nep-int New Economics Papers
on International Trade
Issue of 2023‒05‒08
twenty-six papers chosen by
Luca Salvatici
Università degli studi Roma Tre

  1. Input-Trade Liberalization and Formal Employment: Evidence from Mexico By Maria Bas; Pamela Bombarda
  2. Deglobalisation? The reorganisation of global value chains in a changing world By Alexander Jaax; Sébastien Miroudot; Elisabeth van Lieshout
  3. Capital Controls and Trade Policy By Simon P. Lloyd; Emile A. Marin
  4. African economic integration and its effects on climate change adaptation and hunger By Simola, Antti; Boysen, Ole; Ferrari, Emanuele; Nechifor, Victor
  5. Trade Networks and Natural Disasters: Diversion, not Destruction By Gigout, Timothee; London, Melina
  6. Towards sustainability: The relationship between foreign direct investment, economic freedom and inclusive green growth By Ofori, Isaac K.; Figari, Francesco; Ojong, Nathanael
  7. Modelling the impacts of a surge in shipping costs By Ferrari, Emanuele; Christidis, Panayotis
  8. Expanded brinks model of international trade of the visegrad four countries in 2000-2015 By Yekimov, Sergey
  9. Towards sustainability: The relationship between foreign direct investment, economic freedom and inclusive green growth By Isaac K. Ofori; Francesco Figari; Nathanael Ojong
  11. Do firms react to supply-chain disruptions? By Juan de Lucio; Carmen Díaz-Mora; Raúl Mínguez; Asier Minondo; Francisco Requena
  12. Economic sectors and globalization channels to gender economic inclusion in Sub-Saharan Africa By Simplice A. Asongu; Nicholas M. Odhiambo
  13. Are digital technologies reshaping trade patterns? Evidence from European industries By Marco Sforza
  14. FDI and Superstar Spillovers: Evidence from Firm-to-Firm Transactions By Mary Amiti; Cédric Duprez; Jozef Konings; John Van Reenen
  15. Immigration and the Slope of the Labor Demand Curve: The Role of Firm Heterogeneity in a Model of Regional Labor Markets By Andrea Ariu; Tobias Müller; Tuan Nguyen
  16. Navigating the Geography of Regional Disparities: Market Access and the Core-Periphery Divide By Gabrielle Gambuli
  17. Africa's Industrialization Prospects: A Fresh Look By Naudé, Wim; Tregenna, Fiona
  18. The economic impacts of a hypothetical foot and mouth disease outbreak in Australia By Glyn Wittwer
  19. The use of complex variable functions in economic and mathematical models, using the example of the international trade model of the Visegrad four countries for 2000-2015 By Yekimov, Sergey
  20. Renminbi Usage in Cross-Border Payments: Regional Patterns and the Role of Swaps Lines and Offshore Clearing Banks By Ms. Longmei Zhang; Hector Perez-Saiz
  21. The Causes of Deindustrialization: a conceptual discussion By Alexandre Ricardo de Aragão Batista; Guilherme Grandi
  22. Immigrant assimilation in health care utilisation in Spain By Zuleika Ferre; Patricia Triunfo; Jos\'e-Ignacio Ant\'on
  23. Evaluating the Prediction Performance of the International Food Security Assessment's Production Models: A Cross-Validation Approach By Zereyesus, Yacob Abrehe; Baquedano, Felix; Morgan, Stephen
  24. Fallacy of floating? Reconsidering the ability of flexible exchange rates to offset terms-of-trade volatility in developing countries By Ioana Octavia Popescu
  25. The international tax agreement of 2021: Why it's needed, what it does, and what comes next? By Kimberly A. Clausing
  26. Economic sanctions against Russia: How effective? How durable? By Jeffrey J. Schott

  1. By: Maria Bas (Université Paris 1 Panthéon-Sorbonne, Centre d'Economie de la Sorbonne); Pamela Bombarda (Université de Cergy-Pontoise, THEMA)
    Abstract: This work investigates the role of input-trade liberalization on labor allocation between informal and formal employment in Mexico. Using individual household data for Mexico (1993-2001), we exploit exogenous input tariff changes applied to United States (U.S.) products when Mexico enters the North American Free Trade Agreement (NAFTA) in 1994. The theoretical mechanisms considered are the foreign input cost reduction that increases revenues in the formal sector and the foreign input-skilled biased channel, such that input-trade liberalization induces the reallocation of workers from informal to formal firms. Our findings confirm these mechanisms: individuals working in manufacturing industries experiencing the average reduction in input tariffs (12 percentage points) are almost 4 percent more likely to work in formal rather than informal occupations. This effect is concentrated on high-skilled workers which reinforces the input-skilled biased complementarity channel
    Keywords: informal and formal employment; trade liberalization; household data
    JEL: F12 F16 O14 J16 O17
    Date: 2023–04
  2. By: Alexander Jaax; Sébastien Miroudot; Elisabeth van Lieshout
