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on International Trade |
| By: | Alejandro G. Graziano; Monika Sztajerowska; Christian Volpe Martincus; Alejandro Graziano |
| Abstract: | The recent changes in trade policy have significantly impacted trade flows. There is an ongoing debate on whether and to what extent firms may have also reacted to the new trade barriers by modifying the spatial organization of their multinational production to circumvent them. This paper aims to provide new evidence on whether such a tariff-induced shift in the location patterns of multinational firms has actually taken place. To do so, we exploit the changes in U.S. import tariffs in 2018-2019. The evidence indicates that firms have indeed responded to these new tariffs by adjusting the extensive margin of their multinational production across countries and that both structural factors and trade agreements played an important role in shaping these adjustments. |
| Keywords: | multinational firms, foreign direct investment, trade policy, tariffs |
| JEL: | F13 F21 F23 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11514 |
| By: | Jeffrey H. Bergstrand; Jordi Paniagua |
| Abstract: | Over the past 30 years, “deep trade agreements” (DTAs) have proliferated. DTAs go beyond traditional preferential trade agreements focused historically on reducing tariff rates on goods trade, influencing the behavior of exporting firms and multinational enterprises (MNEs) via a broad swath of “provisions.” However, estimation of individual effects of several hundred provisions in DTAs on trade using the World Bank’s DTA database remains in its infancy. While this database categorizes substantive provisions between liberalizations vs. obligations, this paper is the first to use the Shapley Value approach from cooperative game theory to generate unbiased estimates of the signs of all individual provisions’ partial effects. First, we find ex post evidence that (the World Bank’s) “liberalizations” can have positive or negative effects on trade and “obligations” can have negative or positive effects. Our approach generates precise estimates of the positive-versus-negative effects of narrow sets of provisions, while addressing challenges posed by omitted-variables, over-aggregation, and multi-collinearity biases. Second, in contrast to most studies that focus exclusively on trade effects of DTAs, we introduce a new data set on MNEs to inform us of DTA provisions’ effects on MNEs’ bilateral FDI, costs, employment, revenues, and assets – alongside provisions’ effects on trade – which are of importance to MNEs’ managements and governments’ policymakers. Third, we find convincing evidence that provisions that positively (negatively) affect trade flows also negatively (positively) affect FDI flows, suggesting that trade and FDI are predominantly substitutes with respect to DTAs’ provisions. Finally, we provide computable general equilibrium welfare estimates associated with several policy counterfactuals. |
| Keywords: | international trade, foreign direct investment, multinational enterprises, foreign affiliate sales, deep trade agreements |
| JEL: | F10 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11526 |
| By: | Rlung, Ahmad Saleem; Rasa, Mohammad Mirwais; Gull, Zubair Mubarak |
| Abstract: | Afghanistan is a landlocked country, needing transit agreements with neighbouring countries such as Pakistan and Iran. Afghanistan is primarily relying on Pakistan and secondly relying on Iran for its international trade. This investigation aimed to understand the effect of the Afghanistan-Pakistan Transit Trade Agreement on Afghanistan Trade. The investigation would collect secondary data from the Afghanistan National Statistics and Information Authority, the Federal Board of Revenue, the Government of Pakistan, and reports of the World Bank and the World Trade Organization. Where quantitative data would be analyzed through percentages, average values, pivot tables and pivot charts. The results show that there is a slight change in the export figure to Pakistan from the year 2015 to 2018 while a drastic decrease in 2019, which is the political tension among the countries and not implementing the APPTA agreement. There is a significant increase in exports to India from the year 2015 to 2019. The finding indicates that the APPTA agreement had a significant effect on Afghanistan trade as a result the imports from Pakistan drastically increased from the year 2009 to 2015 while the imports reduced from 2016 to 2019. This indicates that political tension and border close out for several months in 2016 and 2017 between Afghanistan and Pakistan significantly reduced the imports from Pakistan to Afghanistan. Where Afghanistan managed to use Iran and China as an alternative way for fulfilling their import needs over the years. The finding indicates that the import share of Pakistan was 9.22% in 2009, reaching its peak in 2016 at 18.34%. Due to conflict in the implementation of the APTTA agreement and political tension among countries and border closer. Pakistan import share in Afghanistan’s total imports reduced to 12.7% in 2019. This indicates that the effect of the APPTA agreement on Afghanistan trade has reduced over the last few years. Pakistan and Afghanistan should learn from regional and international transit agreements to make the APTTA effective and efficient they may also look at transit agreements among Nepal and India. India and Nepal have tariff parity as importers in Nepal pay the same import duty on goods as paid by Indian importers. If Afghanistan and Pakistan introduce tariff parity under APTTA, it can address plenty of issues raised in the agreement. |
| Keywords: | Afghanistan Pakistan Transit Trade and Agreement, and Tariff parity |
| JEL: | F2 F23 F4 |
| Date: | 2024–11–10 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123183 |
| By: | Lin, Faqin; Li, Xuecao; Jia, Ningyuan; Feng, Fan; Huang, Hai; Huang, Jianxi; Fan, Shenggen; Ciais, Philippe; Song, Xiao Peng |
| Abstract: | Ukraine and Russia are two important grain producers and exporters in the world, accounting for 12% and 17% of the world's wheat exports, respectively. The conflict between Russia and Ukraine may greatly impact Ukraine's wheat production and export as well as Russia's wheat export. Satellite observations have showed signs of wheat production reduction in Ukraine in the season 2021–2022. Considering the uncertainty of the conflict duration, we have designed three scenarios (i.e., slight, medium, and severe) depending on how the war would significantly impact the wheat harvest and trade disruption. From analysis of potential impacts of the conflict on global wheat market under the general equilibrium trade model, we have found that the conflict would lead to a trade drop (60%), soaring wheat prices (50%), and severe food insecurity with decreased purchasing power for wheat (above 30%) in the most severe scenario, especially for countries that heavily rely on wheat imports from Ukraine, such as Egypt, Turkey, Mongolia, Georgia, and Azerbaijan. Considering the role of Russia and Ukraine in agricultural input sectors including oil, natural gas, and fertilizers, especially Russia, the trade blockade caused by the conflict will give rise to price increase by 10%–30% and welfare decline by 15–25% for most affected countries. The conflict would put as many as 1.7 billion people in hunger and 276 million people in severe food insecurity. Food shortages, energy shortages and inflation have spread to many countries like dominoes which have fallen into trouble one after another with social unrest day after day. Our analysis also shows that countries including the United States, China, India, Canada, Australia, France, Argentina, and Germany would increase their wheat production and exports for the reconstruction of the global wheat supply pattern. The modeled results indicate that the conflict-induced global wheat crisis and food insecurity can be notably alleviated if these countries increase their production by 2%–3% in 2022–2023 and unnecessary trade restrictions are exempted. |
| Keywords: | general equilibrium trade model; global food security; quantification; Russia-Ukraine conflict; wheat crisis |
| JEL: | Q18 |
| Date: | 2023–03–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:117700 |
| By: | David J. Kuenzel (Department of Economics, Wesleyan University); Rishi R. Sharma (Department of Economics, Colgate University) |
| Abstract: | We study the product-level effects of Preferential Trade Agreements (PTAs) on the implementation of non-tariff measures (NTMs) using a global database spanning the 2000-2017 period. Employing an instrumental variable strategy, we provide evidence that an increase in the import share of PTA partners leads to a reduction in the application of NTMs. Exploring several mechanisms, we find that these effects are driven by products with higher preferential margins, the gap between MFN and preferential tariff rates. This result is consistent with what we call a “rent preservation effect, ” whereby PTA partner countries push to limit the imposition of NTMs in order to preserve their preferential rents. Importantly, higher PTA import shares contribute to multilateral liberalization by lowering both the usage of NTMs against PTA members and non-PTA partners. |
| Keywords: | Trade Agreements, Non-tariff Measures |
| JEL: | F13 F14 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:wes:weswpa:2025-001 |
| By: | Riottini Depetris Franco |
| Abstract: | This paper examines the impact of ambassadors on trade promotion, utilizing the 2012 Paraguayan political crisis as a natural experiment. Using highly disaggregated customs data and a difference-in-differences approach, we analyse how the unexpected withdrawal of Argentina's ambassador affected bilateral trade patterns. Our findings reveal that the ambassador's absence led to a significant decrease in Paraguay's imports from Argentina, primarily driven by reductions in the extensive margin of trade. We observed a 3% decline in the number of suppliers and a 5% decrease in the number of imported products. To elucidate the mechanisms, we analyse data on commercial and specific actions undertaken by the Argentine embassy in Paraguay. Results indicate that the ambassador's absence corresponded with a substantial decrease in both major trade events and smaller, targeted activities, despite no change in the embassy's budget allocation. Our analysis is robust to various specifications, including different regional samples and trade volume thresholds. This research contributes to the literature on economic diplomacy by providing causal evidence of ambassadors' role in facilitating international trade, particularly in establishing new trade relationships. |
