also in the whole world. It is therefore important that the Kenya Government come up with strategies to stop the spread of COVID-19 while at the same time protecting the lives and livelihoods of its citizens. EAC as well as other African countries should prioritize vaccination in the short term to stop the spread of the COVID-19. Trade restrictive measures that have translated into NTBs require Kenya and other African countries to start thinking of how they can become producers as well as consumers of their own products and more so those products that are essential for human life such as pharmaceuticals and vaccines. |
| Keywords: | International Relations/Trade, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333422&r=int |
| By: | Allali, Sara |
| Abstract: | This article presents an assessment of the economic implementations of the ongoing African Continental Free Trade Area agreement (AfCFTA) on the Moroccan economy. In this study a two-level economic modeling work has been performed, firstly, beginning with the computable general equilibrium model , followed by a micro-simulation analysis.The implementation of the Agreement would result in the liberalization of trade in goods in conformity with the agreed terms of the AfCFTA; a 50% reduction in actionable trade barriers in the five priority service sectors (tourism, transportation, communication, financial services, and business services), as well as in health and education services that have received special attention due to the coronavirus (COVID-19)-induced crisis and a cut of 50% in actionable NTMs. Following the implementation of the AfCFTA, Morocco's GDP and output, are all expected to increase. On the trade front, a trade distortion in favor of Africa is expected. The second part of the study is conducted through a microsimulation model to assess the effects of AfCFTA on the reduction of poverty and social inequalities in Morocco. In terms of modeling, the approach used is non-parametric (Magher, 1993), capturing changes in the distribution of income as a result of shocks related to the implementation of the Agreement. In terms of outcomes, the impact of the implementation of the AfCFTA on poverty and social inequality in Morocco will be relatively modest. In conclusion, it can be observed that the impact of the AfCFTA will be felt mainly at the macroeconomic level, and more particularly in trade. Indeed, the Agreement will contribute to the expansion of trade between Morocco and the African countries. |
| Keywords: | International Relations/Trade, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333396&r=int |
| By: | Antonis Kotidis (Board of Governors of the Federal Reserve System); Margaux MacDonald (International Monetary Fund); Dimitris Malliaropulos (Bank of Greece and University of Piraeus) |
| Abstract: | Banks guarantee international trade through letters of credit. This paper analyzes what happens to trade when the critical role of banks as trade guarantors is compromised. Using the case of the Greek capital controls in 2015, the events around which led to a massive loss of confidence in the domestic banking system, we show that firms whose operations were more dependent on domestic banks suffered a steep decline in imports and, subsequently, exports. This operated through letters of credit, which during the capital controls period had to be backed by firms’ own cash collateral rather than the bank guarantee. As a result, cash-poor firms imported relatively less. Public intervention to guarantee transactions is shown to help mitigate some of the decline in imports. |
| Keywords: | Bank guarantee; letters of credit; imports; exports; capital control |
| JEL: | F14 F23 F34 G21 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:bog:wpaper:316&r=int |
| By: | Devarajan, Shanta; Go, Delfin S.; Robinson, Sherman; Thierfelder, Karen |
| Abstract: | In this paper, we explore the dual goals of CBAM – to level the playing field for the EU and to encourage decarbonization in countries with high CO2 emissions. To do so, we consider the effects of carbon taxes and carbon tariffs. Carbon tariffs are differentiated by exporting country and are based on carbon emitted per unit of output. We consider the following scenarios: all regions introduce a carbon tax of $75 per ton – this is the first best outcome when the policy objective is to reduce global carbon emissions. Countries also increase tax revenue collected so experience a “double dividend” and may choose to reduce other taxes. Next, we consider a carbon tax in developed countries and a carbon tariff against imports of commodities with high CO2 per unit of output – fertilizer, iron & steel, aluminum, cement, and electricity – from all countries without a carbon tax. Finally, we consider a carbon tax with different tax rates by country income levels, as suggested in a recent IMF report on carbon pricing. For the analysis, we use a comparative static multi-region, multi-sector computable general equilibrium (CGE) model. Data are from GTAP v10, 2014, aggregated to focus on major polluting regions such as India, China, and SACU, and sectors subject to a CBAM tariff: iron & steel, aluminum, cement, fertilizers, and electricity. We use GTAP’s satellite energy accounts data which record the CO2 emissions associated with each energy commodity and using agent. Production behavior includes incentives to substitute away from energy inputs as prices change. Preliminary results suggest carbon taxes are effective at reducing CO2 emissions and generating tax revenue. CBAM provides some assistance in reducing leakage in countries with a carbon tax. However, countries punished by CBAM tariffs can divert exports to other regions which do not impose CBAM tariffs, so the impact of CBAM on decarbonizing is limited. |
| Keywords: | Environmental Economics and Policy, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333494&r=int |
| By: | Md Deluair Hossen |
