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on International Trade |
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Issue of 2025–09–08
twelve papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Malik, Shahroo; Lahiri, Sajal |
| Abstract: | We explore the impact of export quality on the levels of exports and domestic trade. First, we developed a theoretical framework, using the two-country oligopolistic model with quality differentials in product. We find that a consumer-preference driven increase in export quality improves export performance of a country but it reduces domestic trade, in the absence of any constraint on production capacity. We then test the theoretical findings empirically, using annual bilateral inter-country and intracountry trade data for 142 countries from 1963 – 2014 and by applying the gravity model of trade. We use the IMF’s Export Quality Index to estimate a two-stage gravity model and to examine the effects of exports quality on both exports and domestic trade. Our empirical findings are consistent with our theoretical predictions. The empirical findings suggest that a one percent increase in quality leads to an increase in total exports by 1.08% and a fall in intra-national trade by 2.69%. We also find that the effect of export quality is more pronounced for OECD member countries than the non-OECD member countries. |
| Keywords: | Export Quality; International Trade; Domestic Trade; OECD |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:wiw:wus005:76995586 |
| By: | Felbermayr, Gabriel; Peterson, Sonja; Wanner, Joschka |
| Abstract: | While international trade can offer gains from specialization and access to a wider range of products, it is also closely interlinked with global environmental problems, above all, anthropogenic climate change. This survey provides a structured overview of the economic literature on the interaction between environmental outcomes, trade, environmental policy and trade policy. In this endeavor, it covers approaches reaching from descriptive data analysis based on input‐output tables, over quantitative trade models and econometric studies to game‐theoretic analyses. Addressed issues are in particular the emission content of trade and emissions along value chains, the relocation of dirty firms and environmental impacts abroad, impacts of specific trade policies (such as trade agreements or tariffs) or environmental policies (such as border carbon adjustment), transportation emissions, as well as the role of firms. Across the different topics covered, the paper also tries to identify avenues for future research, with a particular focus on extending quantitative trade and environment models. |
| Keywords: | carbon border adjustment, carbon leakage, climate change, trade, trade policy |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkie:323983 |
| By: | David Kohn; Emiliano Luttini; Michal Szkup; Shengxing Zhang |
| Abstract: | We study how trade finance and long-term relationships between exporters and importers facilitate international trade by allowing exporters to learn about demand uncertainty and counterparty risk. Using detailed micro-level Chilean data, we document that new exporters are more likely to use cash-in-advance (CIA) arrangements and gradually switch to providing trade credit as they continue to export. These dynamics affect export growth and are more salient for firms with less exporting experience and selling to riskier destinations. We set up an international trade model in which firms make exporting and trade financing decisions subject to demand and counterparty risks and estimate it using microdata. We then use the model to quantify the relative importance of demand and counterparty risks and investigate how trade finance choices and learning affect the dynamics of exports. Our model implies that the response of aggregate exports and the number of exporters to shocks to aggregate interest rates can overshoot in the short run if long-term relationships and relationship-specific knowledge are destroyed. Building relationships takes time, making the response to these shocks sluggish and persistent. Crucially, these responses depend on the riskiness of trade destinations. |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:chb:bcchwp:1031 |
| By: | Christoph Trebesch; Josefin Meyer; Alberto Martin; Fernando Broner |
| Abstract: | How do shifts in the global balance of power shape the world economy? We propose a theory of alignment-based "hegemonic globalization, " built on two central premises: countries differ in their preferences over policies (such as the rule of law or regulatory frameworks) and trade between any two countries increases with the degree of alignment in these policies. Hegemons promote policy alignment and thereby facilitate deeper trade integration. A unipolar world, dominated by a single hegemon, tends to support globalization. However, the transition to a multipolar world can trigger fragmentation, which is particularly costly for the declining hegemon and its closest allies. To test the theory, we use international treaties as a proxy for alignment and compile a novel "Global Treaties Database, " covering 77, 000 agreements signed between 1800 and 2020. Consistent with the theory, we find that hegemons account for a disproportionate share of global treaty activity and that treaty-signing is a leading indicator of increasing bilateral trade. |
