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on International Trade |
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Issue of 2025–11–03
fifteen papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Xenia Matschke; Juan Rene Rojas Rodriguez |
| Abstract: | The inclusion of domestic (intra-national) trade when estimating structural gravity models is an important topic and has been shown to solve empirical puzzles such as the missing globalization puzzle (Yotov, 2022). Despite efforts to construct intra-national trade data, its measurement still remains a challenge, in particular for historical trade data. Campos et al. (2021a) recently claimed that the exact definition of domestic trade flows (gross vs. net production) is not important for the estimation of free trade agreement (FTA) effects in a gravity framework: a surprising finding, since the size differences between these measures are large, and their correlation of about 80%, while high, is not perfect. In a simulation framework, we revisit the question of the (non)-importance of whether to include and how to measure domestic trade and find some support for the conclusion of Campos et al. (2021a) concerning the estimation of trade agreement or tariff effects. However, with regard to the point estimates, marked differences arise depending on how domestic trade flows are calculated: the GDP-based domestic trade flows clearly distort the coefficient estimates. Interestingly, using only inter- national trade flows yields results that are unbiased and as precisely estimated as those obtained when correctly measured (GO-based) domestic trade flows are included. Depending on what effects researchers are interested in, the basic gravity model without inclusion of domestic trade flows may thus be the preferred alternative after all. |
| Keywords: | Intra-national Trade, Gravity Model |
| JEL: | F14 F15 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:trr:wpaper:202510 |
| By: | John Brown; Xenia Matschke; Juan Rene Rojas Rodriguez |
| Abstract: | Using a state of the art structural gravity model, we investigate the impact of various (post-)colonial cocoa trading arrangements on the cocoa trade between developing cocoa producer countries and rich industrial cocoa consumer nations in the time period 1951 to 1999. We find that in particular the trading arrangements of the European (Economic) Community (EEC/EC), such as the Association, Yaoundé and Lomé Agreements, as well as the UNCTAD International Cocoa Agreement, had a measurable positive impact on cocoa trade flows, in contrast to the British Commonwealth partnership or the GATT Generalized System of Preferences. In particular, the Yaoundé Agreement did not only increase the trade between other EEC/EC members and the signatory cocoa producers, but also strengthened the trading relationship between the former colonizer countries and their cocoa producing former colonies, in fact more than offsetting the negative effect of independence. |
| Keywords: | cocoa trade, developing country commodity trade, international trading arrangements, European (Economic) Community, gravity model |
| JEL: | F13 F14 F15 F54 F55 F63 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:trr:wpaper:202512 |
| By: | Xenia Matschke; Juan Rene Rojas Rodriguez |
| Abstract: | Campos et al. (2021) (Economics Letters) show that including domestic trade flows in the gravity model is important for estimating the effect of trade agreements (TAs), regardless of how these flows are measured. Without domestic trade flows, TA effects are small, negative, and statistically insignificant. The opposite holds once domestic flows are included. Using the Campos et al. (2021) data, we show that their results are caused by the big size difference between international trade and domestic trade flows in combination with the Poisson Pseudo Maximum Likelihood (PPML) estimator. We find that the TA variable is not statistically significant in the Campos et al. (2021) data. |
| Keywords: | Intra-national Trade, Gravity Model |
| JEL: | F14 F15 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:trr:wpaper:202511 |
| By: | Joseph B. Steinberg |
| Abstract: | This paper studies how Knightian uncertainty about the distribution of future trade policies affects current trade flows using a dynamic trade model with a sunk cost of exporting. Qualitatively, trade-policy ambiguity reduces export participation in a similar manner to standard trade-policy risk, but also increases sensitivity to tariff bounds, decreases sensitivity to the likelihood of a tariff increase, and can either increase or decrease sensitivity to tariff persistence. Quantitatively, ambiguity dampens the response of trade to persistent reforms and strengthens the response to transitory reforms. |
| JEL: | F12 F13 F17 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34408 |
| By: | Joseph Kopecky (Department of Economics, Trinity College Dublin) |