| Abstract: | In international trade, firms face lengthy ordering-producing-delivery times and make shipping frequency decisions based on the per-shipment costs and financing costs. In this paper, I develop a model of importer-exporter procurement where the importer procures international inputs from exporting firms in developing countries. The exporters are credit constrained for working capital, incur the per-shipment fixed costs, and get paid after goods are delivered to the importer. The model shows that the shipping frequency increases for high financing costs in origin and destination. Furthermore, longer delivery times increase shipping frequency as well as procurement costs. The model also shows that the higher per-shipment fixed costs reduce the shipping frequency, in line with previous literature. Reduced transaction costs lower the exporter's demand for financial services through shipping frequency adjustment, mitigating the financial frictions of the firm. Then, I empirically investigate whether the conclusions regarding the effect of per-shipment fixed costs on shipping frequency from the theoretical model and in the existing literature extend to developing countries. My estimation method addresses several biases. First, I deal with aggregation bias with the firm, product, and country-level analysis. Second, I consider the Poisson Pseudo Maximum Likelihood (PPML) estimation method to deal with heteroscedasticity bias from the OLS estimation of log-linear models. Third, I fix the distance non-linearity of Bangladeshi exports. Finally, I consider the effect of financing cost on shipping frequency to address omitted variable bias. Using transaction-level export data from Bangladesh, I find that 10% higher per-shipment costs reduce the shipping frequency by 3.45%. The findings are robust to different specifications and subsamples. |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2303.04223&r=int |
| By: | He, Jianwu; Li, Shantong |
| Abstract: | In 2021, the EU announced a detailed proposal for the "Carbon Border Adjustment Mechanism (CBAM)". The EU is China's second largest export market, and the carbon emission intensity of China's export products is significantly higher than that of many other countries. Therefore, it is necessary to analyze the impact of the carbon border adjustment mechanism on China's economy. In order to assess the macro-economic impacts of the CBAM, this study will use ENVISAGE model. In this paper the model covers 16 countries and regions, and 27 sectors. The ENVISAGE model is used to compare CBAM policy against a baseline scenario (without CBAM), and the difference represents the impact of CBAM on the global economy. As for the uncertainties, two scenarios of CBAM are designed to analyze the impacts of CBAM. The first is the partial scenario, that is, the scenario in which both the coverage of product and the embedded carbon emission are narrow. The second is the comprehensive scenario, that is, the CBAM will cover all primary products and industrial products, and the carbon emissions of products include both direct and indirect carbon emissions. This report calculated the carbon emissions of products (incl. direct and indirect carbon emission) for 15 countries and regions based on the GTAP 11 database, and then calculated the carbon tariffs in the two scenarios based on product coverage and the difference of carbon price between the EU and other countries and regions. The carbon tariffs will be feed into the ENVISAGE model to simulate the economic impacts of the CBAM scenarios. The results of the simulation show that if the carbon border adjustment mechanism is limited to five types of products such as steel, cement, fertilizer, aluminum and electricity, its impact on China will be very limited; and once the carbon border adjustment mechanism is fully implemented, it will lead to a loss of GDP by 0.64% and about 2.3 million manufacturing jobs in China in the short term. |
| Keywords: | Environmental Economics and Policy |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333491&r=int |
| By: | Jonathan F. Cogliano (University of Massachusetts Boston.); Roberto Veneziani (Queen Mary University of London); Naoki Yoshihara (University of Massachusetts Amherst) |
| Abstract: | Abstract: This paper develops a framework to analyse imperialistic international relations and the dynamics of international exploitation. A new measure of unequal exchange across borders is proposed which captures the territorial structure of imperialistic international relations: wealthy nations are net lenders and exploiters, whereas endowment-poor countries are net borrowers and exploited. Capital flows transfer surplus from countries in the periphery of the global economy to those in the core. However, while international credit markets and wealth inequalities are central in generating international exploitation, other factors, including labour-saving technical change, are shown to be essential in explaining its persistence. |
| Keywords: | International exploitation; Imperialism; Unequal exchange; Uneven development; Capital movements. |
| JEL: | F54 B51 D63 |
| Date: | 2022–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:qmw:qmwecw:942&r=int |
| By: | Ascani, Andrea; Nair, Lakshmi Balachandran; Iammarino, Simona |
| Abstract: | This paper studies the extent to which the international location patterns of Chinese MNEs privilege economies with environmentally sustainable practices. We develop a theoretical framework confronting the traditional race-to-the-bottom arguments with the Chinese MNEs' need to gain legitimacy abroad and signal their global citizenship. We also examine a set of conditioning factors pertaining to the heterogeneity of both host countries and firms, to explore potential sources of ethical pluralism in Chinese MNEs' location strategies. Empirically, we study 948 greenfield investments in manufacturing undertaken by Chinese companies in 82 countries over the 2013–2019 period. Our results suggest that Chinese MNEs may feed a downward spiral by favouring locations with fragile ecosystem vitality, that is, a weak sustainable use of natural resources with the consequent erosion of environmental quality. This result is driven by Chinese FDI in developing countries and locations with fragile institutional setting. Furthermore, the attracting force of a degraded environmental situation holds especially for Chinese MNEs operating in most polluting sectors and with private ownership. |