    Abstract: New evidence is presented on the evolution of global value chains (GVCs) since the Great Financial Crisis. Drawing on novel OECD inter-country input-output tables in previous year’s prices, it shows there was no general trend towards deglobalisation in the period up to 2020. The fragmentation of production remained at a historically high level in 2019 and close to the level of 2011, confirming a stabilisation of the depth of global economic integration. Different trends are observed across economies: in the European Union, the import intensity of production grew before the COVID-19 pandemic, while China increasingly relied on domestic inputs. To explain these trends, bilateral trade costs are estimated and their cumulative impact along value chains is then calculated; structural changes and higher uncertainty seem to be the main drivers of increasing cumulative trade costs for some GVCs. To preserve the benefits of GVCs, policy makers should seek to increase the ease of trade and reduce uncertainty.
    Keywords: Fragmentation of production, Global Value Chains, Trade costs
    JEL: F14 F15 C67
    Date: 2023–04–25
  3. By: Simon P. Lloyd; Emile A. Marin
    Abstract: How does the conduct of optimal cross-border financial policy change with prevailing trade agreements? We study the joint optimal determination of trade policy and capital- flow management in a two-country, two-good model with trade in goods and assets. While the cooperative optimal allocation is efficient, a country-planner can achieve higher domestic welfare by departing from free trade in addition to levying capital controls, absent retaliation from abroad. However, time variation in the optimal tariff induces households to over- or under-borrow through its effects on the path of the real exchange rate. As a result, optimal capital controls can be larger when used in conjunction with optimal tariffs in specific cases; and in others, the optimal trade tariff partly substitutes for the use of capital controls. Accounting for strategic retaliation, we show that committing to a free-trade agreement can reduce incentives to engage in costly capital-control wars for both countries.
    JEL: F13 F32 F33 F38
    Date: 2023–03
  4. By: Simola, Antti; Boysen, Ole; Ferrari, Emanuele; Nechifor, Victor
    Abstract: We study the effects of the African Continental Free Trade Area on climate change adaptation and mitigation. We also estimate the consequent effects on African economic prospects and food security. We apply a global CGE model that incorporates with several representative concentration pathways on its baseline.
    Keywords: International Relations/Trade, Food Security and Poverty
    Date: 2022
  5. By: Gigout, Timothee (Banque de France); London, Melina (European Commission)
    Abstract: We study how international trade networks react to natural disasters. We combine exhaustive firm-to-firm trade credit and disaster data and use a dynamic difference-in-differences identification strategy. We establish the causal effect of natural disasters abroad on the size, shape and quality of French exporters' international trade networks. We find evidence of large and persistent disruptions to international buyer-supplier relationships. This leads to a restructuring of the trade network of the largest French exporters and a change in trade finance sources for affected countries. We find strong and permanent negative effects on the trade credit sales of French suppliers to affected destinations. The largest firms are driving the response, both on the supplier and buyer side. Trade network restructuring towards unaffected destinations is higher for large multinationals trading more homogeneous products. This effect operates exclusively through a reduction in the number of buyers. This induces a negative shift in the distribution of the quality of buyers in the destination affected by the natural disaster.
    Keywords: Firm Dynamics; Trade Networks; Natural Disaster, Granularity
    JEL: E32 F14 F23 F44 L14
    Date: 2023–02
  6. By: Ofori, Isaac K.; Figari, Francesco; Ojong, Nathanael
    Abstract: This study contributes to the environmental and socioeconomic sustainability literature by examining three important issues. First, the study examines the effects of foreign direct investment (FDI) and economic freedom on inclusive green growth (IGG) in sub-Saharan Africa (SSA). Second, we investigate whether economic freedom interacts with FDI to promote IGG. Third, we identify minimum thresholds required for economic freedom to cause FDI to foster IGG. The findings are based on macro data for 20 SSA countries. Evidence, based on instrumental variable regression, shows that, unconditionally, FDI is not statistically significant for promoting IGG. Second, the study finds that SSA’s ‘Mostly unfree’ economic architecture conditions FDI to reduce IGG. Third, results from our threshold regression reveal that the minimum threshold required for economic freedom to cause FDI to foster IGG is 66.2% (Moderately free). The study sheds new light on investments necessary for SSA’s economic architecture to form relevant synergies with FDI to promote IGG.