| Abstract: | Has the euro improved trade evenly across member states? This paper revisits the impact of the euro on trade, focusing on systematic heterogeneity between core and peripheral members. I develop a stylized conceptual framework showing that while the elimination of exchange-rate volatility should raise trade for all European Monetary Union (EMU) members, other forms of price convergence may generate asymmetric effects. Using bilateral trade data from 1960–2018, I estimate a gravity model with Poisson pseudo maximum likelihood (PPML) and apply a doubly robust inverse-propensity score weighting estimator. The results show that the average EMU effect masks substantial heterogeneity across member states. On average, euro membership increases trade by about 6%, with stronger gains, around 12%-for core country exports (to both core and periphery destinations) and within periphery exports. However, trade flows from the periphery to core members decline by an estimated 7%. |
| Keywords: | Euro; Currency unions; Trade; Gravity |
| JEL: | F10 F13 F45 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:tcd:tcduee:tep1625 |
| By: | Centorrino, Samuele; Diakantoni, Antonia; Keck, Alexander; Ruta, Michele; Sztajerowska, Monika; Wei, Yuting |
| Abstract: | This paper introduces the Trade Policy Activity (TPA) Index, a novel indicator measuring evolving global trade policy dynamics since the Global Financial Crisis. Using a Dynamic Factor Model on comprehensive trade policy data covering 197 countries and territories, we document a structural shift around 2019 with a substantial expansion in the use of trade policies. The TPA Index also identifies cyclical episodes of heightened activity and reveals interconnections between different types of measures. We are also able to identify systematic differences in trade policy deployment among groups of economies. Additionally, we employ MIDAS (Mixed Data Sampling) regressions with high-frequency data to develop nowcasting capabilities for trade policy activity, enabling realtime identification of potential policy shifts. These results contribute to the trade policy measurement literature and offer a tool for monitoring global trade policy developments in real time. |
| Keywords: | Trade policy, Dynamic factor models, Nowcasting |
| JEL: | F13 C32 C38 C53 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wtowps:330318 |
| By: | KATO, Hayato; SUZUKI, Kensuke; TAKAHASHI, Motoaki |
| Abstract: | We examine how tariffs affect sectoral composition and welfare in an economy with nonhomothetic preferences and sectors being complements—key drivers of structural change. Beyond their conventional role in trade protection, tariffs influence industrial structure by altering relative prices and income levels. We qualitatively characterize these mechanisms and use a quantitative dynamic model to show that a counterfactual 20-percentage-point increase in U.S. manufacturing tariffs since 2001 would have raised the manufacturing value-added share by one percentage point and increased welfare by 0.36 percent. However, if all the U.S. trading partners responded reciprocally, U.S. welfare would have declined by 0.12 percent. |
| Keywords: | Tariff, Ricardian model of trade, Structural transformation, Nonhomothetic preferences, Capital accumulation, Trade war |
| JEL: | F11 G13 O41 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:hit:hituec:772 |
| By: | Samuele Centorrino; Antonia Diakantoni; Alexander Keck; Michele Ruta; Monika Sztajerowska; Yuting Wei |
| Abstract: | This paper introduces the Trade Policy Activity (TPA) Index, a novel indicator measuring evolving global trade policy dynamics since the Global Financial Crisis. Using a Dynamic Factor Model on comprehensive trade policy data covering 197 countries and territories, we document a structural shift around 2019 with a substantial expansion in the use of trade policies. The TPA Index also identifies cyclical episodes of heightened activity and reveals interconnections between different types of measures. We are also able to identify systematic differences in trade policy deployment among groups of economies. Additionally, we employ MIDAS (Mixed Data Sampling) regressions with high-frequency data to develop nowcasting capabilities for trade policy activity, enabling real-time identification of potential policy shifts. These results contribute to the trade policy measurement literature and offer a tool for monitoring global trade policy developments in real time. |
| Keywords: | Trade Policy; Dynamic Factor Models; Nowcasting |
| Date: | 2025–10–24 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/220 |
| By: | Carmen Berta C. De Saituma Cagiza; Ilidio Cagiza |
