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on International Trade |
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Issue of 2026–03–09
thirteen papers chosen by Nicola Daniele Coniglio, Università degli Studi di Bari “Aldo Moro” |
| By: | Fabrice Defever; Emanuel Ornelas |
| Abstract: | We study how the end of the quota system for textiles and clothing products in the American and European markets on January 1, 2005, affected China’s exports to third countries, where policy was unchanged. Using a difference-in-differences approach, we find that the number of Chinese firms exporting previously restricted products to third countries increased sharply after quota removal. The expansion involved many private firms that exported to neither US-EU markets before nor after 2005. This indicates that the policy shock enhanced China’s role as an export base. Conversely, protectionist shifts in large economies would likely generate sizeable negative third-market effects. |
| Keywords: | import quotas, export entry, China |
| JEL: | F13 F14 D22 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12511 |
| By: | Rodrigo Adao; John Sturm Becko; Arnaud Costinot; Dave Donaldson |
| Abstract: | We use global tariffs to reveal the weights that nations implicitly place on the welfare of their trading partners relative to their own. Our estimated welfare weights suggest that formal and informal rules of the world trading system make countries internalize the impact of their policies onto others to a substantial extent, though not fully. On average, countries place 25% less value on transfers to foreigners than transfers to their own residents. Across nations, we find that countries that put higher welfare weights on the welfare of foreigners also tend to receive higher weights from them, consistent with a general form of reciprocity among nations. Using our estimated welfare weights, we provide a first look at what countries stand to lose, or gain, fromthe dissolution of the world trading system as we know it. |
| Keywords: | international trade, trade policy, trade agreements, international cooperation, reciprocity |
| JEL: | F10 F14 F50 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12374 |
| By: | Akira Sasahara (Keio University) |
| Abstract: | This article provides an overview of three puzzles related to the gravity model of trade---the Glick–Rose puzzle, the border puzzle, and the missing globalization puzzle. It summarizes recent developments in estimation methods, including the shift from cross-sectional to panel settings, the inclusion of appropriate fixed effects, and the shift from log-linear specifications to nonlinear approaches. |
| Keywords: | The gravity model of trade, the Glick-Rose puzzle, the border puzzle, the missing globalization puzzle |
| JEL: | F14 F43 O47 |
| Date: | 2025–02–20 |
| URL: | https://d.repec.org/n?u=RePEc:keo:dpaper:dp2026-002 |
| By: | Klaus Abberger; Arbërim Bibaj; Hans Gersbach; Alexis Perakis; Alexander Rathke; Samad Sarferaz; Kieran Walsh |
| Abstract: | We study how firms’ expectations respond to prospective tariff shocks using a randomized survey experiment among Swiss manufacturing firms. When confronted with potential U.S. tariffs, respondents expect sizable declines in turnover and investment, yet anticipate increases in ex-tariff export prices despite falling demand. This combination of declining activity and rising prices runs counter to the standard prediction of trade models, in which tariffs reduce foreign demand and put downward pressure on exporters’ prices. The observed pattern is consistent with a destination-specific cost-push mechanism, whereby tariffs raise exporters’ marginal costs through compliance burdens, logistical frictions, or reduced scale. Embedding firms’ stated price and sales expectations in a parsimonious structural pricing model, we quantify the implied cost changes and recover sector-level demand elasticities. The estimates indicate substantial heterogeneity across industries and are, on average, consistent with short-run trade elasticities from the recent literature. Moreover, we corroborate the experimental evidence using panel survey data on firms’ expectations around an unexpected U.S. tariff announcement. |
| Keywords: | international trade, tariffs, firm expectations, pricing, cost pass-through |
| JEL: | F13 D22 E31 D84 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12510 |
| By: | Pau S. Pujolas; Jack Rossbach |