    Keywords: Economic Freedom; FDI; Government Integrity; Inclusive Green Growth; Sustainable Development; sub-Saharan Africa
    JEL: F21 F4 F6 H1 O1 O55 P1 Q01 Q56
    Date: 2023–04–05
  7. By: Ferrari, Emanuele; Christidis, Panayotis
    Abstract: The paper evaluates the impact of the increase of freight transport costs on the global economy. Using a detailed transport database, a set of detailed shocks by transportation mode, regions and commodities feed a multi-region, recursive dynamic general equilibrium model which analyses the sectorial (agri-food sectors, manufacturing) and macroeconomic (trade, wide-economic indicators) impacts of the recent surge in shipping costs.
    Keywords: Public Economics, International Relations/Trade
    Date: 2022
  8. By: Yekimov, Sergey
    Abstract: Interpolation of time series by the sum of exponents of a function of a complex variable makes it possible to obtain a model that is not inferior to the accuracy of regression models . Although time series are interpolated by functions of a complex variable, the sum of these functions, subject to certain conditions, are real numbers. The standard MATHLAB software was used in the calculation process. The article presents an extended BRINKS model of international trade of the Visegrad Four countries (Czech Republic, Slovakia, Poland, Hungary). The numerical series characterizing the volume of exports and imports within the Visegrad Four were approximated as the sum of eight exponents, which are functions of a complex variable.
    Keywords: BRINKS model of international trade , approximation by functions of a complex variable , international trade
    JEL: A10 O10
    Date: 2023–04–11
  9. By: Isaac K. Ofori (University of Insubria, Varese, Italy); Francesco Figari (Novara, Italy); Nathanael Ojong (York University, Toronto, Canada)
    Abstract: This study contributes to the environmental and socioeconomic sustainability literature by examining three important issues. First, the study examines the effects of foreign direct investment (FDI) and economic freedom on inclusive green growth (IGG) in sub-Saharan Africa (SSA). Second, we investigate whether economic freedom interacts with FDI to promote IGG. Third, we identify minimum the thresholds required for economic freedom to cause FDI to foster IGG. The findings are based on macro data for 20 SSA countries. Evidence, based on instrumental variable regression, show that, unconditionally, FDI is not statistically significant for promoting IGG. Second, the study finds that SSA’s ‘Mostly unfree’ economic architecture conditions FDI to reduce IGG. Third, results from our threshold regression reveal that the minimum threshold required for economic freedom to cause FDI to foster IGG is 66.2% (Moderately free). The study sheds new light on investments necessary for SSA’s economic architecture to form relevant synergies with FDI to promote IGG.
    Keywords: Economic Freedom; FDI; Government Integrity; Inclusive Green Growth; Sustainable Development; sub-Saharan Africa
    JEL: F21 F6 H1 P1 O55 Q01 Q56
    Date: 2023–01
  10. By: Rául Serrano (Department of Business Administration, Universidad de Zaragoza and Instituto Agroalimentario de Aragón); Juan R. Ferrer (Department of Agricultural Economics, Statistics and Business Administration, Universidad Politécnica de Madrid); Silvia Abella (Department of Business Administration, Universidad de Zaragoza); Vicente Pinilla (Department of Applied Economics, Universidad de Zaragoza and Instituto Agroalimentario de Aragón)
    Abstract: The objective of this paper is to study the importance that adjustments between the marketing mix of the company and the characteristics of the destination market have in improving export performance. Four adjustments have been analysed: channel, positioning, price and knowledge. The most novel aspect of this research is the use of exports on a firm level, basing their explanation on a combination of the internal decisions of the companies and the characteristics of the destination markets. The results reveal the importance of strategic positioning adjustment between the origin and destination as a key factor that favours exports.