| Keywords: | Chinese outward foreign direct investment (Chinese OFDI); emerging countries' multinationals (EMNEs); environment; legitimacy; location strategies; NWO-Innovational Research Incentives Scheme Veni SSH 2018 [Grant N. 016.Veni.195.085] |
| JEL: | J50 F3 G3 |
| Date: | 2023–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:117793&r=int |
| By: | Kazumichi Iwasa (Research Institute for Economics and Business Administration, Kobe University, JAPAN); Kazuo Nishimura (Research Institute for Economics and Business Administration and Center for Computational Social Science, Kobe University, JAPAN) |
| Abstract: | We investigate the properties of a two-country dynamic Heckscher-Ohlin model that allows international borrowing and lending. As is well known, international trade patterns become undecidable when international borrowing and lending is allowed. To avoid this, we assume a consumable capital good to be nontradable. A key feature of our model is the existence of a continuum of steady state levels of capital stocks, which enables us to examine how the initial amount of physical capital and assets in each country affects the amount of capital and assets in the steady state. |
| Keywords: | Two-country model; International borrowing and lending; Continuum of steady states |
| JEL: | E13 E21 F11 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2023-08&r=int |
| By: | Sampson, Thomas |
| Abstract: | This paper quantifies the contribution of technology gaps to international income inequality. I develop an endogenous growth model where cross-country differences in R&D efficiency and cross-industry differences in innovation and adoption opportunities together determine equilibrium technology gaps, trade patterns and income inequality. Countries with higher R&D efficiency are richer and have comparative advantage in more innovation-dependent industries. I calibrate R&D efficiency by country and innovation-dependence by industry using R&D, patent and bilateral trade data. Counterfactual analysis implies technology gaps account for one-quarter to one-third of nominal wage variation within the OECD. |
| Keywords: | technology gaps; development accounting; comparative advantage; innovation; technology diffusion; endogenous growth |
| JEL: | D21 D24 D31 F14 O31 O33 O47 |
| Date: | 2023–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:117370&r=int |
| By: | Wittwer, Glyn |
| Abstract: | The TERM (The Enormous Regional Model) methodology has been applied to many countries over the past two decades to model sub-national regional impacts of policy scenarios. The methodology does not rely on sub-national regional input-output tables. Instead, estimates of regional activity shares are used to split a national CGE database into regions. Activity shares are based on industry by region employment numbers extracted from census data, regional agricultural and mining activity data and international trade data by port. EuroTERM provides an example of extending the TERM methodology. First, the GTAP master database is aggregated for non-European nations while keeping 31 European nations plus Russia, Ukraine and Moldova (proxied by Rest of Eastern Europe) represented separately. The database is reconfigured to 34 individual CGE databases. Using NUTS2 data based on similar raw data as TERM, regional shares are estimated. Eurostats is the main source of these data. Regional shares provide the basis for splitting 24 European CGE databases to the NUTS-2 level. The other 10 nations remain as single regions. Industry cost structures or technologies are based on GTAP data for each nation. This approach differs from single-nation TERM, in which a single industry technology applies to each region. The methodology used to estimate inter-regional trades in TERM has been modified to accommodate matrices of known international trades from GTAP, while splitting origins and destinations into sub-national regions. Port activity data also contribute to estimation of sub-national trade matrices. Electricity Global data on power plants by location have contributed to a split of electricity into 9 generating sectors plus distribution. The war in Ukraine has provided motivation for adding Ukraine, represented by 24 oblasts plus Kyiv city. The EuroTERM master database at present includes 74 sectors in 322 regions. |
| Keywords: | Environmental Economics and Policy, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333470&r=int |
| By: | Chepeliev, Maksym; Maliszewska, Maryla; Rodarte, Israel Osorio; Pereira, Maria Filipa Seara; van der Mensbrugghe, Dominique |
| Abstract: | The impact of a changing climate and the transition to a low carbon world will lead to differing economic outcomes between and within countries. This paper applies global economic models and disaggregated sector and country level modelling to assess the impacts on different countries and groups within countries of shifts in comparative advantage due to climate change and of policies introduced to mitigate emissions. The latter will lead to significant changes in the energy structures that could lead to dramatic changes in countries’ economies and global trade—depending on the nature of the transformation and the policies implemented to achieve GHGs emission reductions. For example, a sharp move to solar and wind, or other renewables, on the other hand, will drastically reduce the demand for fossil fuels and create a new set of winners and losers in the production and export of energy and energy related goods and services. Taxes on greenhouse gas emissions (or other policies to limit emissions) will change the relative cost of production and prices of goods and change comparative advantage for sectors across the board and induce changes in trade patterns. The research will conclude with policy recommendations aimed at facilitating the low carbon transition while minimizing the adjustment costs for workers. |