| Abstract: | This study investigates the dynamic relationship between development finance institutions (DFIs), foreign direct investment (FDI), and economic development in Sub-Saharan Africa (SSA) from 1990 to 2018, using a quantitative panel dataset of annual data for five SSA countries (Nigeria, Ghana, Kenya, South Africa, and Zimbabwe) and a fixed-effects model estimated in STATA. Specifically, the analysis examines whether DFIs enhance FDI inflows, thereby promoting economic growth and contributing to the achievement of the Sustainable Development Goals (SDGs). The findings indicate that although DFIs have a theoretically positive impact on FDI, this relationship is not statistically significant across the sample, suggesting contextual dependencies influenced by regional economic variations. The study also analyzes how economic growth, trade openness, inflation, political stability, and the rule of law influence this nexus, elucidating their roles in shaping investment climates. A sectoral analysis indicates that DFI investments in infrastructure, agribusiness, and finance significantly affect FDI, with infrastructure having the greatest impact owing to its foundational role in economic systems. This research contributes by linking DFIs with FDI in SSA in a panel setting, thus providing a framework for policymakers to strengthen institutional and macroeconomic conditions to optimize the impact of DFIs on FDI and, ultimately, on sustainable development. The findings underscore the need for targeted policies to address regional disparities and enhance DFI effectiveness in fostering sustainable growth. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2510.16472 |
| By: | Chepeliev, Maksym; Maryla Maliszewska; Amit Kanudia; Wen Jin Yuan; Channing Arndt; Dominique van der Mensbrugghe |
| Abstract: | This paper uses a combination of the global energy system model KINESYS and global computable general equilibrium (CGE) model ENVISAGE to analyze the impact of future climate mitigation policies. Results are subsequently linked to an atmospheric source-receptor model. Principal findings are as follows: (i) Holding global temperatures below 2oC requires significant policy effort. A uniformly applied tax of nearly $400 (2014 USD) per tonne of CO2eq is required. (ii) Ignoring benefits and co-benefits of mitigation policy, the cost to the global economy is relatively small. Holding global temperature rise below 2oC implies a loss of about 1.1% of global GDP. Using the revenue from carbon taxation to offset distorting taxes, as opposed to transferring carbon revenues in a lump sum manner to households, further reduces or reverses economic losses. (iii) However, benefits and co-benefits are significant. Benefits relate to reduced climate-related damages, such as lower frequency/intensity of extreme weather events. The co-benefit in focus relates to reduced air pollution. The monetized co-benefits of reduced air pollution substantially exceed the costs of mitigation alone by 2050 in most scenarios. Low-income countries experience a higher benefit-to-cost ratio compared to high-income economies. (iv) As mitigation effort increases, global trade-to-GDP ratios decline. Mitigation substitutes strongly traded fossil fuels for mostly domestically generated electricity. This downdraft on trade volume is a major and robust result. (v) The composition of trade shifts in logical ways, with production/trade in energy-intensive products tending to decline more and production/trade in less energy-intensive products tending to decline less. |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:gta:workpp:7609 |
| By: | CHENG, Haitao; YANASE, Akihiko |
| Abstract: | Article 6 of the Paris Agreement seeks to foster international cooperation between developed and developing countries in curbing global carbon emissions. Central to this provision is the facilitation of international transfers of green technology and carbon mitigation outcomes. Through this mechanism, developed countries transfer their green technology to developing countries to help them mitigate emissions. In return, developing countries transfer emission permits equivalent to the mitigated outcomes to developed countries to alleviate their abatement burden. This study employs an international oligopoly model to explore the implications of green technology transfer (GTT) and international transfer of mitigated outcomes (ITMO) on welfare, emission permit issuance and global emissions. We find that once successfully implemented, these transfers consistently improve global welfare. Moreover, when permits are determined non-cooperatively by the countries, the implementation of GTT and ITMO leads to a reduction in global emissions. |
| Keywords: | Green technology transfer, Internationally transferred mitigation outcomes, Permit markets, International coordination, Paris Agreement |
| JEL: | F12 F18 H23 Q54 |
| Date: | 2025–10–16 |
| URL: | https://d.repec.org/n?u=RePEc:hit:hiasdp:hias-e-154 |
| By: | Alexandre Gohin (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Rennes Angers - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Alan Matthews (University of Dublin) |