| JEL: | F10 F14 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:aep:anales:4757 |
| By: | , samok66696@rustetic.com |
| Abstract: | Foreign Direct Investment (FDI) inflows play a crucial role in the ASEAN (Association of Southeast Asian Nations) region's economic growth, as they contribute capital, technology, managerial expertise, and enhance economic integration among member states. However, FDI distribution across ASEAN countries is uneven, with larger and more open markets receiving a larger share, while smaller or less developed countries attract less investment. This research aims to identify the determinants of FDI inflows in the ASEAN-10 region from 2010 to 2021. A quantitative approach is employed, utilizing panel data regression analysis. The models tested include the Common Effect Model (CEM), Fixed Effect Model (FEM), and Random Effect Model (REM), with the FEM selected as the most appropriate. The results of the partial test reveal that economic growth and regulatory quality positively influence FDI inflows in ASEAN-10, while the Voice and Accountability indicator has a negative effect. Conversely, political stability, government effectiveness, rule of law, and control of corruption do not significantly impact FDI inflows. Overall, these variables account for approximately 87.20% of the variance in FDI flows in the region. The findings suggest that ASEAN countries should formulate more effective policies to attract FDI, particularly by implementing sound economic strategies, enhancing institutional quality, improving the investment climate, and boosting global competitiveness. |
| Date: | 2024–12–12 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:7ge9z |
| By: | Philip Unverzagt; Dirk Kamps; Johannes Schuffels |
| Abstract: | GDP growth correlations and different recovery paths from recent economic shocks suggest a divergence in economic outcomes in the Netherlands and Germany in the past decade. While there may be several possible explanations, this brief investigates recent developments in Dutch exports to Germany and differences in the export structure (economic activity and geographical diversification) of the two countries. The brief mainly looks at these issues from the perspective of the Netherlands, aiming to assess the dependence of the Dutch economy on Germany as an export market. The brief notes that the value of Dutch goods exports to Germany as a share of Dutch GDP has been increasing since 2000, which is in line with the increase in Dutch goods exports to the rest of the world as a share of GDP. However, Dutch trade with Germany is lower than predicted by a gravity model of trade based on the size of the German economy and its close geographical location. In addition, we observe that re-exports are outgrowing exports of domestically produced goods to Germany and, since 2012, account for more than half of total exports to Germany. Due to the value added per euro of re-exports being much lower than that of domestically produced goods, the value added of all Dutch goods exports to Germany as a share of GDP has been on a slightly decreasing path since 2012. We also find that Dutch exports are less concentrated in specific industries than those from Germany and the Netherlands has increased the geographical diversification of its exports significantly. |
| Keywords: | Bilateral trade relations, international trade, trade in value added, trade diversification, trade shares, re-exports, gravity model, business cycles, globalisation, economic resilience. |
| JEL: | F10 F12 F44 |
| URL: | https://d.repec.org/n?u=RePEc:euf:ecobri:082 |
| By: | Mau, Karsten (RS: GSBE MORSE, RS: GSBE FSD, RS: GSBE other - not theme-related research, Macro, International & Labour Economics); Xu, Mingzhi; Zheng, Yawen |
| Abstract: | We evaluate how access to international transport infrastructure promotes trade and economic development. Exploiting the gradual unfolding of transcontinental rail freight connections between China and Europe, our empirical findings indicate increasing exports from connected cities, with positive spillovers to other transport modes, neighboring cities, and indicators of economic activity. Not all products and cities are equally responsive to new rail export opportunities. We set up a multi-sector heterogeneous firms model with a rich specification of trade costs, in which firms optimize trade costs by choosing alternative transportation modes and routes. Leveraging a unique data set on trade flows between Chinese cities, we calibrate our model to discuss local welfare effects, relying on a sufficient statistic that quantifies changes in city-level trade costs. We also highlight significant spatial distributional effects of trade infrastructure development. |
| JEL: | F14 F15 R11 R41 |
| Date: | 2025–01–16 |
| URL: | https://d.repec.org/n?u=RePEc:unm:umagsb:2025001 |
| By: | António Afonso; José Alves; Lucas Menescal; Sofia Monteiro |
| Abstract: | After computing the Gini and Herfindahl-Hirschman indexes for exports and imports partner concentration for a set of 31 European countries between 1995 and 2023, we analyse the role of macroeconomic, institutional and uncertainty effects on the partner concentration (diversification) of exports and imports. From our analysis, we disentangle different effects, namely that while global GDP leads to an increase in concentration in both exports and imports, internal rates of return increase exports diversification, reducing it for imports. Additionally, European uncertainty reduces the concentration of the product countries’ origin/destination for imports and exports, respectively. Our results provide a comprehensive set of results that enable public authorities and firms to minimize their risks when trading with the exterior. |
| Keywords: | exports, imports, Gini index, Herfindahl-Hirschman index, determinants of concentration |
| JEL: | C33 E02 F14 F32 F41 G15 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11481 |
| By: | - |
| Abstract: | United States trade in goods slowed in 2023, ending the recovery following the coronavirus disease (COVID-19) pandemic, as goods exports and imports declined by 2.2% and 4.9%, respectively. The decrease in merchandise trade contrasts with significant improvements in services trade, as exports and imports of services rose by 8.2% and 4.8%, respectively. Recently, exports of digitally enabled services have considerably outpaced those of other services and goods, underscoring their growing importance in the global market. The relative weight of Latin America and the Caribbean in United States trade has surpassed pre-pandemic levels, with trade between the region and the United States accounting for 19.3% of that country’s total trade in 2023. The United States is a net importer of goods from Latin America and the Caribbean (the goods trade deficit deteriorated in 2023, to US$ 122.26 billion) and a net exporter of services to the region (the trade surplus with the region has gradually risen since 2021, to US$ 27.15 billion in 2023). United States-Latin America and the Caribbean Trade Developments 2024 provides an overview of selected developments in United States trade relations with Latin America and the Caribbean. This year’s report includes a section on trade and the circular economy. |
| Date: | 2025–01–03 |
| URL: | https://d.repec.org/n?u=RePEc:ecr:col896:81190 |
| By: | Inga Heiland; Patrik Šváb |
| Abstract: | A large number of recent papers employ value-added trade data alongside traditional gross measures of trade to estimate the impact of various trade costs on bilateral trade. Value-added gravity equations are typically justified by referencing the theoretical and empirical merits of traditional gravity equations for gross trade. Contradicting this notion, we use theory and simulations to show that value-added gravity equations are misspecified when the gross trade gravity equation is correct. Consequently, estimates from value-added gravity equations are difficult to interpret and prone to omitted variables bias. |
| Keywords: | structural gravity, trade in value added |
| JEL: | F12 F15 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11480 |
| By: | Mariz Abdou (Université Clermont Auvergne and Cairo University); Ibrahim Elbadawi (ERF); Patrick Plane (Université Clermont Auvergne and Ferdi); Chahir Zaki (Laboratoire d’Economie d’Orléans, University of Orléans) |
| Abstract: | The undervaluation of the real exchange rate (RER) can influence the performance of national exports and affect a country’s participation in global value chains (GVCs). Thus, using the Eora dataset for 143 countries over the period 1995-2018, we assess the impact of this policy on a country’s foreign value added (FVA) in exports which represents the value added in exports whose outputs are produced by foreign industries (backward participation) and the domestic value added (DVX) in exports, that refers to the value added that is embodied in the exports of other countries (forward linkages). Currency undervaluation displays a positive impact on these two ways of participating in GVCs. Consistent with what has been noted in a recent strand of literature, undervaluation acts as a compensatory factor for countries with weak institutions, and the impact of this undervaluation becomes more pronounced as the level of digitization in the economy increases. Our econometric results remain robust to a battery of sensitivity analysis tests. |
| Date: | 2024–08–20 |
| URL: | https://d.repec.org/n?u=RePEc:erg:wpaper:1709 |
| By: | Kox, Henk L.M. |