    JEL: F14 M21 Q13 Q17
    Date: 2023–03
  11. By: Juan de Lucio (Universidad de Alcalá. Pza. San Diego, s/n, 28801, Alcalá de Henares (Spain)); Carmen Díaz-Mora (Universidad de Castilla-La Mancha, Cobertizo de San Pedro Mártir, s/n, 45071 Toledo (Spain)); Raúl Mínguez (Universidad Antonio de Nebrija. Calle de Santa Cruz de Marcenado, 27, 28015, Madrid (Spain)); Asier Minondo (Deusto Business School, University of Deusto, Camino de Mundaiz 50, 20012 Donostia - San Sebastián (Spain)); Francisco Requena (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain))
    Abstract: Since the outbreak of the Covid-19 pandemic, the disruption of supply chains has become a major concern for global firms. This paper uses a representative sample of Spanish manufacturers that participate in global value chains to analyze whether firms are implementing strategies to respond to this concern. Using data for the period 2017-2022, we find that, on average, manufacturers have not increased the number of countries they source their inputs from since the Covid-19 pandemic. Firms have not either shifted their imports to countries that are geographically and geopolitically close to Spain, and have not reshored imports. However, firms have significantly increased the stock of intermediates. Firms only diversify when they have one supplier, export to many destinations, and the imported input has a high risk of experiencing a supply-chain disruption. Firms nearshore and friendshore when their main supplier is geographically distant.
    Keywords: supply-chain disruptions, diversification, nearshoring, friendshoring, reshoring, stocks, Spain
    JEL: F10 F14
    Date: 2023–04
  12. By: Simplice A. Asongu (Yaounde, Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    Abstract: This study complements the extant literature by assessing economic sector and globalization channels for gender economic inclusion. The study is focused on 35 countries in sub-Saharan Africa for the period 1995-2019 and the empirical evidence is based on fixed effects regressions. The following findings are established. First, economic and political globalization positively affect female employment in agriculture and the positive effect of economic globalization is driven by the trade globalization dynamic while social globalization negatively affects female employment in agriculture and the negative effect of social globalization is driven by cultural and informational globalization dynamics. Second, aggregate globalization and sub-components (i.e. economic globalization, social globalization and political globalization) negatively affect gender employment in the industry and the negative effect is driven by the financial globalization sub-component of economic globalization and by the informational and cultural components of social globalization. Third, aggregate globalization and sub-components positively affect gender employment in the service sector and the corresponding positive effect is driven by the trade globalization sub-component of economic globalization and by all sub-components (i.e. interpersonal, informational and cultural dimensions) of social globalization. In the terms of policy implications, policy makers should focus on promoting dimensions of globalization that are established to positively influence female employment as well as put in place measures that are designed to reverse the negative incidence of globalization dynamics that have been established to affect female employment. Moreover, policy makers should also be aware of the fact that when formulating the corresponding policies, the effect of globalization is contingent on globalization dynamics as well as on various economic sectors.
    Keywords: Globalization; female; gender; labour force participation; sub-Saharan Africa
    JEL: E60 F40 F59 D60 O55
    Date: 2023–01
  13. By: Marco Sforza (Department of Economics, Roma Tre University)
    Abstract: The paper explores the relationship between the industry-level diffusion of digital technologies and the regionalisation of trade in value added. Theoretical literature underlines two potential effects of these technologies. They may facilitate coordination, favouring higher fragmentation, but also redefine comparative advantages, pushing toward relocation. The aim of the paper is to provide empirical evidence on the relationship between digital technologies and trade regionalisation, for a panel of selected European countries and sectors over the period 2005-2018. I build a dataset combining data from TiVA-OECD, EU-KLEMS and Eurostat SBS. I define two regionalisation measures, comparing intra-EU against extra-EU trade flows, to capture the relative importance of the two regions for input sourcing and output destination. The econometric analyses show a differentiated effect on the two measures: digital capital reduces regionalisation of the input sourcing, while positively correlating with the regionalisation of the intermediate output. Finally, a differentiated effect is also found in magnitude between technologies, namely, physical ICT and software.
