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on International Trade |
| By: | António Afonso; José Alves; Lucas Menescal; Sofia Monteiro |
| Abstract: | We examine the effects of World Uncertainty and Geopolitical Risk on Trade flows for 31 European economies between 1995 and 2023. To do so, we resort to Panel estimation techniques, including OLS and Poisson Pseudo Maximum Likelihood (PPML). Our findings reveal that European nations primarily respond to global uncertainty by concentrating their exports and imports among top trading partners particularly their top 5 highest trading partners. This result is more pronounced when uncertainty is driven by low-income countries. Moreover, there is a stronger relationship between imports and global uncertainty compared to exports. Our study underscores the importance of European economies strategically adapting their export and import approaches in response to these challenges. |
| Keywords: | Geopolitical Risk; World Uncertainty; Trade Flows; International Trade; European Economies |
| JEL: | C23 E44 F14 F41 F62 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp03462024 |
| By: | Aaron Flaaen; Fariha Kamal; Eunhee Lee; Kei-Mu Yi |
| Abstract: | This paper measures global value chain (GVC) activity, defined as imported content of exports, of U.S. manufacturing plants between 2002 and 2012. We assesses the extent of aggregation bias that arises from relying on industry-level exports, imports, and output to establish three results. First, GVC activity based on industry-level data underestimate the actual degree of GVC engagement by ignoring potential correlations between import and export activities across plants within industries. Second, the bias grew over the sample period. Finally, unlike with industry-level measures, we find little slowdown in GVC integration by U.S. manufacturers. |
| Keywords: | global value chains, aggregation bias |
| JEL: | F1 F14 O51 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:24-49 |
| By: | Sean Bottomley; Brian D. Varian |
| Abstract: | The development of the international telegraph network coincided with the nineteenth-century "golden age" of globalisation, but whether the former contributed to the latter is a question that has, hitherto, received only limited attention from economic historians. Fundamentally, it is a question that concerns the relationship between information-cost-reducing technology and trade. This paper introduces and utilises what is, we believe, the most comprehensive dataset of the years of international telegraphic linkages ever to have been compiled. Empirically, we analyse the effect of these telegraphic linkages on polity-specific British exports from 1849-90. Aside from intra-Empire trade flows, we find no statistically significant effect of the telegraph on British exports. Furthermore, we argue that previous estimates of the effect of the telegraph network on trade are implausibly high. |
| Keywords: | globalisation, information costs, nineteenth century, technology, telegraph, trade |
| JEL: | F15 N70 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:auu:hpaper:125 |
| By: | Eduardo Hernandez-Rodriguez; ; ; ; |
| Abstract: | This paper studies technological diversification in European regions incorporating global value chain participation as interregional linkages. The empirical analysis is developed for 243 NUTS-2 European regions between 2000-2010. Results show that, while regional capabilities remain crucial, global value chain participation matters for technological diversification. Particularly, backward participation in global value chains increases the chances of regions to trigger technological diversification. Forward participation in global value chains only increases the likelihood of technological diversification when combined with regional capabilities. Finally, global value chain participation is found to be more relevant for transition regions rather than for less and more developed regions. |
| Keywords: | Global value chains, technological diversification, backward-forward participation, relatedness, interregional linkages, European regions |
| JEL: | F14 F63 O33 R11 R12 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2429 |
| By: | Catherine Casanova; Mr. Eugenio M Cerutti; Swapan-Kumar Pradhan |
| Abstract: | While Chinese banks have become the top cross-border lender to EMDEs, their expansion has slowed recently, both in terms of volume and market share. Also, the strong correlation of China’s bilateral trade and its banks’ cross-border lending has weakened, while during 2020-22 lending became more positively correlated with FDI. In our paper, we analyse these patterns and we explore the role of borrower risk variables and foreign policies. Our findings show that, although the shifting correlation from trade to FDI is a general EMDE phenomenon, China’s Belt and Road Initiative reinforces it. By contrast, borrowers that potentially benefit from geoeconomic fragmentation do not display stronger FDI-lending relationships. We also find that Chinese banks exhibit different levels of risk tolerance relative to other bank nationalities as borrower country risk variables are positively correlated with Chinese banks’ market shares, but not with their amounts of cross-border lending. |
| Keywords: | ross-border lending; Chinese banks; Trade; FDI; Borrower indebtedness; Pandemic; Sanctions; Geoeconomic fragmentation |