| Keywords: | Environmental Economics and Policy, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333497&r=int |
| By: | Jonathan I. Dingel; Joshua D. Gottlieb; Maya Lozinski; Pauline Mourot |
| Abstract: | We measure the importance of increasing returns to scale and trade in medical services. Using Medicare claims data, we document that “imported” medical care — services produced by a medical provider in a different region — constitute about one-fifth of US healthcare consumption. Larger regions specialize in producing less common procedures, which are traded more. These patterns reflect economies of scale: larger regions produce higher-quality services because they serve more patients. Because of increasing returns and trade costs, policies to improve access to care face a proximity-concentration tradeoff. Production subsidies and travel subsidies can impose contrasting spillovers on neighboring regions. |
| JEL: | F12 F14 I11 R12 |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31030&r=int |
| By: | Osea Giuntella (PITT - University of Pittsburgh - Pennsylvania Commonwealth System of Higher Education (PCSHE), National Bureau of Economic Research, Cambridge, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics); Lorenzo Rotunno (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Luca Stella (Freie Universität Berlin, CESifo - LMU - Ludwig-Maximilians-Universität München, IZA - Forschungsinstitut zur Zukunft der Arbeit - Institute of Labor Economics) |
| Abstract: | Declines in marriage and fertility rates in many developed countries have fostered research debate and increasing policy attention. Using longitudinal data from the German Socio-Economic Panel, we analyze the effects of exposure to globalization on fertility and marital behavior in Germany, which was a lowest-low fertility setting until recently. We find that exposure to greater import competition from Eastern Europe led to worse labor market outcomes and lower fertility rates. In contrast, workers in industries that benefited from increased exports had better employment prospects and higher fertility. These effects are driven by low-educated individuals, married men, and full-time workers and reflect changes in the likelihood of having any child (the extensive margin). We find evidence of some fertility postponement and significant effects on completed fertility, but we see little evidence of a significant impact on marital behavior. Our results inform the public debate on fertility rates in settings with lowest-low fertility, such as Germany, during the period under investigation. |
| Keywords: | Globalization, Labor mar ket out comes, Fertility, Marriage |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03999500&r=int |
| By: | Grillitsch, Markus (CIRCLE, Lund University); Martynovich, Mikhail (CIRCLE, Lund University); Nilsson, Magnus (CIRCLE, Lund University); Schubert, Torben (CIRCLE, Lund University) |
| Abstract: | This paper analyses how the presence of foreign-owned multinational enterprises (MNEs) affects the performance of start-ups in the same region. Focusing on the population of Swedish start-ups and MNEs between 2007 and 2015, we investigate the relationship between start-up productivity and regional share of MNE employment. We find effects that differ by sectoral belonging of start-ups and MNEs. Notably, while the effects of the local presence of foreign-owned MNEs are negative when start-ups and local MNEs belong to the same sector, they are positive for the local presence of MNEs in related and (to some weaker extent) unrelated sectors. Moreover, we find that as start-ups mature the effect of the local presence of foreign-owned MNEs on start-up productivity increases, irrespective of their sectoral belonging. We interpret this as evidence of age-dependent processes of learning, legitimacy building, and resource accumulaton allowing start-ups to reap the benefits while mitigating negative effects of MNE proximity. Interestingly, we show that the documented effects are more pronounced for service firms, particularly in the knowledge-intensive sectors. |
| Keywords: | Productivity; start-ups; MNE |
| JEL: | M13 M16 R11 |
| Date: | 2023–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2023_003&r=int |
| By: | Jaime de Melo (UNIGE - Université de Genève = University of Geneva, FERDI - Fondation pour les Etudes et Recherches sur le Développement International) |
| Abstract: | Mauritius and other Small Island Development States (SIDS) depend heavily on international trade. This presents challenges to environmental management. SIDS are vulnerable to all forms of environmental degradation, of which part are related to international trade, the focus of this chapter. While climate change causes of environmental degradation are beyond the control of the government, others like deforestation, loss of biodiversity or degradation of their maritime and terrestrial environments including depletion of fish stocks in their Extended Economic Zones (EEZs) are, at least, partly, under their control. |
| Keywords: | Environment, Mauritus, SIDS, EEZs, Climate change |
| Date: | 2023–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-04001711&r=int |
| 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 given a blow to the perception of the economic globalization as the most efficient system to improve world economic performance. Liberal globalization is now undergoing a crisis of confidence. The pandemic has clearly highlighted the dangers of an economic globalization concerned only with the short-term individual interests of the wealthiest. The rise of social and societal inequalities, the critical weakening of public services, the permanence of autocratic systems and the lack of consistent environmental standards and global warming policies are dangerous situation for a peaceful world. |