| Abstract: | During the 2008-2010 financial crisis, OECD and IMF changed the definition of foreign direct investment (FDI) to get better information on intra-company financing activity. The new definition gives financing activities by subsidiary affiliates of multinational companies the same status as equity-based managerial control of foreign firms. It resulted in a systematic drop of quality, informative content and consistency of FDI statistics, as is frequently signalled in the literature. We propose a new formal framework for achieving time-consistent FDI data. It emulates the FDI definition of before 2013 that was based primarily on FDI assets. We develop a formal framework for this method and provide a full proof-of-concept. We constructed a new long-term dataset, called UIFS4. The database is a balanced panel covering bilateral FDI between 232 jurisdictions over the period 2001-2022. The dataset is solely based on reported data and uses no estimation or imputation. The performance of UIFS4 is evaluated quantitatively in a comparison with the original source data. |
| Keywords: | foreign direct investment (FDI); balance of payments; multinational companies; capital account; measurement |
| JEL: | C46 C55 C82 F21 |
| Date: | 2024–10–20 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122883 |
| By: | César Andrés Manuel; Arias Omar; Fukuzawa Daisuke; Trung Le Duong |
| Abstract: | The evidence on the final effect of industrial automation on employment is still inconclusive. We argue that automation leads to employment creation when there are greater trade opportunities because productivity growth lead to scale effects that outweigh displacement effects, in line with the traditional argument of trade gains based on comparative advantages but augmented by automation. On the import side, industrial automation increases the demand for raw materials and standardized intermediate inputs. On the export side, an increased production at lower cost benefits from greater access to the world market. Exploiting cross-country variation in population aging combined with global industry trends in robot adoption, we find that industries experiencing greater automation exhibit higher increments in their (backward and forward) participation in GVCs, output and employment, than less exposed industries; and no differential effects on the average wage or labor’s share of value added. Interestingly, our estimates suggest that greater integration into GVCs is associated with both increased robot adoption and employment gains from automation. Finally, we find that growing robot adoption in industry’s export destinations is related to increased robot adoption in the domestic market, which supports a demand-driven explanation for automation. |
| JEL: | F14 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:aep:anales:4717 |
| By: | Benjamin Hilgenstock; Elina Ribakova; Anna Vlasyuk; Guntram Wolff |
| Abstract: | Abstract Russian imports of battlefield goods subject to export controls have surged since mid‐2022 and reached levels close to those prior to Russia's full‐scale invasion of Ukraine. Russia thus continues to be able to acquire foreign components critical for its military industry. These imports largely occur via mainland China, Hong Kong, Turkey and the United Arab Emirates, while other countries including Armenia, Georgia, Kazakhstan and the Kyrgyz Republic have also seen massive increases in tech imports that likely end up in Russia. The enforcement of export controls faces multifaceted challenges centred around complex supply chains, lack of transparency and opaque financial structures, issues familiar from anti‐money laundering (AML) and countering financing of terrorism (CFT) frameworks. We propose using a similar framework in export control enforcement: First , financial institutions need to play a role in monitoring trade in export‐controlled goods and blocking illicit transactions. Second , non‐financial companies could learn from banks' efforts in the AML/CFT sphere to implement proper due‐diligence procedures and to ensure export controls compliance. Public‐sector investigations and appropriate fines are critical to increase the incentives for firms to act. Technology sanctions will remain part of the economic statecraft toolbox. The Russia case will test their effectiveness and credibility. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/386935 |
| By: | Ryan, Michael; Tanaka, Ayumu (Aoyama Gakuin University) |
| Abstract: | This paper examines Brexit's impact on Japanese foreign direct investment (FDI) in the UK, with a specific focus on affiliate exit and divestment. Utilizing Toyo Keizai Inc.'s Overseas Japanese Companies Data spanning 2010--2020, the study employs a difference-in-differences (DiD) estimation approach and synthetic DiD approach to compare Japanese affiliates' exit and divestment in the UK to affiliates located in other EU nations. Contrary to widespread expectations of a mass exodus of Japanese firms from the UK post-Brexit, the study reveals no statistically significant impact of Brexit on either Japanese affiliate exit or divestment. This finding challenges a prevailing narrative surrounding Brexit's detrimental effects on foreign investment in the UK. The observed resilience of Japanese affiliates is likely attributable to FDI hysteresis effects, arising from the substantial fixed and sunk costs inherent in FDI. These costs create a strong incentive for firms to maintain existing operations even in the face of political and economic uncertainty. |
| Date: | 2024–12–11 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:yx7as |
| By: | , Rojas Daniel; Trejo, Alfredo III; Peters, Margaret E.; Zhou, Yang-Yang (University of British Columbia) |
| Abstract: | When do host governments protect migrants and expand their rights? On February 8, 2021, Colombian President Iván Duque announced a 10-year temporary protected status for over 1.7 million Venezuelan migrants, a policy shift that contrasts with more restrictive migration responses globally. This paper examines the underlying motivations for Colombia's unexpected generosity, identifying three key factors: the pragmatic response to challenges in border control, the economic and legibility benefits of migrant regularization, and the pursuit of international reputation gains. Drawing on interviews with 30 Colombian policymakers, politicians, diplomats, bureaucrats, and NGO leaders, this study offers new insights into the drivers of inclusive migration policies in the Global South. |
| Date: | 2024–12–16 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:f4j63 |
| By: | Federica Cappelli (Università degli studi di Ferrara) |
| Abstract: | The European Union's energy security is increasingly challenged by its heavy dependence on imported oil, which exposes the region to geopolitical risks and market vulnerabilities. This study explores the role of trade dynamics in exacerbating this dependency, leading to what we term trade lock-in. Additionally, we assess the effectiveness of environmental policies in reducing oil import dependence, investigating whether these policies foster a shift toward greener investments (divestment effect) or inadvertently drive increased oil extraction (green paradox effect). We use network analysis to represent the international oil trade network and use this information in an econometric framework covering the period from 1999 to 2019, accounting for the presence of cross-sectional dependence. We identify two main factors that lock energy systems into an oil-based path: technological (represented by the level of energy intensity) and trade (represented by the existence of privileged trade relations with major oil-exporting countries) lock-ins. Furthermore, we find evidence of the divestment effect for some specific environmental policy instruments, but the effect is not uniform across instruments characterised as either demand-pull or technology-push. Finally, we find that an efficient eco-innovation system can effectively reduce oil import dependence only in countries with a comparative advantage in exporting clean technologies. |
| Keywords: | oil dependence; network analysis; environmental policy; technological change; European Union |
| JEL: | F18 O32 Q32 Q37 Q48 |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:srt:wpaper:0125 |
| By: | Marius Fossum; Inga Heiland; Viktor Moulin |
| Abstract: | Many developed countries grant preferential tariffs to exporters from developing countries through the Generalized System of Preferences (GSP), aiming to enhance growth through exporting. On December 31st, 2020, the US GSP expired because the US Congress failed to agree on renewing the program’s funding. We use the expiration as a natural experiment to analyze the trade effects of the GSP countries’ loss of preferential access to the US market. Using a triple difference approach, we find that the expiration caused a significant pain for previously eligible exporters from developing countries: US imports of eligible products from eligible countries dropped by 5-10% due to the expiration. |
| Keywords: | GSP, preferential tariffs |
| JEL: | F13 O19 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11509 |
| By: | Natalia Turdyeva (Bank of Russia, Russian Federation) |