| Keywords: | cooperation, globalization, hegemon, international coercion, international treaties, multipolar world, trade integration |
| JEL: | F02 F15 F50 F51 F55 F60 P45 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1504 |
| By: | Mao, Haiou; Görg, Holger |
| Abstract: | Geographical Indication (GI) is a rising policy in developing countries, which has been relatively neglected in the existing literature. This article studies Chinese agricultural GIs and its impact on firms’ exports. By relating newly authorized GIs with firm‐product‐location‐destination level customs trade data according to GIs’ geographical coverage and product type, we estimate the impact of these new GIs on firm's exports. Importantly, we can distinguish GIs with and without quality supervision. For the latter we find negative impacts on export quality, which is not the case for GIs with quality supervision. We interpret this in the context of our theoretical framework as evidence for quality free‐riding, where individual firms have an incentive to lower the quality of the export product. We show that this negative effect is less, the more concentrated an industry is or the more GIs there are for a particular product. Furthermore, our results suggest that the China‐EU agreement on Geographical Indications may play the role of quality supervision and prevent the possibility of free‐riding. |
| Keywords: | Agricultural Geographical Indications, China, export quality, free-riding |
| JEL: | F10 Q18 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkie:323987 |
| By: | Lehr, Jakob |
| Abstract: | Using the German census of the manufacturing industry, I analyze the impact of import competition on carbon emissions per unit of deflated sales (emission intensity). I combine precise information on firm‐level CO emissions with sector‐level trade flows. Looking at the period 1995 until 2017, I focus on the impact of the rise of Eastern Europe and China while addressing the endogeneity of trade flows with an instrumental variable approach. The baseline results suggest that a 1 pp increase in the import penetration ratio caused a reduction of the average firm's emission intensity by approximately 0.3%. This result implies that the rise of the joint East between 1995 and 2017 kept the average firm's emission intensity 6% below the level it would have had in the absence of the East's rise. I do not find strong indication for reallocation of production towards more efficient firms. Finally, I supplement the analysis by examining the effect of export opportunities due to the East's rise. The results indicate that exporting to the East increased sales and emissions, with a small, if any, negative effect on emission intensities. |
| JEL: | F18 Q54 L60 D22 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkie:323985 |
| By: | Timothy J. Kehoe; Xing Xu |
| Abstract: | In the late 1980s, Mexico opened itself to international trade and foreign investment, followed in the early 1990s by China. China and Mexico are still the two countries characterized as middle-income by the World Bank with the highest levels of merchandise exports. Although their measures of openness have been comparable, these two countries have had sharply different economic performances: China has achieved spectacular growth, whereas Mexico’s growth has been disappointingly modest. In this article, we extend the analysis of Kehoe and Ruhl (2010) to account for the differences in these experiences. We show that China opened its economy while it was still achieving rapid growth from shifting employment out of agriculture and into manufacturing while Mexico opened long after its comparable phase of structural transformation. China is only now catching up with Mexico in terms of GDP per working-age person, and it still lags behind in terms of the fraction of its population engaged in agriculture. Furthermore, we argue that China has been able to move up a ladder of quality and technological sophistication in the composition of its exports and production, while Mexico seems to be stuck exporting a fixed set of products to its North American neighbors. |
| JEL: | F43 O32 O47 O57 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34181 |
| By: | Bonk, Alica Ida; Larkou, Chloe |