| Abstract: | La pandémie a clairement mis en évidence les dangers d'une mondialisation économique préoccupée uniquement par les intérêts individuels à court terme des plus riches. La montée des inégalités sociales et sociétales, l'affaiblissement critique des services publics et l'absence de normes environnementales cohérentes et de politiques de lutte contre le réchauffement climatique sont autant de situations dangereuses pour un monde en paix. |
| Keywords: | Globalization, war, pandemic, wars, Ukraine, Russia, Europe |
| Date: | 2023–01–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-03963350&r=int |
| By: | Chibanda, Craig; Thobe, Petra; Almadani, Mohamad Isam; Deblitz, Claus; Awuni, Stephen |
| Abstract: | Ghana has experienced an explosion in the consumption of chicken meat in the last two decades. However, local production has failed to keep up with the growing demand for poultry meat. Consequently, Ghana is highly dependent on frozen chicken imports as it imports an estimated 65 % of its total poultry meat supply. Ghana’s dependency on chicken imports is a subject of significant debate. One of the questions in the debate is: “How is it possible that EU countries are able to export frozen chicken meat to Ghana at such low prices and still make a profit?”. Some studies explain that EU countries like Germany are able to export frozen chicken cuts to African countries at low prices because EU consumers prefer to consume chicken breasts, therefore, other parts are either exported or processed into pet food. However, this explanation does not provide insights into why a significant amount of frozen whole chickens are also exported to West Africa at lower prices than the locally produced ones. Therefore, this means that there are other factors that contribute to the low-cost of frozen chicken meat exports from the EU. In this context, this study investigates whether the farm performance of German conventional broiler farms contributes to the low prices of German frozen chicken exports to Ghana. The typical farm approach was used to construct and quantify typical conventional broiler farms in Ghana and Germany. The approach entails the construction of empirically grounded farm data sets through the use of semi-structured interviews and focus groups. Our preliminary results show that the typical German conventional broiler farm is technically more efficient in comparison to the Ghanaian farms. The production costs in Germany are significantly lower compared to the Ghanaian farms. The results also show that all typical conventional broiler farms in Ghana and Germany are profitable in the short-term, which considers only cash costs. |
| Keywords: | Agricultural and Food Policy, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333506&r=int |
| By: | Zamani, Omid; Chibanda, Craig; Pelikan, Janine |
| Abstract: | The present paper primarily aims to compare different key factors behind the high cost of production in the Ghanaian poultry value chain and investigate the possible scenarios to reduce it. In the case of Senegal, the poultry ban is the major policy intervention in the poultry market. Since 2005, the Senegalese poultry sector has been experiencing a trade ban on poultry imports to prevent the Avian Influenzas outbreak. We evaluate the potential effects of the ban policy on the performance of poultry farms using a comparative analysis between Senegal and Ghana. Given the scope of our analysis and data availabilities, we use different methods to evaluate the policies of interest. To begin with, we develop a spatial partial equilibrium model including different stages to assess the spillover effects of feed costs on the poultry meat market. Figure 1 presents the input and product flow in a typical poultry value chain in Ghana from farm to home. The model is based on a spatial partial equilibrium model developed by Samuelson (1952) and extended by Takayama, and Judge (1964). The final calibrated model is applied to investigate the impact of feed processing capacity and efficiency on poultry meat production. In our analysis, the main advantage of using a partial equilibrium approach compared to general equilibrium is that it permits analysis within the value chain context including feed conversion ratio and processing details. Additionally, it allows us to assess the effects of policies at price levels. |
| Keywords: | Livestock Production/Industries, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333455&r=int |
| By: | Ioannou, Demosthenes; Pérez, Javier J.; Balteanu, Irina; Kataryniuk, Ivan; Geeroms, Hans; Vansteenkiste, Isabel; Weber, Pierre-François; Attinasi, Maria Grazia; Buysse, Kristel; Campos, Rodolfo; Clancy, Daragh; Essers, Dennis; Faccia, Donata; Freier, Maximilian; Gerinovics, Rinalds; Khalil, Makram; Kosterink, Patrick; Mancini, Michele; Manrique, Marta; McQuade, Peter; Molitor, Philippe; Pulst, Daniela; Timini, Jacopo; Van Schaik, Ilona; Valenta, Vilém; Vergara Caffarelli, Filippo; Viani, Francesca; Viilmann, Natalja; Almeida, Ana M.; Alonso, Daniel; Bencivelli, Lorenzo; Borgogno, Oscar; Borrallo, Fructuoso; Cuadro-Sáez, Lucía; Di Stefano, Enrica; Esser, Andreas; García-Lecuona, María; Habib, Maurizio; Jeudy, Bruno-Philippe; Lájer, Andrés; Le Gallo, Florian; Martonosi, Ádám; Millaruelo, Antonio; Miola, Andrea; Négrin, Pauline; Zangrandi, Michele Savini; Strobel, Felix; Tylko-Tylczynska, Kalina Paula |