| Abstract: | We are considering the introduction of climate policy in Russia under conditions of quantitative export restrictions. We have enhanced the model employed in the article (Burova et al., 2023) by incorporating a mechanism for quantitative trade restrictions. We demonstrate that in the case of deterioration in external economic conditions, such as a decline in the prices of Russian exports, the significance of quantitative export restrictions becomes secondary. The reason is that at low export prices the optimal physical volume of exports only marginally exceeds or may even be less than the quantitative restrictions. Without unrestricted access to global green technologies, ambitious climate policy goals may become excessively costly in terms of economic impact. In the presented model, attempting to achieve a 70% reduction in CO2-equivalent emissions from the 2016 level, coupled with decreasing prices for Russian exports and quantitative trade restrictions, could result in a deviation of GDP in 2040 by 11% from the baseline scenario, which implies maintaining the current status quo in climate policy both in Russia and globally. A more economically viable approach seems to be a moderate climate policy: achieving a 36% reduction in emissions from combustion compared to the 2016 level results in a 4.7% downward deviation of real GDP in 2040 from the baseline scenario. Only 0.3% of this decrease is attributed to the impact of domestic climate policy through an emissions trading system. The remaining 4.4% is explained by the deterioration of external economic conditions, stemming from the climate policies of other countries and quantitative restrictions on Russian exports. In the absence of a proactive climate policy, the carbon intensity of Russian GDP rises, amplifying transitional and physical risks of addressing the consequences of climate change. Essential measures to mitigate these risks involve the promotion and development of green industries, particularly those oriented towards exports. |
| Keywords: | Russia, climate policy, NGFS scenarios, export restrictions, CGE, emissions trading, ETS |
| JEL: | C68 F13 Q52 Q54 Q58 |
| Date: | 2024–02 |
| URL: | https://d.repec.org/n?u=RePEc:bkr:wpaper:wps125 |
| By: | Vera Z. Eichenauer; Feicheng Wang |
| Abstract: | Openness to foreign investments is associated with national security risks. To mitigate these risks, many high-income countries have strengthened the control of foreign investments in an increasing number of sectors considered security-sensitive. However, this policy may deter foreign investments and thereby affect the economy negatively. This is the first cross-country panel study to examine how investment screening affects cross-border investments. We combine data on cross-border mergers and acquisitions (M&As) for the period 2007-2022 with information on sectoral investment screening by 43 OECD or EU countries. Using a staggered triple differences design, we estimate that investment screening leads to an average reduction of 12 to 16 percent in the number of M&A deals. The negative impact is driven by minority acquisitions with an acquired stake below 50 percent. The findings call policymakers’ attention to weighing the benefits of national security against the unintended economic costs of broad investment screening policies. |
| Keywords: | foreign direct investments, national security, investment screening, geoeconomic fragmentation, deglobalization |
| JEL: | F21 F52 G34 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11538 |
| By: | Aaditya Mattoo; Michele Ruta; Robert W. Staiger |
| Abstract: | Until the beginning of this century, the GATT/WTO system worked. Economic research provided a compelling explanation. It showed that if governments maximize the well-being of their own countries broadly defined, GATT/WTO principles would facilitate mutually beneficial cooperation over their trade policy choices. Now heightened geopolitical rivalry seems to have undermined the WTO. A simple transposition of the previous rationalization suggests that geopolitics and trade cooperation are not compatible. We show that this is only true if rivalry eclipses any consideration of own-country well-being. In all other circumstances, there are gains from trade cooperation even with geopolitics. Furthermore, the WTO’s relevance is in question only if it adheres too rigidly to its existing rules and norms. Through measured adaptation to the geopolitical imperative, the WTO can continue to thrive as a forum for multilateral trade cooperation in the age of geopolitics. |
| JEL: | F11 F13 F5 F51 F53 F55 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33293 |
| By: | Aguiar, Angel; Terrie Walmsley |
| Abstract: | GMig2, the GTAP migration extension, is a globally consistent database of bilateral population, labor by skill, wages, and remittances that can be used for economic modeling of international migration issues. Although new databases have significantly improved access to migration data, information on the skills of migrant labor is incomplete and bilateral remittance data are unavailable. This paper examines the underlying data available and then outlines the assumptions and techniques used to construct bilateral data on migrant labor by skills, remittances, and wages. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:gta:resmem:7396 |
| By: | Fabrizio Leone |
| Abstract: | The diffusion of automation technology raises questions about the future of work, leading to calls for policy interventions. The ongoing debate centers on the decisions made by technology adopters. In this paper, I study supply-side adjustments and their role in shaping policy outcomes. I focus on the global market for industrial robots, a leading type of automation technology, where a few multinational enterprises (MNEs) dominate sales. To evaluate how these MNEs respond to policy changes, I collect new data on their characteristics and global sales networks. I then develop and estimate a multi-country general equilibrium model featuring oligopolistic multinational robot sellers. Using this model, I find that MNEs' market entry and pricing responses transmit internationally and amplify the aggregate and distributional effects of policies targeting robots. |
| Keywords: | multinational enterprises, market power, automation |
| JEL: | F10 F16 F23 L13 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11537 |
| By: | Guido Menzio |
| Abstract: | I study the equilibrium and the welfare effects of international trade when product markets are imperfectly competitive due of search frictions—as in Burdett and Judd (1983)—rather than product differentiation—as in Dixit and Stiglitz (1977). Markups are positive, even though there are multiple firms producing identical goods. Markups depend negatively on the number of firms producing identical goods, which, in turn, determines the extent of competition in the market. Markups may be increasing, constant, decreasing or non-monotonic in firm's size, depending on the extent of competition and on the distribution of marginal costs. The entry of firms and the quantity of output produced by each firm are efficient, even though the market is imperfectly competitive. International trade increases the measure of firms in the market, intensifies competition, lowers markups, and unambiguously increases welfare. These "natural" effects of trade emerge generically in the Burdett-Judd model of imperfect competition. In the Dixit-Stiglitz model of imperfect competition, these effects are an artifact of particular specifications of preferences. |
| JEL: | D43 D83 F12 L16 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33253 |
| By: | MUYA, Jonathan |
| Abstract: | This paper explores the impact of geopolitical fragmentation on developing countries amid rising tensions between major powers like the USA, Russia, and China. It examines how these dynamics compel developing nations to make difficult decisions regarding economic survival, sovereignty, and growth. The analysis focuses on the economic, political, security, and environmental consequences of this fragmentation, using examples such as sanctions and trade wars. The study also assesses the role of the USA and its allies in shaping global governance, highlighting the challenges brought by the increasing influence of emerging powers like China and India. It argues for the need to reform institutions such as the IMF to better reflect the complexities of this fractured global landscape. At the same time, the paper emphasizes the potential of regional institutions to address these challenges and foster cooperative development. Ultimately, the paper underscores the importance of navigating these shifts to ensure sustainable development in a divided geopolitical environment. |
| Keywords: | Geopolitical Fragmentation, Developing Countries, Major Powers, Global Governance, Emerging Economies |
| JEL: | F51 F52 F53 F63 O19 Q56 R58 |
| Date: | 2024–11–09 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122708 |
| By: | Meunier, Sophie; Danzman, Sarah Bauerle |
| Abstract: | The European Union is considering implementing regulations and possible prohibitions on outbound FDI in some high-technology sectors. These deliberations are part of a substantial re-evaluation of the security implications of economic interdependence. This Perspective contextualizes the EU's recent interest in outbound controls and explores potential challenges of such actions. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:colfdi:308151 |
| By: | Kowsar Yousefi (Sharif University of Technology); Samad Alaamati |
| Abstract: | While governments justify trade bans in terms of home protection and controlling currency crises, traders employ different circumvention tactics. We evaluate the impact of a substantial import prohibition policy in Iran since 2018 on the trade evasion. The prohibition was enforced after a currency crisis, led by sanctions, and banned the importation of more than 1300 HS8 products. Our methodologies are difference-in-difference (DiD) and event studies. Covariates like tariffs, value-added tax, and product trends are controlled. Findings indicate that the prohibition caused a substantial rise in evasion, with an estimate of about 20%. As a piece of advice to policymakers who aim to control the demand for foreign currency in a crisis, our results show that evasion neutralizes a considerable part of the prohibition. Though, other means of circumventions like misclassifications and barter informal trade have an additional role in neutralization, that could be measured in future studies. |
| Date: | 2024–08–20 |
| URL: | https://d.repec.org/n?u=RePEc:erg:wpaper:1717 |
| By: | Cathrin Mohr; Christoph Trebesch |