| Date: | 2024–09–23 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/205 |
| By: | Dolabella, Marcelo |
| Abstract: | Private actors have been actively working on standards that certify products and their production processes to minimize negative externalities. The number of Voluntary Sustainability Standards (VSS) has been increasing over the last few decades, raising interest in understanding their impact on trade flows. Standards governing the production of agricultural commodities are especially crucial for developing countries as these goods often constitute a significant portion of their exports. Using a structural gravity model, we investigate how VSS certification affects exports for developing countries across eight highly traded commodities, and twelve VSS certification schemes from 2013 to 2021. Our analysis highlights how these effects differ for Latin America and the Caribbean compared to the rest of the world. The results indicate a positive and significant effect of VSS certification on exports, with on average a one percent increase in VSS coverage, resulting in a 1.86% increase in export value. We observed positive and significant impacts on bananas, palm oil, tea, and cotton exports. Our findings also suggest that trade gains are larger for lower-income exporters trading with high-income destinations, suggesting an important role of VSS in reducing information asymmetries. Also, we observe that the proliferation of standards might reduce the positive effects associated with VSS adoption for the main agricultural producers. |
| Keywords: | Voluntary sustainability standards;Private standards;International trade;developing countries |
| JEL: | F18 Q17 Q18 Q56 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13764 |
| By: | Haibing Shu (Shanghai Jiao Tong University); Jagadeesh Sivadasan (University of Michigan); Wenjian Xu (Shanghai Jiao Tong Universit) |
| Abstract: | Leveraging the unanticipated increases in US tariffs initiated in 2018, we examine how Chinese firms altered the composition and compensation of their executive team to manage adversity. Firms that faced more adverse US tariff shocks increased the proportion of executives with overseas experience, especially of those with marketing expertise and with a European background. Such executives received greater equity-based compensation, suggesting a higher return to their effort. We find suggestive evidence that these executives help maintain higher overseas revenue, and help create more and larger foreign subsidiaries. The stock market reacted more negatively to the unexpected departures of executives with foreign experience in the trade conflict period. The results suggest that executive human capital played an important role in coping with adverse trade shocks. |
| Keywords: | Management, Experience, Trade War, Human Capital, Mobility |
| JEL: | G32 G34 O24 F12 F14 F16 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:mie:wpaper:689 |
| By: | Paola Conconi; Florin Cucu; Federico Gallina; Mattia Nordotto |
| Abstract: | The European Union (EU) has long been accused of suffering from a "democratic deficit". The European Parliament (EP), the only EU institution directly elected by citizens, is seen as having limited powers. Moreover, its members (MEPs) are often portrayed as unresponsive to the interests of their constituents due to the second-order nature of European elections: instead of being shaped by EU policies, they are driven by domestic politics. In this paper, we provide evidence against these Eurosceptic arguments using data on a key policy choice made by MEPs: the approval of free trade agreements. First, we show that MEPs are responsive to the trade policy interests of their electorate, a result that is robust to controlling for a rich set of controls, fixed effects, and employing an instrumental variable strategy. Second, we carry out counterfactual exercises demonstrating that the EP's power to reject trade deals can help explain why only agreements with broad political support reach the floor. Finally, against the idea that European elections are driven solely by domestic politics, we find that the degree of congruence between MEPs' trade votes and their electorate's interests affects their re-election chances. |
| Keywords: | EU democratic deficit, European Parliament, roll-call votes, trade agreements |
| Date: | 2024–10–15 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2041 |
| By: | Eduardo Hernandez-Rodriguez; Ron Boschma; Andrea Morrison; Xianjia Ye; |
| Abstract: | This paper studies the role of complementary interregional value chain linkages in functional upgrading and downgrading in global value chains in EU regions. It adopts an evolutionary approach to assess functional upgrading and downgrading using relatedness and economic complexity metrics. The empirical analysis of 199 EU regions between the years 2000-2010 shows that, while local capabilities remain crucial, complementary interregional value chain linkages increase (decrease) the likelihood of functional upgrading (downgrading) in GVCs. Regions engaged in GVCs in which partner regions offer complementary capabilities are more likely to specialise in more complex functions and to retain such specialisations over time. By doing so, this paper proposes a new theoretical-analytical framework to identify partner regions that can offer complementary capabilities in GVCs. |
| Keywords: | Global value chains, upgrading/downgrading, interregional linkages, complementary capabilities, EU regions |