| Abstract: | Over the past decade, geopolitical developments - and the policy responses to these by major economies around the world - have challenged economic openness and the process of globalisation, with implications for the economic environment in which central banks operate. The return of war to Europe and the energy shock triggered by the Russian invasion of Ukraine in 2022 are the latest in a series of episodes that have led the European Union (EU) to develop its Open Strategic Autonomy (OSA) agenda. This Report is a broad attempt to take stock of these developments from a central banking perspective. It analyses the EU's economic interdependencies and their implications for trade and finance, with a focus on strategically important dimensions such as energy, critical raw materials, food, foreign direct investment and financial market infrastructures. Against this background, the Report discusses relevant aspects of the EU's OSA policy agenda which extend to trade, industrial and state aid measures, as well as EU initiatives to strengthen and protect the internal market and further develop Economic and Monetary Union (EMU). The paper highlights some of the policy choices and trade-offs that emerge in this context and possible implications for the ECB's monetary policy and other policies. JEL Classification: F0, F10, F30, F4, F5, F45, E42, L5, Q43 |
| Keywords: | capital flows, European Central Bank, European Economic and Monetary Union, financial market infrastructures, financial stability, geoeconomics, geopolitics, globalisation, global value chains, industrial policy, international trade, monetary policy, multilateralism, Open Strategic Autonomy |
| Date: | 2023–03 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:2023311&r=int |
| By: | Congressional Budget Office |
| Abstract: | About 45 million people living in the United States in 2021 were born in other countries. Foreign-born people accounted for about half of the growth of the U.S. labor force between 2002 and 2018. In 2019, 2020, and 2021, the size of the foreign-born labor force dropped considerably because of changes in immigration policy and the pandemic. |
| JEL: | F22 F66 J11 J15 J61 |
| Date: | 2023–04–05 |
| URL: | http://d.repec.org/n?u=RePEc:cbo:report:58939&r=int |
| By: | Shehaj, Pranvera; Zagler, Martin |
| Abstract: | This study focuses on asymmetric tax treaties and investigates the impact of OECD member states’ double tax relief method and of treaty tax sparing provisions on investments in developing countries, while considering network effects. In addition, it analyses the impact of a residence country’s tax relief method on the source country’s tax policy. Our results suggest that having a treaty between the OECD member state and the developing country, which improves the investor’s conditions in terms of tax burden by changing the unilateral tax relief method, increases FDI to the developing country. The positive effect prevails when investigated within investments made through the direct route from home to host. Furthermore, results suggest that OECD member states offer tax sparing provisions mostly to less-developed economies, which already receive very low, if any, foreign direct investment. Finally, we find that developing countries set higher CIT when the OECD member state relieves double taxation through the exemption method, as compared to when it offers a foreign tax credit, while the inclusion of tax sparing agreements has a positive effect on the CIT. |
| Keywords: | Finance, |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:idq:ictduk:17904&r=int |
| By: | Chepeliev, Maksym; Aguiar, Angel; Farole, Thomas; Liverani, Andrea; van der Mensbrugghe, Dominique |
| Abstract: | Rapidly increasing material extraction is putting major pressure on ecosystems. Future increases in incomes and population could result in over 2.5 times growth in global material demand by 2050, putting even more pressure on environment. Thus, an absolute decoupling of material use from GDP and income is of major importance to preserve the safe operating boundaries. It is vital to understand how current policy efforts, including climate mitigation, could impact material use patterns and what complementary circular economy (CE) policies should be implemented to support dematerialization. Here we develop a special version of the Global Trade Analysis Project (GTAP) database (GTAP-CE) with detailed representation of primary, secondary, and recycling activities for metals (steel, aluminum, copper, etc.) and plastics. We also incorporate quantity flows of metal ores and non-metallic minerals. We investigate a set of scenarios focusing on Europe that include mitigation and CE-specific policies using a dynamic general equilibrium model (ENVISAGE). A set of CE-specific policies includes fiscal measures to stimulate recycling and penalize primary production, extraction levies (for non-metallic minerals), and demand-side measures, such as shifts in consumption patterns toward dematerialization, changes in the product design and product lifetime extensions. We also model various border tax adjustments covering embodied raw materials and consider alternative revenue recycling mechanisms. Our results indicate that EU mitigation measures will have a moderate impact on material use. Similarly, materials-focused measures will have only a modest impact on CO2 emissions. Aggregate material use in the EU could decline up to 8-11% (relative to baseline in 2030) under alternative CE policies allowing to achieve absolute decoupling. We also find that using CE production taxes’ revenue to reduce labor taxes would lead to increase of growth and welfare. |
| Keywords: | International Relations/Trade, Environmental Economics and Policy |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333431&r=int |
| By: | Bekkers, Eddy; Cariola, Gianmarco |