| Abstract: | We review the literature on geoeconomics, defined as the field of study that links economics and geopolitics (power rivalry). We describe what geoeconomics is and which questions it addresses, focusing on five main subfields. First, the use of geoeconomic policy tools such as sanctions and embargoes. Second, the geopolitics of international trade, especially recent work on coercion and fragmentation. Third, research on the geopolitics of international finance, which focuses on currency dominance and state-directed capital flows. Fourth, the literature on geopolitical risk and its spillovers to the domestic economy, e.g. on investments, credit, and inflation. Fifth, the economics of war, in particular research on trade and war and on military production. As geopolitical tensions grow, we expect the field to grow substantially in the coming years. |
| Keywords: | geoeconomics, geopolitics, political economy, power, trade, international finance, war, sanctions, coercion |
| JEL: | F01 P45 D74 H56 N40 F10 F20 F30 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11564 |
| By: | Wardak, Ahmad Shah; Rasa, Muhammad Mirwais |
| Abstract: | This study inquiries the determinants of trade Costs of Afghanistan with its Major Trading Partners. The study elaborates the determinants of trade costs include transportation costs (both freight costs and time costs), policy barriers (tariffs and non-tariff barriers), information costs, contract enforcement costs, costs associated with the use of different currencies, local distribution costs (wholesale and retail) and legal and regulatory costs. |
| Keywords: | Afghanistan, Trade Costs, Trading partners, Gravity Model |
| JEL: | F0 F3 F36 F38 |
| Date: | 2024–09–12 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122953 |
| By: | Yasmine Eissa (The American University in Cairo) |
| Abstract: | This paper studies the role of global value chains (GVC) participation in fostering labor market outcomes in Egypt, Jordan, and Tunisia. While theory suggests an upward GVC effect on labor market conditions, we empirically investigate this assumption in Middle East and North Africa (MENA) countries endorsed with low GVC participation, weak labor markets, and high labor divides (skilled vs. unskilled and male vs. female). By merging World Bank Enterprise Surveys (WBES) and Integrated Labor Market Panel Surveys (ILMPs) data, we contribute to the literature as follows. First, we differentiate between GVC participation margins (extensive vs. intensive) and capture the effect of each on different labor market outcomes. Second, we explore the moderating role of job skill requirement in the GVCs and wages nexus. Third, we capture the GVC effect on skilled blue-collar and female employment and study the sectoral effect on the latter. Our results show a positive effect of GVCs on real wages, industry wage premium, skilled production workers, and female employment. In addition, the skill requirement strengthens the positive GVC effect on real wages. Results remain robust when we use alternative methodologies to control for endogeneity.political, and demographic factors to understand how they contribute to conflict. |
| Date: | 2024–09–20 |
| URL: | https://d.repec.org/n?u=RePEc:erg:wpaper:1730 |
| By: | Bächli, Mirjam (University of Lausanne); Glitz, Albrecht (Universitat Pompeu Fabra) |
| Abstract: | Immigration may affect income inequality not only by changing factor prices but also by inducing policy makers to adjust the prevailing income tax system. We assess the relative importance of these economic and political channels using administrative data from Switzerland where local authorities have a high degree of tax autonomy. We show that immigrant inflows not only raise gross earnings inequality but also reduce the progressivity of local income taxes, further increasing after-tax inequality. Our estimates suggest that around 10 percent of the impact of immigration on the net interquartile and interdecile earnings gaps can be attributed to the political channel. |
| Keywords: | immigration, income taxes, earnings inequality |
| JEL: | H23 H24 H71 J31 J61 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17523 |
| By: | Kallmer, Josh |
| Abstract: | Technology firms often make their greatest contributions to markets without making significant physical investments or hiring many people. This Perspective argues that governments need to think more expansively about their investment policies, to recognize the importance of cross-border data flows and enable these firms to deliver the benefits they promise. |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:colfdi:308150 |
| By: | Thiemo Fetzer; Peter John Lambert; Bennet Feld; Prashant Garg |
| Abstract: | This paper leverages generative AI to build a network structure over 5, 000 product nodes, where directed edges represent input-output relationships in production. We layout a two-step ‘build-prune’ approach using an ensemble of prompt-tuned generative AI classifications. The ’build’ step provides an initial distribution of edge-predictions, the ‘prune’ step then re-evaluates all edges. With our AI-generated Production Network (AIPNET) in toe, we document a host of shifts in the network position of products and countries during the 21st century. Finally, we study production network spillovers using the natural experiment presented by the 2017 blockade of Qatar. We find strong evidence of such spill-overs, suggestive of on-shoring of critical production. This descriptive and causal evidence demonstrates some of the many research possibilities opened up by our granular measurement of product linkages, including studies of on-shoring, industrial policy, and other recent shifts in global trade. |
| Keywords: | supply-chain network analysis, large language models, on-shoring, industrial policy, trade wars, econometrics-of-LLMs |
| JEL: | F14 F23 L16 F52 O25 N74 C81 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11497 |
| By: | Mohammad Reza Farzanegan; Jerg Gutmann |
| Abstract: | This study investigates the case of Iran to evaluate how changes in the intensity of international sanctions affect internal conflict in the target country. Estimating a vector autoregressive model for the period between 2001q2 and 2020q3 with quarterly data on internal conflict and its three subcomponents (civil disorder, terrorism, and civil war) as well as a sanction intensity index, we find that an unexpected increase in sanction intensity causes an increase in both civil disorder and terrorism risk. In contrast, the risk of civil war declines after an increase in sanction intensity. These findings for Iran indicate that higher intensity sanctions may allow sender country governments to put pressure on target country political regimes without risking an outbreak of major violent conflicts. Therefore, more intensive sanctions, may also not be helpful in inducing violent regime change. |
| Keywords: | sanctions, sanction intensity, internal conflict, civil disorder, terrorism, civil war, VAR model, Iran |
| JEL: | D74 F51 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11578 |
| By: | Lorenzo Cresti; Dario Mazzilli; Aurelio Patelli; Angelica Sbardella; Andrea Tacchella |
| Abstract: | This paper investigates the structural vulnerabilities and competitive dynamics of the EU27 automotive sector, with a focus on the complexity and the fragmentation of production processes across global value chains. Employing a mixed-methods approach, our analysis integrates input-output tables to quantify the sector's reliance on non-EU economic branches, alongside an economic complexity framework to assess the underlying productive capabilities of European countries in automotive-related industries. The findings indicate an increasing dependency on extra-EU suppliers, particularly China, for critical components such as lithium-ion batteries, which heightens supply chain risks. Currently, Eastern European countries-most notably Poland, Czechia, and Hungary-have enhanced their competitiveness in the production of automotive components, surpassing traditional leaders such as Germany. The paper advances the literature by providing a novel, granular list of 6-digit products within the automotive supply chain and offers new insights into the challenges posed by the ongoing electric mobility transition in the European Union, particularly in relation to electric accumulators. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2501.01781 |
| By: | Berliant, Marcus; Tabuchi, Takatoshi |
| Abstract: | To investigate questions related to migration and trade, a model of regional or international development is created by altering Melitz and Ottaviano (2008) to include a labor market. The model is then applied to analyze poverty traps and the home market effect. We find that in the spatial economics context of migration but no trade, poverty can persist unless population in one region of many is pushed past a threshold. Then growth commences. In the context of trade but no migration, the home market effect holds for a range of parameters, similar to previous literature. However, unlike previous literature, we find that if populations in the countries are large, the home market effect can be reversed. |
| Keywords: | Monopolistic competition; Poverty trap; Home market effect; Labor market clearing |
| JEL: | F12 R11 |
| Date: | 2024–12–02 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122854 |
| By: | Weber, Pierre-François; Afota, Amandine; Boeckelmann, Lukas; De Gaye, Annabelle; Dieppe, Alistair; Faubert, Violaine; Grieco, Fabio; Le Roux, Julien; Meunier, Baptiste; Munteanu, Bogdan; Nobletz, Capucine; Norring, Anni; Reininger, Thomas; Skackauskaite, Ieva; Suárez-Varela, Marta; Svartzman, Romain; Valadier, Cécile; Vlajie, Diana; Wilbert, Lucia; Zaghini, Andrea; Attinasi, Maria Grazia; Brüggemann, Axel |