| Abstract: | Following 25 years of negotiations, the Mercosur countries and the European Commission reached a political agreement on a comprehensive association agreement in December 2024. However, its ratification is currently uncertain due to concerns of some European member states, among other issues, around possible negative impacts on their farm/livestock sectors. The main objective of this paper is to quantify these likely impacts. Our methodology elaborates on the general equilibrium framework used in previous sustainable impact assessments, where potential or illustrative agreements were analysed. We simulate both a full liberalisation scenario as well as a scenario simulating the more limited market‐opening offers in sensitive sectors, notably tariff rate quotas in agriculture. This allows us to identify the protective impact of these more limited offers. We also provide results for the main European member states and conduct several robustness analyses. We find that, because the beef offer is limited to additional import quotas, the negative impacts on livestock income are heavily muted. We also find that the European livestock sector, and more generally the farm and food industries, benefit from the income growth induced by the other components of the agreement. Finally, we do not find stronger negative effects in countries currently opposed to ratification, in particular France, because their consumers prefer domestic foods. |
| Keywords: | General equilibrium, Income, Livestock, Mercosur, Trade agreement, Europe |
| Date: | 2025–09–26 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05319827 |
| By: | Kym Anderson; Roehlano Briones |
| Abstract: | For decades the Philippines has protected many of its farmers from import competition, taxed farm exports, and insulated domestic markets from fluctuations in international prices. Policy developments to the mid-1960s are summarized by Power (1971), and were updated to the mid2000s by David, Intal and Balisacan (2009). This paper looks at what has changed in terms of agricultural assistance and food market insulation in the two decades since then, with emphasis on the extent to which those rates of assistance have fluctuated from year to year with international price movements as governments attempted to stabilize the nation’s domestic prices of farm products, most notably for rice. Philippine policies have been similar to those of other food-importing countries in adopting farm-support policies but have been unusual in being so protectionist so early in the country’s economic development. The paper explores the prospect of re-purposing support away from price-distorting measures – which are highly inequitable – toward more-direct forms of support for just the poorest rural households and boosting investment in rural public goods such as infrastructure and agricultural research. The latter would benefit a larger proportion of rural people as well as reduce food prices in urban areas. |
| JEL: | F13 F14 Q17 Q18 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pas:papers:2025-12 |
| By: | Todd D. Gerarden; Bryan K. Bollinger; Kenneth Gillingham; Daniel Xu |
| Abstract: | This study examines the effects of tariffs imposed by the U.S. on imported solar panels. We first provide clear evidence that tariff-exposed firms shifted production to locations that did not face tariffs, and that domestic prices increased relative to other markets. We then develop a structural model to analyze welfare effects. We find that the tariffs generated modest gains for domestic manufacturers and for government revenues, but larger losses in domestic consumer surplus and environmental benefits, thereby reducing domestic welfare. Furthermore, the tariffs reduced domestic solar industry employment and wages. By contrast, subsidizing solar panel manufacturing could increase domestic production, employment, and welfare. |
| JEL: | F13 Q48 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34401 |
| By: | Sachiko KAZEKAMI |
| Abstract: | This study investigates the impact of globalization on domestic urbanization and employment structures in the non-manufacturing sector. Despite its significance, this area has been understudied because of data limitations. Diverse transactions and expansion without capital investments make services difficult to capture in official statistics. However, services comprise 80% of employment in advanced economies. While data constraints remain, this study improves estimation precision by using firm-level data on overseas investments and actual domestic employment, rather than relying on proxy allocations based on regional employment shares. The analysis utilizes Japanese data from 2005 to 2020, examined by employment areas, and employs panel fixed-effects models with instrumental variables. In the information and communications industry, globalization is associated with an increase in employment, especially among female, college-educated, and regular employees, driven by inflows and increased labor participation, indicating job creation accompanied by a reallocation of human resources. Conversely, in the academic research and professional and technical services industry, foreign labor substitutes for domestic labor, resulting in lower wages. Meanwhile, the accommodation and food services sector saw employment growth but a decrease in wages, without labor migration. While the manufacturing sector showed few significant effects, beyond these examples, the non-manufacturing sector exhibited diverse spillover effects on employment, mobility, and wages. The pathways through which globalization affects regional communities—such as through the reallocation of human resources and changes in employment conditions—have not been fully captured by conventional manufacturing-focused perspectives. |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25099 |