| JEL: | F14 F63 O19 R11 R12 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2432 |
| By: | Dawn Chinagorom-Abiakalam; Fernando Leibovici |
| Abstract: | An analysis examines China’s price advantage in U.S. import markets relative to other countries and its role as the cheapest source for many products. |
| Keywords: | imports; United States; China |
| Date: | 2024–09–19 |
| URL: | https://d.repec.org/n?u=RePEc:fip:l00001:98829 |
| By: | Bruno Conte; Klaus Desmet; Esteban Rossi-Hansberg |
| Abstract: | Using a multisector dynamic spatial integrated assessment model (S-IAM), we argue that a carbon tax introduced by the European Union (EU) and rebated locally can, if not too large, increase the size of Europe’s economy by concentrating economic activity in its high-productivity non-agricultural core and by incentivizing immigration to the EU. The resulting change in the spatial distribution of economic activity improves global efficiency and welfare. A carbon tax introduced by the US generates similar effects. This stands in sharp contrast with standard models that ignore trade and migration in a world shaped by economic geography forces. |
| Keywords: | economic geography, climate change, carbon taxes |
| JEL: | R12 Q54 H23 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1464 |
| By: | Andrea Coveri (Department of Economics, Society & Politics, Università di Urbino Carlo Bo); Elena Paglialunga (Department of Economics, Roma Tre University, Italy); Antoenllo Zanfei (Department of Economics, Society & Politics, Università di Urbino Carlo Bo) |
| Abstract: | The geographic dispersion of production activities has led regions to increasingly specialize in specific value chain functions, giving rise to a finer spatial division of labour. In this work, we use georeferenced FDI data to investigate the geography of functions and the interdependencies between functional and sectoral specialization of European regions. We show that the most intangible-intensive functions at the upper ends of value chains are concentrated in few advanced regions, while lower-income ones are largely and persistently specialized in production operations. Moreover, we find that regions locked-into low value-adding functions are the least likely to upgrade towards more knowledge-intensive industries. By contrast, only the few regions which experienced functional upgrading trajectories have been able to diversify towards more innovative industries. Accordingly, regional policies should aim at favouring functional upgrading of laggard regions as a key vehicle for economic and spatial convergence in Europe. |
| Keywords: | Geography of functions; Inter-regional inequality; Foreign direct investment; Global value chains; European regions |
| JEL: | F21 F23 L23 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:urb:wpaper:24_01 |
| By: | Ikuto AIBA; Atsushi TADOKORO |
| Abstract: | We provide more generalized properties of gains from trade and trade liberalization in monopolistic competition models featuring firm heterogeneity characterized as Paretodistributed productivity and variable markups associated with pro-competitive effects. For a large class of utility functions thatwe consider, firmheterogeneity alters the nature of markup distortion that should be addressed by the pro-competitive effects. Our finding implies that the pro-competitive effects of trade are not effective in correcting such markup distortion unique to heterogeneous firm frameworks. As a result, gains from trade in our framework are characterized as consumption variety expansion and selection effects without efficiency gains. We provide rich insights into the varying impacts of trade and trade liberalization across countries with differences in factors such as market size, technology, and geography. |
| Keywords: | Monopolistic competition, Firm heterogeneity, Efficiency, Pro-competitive effect, Gains from trade comparative analysis (fsQCA) |
| JEL: | D43 D61 F12 L13 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:kue:epaper:e-24-007 |
| By: | ANDREI, Liviu |
| Abstract: | We have chosen to study the FDI topic as its world table of flows’ landscape, together with the role of individual countries as adequate in context in a series of papers of both large(r) and narrow(er) size(s). A distinct theory of FDI (sources) was equally needed – while / despite that other several theories were already existent – and this was drawn together with a corresponding model in two parts that were also called ‚models’. ‚Model one’ was aimed to study on data directly offered by UNCTAD – FDI-inflows and/versus DIA-outflows, as a double basis – and focuses on analyses that are seen as [A] static and [B] dynamic views. ‚Model two’ prefers the FDI-DIA double basis turn into a unique-basis with a different accounting concept and so/then the two models: (i) found a deeply uneven distribution of FDI&DIA sources together with a general trend of remaking the FDI=DIA flows by individual countries; (ii) also found a reduced number of countries, in the total number of them world-wide, detaining world capital majorities on both FDI&DIA, plus a cumulated deficit (FDI DIA) that actually makes the FDI activity popular for a larger number of countries, at the same; (iii) helped the description of the FDI&DIA picture world-wide by world regions and countries, in which (iv) the regions reached a general classification, as FDI&DIA behavioral and (v) sections of the international capital were found on the world territory encompassing individual countries and regions, and so, finally, (vi) our research tried to get at least to the major FDI&DIA flows world-wide during a quarter a century representative epoch like the 1990-2015 interval is. All remaining to complete such a study on those data is the second part of model one, the FDI&DIA dynamic view – i.e. while all the previous results and findings see the whole interval done, the dynamic analysis will be the lonely one viewing it also by parts. It is what will be developed in/by the paper below. |