| Abstract: | Two phenomena are increasingly reshaping the world economy. One is the growing and well-documented importance of climate transition policies that differ across countries. The other is the stark rise of geoeconomic fragmentation (GEF) concerns. While differences in climate transition policies are not new, they could amplify GEF, which is a new, growing risk. Conceptually, GEF is a policy-driven reversal of global economic integration, guided by strategic considerations such as national security, sovereignty, autonomy, or economic rivalry. It does not include reversals to global economic integration that are driven by autonomous change, such as shifts in technology, demographics or preferences, or policies motivated primarily by prudential or environmental concerns and labour or human rights. GEF propagates via all the channels through which countries engage with each other economically and politically to provide global public goods such as climate change mitigation. The steep rise in trade and investment restrictions points to coming headwinds which could be compounded by uncoordinated climate transition policies. Conversely, GEF could make transition policies more difficult as, together with their prerequisites – such as shared regulatory approaches, knowledge sharing and financial aid to less well-off countries – they hinge on effective cross-border coordination and collaboration. There is a considerable risk that GEF may hinder climate transition policies. The report is structured as follows. The first section sheds light on how climate policies may contribute to GEF. The second section analyses the extent to which GEF could hinder the green transition. The last section discusses gaps and avenues for further analytical and model-based work. JEL Classification: F52, F64, H87, Q54 |
| Keywords: | climate change, geoeconomic fragmentation, international cooperation, international public goods |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbops:2025366 |
| By: | Zwysen, Wouter; Demireva, Neli |
| Abstract: | The labour market integration of migrants is a heavily politicised topic in Europe. Using detailed and recently updated data on migrant’s motivations this paper places a much needed emphasis upon the heterogeneity of migrant groups and the pathways to their labour market integration. We focus on host country human capital and labour market outcomes from three ad-hoc modules of the EU Labour Force Survey to analyse (1) who takes up host country human capital; and (2) determine what the role of host country human capital acquisitions are in the labour market integration of heterogenous migrant groups and across time. Our results indicate that the take-up of host country human capital differs strongly between countries, with some of these differences reflecting the impact of specific policies, as well as variation in the economic context upon arrival. Importantly, we find that whereas non-economic migrants are at a substantial disadvantage compared to the majority, non-economic migrants benefit relatively much more from host-country human capital, particularly better language skills, host country qualifications and having equivalised their degrees. Our analysis points to the need to consider the trajectories of labour market integration of different migrant groups separately as there is great variation with years of residence and the take up of host country human capital. |
| Date: | 2025–01–07 |
| URL: | https://d.repec.org/n?u=RePEc:ese:iserwp:2025-01 |
| By: | Oded Galor; Marc Klemp; Daniel C. Wainstock |
| Abstract: | This study reveals the pivotal impact of the prehistoric out-of-Africa migration on global variation in the degree of cultural diversity within ethnic and national populations. Drawing on novel diversity measures—encompassing folkloric and musical traditions among indigenous ethnic groups, as well as norms, values, and attitudes in modern societies—an intriguing pattern emerges: societies whose ancestors migrated farther from humanity's cradle in Africa exhibit lower cultural diversity. These striking findings underscore: (i) the profound role of cultural dynamics in shaping the enduring effects of the out-of-Africa migration on social cohesion, innovativeness, and living standards; (ii) the origins of persistent global variations in cultural expressions within an increasingly interconnected world; and (iii) the roots of variations in societal adaptability to evolving economic and technological landscapes. |
| Keywords: | diversity, culture, out-of-Africa, folkloric diversity, musical diversity, social norms |
| JEL: | O10 Z10 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11524 |
| By: | Michael Koch; Luca Macedoni; Angelina Odintsova |
| Abstract: | This paper studies how foreign acquisitions affect firms’ internal labor organization, particularly occupational switching. This focus is inspired by new stylized facts we document using linked employer-employee data from Denmark: while the total number of occupations and hierarchical layers in firms remains stable, a significant share of firms simultaneously add and drop occupations and layers each year. Applying a dynamic two-way fixed effects matching estimator, we find that foreign acquisitions lead to significant reorganization within firms: though the number of layers or occupations remains unchanged, firms exhibit substantial occupational churning among existing workers, especially among higher-paid employees. |
| Keywords: | occupation switching, firm organization, foreign acquisitions |
| JEL: | D22 D24 F23 G34 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11525 |
| By: | Freitas-Monteiro, Teresa; Ludolph, Lars |
| Abstract: | Asylum seekers who migrate from developing countries to Europe frequently experience victimization events during their journey. The consequences of these events for their economic integration into destination countries are not yet well explored. In this paper, we analyze how victimization during asylum seekers’ journeys affects their labor market integration in Germany by using survey data collected in the aftermath of the 2015 refugee crisis. Our data allow us to account for the exact timing and geography of migration, such that samples of physically victimized and nonvictimized refugees are balanced along a wide range of characteristics. We find that, compared to nonvictimized refugees, refugees who were physically victimized during their journey to Germany favor joining the labor force and taking up low-income employment rather than investing in host country human capital. To explain these findings, we explore a range of potential mechanisms and find suggestive evidence that experiencing physical victimization in vulnerable situations is not only associated with a decline in mental health but also with a “loss of future orientation” among physically victimized refugees, leading them to discount future payoffs more heavily. |
| Keywords: | education; labor market integration; refugees; victimization |
| JEL: | F22 J15 J21 O15 |
| Date: | 2025–02–28 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126235 |
| By: | Marc Kaufmann; Joël Machado; Bertrand Verheyden |
| Abstract: | Empirical evidence suggests that the majority of immigrants who initially planned a temporary stay end up staying permanently in the host country. Since beliefs about the duration of stay are a strong determinant of integration, many long-term migrants may end up less than optimally integrated. We theoretically model migrants with potential misperceptions about their future utility and wage prospects in the host country relative to their country of origin. We describe conditions under which these misperceptions generate, and conditions on observables that identify, unexpected staying. These conditions involve pessimism about the endogenous long-term wage for which migrants are indifferent between staying and leaving: either they overestimate the probability of earning less than this indifference wage, or they underestimate their utility in the destination country when earning this wage. Using the German Socio-Economic Panel (SOEP), we find that higher levels of pessimism about utility and wages at arrival are associated with staying in the long-term in Germany despite having initially predicted a temporary stay. |
| Keywords: | Migrant integration, return intentions, unexpected staying, misperceptions, pessimism; SOEP |
| JEL: | F22 D91 J61 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1215 |
| By: | Nicola Gagliardi |
| Abstract: | This PhD thesis includes three original microeconomic analyses that investigate critical factors influencing workers’ wages and firm productivity, and underpinning relevant megatrends poised to reshape economic systems and lifestyles worldwide for decades to come. Specifically, the thesis explores the following dimensions: firms’ relative positioning within Global Value Chains (GVCs), organizational tenure (i.e. the length of employment in a given firm), and the economic implications of global warming. The first two analyses focus on the Belgian labor market, while the third adopts a broader European perspective. Based on matched employer-employee data relative to the Belgian manufacturing industry for the period 2002-2010 combined with a unique indicator of firm-level upstreamness (i.e. the steps before the production of a firm meets final demand), Chapter 1 shows that workers earn significantly higher wages when employed in more upstream firms. However, the benefits from upstreamness are found to be unequally shared among workers, both along the wage distribution and when considering the gender dimension of the workforce. Using rich longitudinal matched employer-employee data on Belgian firms over the period 2005-2016, Chapter 2 point to positive, but decreasing, returns to tenure. The study also finds that the impact differs widely across several firm dimensions (e.g. task routineness, job complexity, capital intensity). Using longitudinal firm-level balance-sheet data from private sector firms in 14 European countries over the period 2013-2020, combined with detailed weather data, including temperature, Chapter 3 reveals that global warming significantly and negatively impacts firms’ Total Factor Productivity (TFP). Labor productivity also declines markedly as temperatures rise, while capital productivity remains unaffected – indicating that TFP is primarily affected through the labor input channel. Such impacts appear to persist across geographical, sectoral, and firm-specific dimensions. |
| Keywords: | Global Value Chains; Firm Productivity; Wages; Gender Wage Gap; Organizational Tenure; Climate Change; Global Warming |
| Date: | 2025–01–14 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/386761 |
| By: | Herrera Gómez Marcos; Elosegui Pedro; Michelena Gabriel |