    Keywords: Digital technologies; Global Value Chains; Trade regionalisation
    JEL: O33 F10 F15
    Date: 2023–04
  14. By: Mary Amiti; Cédric Duprez; Jozef Konings; John Van Reenen
    Abstract: Despite competition concerns over the increasing dominance of global corporations, many argue that productivity spillovers from multinationals to domestic firms justify pro- FDI policies. For the first time, we use firm-to-firm transaction data in a developed country to examine the impact of forming a new relationship with a multinational, and find a TFP increase of about 8% three or more years after the event. Sales to other buyers, trade and customer quality also increase. However, we also document that starting to supply other “superstar firms” such as those who heavily export or are very large also increases performance by similar amounts, even if the superstar is a non-multinational. Placebos on starting relationships with smaller firms and novel identification strategies relying solely on demand shocks to superstar firms support a causal interpretation. A model of technology transfer rationalizes these effects and also correctly predicts (i) falls in post-event markups; (ii) the type of firms who form superstar relationships and (iii) bigger treatment effects from superstars intensive in R&D, IT and/or human capital. In addition to productivity spillovers, we document the transmission of “relationship capabilities” and “dating agency” effects as the increase in new buyers is particularly strong within the superstar firm’s existing network. These results suggest an important role for raising productivity through the supply chains of superstar firms regardless of their multinational status.
    JEL: F21 F23 O30
    Date: 2023–04
  15. By: Andrea Ariu; Tobias Müller; Tuan Nguyen
    Abstract: In this paper, we provide new explanations for the puzzling findings in the literature that migrants do not decrease natives’ wages, and that skilled immigration can actually increase them. We develop a model with regional labor markets and heterogeneous firms in which workers of different skill levels are imperfect substitutes, but for a given skill level, natives and migrants are perfect substitutes within a firm. In this setting, a skilled labor supply shock due to immigration has two consequences. First, it induces skill-intensive firms and skill-abundant regions to expand. These across-firm and across-region reallocations reduce the within-firm and within-region substitution between skilled and unskilled workers, thus limiting relative wage adjustments. Second, the average native’s wage can be partially sheltered from the negative effect of immigration depending on the geographical settlement patterns of immigrants. Both mechanisms make natives and migrants appear as imperfect substitutes at the aggregate level. Quantitatively, our simulations show that the negative impact of immigration on natives' wage is halved when the across-firm and across-region reallocation mechanisms are at work. Finally, both theory and simulations show that when these mechanisms are coupled with human-capital externalities that are skill-neutral at the firm level but skill-biased on aggregate, skilled immigration can increase absolute and relative skilled wages. Therefore, firm heterogeneity, local labor markets, and human-capital externalities are crucial for understanding the impact of immigration on natives’ wages.
    Keywords: immigration, firm heterogeneity, wages
    JEL: F22 J61 J31
    Date: 2023
  16. By: Gabrielle Gambuli (Université de Cergy-Pontoise, THEMA)
    Abstract: This paper investigates the impact of market proximity on subnational development worldwide, considering the heterogeneous effects on core and peripheral regions, as well as on countries with different income levels. A gravity-based market potential index is revised to accurately assess distances for land and maritime trips to better capture geographic limitations. Estimations are performed in cross-section with country-fixed effects, by addressing endogeneity issues with instrumental variables. Robustness checks are also conducted with panel data on a smaller sample. The findings reveal that regions with better access to markets and port experience higher regional income per capita, with the effect being higher for wealthier regions. Peripheral regions consistently exhibit a 2 percentage point lower elasticity to market potential compared to core regions. The paper also highlights the potential negative impact of proximity to foreign markets on peripheral regions. These results suggest that policies which aim at improving the connectivity of peripheral regions to core domestic markets could help mitigate the adverse effects of foreign competition and reduce regional disparities within countries.
    Keywords: International Trade, Market Potential, Economic Geography, Regional Development, Core-Periphery.
    JEL: F14 F15 O18 R11
    Date: 2023
  17. By: Naudé, Wim (RWTH Aachen University); Tregenna, Fiona (University of Johannesburg)
    Abstract: This paper identifies the determinants of industrialization in 18 African countries, 1965 to 2018, using various estimators and applying a battery of robustness checks. Industrialization in Africa is driven by historical legacies such as colonialism; geographical factors such as rainfall and distance from international markets; economic factors such competition from China, market size and urbanization; and technological factors such as digital technology adoption. An inverse U-shape relationship between industrialization and GDP per capita is consistent with (premature) de-industrialization. Technological change and adoption of digital technologies are found to have an ambiguous relationship with industrialisation in Africa. The establishment of the AfCFTA is timely, but its benefits will only be realised if countries also improve infrastructure to overcome the negative consequences of adverse geography, improve trade facilitation to exploit learning-by-exporting from intra-African trade, and facilitate urbanization.