| Keywords: | foreign direct investments (FDI), direct investments abroad (DIA), international direct investing, investment flows & stocks, world multi-country regions, capital market & sections. |
| JEL: | D00 F2 |
| Date: | 2023 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122306 |
| By: | Shunta Yamaguchi |
| Abstract: | Circular economy policies can aim to ensure that products placed on the market are environmentally sustainable throughout their lifecycle. These upstream circular economy policies can include initiatives to phase out hazardous substances, and enhance product durability, repairability, reusability, and recyclability. Policy instruments used to this end include Extended Producer Responsibility (EPR) schemes, eco-labelling and information schemes, product-related standards, eco-design requirements, green public procurement, and fiscal policies. While these upstream circular economy policies are increasingly considered in policymaking, their linkages with international trade have received less attention, especially in contrast to downstream aspects such as trade in waste and scrap. These policies can have potential implications for trade, including creating synergies between trade and circular economy objectives (e.g. making traded products more recyclable), as well as unintended consequences (e.g. through regulatory fragmentation). This report aims to fill this knowledge gap by exploring the trade implications of upstream circular economy policies. |
| Keywords: | Circular economy, Durability, Eco-labelling, Environment policy, Extended producer responsibility, Green public procurement, Hazardous content, Material content, Product lifespan, Product-based standards, Recyclability, Recycled content, Repairability, Resource efficiency, Reusability, Trade and environment, trade policy, Trade-related environmental measures |
| JEL: | F13 F18 F64 Q56 |
| Date: | 2024–10–22 |
| URL: | https://d.repec.org/n?u=RePEc:oec:traaaa:2024/01-en |
| By: | Flora Bellone (Université Côte d'Azur, CNRS, GREDEG, France; OFCE, SciencePo); Arnaud Persenda (Université Côte d'Azur, CNRS, GREDEG, France); Paolo Zeppini (Université Côte d'Azur, CNRS, GREDEG, France; University of Bath, UK) |
| Abstract: | In this paper we revisit the emergence of China as a dominant player within the world economy by using the innovative framework of autocatalytic networks. Specifically, we build and apply an autocatalylic sets detection algorithm to a world input-output (IO) network built from the WIOD database, covering the 2000-2014 period. From this analysis, we identify two key turning points in the course of China development: First, the year 2005, when a Chinese densifying local autocatalytic set branched to a global one, unraveling the complementarity between domestic and international cyclical IO connections in the course of China development. Second, the year 2013, when key Chinese industries replace their U.S. counterparts at the core of the global autocatalytic set, revealing an economic rivalry between these two large economies specifically for their role and position in the global production network. |
| Keywords: | Autocatalytic networks, Trade, Input-Output tables, China |
| JEL: | F63 O14 D57 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2024-26 |
| By: | Pazhanisamy, R.; Muruganandam, Bharathi |
| Abstract: | The Organization of Petroleum Exporting Countries (OPEC) has been one of the most influential organizations in the global energy sector which controls a significant portion of the world’s oil reserves and has often influenced global oil prices through international trade policies such as quotas and strategic decision-making. The rapid global shift towards renewable energy, increased awareness of climate change, and technological advancements in energy production pose various challenges to OPEC's relevance and future. As a member of OPEC, Qatar's economic strategies and policies are intricately linked to the future of OPEC’s economy. In this context this paper attempted to explore the future of the OPEC economy with the perspective of energy transitions and how this could shape Qatar's economic policies so that its economy can mov forward. The central premise of this paper is that while OPEC's influence on global oil markets may diminish due to energy transitions and global environmental initiatives, member countries such as Qatar will need to adopt innovative economic policies that ensure sustained prosperity even in a low-oil-demand scenario. With energy diversification gaining momentum globally, this paper outline what kind of policy decisions today will significantly impact the economic and political stability of OPEC for sustainability. |
| Keywords: | Zero carbon solution to Qatar, Challenges of OPEC, Economic Policy for Qatar, Sustainable oil trade, Global Energy transitions, OPEC alternative Economic Policies |