| Abstract: | Multi-regional input-output (MRIO) matrices are an important tool for regional economic analysis, but compiling the data for them remains challenging, especially in developing countries like Argentina. There is no consistent, up-to-date, official national I-O table available for Argentina, and data at the provincial level is limited and fragmented across different sources. This paper develops a premier (limited information) multi-regional input-output matrix for Argentina 2019 making a dual contribution: (i) constructing the first MRIO table for Argentina using official and customized sources, and (ii) evaluating I-O multipliers, providing insights for future applications. The MRIO table includes 5 regions aggregating the 24 Argentinean provinces and 20 economic sectors. While only basic multipliers are presented, the table provides a foundation for more in-depth input-output modeling and analysis of production, consumption, and trade linkages between regions and sectors in Argentina. We found a high concentration in the provinces of the Pampeana region in gross output, value added and regional internal inputs, although less in external inputs, confirming the asymmetric structure of the country. In addition, the analysis of multipliers allows us to detect some relevant links in the peripheral regions reflecting the interaction of spatial location and sector specialization in a federal and heterogeneous open developing economy. |
| JEL: | C67 D57 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:aep:anales:4739 |
| By: | Ashani Amarasinghe; Kathryn Baragwanath |
| Abstract: | This paper examines how domestic economic conditions shape international status-seeking behavior. We develop a novel measure of inter-government interactions using high-frequency event data across 18, 330 country dyads from 2001-2019. To establish causality, we exploit plausibly exogenous variation in countries’ natural resource wealth driven by global commodity price shocks. We find that positive resource shocks significantly increase countries’ aggressive behavior in international relations, primarily through verbal rather than material confrontation. This effect operates strategically: aggression is targeted at peripheral nations while avoiding major trading partners, suggesting a deliberate approach to status enhancement that preserves economic relationships. The mechanism works through domestic political channels, with resource windfalls reducing public discontent and providing governments with political capital to pursue more assertive foreign policy. Consistent with theories of status-seeking behavior as a tool for enhancing international standing, the effects are concentrated in middle and low-income countries and in political systems with electoral accountability. Our findings highlight how domestic economic conditions influence international relations through the strategic pursuit of status, with implications for understanding the economic roots of geopolitical behavior. |
| Keywords: | Economic shocks, natural resources, international interactions, status-seeking |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:syd:wpaper:2025-01 |
| By: | Mountford, Andrew; Wadswoirth, Jonathan |
| Abstract: | Should we think of immigration as an exogenous shock to labor supply in the receiving economy? The time series of the share of migrant labor is `Granger caused' by that of total hours worked and the average real wage in the UK economy. This suggests that immigration is, in part, determined by demand and supply effects in the labor market. In this paper we model, for the first time, immigration, wages and hours worked, as responding to demand, supply and immigration shocks at the aggregate and sectoral levels. The labor market is therefore modelled as being subject to multiple shocks at any one time, with individual shocks reinforcing and offsetting each other. We use a vector autoregression (VAR) on a time series of UK labor market variables from 2001-2019 for 35 different sectors. We find, across different identification techniques taken from the macroeconomics literature, that a fundamental component of the estimated time series process has a negative association between immigration and native wages. This shock, which can be interpreted as an `immigration shock', plays a significant role in the determination of wage growth, although its influence varies across sectors and identification methods. Indeed, immigration itself is also determined, in part, by aggregate demand and supply shocks. |
| Keywords: | Immigration, Demand, Supply, VAR, Sectoral Heterogeneity |
| JEL: | E0 F2 F6 J2 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122836 |
| By: | Federico Revelli; Tsung-Sheng Tsai |
| Abstract: | We study the impact of climate change on migration by developing a real options model that rigorously formalizes the trade-off between migrating early and procrastinating to learn more about the government’s implementation of an adaptation policy that can effectively moderate the consequences of climate change. The model delivers an unambiguous guide to estimation of the impact of climate change on the occurrence of natural disasters and of the latter on migration decisions within a structural empirical model where the distinct mediation roles of the option value of waiting components (migration cost, home income, quality of government) are specified in a principled way. Evidence from panel data on international bilateral migration flows supports the main predictions of the theory and points to the key mediating role of government. |
| Keywords: | option value of waiting, climate change adaptation, international migration |
| JEL: | C33 H31 O15 Q54 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11493 |
| By: | Balgova, Maria (Bank of England); Illing, Hannah (University of Bonn) |
| Abstract: | This paper examines the differential impact of job displacement on migrants and natives. Using administrative data for Germany from 1997-2016, we identify mass layoffs and estimate the trajectory of earnings and employment of observationally similar migrants and natives displaced from the same establishment. Despite similar pre-layoff careers, migrants lose an additional 9% of their earnings in the first 5 years after displacement. This gap arises from both lower re-employment probabilities and post-layoff wages and is not driven by selective return migration. Key mechanisms include sorting into lower-quality firms and depending on lower-quality coworker networks during job search. |
| Keywords: | immigration, job displacement, job search |
| JEL: | J62 J63 J64 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17496 |
| By: | Steven Brakman; Charles van Marrewijk |
| Abstract: | The literature on international transfers has studied the possibility of transfer paradoxes; the donor gains and the recipient loses from a transfer. This can occur in a wide range of circumstances, including perfect competition and the absence of distortions. The literature, however, largely ignores the fact that most transfers are given in the form of money and not in real (consumption) terms. Money holdings reflect postponed consumption and requires that a time dimension enters the analysis. This aspect is ignored in the literature. We focus on money transfers in an otherwise standard set-up of a Walrasian perfect competition model. We determine whether transfer paradoxes are likely. We also study the welfare consequences of financial transfers for the donor and the recipient, and their impact on the Balance-of-Payments. We find that under normal circumstances transfer paradoxes do not occur, the donor's current account deteriorates and the recipient's current account improves. |
| Keywords: | money, transfers, international trade |
| JEL: | F32 F35 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11518 |
| By: | Łukasz Postek (Narodowy Bank Polski; University of Warsaw, Faculty of Economic Sciences); Małgorzata Walerych (Narodowy Bank Polski; Institute of Economics) |
| Abstract: | This paper investigates the role of immigration shocks in shaping unemployment and wage dynamics in Poland – a country that experienced a significant influx of immigrants following Russia’s invasions of Ukraine in 2014 and 2022. To achieve this, we construct novel proxies for the size of immigration to Poland and use them to estimate structural BVAR models. Our results suggest that the impact of the 2022 refugee wave on the Polish economy differs from previous immigration inflows, primarily influencing aggregate demand and, to a lesser extent, boosting labour supply. More specifically, in recent years, immigration shocks have slightly reduced the unemployment rate and, to a greater extent, lowered the annual growth rate of real wages. At the same time, they contributed to higher growth in nominal wages, particularly after 2022, when the influx of non-working immigrants, which created significant consumption demand, was at its highest. |
| Keywords: | immigration, Bayesian VAR, labour market |
| JEL: | C11 C32 E32 J61 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:nbp:nbpmis:373 |
| By: | George J. Borjas; Nate Breznau |
| Abstract: | When studying policy-relevant topics, researchers’ policy preferences may shape the design, execution, analysis, and interpretation of results. Detection of such bias is challenging because the research process itself is not normally part of a controlled experimental setting. Our analysis exploits a rare opportunity where 158 researchers working independently in 71 research teams participated in an experiment. After being surveyed about their position on immigration policy, they used the same data to answer the same well-defined empirical question: Does immigration affect the level of public support for social welfare programs? The researchers estimated 1, 253 alternative regression models, producing a frequency distribution of the measured impact ranging from strongly negative to strongly positive. We find that research teams composed of pro-immigration researchers estimated more positive impacts of immigration on public support for social programs, while anti-immigration research teams reported more negative estimates. Moreover, the methods used by teams with strong pro- or anti- immigration priors received lower “referee scores” from their peers in the experiment. These lower-rated models helped produce the different effects estimated by the teams at the tails of the immigration sentiment distribution. The underlying research design decisions are the mechanism through which ideology enters the production function for parameter estimates. |