    Keywords: industrialization, development, employment, technology, trade, Africa
    JEL: O47 O33 J24 E21 E25
    Date: 2023–03
  18. By: Glyn Wittwer
    Abstract: This study uses a multi-country, dynamic quarterly CGE model, GlobeTERM, to estimate the economic impacts of a hypothetical foot and mouth disease outbreak in Australia. State government protocols in response to an outbreak concerning Local Control Areas and disease eradication have local severe short-term economic impacts. However, the national welfare losses arising from the outbreak depend mostly on the duration of trade sanctions by importers of Australian animal products. If an outbreak is contained within several months, and trade sanctions are dropped within a year of the outbreak, the net present value of Australia's welfare losses may be around $10 billion. If all importers restore Australian access within a year, other than China which delays by 5 years, welfare losses are around $21 billion. In a less likely scenario, in which trade sanctions persist in all trading partners for 5 years after the disease has been eradicated, contrary to international guidelines, welfare losses may exceed $85 billion. Trading partners also suffer welfare losses due to trade sanctions.
    Keywords: CGE modelling, foot and mouth disease, trade sanctions, welfare, CGE modelling
    JEL: C68 R10 N50 Q17
    Date: 2022–12
  19. By: Yekimov, Sergey
    Abstract: Interpolation of time series by the sum of exponents of a function of a complex variable gives an approximation no worse than using regression analysis. Despite the fact that time series are interpolated by functions of a complex variable, the values of these functions under certain conditions are real numbers. The imaginary component of complex numbers that occurs during calculations is several orders of magnitude smaller than the real part . The appearance of the imaginary part is due , in the author 's opinion , to the error of calculations and it can be neglected when interpreting the result of calculations . To calculate the interpolating function, the author used standard procedures used in the MATHLAB software. The absence of extremum points for exponents is the main advantage when using exponent sums for interpolation purposes compared to interpolation by polynomials.
    Keywords: Functions of a complex variable , series of exponents , interpolation by sums of exponents , international trade model
    JEL: C10 F43
    Date: 2023–04–12
  20. By: Ms. Longmei Zhang; Hector Perez-Saiz
    Abstract: The paper examines the usage of the Renminbi (RMB) as an international payment currency. Globally, the use of RMB remains small, accounting for 2 percent of total cross-border transactions. Using country-level transaction data from Swift** for 2010–21, we find significant regional variations in the use of RMB for cross-border payments. While RMB is little used in some regions, it has gained traction in others, and these cross-country differences have widened over the years. Such differences can be partly explained by an economy’s geographic distance, political distance, and trade linkages with China. However, it also reflects the impact of policy measures by the People’s Bank of China, including establishing bilateral swap lines and offshore clearing banks. Both policy measures helped to address offshore RMB liquidity shortages given China’s overall capital account restrictions, with the offshore clearing banks having a quantitatively larger impact. Our analysis contributes to a better understanding of the growing importance of RMB within the international monetary system.
    Keywords: RMB internationalization; Swift; Swap lines; Offshore Clearing Banks
    Date: 2023–03–31
  21. By: Alexandre Ricardo de Aragão Batista; Guilherme Grandi
    Abstract: The paper presents the conceptual variety around the term deindustrialization. Then, based on the literature and the debate raised, it presents its causes which, in this article, include the real exchange rate, trade liberalization, the impact of Chinese trade, the services sector, labor productivity, investments, effective demand, taxes, and some extra-economic impacts. In addition to exposing our critical view on the subject, we observe that there is great heterogeneity in the concept of deindustrialization and its causes, which does not lead the debate to a consensus.
    Keywords: Deindustrialization; Industry; Dutch Disease
    JEL: F10 L60 O14
    Date: 2023–04–25
  22. By: Zuleika Ferre; Patricia Triunfo; Jos\'e-Ignacio Ant\'on
    Abstract: Abundant evidence has tracked the labour market and health assimilation of immigrants, including static analyses of differences in how foreign-born and native-born residents consume health care services. However, we know much less about how migrants' patterns of health care usage evolve with time of residence, especially in countries providing universal or quasi-universal coverage. We investigate this process in Spain by combining all the available waves of the local health survey, which allows us to separately identify period, cohort, and assimilation effects. We find that the evidence of health assimilation is limited and solely applies to migrant females' visits to general practitioners. Nevertheless, the differential effects of ageing on health care use between foreign-born and native-born populations contributes to the convergence of utilisation patterns in most health services after 20 years in Spain. Substantial heterogeneity over time and by region of origin both suggest that studies modelling future welfare state finances would benefit from a more thorough assessment of migration.