| Abstract: | The introduction of carbon pricing faces two main challenges: the need for global cooperation to tackle the collective action problem and the need to share the its burden in a fair way following the principle of common but differentiated responsibility (CBRD). In this paper we explore different ways to build a carbon pricing coalition while minimizing the welfare losses for low-income countries using simulations with a recursive dynamic computable general equilibrium (CGE) model. We first present the need for and efficiency and urgency of global carbon pricing policies. Global carbon pricing is needed to tackle climate change, is more efficient than regional carbon pricing, and is urgent to prevent a patchwork of carbon pricing policies leading to calls for border carbon adjustment (BCA). Because the impact of global carbon pricing on the GDP of most regions is negative, complementary policies are required to tackle the two challenges. We explore four complementary policies: BCA, Nordhaus’s climate club, a global carbon incentive fund, and emission trading with progressive emission reduction targets. We evaluate these proposals based on their projected effects on average income and income inequality among countries, as well as their effectiveness as an incentive to introduce carbon pricing. BCA scores poorly along the three dimensions; Nordhaus’s carbon club performs well as an incentive tool but has a negative impact on average global income and inequality between regions; the global carbon fund has a positive impact on average income and inequality but performs poorly as an incentive tool; and emission trading with progressive reduction targets scores well across all dimensions. We conclude with a discussion of the feasibility of emission trading. |
| Keywords: | International Relations/Trade, Environmental Economics and Policy |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333407&r=int |
| By: | Hu, Xiurong; Liu, Junfeng |
| Abstract: | China’s environmental protection tax (EPT) has been implemented since the beginning of 2018 to conquer the severe air pollution problems. Meanwhile, carbon tax (CAT) has been approved as the most effective way on climate mitigation. However, the combined effects across different environmental taxes on emission reduction have not been comprehensively characterized. Besides environmental taxes, changes in trade policy between countries may also influence pollution emissions, which also needs a deeper investigation. In order to provide insights for decision-making on air pollution mitigation under an uncertain worldwide trade policy, we simulated the effects of the combinations of EPT and CAP changes on air pollutants emissions and economic activities. Utilizing a multiple-province computable general equilibrium (CGE) model, we quantify the emissions changes resulting from the individual or mixed policy components: including variating EPT from 2yuan per kilogram emissions to12yuan/kg, CAT from 50yuan per tonne CO2 emissions to 300yuan/tonne. Our results show that although CAP policy may result in greater emission reductions than that of the EPT, the EPT policy is more cost-effective to the CAP policy. Besides, CAP is most redundant to the EPT, while the EPT is complementary to a CAP policy. On province level, in most provinces, carbon pricing could increase the air pollution mitigation but also strengthen the burden of GDP at the same time, while Heilongjiang, Tianjin, Jiangsu, Hainan, Guangxi and Jiangxi provinces could result in air pollution reduction and GDP increase. Provincial distribution is vital for regional equality. We suggest to introduce relative smaller tax rate on provinces who suffer large GDP loss, or provide subsidies to these provinces. |
| Keywords: | Environmental Economics and Policy, International Relations/Trade |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333460&r=int |
| By: | Kuik, Onno; Zhou, Fujin; Ciullo, Alessio; Brusselaers, Jan |
| Abstract: | The European economy and financial markets are closely connected to the US economy and financial markets through trade and investment flows. Severe natural disasters in the US may not only have economic and financial impacts in the US but also have spill-over effects on Europe, especially under the increasing climate risks. This paper contributes to the thin literature that focuses on the international financial and economic impacts of natural disasters. We adopt a recently introduced climate storyline approach, which is an event-based approach aiming at building “physically self-consistent unfolding of past events, or of plausible future events or pathways”, to estimate the financial and economic impacts of natural disasters. Specifically, we first estimate the economic damages of downward counterfactuals of three hurricanes (Harvey, Irma and Maria) that struck the southern US in 2017.Downward counterfactuals are plausible alternative realizations of historic events that would have been much more impactful than the actual event. We estimate that total damage due to the three hurricanes could have been half a trillion USD in the worst case scenario. We then use a dynamic global equilibrium model to assess how financial and economic impacts on the European Union unfold over time. The results show small but material effects on the European economy, , with marked differences between economic sectors. On the production side, manufacturing sectors (petro-chemicals and other manufactures) increase their production by around 0.1% in the short term. The activity of the construction sector in the EU falls by up to 0.6% for about a decade, as do domestic investments. This has a small but negative impact on economic growth in the European Union. We show how these effects are related to the initial physical damages as well as to the economic responses that are likely to follow after the disaster. |
| Keywords: | International Relations/Trade, Environmental Economics and Policy |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333438&r=int |
| By: | Trang, Luong; Birur, Dileep; Lal, Pankaj |