| JEL: | C90 I38 J69 |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33274 |
| By: | Lennard, Jason; Paker, Meredith |
| Abstract: | This paper evaluates how a major policy shift – the suspension of the gold standard in September 1931 – affected employment outcomes in interwar Britain. We use a new high-frequency industry-level dataset and difference-in-differences techniques to isolate the impact of devaluation on exporters. At the micro level, the break from gold reduced the unemployment rate by 2.7 percentage points for export-intensive industries relative to non-export industries. At the aggregate level, this effect stimulated the labor market, the fiscal outlook, and economic growth. Devaluation was therefore an important initial spark of recovery from the depths of the Great Depression. |
| Keywords: | exports; gold standard; interwar Britain; unemployment |
| JEL: | E24 F41 J64 N14 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126517 |
| By: | Romero Stéfani Mauro Ignacio; Rojas Mara Leticia; Ibáñez Martín María María |
| Abstract: | The economic performance of countries is affected by factors such as financial and trade openness, but their impact on economic growth remains debated. This paper uses parametric panel estimation to analyse how different aspects of commercial and financial openness influence long-term economic growth across 167 economies from 1960 to 2019. The findings reveal that the relationship between financial openness and economic growth differs based on a country’s development level and the specific aspect of financial openness. For high- and low-income countries, a higher ratio of total foreign assets and liabilities to GDP negatively affects growth. Conversely, in middle-income economies, a higher ratio of portfolio equity assets and liabilities to GDP is positively linked to growth. For this group, reducing capital controls is associated with lower growth, while there is some evidence of a positive relationship between a reduction in controls and growth for the high-income group. Trade openness suggests a positive relationship with growth for the whole sample and for high-income countries but is more ambiguous for low- and middle-income countries. Moreover, a negative correlation between real appreciation and growth seems to be statistically robust, especially when financial openness indicators are included for low- and middle-income countries. |
| JEL: | O4 F3 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:aep:anales:4758 |
| By: | Karine Moukaddem (Aix-Marseille School of Economics, Aix-Marseille University); Marion Dovis (Aix-Marseille School of Economics, Aix-Marseille University); Josephine Kass-Hanna (IESEG School of Management); Léa Bou Khater (AUB); Eva Raiber (Aix-Marseille School of Economics) |
| Abstract: | Migration aspirations, the hope and ambition to leave the origin country, are recognized as the key initial step that may lead to actual migration. Drawing on data from a nationally representative survey conducted in Lebanon among 1, 500 women aged 18-35, this study investigates the role of social networks and life aspirations (education, career, marriage and fertility) in shaping migration aspirations, in a context of severe economic crisis and massive emigration wave. Based on a stylized model that integrates aspirations into a standard utility maximization problem, we postulate that individuals aspire to migrate if their life aspirations cannot be locally fulfilled. Furthermore, we focus on local networks to examine their influence on women’s migration aspirations. Our analysis reveals a peer effect, where a higher share of women’s network planning migration increases their migration aspirations. Additionally, unlikely career and education aspirations, but not family aspirations, are associated with a stronger desire to emigrate. These findings highlight the need for a nuanced approach to understanding the interplay between social networks, aspirations, and migration decisions. They offer valuable insights for researchers and policymakers aiming to address the drivers of women’s emigration in Lebanon and other crisis contexts. |
| Date: | 2024–08–20 |
| URL: | https://d.repec.org/n?u=RePEc:erg:wpaper:1715 |
| By: | Reza Zamani (Allameh Tabataba'i University, Tehran) |
| Abstract: | This paper estimates the economic cost of sanctions on Iran (both aggregate and per capita) and their effect on economic development. Using a synthetic control method (SCM), we find that sanctions cost approximately $1.2 trillion for the period 2011-2022, which is even more than the cost of the Iran-Iraq war (1981-1988) for Iran. Sanctions cost around $150, $450, and $600 billion for the agriculture, industry, and services sectors, respectively. On average, Iran has lost around 23 percent of its economic capacity due to sanctions. Moreover, the cost of sanctions during the Obama, Trump, and Biden presidencies is about $500, $450, and $250 billion, respectively, while the annual GDP per capita loss during the Obama, Trump, and Biden presidencies is, on average, $1, 050, $1, 316, and $1, 428, respectively. Sanctions have changed the production structure in Iran, making Iranian economic development move backwards and resulting in lost years (2011-2022). Defining three alternative scenarios and comparing them with the SCM results, confirm our findings. Finally, by studying the average growth rate of both GDP and GDP per capita for Iran, Saudi Arabia, Turkiye, and the United Arab Emirates (UAE), we find that sanctions are the dominant factor for Iran’s accelerating economic divergence from the other three countries |
| Date: | 2024–08–20 |
| URL: | https://d.repec.org/n?u=RePEc:erg:wpaper:1722 |
| By: | Richard Damania (World Bank); Pasquale Lucio Scandizzo (University of Rome “Tor Vergata”) |
| Abstract: | This paper examines the economic implications of evolving water availability with a twofold objective. Firstly, it provides an overview of the problem of economic modelling of water in a general equilibrium context. To this aim, it presents both a general discussion of key issues and a review of CGE models that have attempted to deal with water as a key economic input and its direct and indirect influence on markets and well-being. Secondly, it addresses a crucial gap in the research work to date, by developing and implementing a global CGE model that incorporates the economic impacts of both precipitation and total water storage (TWS) – an aggregate measure encompassing soil moisture, surface water, and groundwater. By integrating these key variables, alongside a detailed representation of how water enters in the different value chains, the model provides novel suggestions and a better understanding of how water availability influences economic activity across sectors. Simulation results from the model are then used to provide insights into the question of the “cost of inaction”, that is the failure to engage in proactive economic policies under various water-related scenarios, including those driven by climate change. |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:awm:wpaper:21 |
| By: | Antonin Bergeaud; Max Deter; Maria Greve; Michael Wyrwich |
| Abstract: | We investigate the causal relationship between inventor migration and regional innovation in the context of the large-scale migration shock from East to West Germany between World War II and the construction of the Berlin Wall in 1961. Leveraging a newly constructed, century-spanning dataset on Germanpatents and inventors, along with an innovative identification strategy based on surname proximity, we trace the trajectories of East German inventors and quantify their impact on innovation in West Germany. Our findings demonstrate a significant and persistent boost to patenting activities in regions with higher inflows of East German inventors, predominantly driven by advancements in chemistry and physics. We further validate the robustness of our identification strategy against alternative plausible mechanisms. We show in particular that the effect is stronger than the one caused by the migration of other high skilled workers and scientists. |
| Keywords: | Patents, Migration, Germany, Iron Curtain, Innovation |
| JEL: | H10 N44 P20 D31 |
| Date: | 2025–01–14 |
| URL: | https://d.repec.org/n?u=RePEc:bdp:dpaper:0059 |
| By: | Christina Anderl; Guglielmo Maria Caporale |
| Abstract: | This paper investigates the role of shipping costs in global crude oil and refined petroleum markets and their effects on regional and country-level inflation and real activity. For this purpose a Global VAR (GVAR) model is estimated jointly for the oil and refined petroleum markets; this includes the Baltic Dirty Tanker Index (BDTI) and the Baltic Clean Tanker Index (BCTI) as measures of the cost of shipping crude oil and refined petroleum commodities, respectively. The results suggest that shocks to the cost of shipping petroleum commodities have a particularly severe negative impact on real economic activity and on petroleum consumption in most regions, while shocks to the price of crude oil and petroleum have inflationary effects, especially in oil-importing countries. Further, it appears that the relationship between commodity prices and their respective shipping costs has broken down since the beginning of the Covid-19 pandemic. Specifically, a counterfactual analysis shows that the pandemic moved the prices of crude oil and petroleum and their costs of shipping in opposite directions. |
| Keywords: | oil markets, petroleum prices, shipping costs, Baltic Dirty Tanker Index (BDTI), Baltic Clean Tanker Index, Global VAR (GVAR), real economic activity, inflation, Covid-19 counterfactual |
| JEL: | C32 F47 O50 Q43 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11551 |