| JEL: | E6 F4 H3 L51 M1 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:303529 |
| By: | Claire Brunel; Arik Levinson |
| Abstract: | We evaluate the economic and environmental consequences of taxes on imported goods based on their carbon content. The analysis uses the simplest possible partial equilibrium framework, with one small open economy and a global pollution externality. It relies on graphs of supply and demand, rather than equations or formulas, hoping to reach readers familiar with basic economics. Despite its simplicity, the framework imparts numerous lessons. (1) Absent a domestic price on carbon, a carbon tariff imposes the same costs on domestic consumers as a domestic carbon price, but a carbon tariff also subsidizes domestic pollution. (2) If one small country imposes a carbon tariff, with or without a domestic carbon tax, the economic incidence of the tariff falls on its consumers. (3) If a holdout country joins the rest of the world by enacting its own carbon regulation and consequently imports more from other countries, those increased imports are not “leakage.” They are the cessation of leakage from when the holdout country’s policy was lax. And (4) if other countries do not appropriately regulate emissions, no single small country can use a combination of carbon taxes and carbon tariffs to fully correct the problem caused by its consumers or producers. |
| JEL: | Q5 Q56 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33024 |
| By: | Julian di Giovanni; Galina Hale; Neel Lahiri; Anirban Sanyal |
| Abstract: | While policies to combat climate change are designed to address a global problem, they are generally implemented at the national level. Nevertheless, the impact of domestic climate policies may spill over internationally given countries’ economic and financial interdependence. For example, a carbon tax charged to domestic firms for their use of fossil fuels may lead the firms to charge higher prices to their domestic and foreign customers; given the importance of global value chains in modern economies, the impact of that carbon tax may propagate across multiple layers of cross-border production linkages. In this post, we quantify the spillover effects of climate policies on forward-looking asset prices globally by estimating the impact of carbon price shocks in the European Union’s Emissions Trading System (EU ETS) on stock prices across a broad set of country-industry pairs. In other words, we measure how asset markets evaluate the impact of changes to the carbon price on growth and profitability prospects of the firms. |
| Keywords: | climate policy shocks; stock markets; international spillovers |
| JEL: | F4 G12 Q5 |
| Date: | 2024–10–10 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:98959 |
| By: | Hunt Allcott; Reigner Kane; Maximilian S. Maydanchik; Joseph S. Shapiro; Felix Tintelnot |
| Abstract: | We study electric vehicle (EV) tax credits in the US Inflation Reduction Act (IRA), the largest climate policy in US history, with three goals. First, we provide the first ex-post microeconomic welfare analysis of this central component of the IRA. Event studies around changes in eligibility for EV tax credits find that short-run economic incidence falls largely on consumers. Additionally, domestic content restrictions on tax credits for purchased vehicles have driven enormous shifts to leasing. Our equilibrium model shows that compared to pre-IRA policy, IRA EV credits generated $1.87 of US benefits per dollar spent in 2023, at taxpayer cost of $32, 000 per additional EV sold. Compared to scenarios with no EV credits, however, the IRA EV credits created only $1.02 of benefits per dollar of government spending. Second, we characterize the gains from policies targeting heterogeneity in externalities across vehicles. We find that relative to uniform credits, differentiating credits across EVs according to their heterogeneous externalities would substantially increase policy benefits. Third, we quantify tradeoffs in the IRA EV credits between foreign and domestic welfare and between trade and the environment. We find that the IRA EV credits benefit the environment but undermine trade, since they decrease global carbon emissions but use profit shifting to decrease foreign producer surplus. A controversial IRA loophole that removes domestic content restrictions on tax credits for EV leases has negative domestic benefits. |
| JEL: | F18 H23 L11 Q58 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33032 |
| By: | Elvis K. Ofori (Taiyuan University of Technology, China); Festus V. Bekun (Istanbul, Turkey); Bright A. Gyamfi (Ä°stanbul Ticaret University, Turkey); Ali E. Baba (Ural Federal University, Russia); Stephen T. Onifade (KTO Karatay University, Konya, Turkey); Simplice A. Asongu (Johannesburg, South Africa) |