| Abstract: | Vaccines for the coronavirus illness (COVID-19) have offered hope for better limiting the pandemic, which had infected over 300 million people and killed over 5 million as of 13 Jan 2022. Currently, 19 economies in the area have approved at least one of these vaccinations, but the number of national approvals for accessible vaccines is projected to rise. This paper endeavors to quantify COVID-19's potential global economy under four different vaccination scenarios. The objective of the paper is to analyze the economywide impact of the COVID-19 pandemic on the global economy, evaluate the effectiveness of COVID-19 vaccinations towards economic recovery, and address vaccine inequity among the developing countries with high COVID-19 infection rates by utilizing a Computable General Equilibrium (CGE) model based on the Global Trade Analysis Project (GTAP) database. The model comprehends the economic interactions due to COVID-19 infection as well as vaccination rates based on the inter-regional and inter-industry relationships. This study showed the impact of the unprecedented COVID-19 pandemic on the global economy. Most of the impacts on their GDP were driven by the economic consequences of reduced labor supply and productivity in various economies. Moreover, our results propose that the COVID-19 vaccine strongly affects economic activity. When the vaccination rates hit much higher levels, people will be more comfortable returning to the new normal with substantial labor productivity gain across all industries. Labor participation and productivity are projected to increase significantly with higher vaccination rates. Relatively lower vaccination rates in some developing countries had shown a slowdown in overall global economic recovery. |
| Keywords: | International Relations/Trade, Health Economics and Policy |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ags:pugtwp:333403&r=int |
| By: | Jean-Michel Severino (I&P - Investisseurs et Partenaires); Sylviane Guillaumont Jeanneney (FERDI - Fondation pour les Etudes et Recherches sur le Développement International) |
| Abstract: | Public financial flows to developing countries serve a multitude of purposes, the growing number of which has led over time to an incoherent institutional landscape of international financing. Institutional fragmentation has profound consequences for the effectiveness of policies. Starting from the achievements of official development assistance, our reflection seeks to clarify the aims of planetary collective action, by distinguishing three main objectives: ensuring the convergence of income between developing countries and industrialized countries; ensuring a foundation of global solidarity; fight against global public evils. This mapping allows us to present a first sketch of what could be an inventory of international financial flows according to a new nomenclature that would be collectively accepted by donors and recipients of flows. But since there are overlaps between the objectives, it is not possible to rigorously separate the objectives of growth, redistribution and the management of global public goods. We offer slightly more complex but still manageable procedures for tracking international flows. Accurate mapping of financial flows could avoid two main pitfalls of the current system, an excessively compassionate vision of the needs of low-income countries at the expense of the requirement to catch up on their economies, and in the face of the climate emergency, priority given to climate change mitigation projects at the expense of those specifically aimed at adaptation in low-income countries or more generally to their development. |
| Abstract: | Les flux financiers publics à destination des pays en développement répondent à une multitude de finalités, dont le nombre croissant a entraîné avec le temps, un paysage institutionnel du financement international peu cohérent. Le morcellement institutionnel a de profondes conséquences sur l'efficacité des politiques. Partant de l'acquis de l'aide publique au développement, notre réflexion s'attache à clarifier les finalités de l'action collective planétaire, en distinguant trois grands objectifs : assurer la convergence des revenus entre les pays en développement et les pays industrialisés ; assurer un socle de solidarité mondial ; lutter contre les maux publics globaux. Cette cartographie nous permet de présenter une première esquisse de ce que pourrait être un recensement des flux financiers internationaux selon une nouvelle nomenclature qui serait collectivement acceptée par les bailleurs et les destinataires des flux. Mais comme il existe des chevauchements entre les objectifs, il n'est pas possible de rigoureusement séparer les objectifs de croissance, de redistribution et de gestion des biens publics mondiaux. Nous proposons des procédures un peu plus complexes mais néanmoins gérables de suivi des flux internationaux. La cartographie précise des flux financiers pourrait éviter deux principaux écueils du système actuel, une vision excessivement compassionnelle des besoins des pays à faible revenu aux dépens de l'exigence de rattrapage de leurs économies, et face à l'urgence climatique une priorité donnée aux projets d'atténuation du réchauffement climatique aux dépens de ceux spécifiquement destinés l'adaptation des pays à faible revenu, ou plus généralement à leur développement. |
| Date: | 2023–03–03 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-04013196&r=int |
| By: | Martin, Will; Minot, Nicholas |
| Abstract: | This paper begins with a survey of recent commodity price developments that highlights the magnitude of this price surge and identifies the rapid rise in wheat prices as a key element. The analysis in this paper focuses on the extent to which domestic markets are insulated from these changes and on the resulting impacts on world prices. An econometric analysis using Error Correction Models finds stable long-term relationships between world wheat prices and most domestic prices of wheat and wheat products, but with considerable variation across countries in the rate of price transmission. A case study of the price shocks during the Covid pandemic and the Ukraine food price crisis finds that price insulation roughly doubled the overall increase in world wheat prices and raised their volatility both during periods of price increase and price decline. |
| Keywords: | Coronavirus; coronavirus disease; Coronavirinae; COVID-19; error correction model; food prices; food price crisis; models; price stabilization; wheat; shocks; cointegration; ECM; price insulation; Ukraine war |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:2175&r=int |