| Abstract: | This paper examines the effects of trade policy shocks on the US economy using a novel identification strategy that combines narrative information on trade policy changes with stock market data. We introduce a new data set of daily trade policy statements from 2007 to 2019, allowing us to capture a comprehensive range of trade policy actions. By analyzing stock price reactions of trade-exposed and non-trade-exposed firms around these statements, we can identify unanticipated trade policy shocks. Using the local projection method, we analyze asymmetries and non-linearities based on the sign and magnitude of the shocks. We find that the gains from trade liberalizations and the damage from protectionism are of equal magnitude in absolute terms, with no non-linearities observed along this dimension. On the other hand, trade policy shocks originating from trading partners have a stronger impact on the economy than those initiated by the US. Moreover, the implementation of policy changes generates a more significant response than mere announcements. Uncertainty about policymakers’ commitment to planned policy changes leads firms and households to adopt a cautious “wait and see” approach. As an extension, we explore whether using President Trump’s tweets instead of official statements affects our results. JEL Classification: F10, F13, F14, G12, G14 |
| Keywords: | protectionism, stock market, tariffs, trade liberalization |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253102 |
| By: | Jaime de Melo (UNIGE - Université de Genève = University of Geneva, FERDI - Fondation pour les Etudes et Recherches sur le Développement International) |
| Abstract: | Ever since their independence, African countries have engaged in a series of treaties creating 8 Regional Economic Communities (RECs) that were (and still are) to pilot this integration starting with a Free Trade Area (FTA) followed by a customs union, a common market, and a monetary union following a ‘variable geometry', along a ‘Minimum Integration Program' at different speeds. This introductory chapter summarizes takeaways from the essays collected in the booklet Essays on Africa's Integration: Prospects and Challenges for Markets and Regional Public Goods. |
| Keywords: | Regional integration - West Africa - ECOWAS - WAEMU - Trade negociations - Common trade policy - External common representation |
| Date: | 2025–08–04 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05199004 |
| By: | Kazuhiro Takauchi (Kansai University); Tomomichi Mizuno (Kobe University); Qing Hu (Kansai University) |
| Abstract: | To enjoy the preferential access of a free trade area (FTA), rules of origin (ROO) of the FTA defines how much to use regional contents. Hence, ROO defines the inter-firm transactions among upstream and downstream firms. We show asymmetric multiple equilibria in the downstream market "one firm meets ROO while the other does not" can appear for the effect of regional upstream competition. Importantly, our results, which correspond the real situation, maximizes consumer and total surpluses in the final-good importer. Hence, if the practitioner in the country concerned promoting utilization of the FTA, it may backfire. |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:koe:wpaper:2519 |
| By: | Jaime de Melo (UNIGE - Université de Genève = University of Geneva, FERDI - Fondation pour les Etudes et Recherches sur le Développement International) |
| Abstract: | This volume is based on research in FERDI's program ‘Regional Integration, trade, competitivity and environment' under the direction of Anne-Marie Geourjon and coordinated by Jaime de Melo. The essays in the volume are destined to policy makers and observers of the pace of African integration. The emphasis is on cooperation, necessary for the provision of regional public goods (infrastructure like transport infrastructure), and on policies (trade, mobility of capital and people) affecting market integration, all in the hands of governments. The essays eschew technical discussions but rely on figures and tables to summarize the narrative. |
| Keywords: | AFCFTA, Regional integration - West Africa - ECOWAS - WAEMU - Trade negociations - Common trade policy - External common representation |
| Date: | 2025–08–04 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05198948 |
| By: | George Economides; Jim Malley; Apostolis Philippopoulos; Anastasios Rizos |
| Abstract: | This paper examines the long-term macroeconomic impacts of Brexit on the UK economy employing a dynamic general equilibrium model that incorporates endogenous firm entry, price markups and market competition. By integrating the trade frictions introduced by Brexit, the model explains how increased trade costs have altered firm behaviour, market structure, and broader economic performance. We assess a range of policy responses, from theoretically optimal but practically difficult tax-subsidy schemes, to more realistic measures aimed at reducing firm entry barriers, encouraging private and public investment, and subsidising labour costs. Our findings underscore the critical role of policies that can most directly influence firm creation, investment, and competition in addressing the structural challenges Brexit has introduced. |
| Keywords: | Brexit, investment, fiscal and industrial policy |
| JEL: | E65 E22 E61 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12076 |