| Abstract: | The current study thus explored the impact of technological innovation and trade openness on clean energy while accounting for economic growth, access to electricity, pollution, industrial restructuring, and urbanization using data from 1990 to 2020 for both the MINT and BRICS economies. A series of test were performed for a robust analysis using second generation econometrics approaches before proceeding to investigate the long-run linkages between renewable energy and the duo of innovation and trade using the Prais-Winsten regression model with panel-corrected standard errors (PCSE) while the Driscoll-Kraay standard errors test was applied for robustness checks. The results, firstly confirm the presence of heterogeneity, cross-sectional dependence, and cointegration among the selected variables. Secondly, technological innovation as a renewable energy determinant demonstrated negative elasticities in both BRICS countries and the full sample, but a positive elasticity in the MINT countries. Thirdly, concerning trade liberalisation, negative elasticities were obtained for the full sample and MINT countries, while the elasticities were positive for the BRICS bloc. Fourthly, the roles of economic growth and environmental pollution reveal a negative impact on renewable energy consumption for all samples while urbanisation and industrial restructuring promote renewable energy developments only in the BRICS bloc. Policy implications are discussed. |
| Keywords: | Renewable energy, trade liberalization, technological innovation, Prais-Winsten regression |
| Date: | 2024–01 |
| URL: | https://d.repec.org/n?u=RePEc:exs:wpaper:24/022 |
| By: | Xuyang Chen |
| Abstract: | Profit shifting by multinational enterprises (MNEs) causes considerable tax revenues losses globally. This thesis focuses on several developments of anti-avoidance measures, and theoretically investigates their effects on MNEs’ behavior and countries’ corporate taxes. Chapter 1 analyzes tax enforcements coordination and cooperation. We consider a fiscal competition game where the timing of countries’ enforcement decisions is endogenized. Countries differ in market size and tax enforcement productivity (captured by enforcement elasticity of tax revenue). We reveal that the low-enforcement productivity country will be the enforcement leader and will benefit more from enforcement cooperation. Chapter 2 is motivated by the fact that many countries are limiting tax deductibility and using turnover taxes targeted at gross revenues. Our analysis starts from the polar cases: a pure profit tax under separate accounting or formula apportionment, and a turnover tax. We derive conditions under which one tax regime dominates the other two in terms of tax revenue. In the general case of tax deductibility, we show that depending on tax capacity and production technologies, tax deductibility affects countries’ tax revenues very differently. Chapter 3 studies the OECD’s global minimum tax (GMT). Different from the minimum tax literature, we consider both profit shifting and capital investment responses of the MNE. We show that the GMT curbs profit shifting and always benefits the large country. In the short run where countries’ tax rates are fixed, introducing the GMT increases (decreases) the small country’s revenue under high (low) profit shifting cost. In the long run where countries can adjust tax rates, the GMT reshapes international tax competition game and may not bring countries’ tax rates above the minimum rate. Moreover, a marginal GMT reform does not necessarily benefit the small country. |
| Keywords: | Profit shifting; Tax competition; Tax enforcement; Tax deductibility; Tax haven; Global minimum tax |
| Date: | 2024–10–18 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/378389 |
| By: | Phil Levy (World Bank) |
| Abstract: | This Policy Brief argues that supply chain breakdowns were not a principal cause of pandemic-era inflation. Levy focuses on US trade in containerized goods and shows that, within months of the pandemic's onset, the quantities of goods delivered in fact increased significantly. The sharp increases in inflation and shipping prices and the accompanying delays and empty shelves in the presence of significantly increased quantities suggest, instead, a large positive demand shock. Goods consumption levels rose sharply and remained elevated into 2023 and beyond, even as shipping delays and price hikes dissipated. The author concludes that, while it may be worthwhile to make supply chains more efficient and aim for increased elasticity of supply, the goal of avoiding inflation and shortages is likely better met through improved demand management. |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:iie:pbrief:pb24-10 |
| By: | Kym Anderson |
| Abstract: | Globalization may have reduced but certainly has not eliminated differences in national commodity cycles. This article examines the case of Australia’s wine industry. Over the past four decades, all annual indicators of that industry’s international competitiveness have traced a steep inverted V. This paper draws on recently compiled data to first summarize such indicators and contrast them with those of other key wine-exporting countries. It then offers a series of partial explanations for the industry’s sharp rise and then equally steep fall in its international competitiveness (and its several bumps along the way). The New Zealand and Californian wine industry’s prolonged expansions in particular are contrasted with Australia’s. Despite the current downturn in the industry’s fortunes, and notwithstanding the likelihood of further boom-slump cycles in the decades ahead, the paper concludes that a return to profitability is possible if vignerons and wine exporters were to raise their current rates of investments in R&D, quality improvements and promotion, and if the AUD remains relatively weak. |
| JEL: | D12 F15 L66 N10 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pas:papers:2024-10 |