    Date: 2023–04
  23. By: Zereyesus, Yacob Abrehe; Baquedano, Felix; Morgan, Stephen
    Abstract: The U.S. Department of Agriculture (USDA), Economic Research Service (ERS) International Food Security Assessment (IFSA) model was developed to help USDA and its stakeholders evaluate the food security status of 76 low- and middle-income countries. The IFSA model provides an estimate of total food demand and food production, both elements in measuring food security. The demand side of the IFSA model is used to estimate the prevalence of country-level food insecurity based on an aggregate food consumption threshold of 2, 100 calories per capita per day. The gap between aggregate domestic food production and food demand is used to estimate the implied additional supply required for each of the 76 countries in the IFSA, which is an indication of potential import needs, including food aid. The primary objective of the IFSA’s supply-side modeling work is to project production. This research evaluates the production model to determine the best performing prediction model specification. This report advances previous research by using a data-driven approach to select the best performing model specification.
    Keywords: International Development, Research Methods/ Statistical Methods
    Date: 2022–11–10
  24. By: Ioana Octavia Popescu
    Abstract: This paper questions the traditionally accepted superiority of flexible exchange rate regimes in o↵setting commodity price fluctuations. Employing an updated measure of the commodity terms-of-trade, a comparison of exchange rate regime classifications and more recent data than much of literature supporting this assertion, I find little evidence that flexible regimes deliver better outcomes in this regard. Although previous results are reproducible with the use of a certain terms-of-trade measure, their significance dissipates when employing an arguably more comprehensive measure. The results are similarly sensitive to the use of an alternative exchange rate regime classification. Notably, any significance found with either measure vanishes in the period after 2004, potentially indicative of a structural break in the transmission of terms-of-trade improvements to economic growth. In light of these findings, I suggest that, with updated measures and awareness of a potential structural break in hand, it may be time to re-evaluate the way in which terms-of-trade shocks have been understood to transmit in developing economies and what kind of exchange rate regime is best suited to this transmission mechanism.
    Date: 2023
  25. By: Kimberly A. Clausing (Peterson Institute for International Economics)
    Abstract: In 2021, more than 135 jurisdictions agreed on transformative new international tax rules that would establish a minimum tax rate of 15 percent on multinational corporate income regardless of where it was reported. In December 2022, the European Union unanimously moved forward to implement this minimum tax, and other countries, including South Korea, Japan, Australia, Canada, and the United Kingdom, are also either implementing the tax or taking substantial steps toward implementation. In tandem, the United States should also reform its international tax system and adopt a stronger minimum tax. While the future of the international agreement is uncertain, it has important implications for the ability of governments worldwide to create tax systems that are administrable, fair, and efficient. The agreement also demonstrates important guiding principles for the future of multilateral cooperation on global collective action problems, including efforts to protect public health from future pandemics, address nuclear proliferation, and resolve territorial conflicts. US progress on international tax reform would enhance much needed international cooperation on these issues.
    Date: 2023–04
  26. By: Jeffrey J. Schott (Peterson Institute for International Economics)
    Abstract: Economic sanctions by Western democracies against Russia have not stopped the war and attacks on Ukrainian civilians. Together with continued economic and military support for Ukraine, however, sanctions are blocking Russian president Vladimir Putin from achieving his territorial objectives. Sanctions have contributed to a sharp compression of Russian imports; forced Russia's military and industry to source from more costly and inefficient suppliers at home and abroad; and slowly begun to squeeze Russian government finances. The G7 countries must sustain and augment their efforts, including by confiscating frozen reserves of the Central Bank of Russia to help fund Ukraine's reconstruction. G7 policymakers need to derive lessons from the current crisis about the utility of sanctions in conflicts between major powers. Maintaining coherent and coordinated sanctions against large and powerful target countries is critical for the effectiveness and durability of the policy. Deploying sanctions against such rivals also requires a long-term commitment to the implementation and enforcement of the trade and finance restrictions. Sanctions impose costs on both the target country and those imposing the sanctions, so Western policymakers need to offset those costs via domestic support or tax relief to sustain political support over time for sanctions in big power conflicts.
    Date: 2023–04

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