| Abstract: | We quantify the Tariff Laffer Curve for the U.S. using a multi-sector Ricardian model calibrated to the 2025 US trade war. We find revenue-maximizing tariffs of 20–30 percent and welfare-maximizing rates of 0–10 percent. We define the Marginal Fiscal Efficiency Index to partition tariffs into welfare-improving, trade-off, and revenue-decreasing regions. Expanding the trade war to more partners raises peak revenue even under retaliation, whereas coordinated retaliation sharply erodes welfare. By January 2026, 20 percent of U.S. tariffs exceed their Laffer peaks. Inverse-optimum estimation reveals diminished U.S. concern for foreign welfare, punitive treatment of China, and rising revenue motives. |
| Keywords: | Laffer Curve; Tariffs; Applied General Equilibrium; International Trade |
| JEL: | F11 F13 F14 F17 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:mcm:deptwp:2026-01 |
| By: | Nora Aboushady (Cairo University); Georges Harb (Lebanese American University); Chahir Zaki (University of Orléans) |
| Abstract: | This paper investigates the impact of aid for trade (AfT) targeted at trade policies on the participation of recipient countries in global value chains (GVCs), and how this impact varies with their prevailing political regimes. In democratic countries, the need for the authorities to account for the interests of various stakeholders (e.g., lobbies, trade unions) can compromise the allocation, use, and effectiveness of AfT. In contrast, less democratic regimes are typically more insulated from political pressures, which may lead to more effective outcomes of aid. At the same time, integration into some complex GVCs requires efficient and democratic institutions, to which these products are sensitive. Employing a sample of 110 countries and data covering 2002-2018, we control for standard determinants of GVC participation, while examining the effect of AfT and the moderating role of the political regime in place. Our estimation addresses the endogeneity of aid through an appropriate instrumentation strategy. Our results suggest that the effect of AfT is mostly positive in autocratic regimes, indicating more effective trade policy reforms. When we account for regional disparities, we find evidence that AfT for trade policy is also impactful in some democratic regimes. This might suggest that the efficacy of AfT is not strictly regime-dependent, but hinges on the government’s commitment to carry out significant reforms leading to greater participation in the global economy. |
| Date: | 2025–12–20 |
| URL: | https://d.repec.org/n?u=RePEc:erg:wpaper:1806 |
| By: | Kwon, Ohyun; Nagengast, Arne J.; Yoon, Jangsu; Yotov, Yoto |
| Abstract: | We combine the latest difference-in-differences estimators for treatments with exit and structural gravity literature to evaluate the effects of sanctions on trade, when they are in place and when they are lifted. Our analysis shows that sanctions reduce trade between senders and targets by 58%, with estimates from our preferred model 50% larger than those from traditional two-way fixed effects (TWFE) models. A bias decomposition highlights arbitrary weighting and contamination bias in TWFE estimates. Sensitivity checks confirm the robustness of our findings, emphasizing the relevance of these methods for gravity estimations, including trade, migration, foreign investment, and other bilateral flows. |
| Keywords: | Difference-in-differences, Multiple treatments, Gravity, Sanctions, Trade |
| JEL: | C13 C23 F10 F13 F14 F51 H5 N4 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bubdps:337466 |
| By: | Andrea Ariu (UNIMI - Università degli Studi di Milano = University of Milan); Jaime de Melo (FERDI - Fondation pour les Etudes et Recherches sur le Développement International, UNIGE - Université de Genève = University of Geneva); Jean-Marc Solleder (UNIGE - Université de Genève = University of Geneva, FERDI - Fondation pour les Etudes et Recherches sur le Développement International) |
| Abstract: | Broadband connectivity, data-driven logistics, e-commerce, cloud services, and fintech reduce coordination costs and loosen the ties between production and physical proximity, opening the door to participation in Global Value Chains (GVCs). These technologies expand opportunities both to embed services into goods exports and to export services directly. This policy brief reviews the evidence on the extent and pattern of Africa's participation in supply chain networks. Research gaps—data, Methodological, and Conceptual Obstacles— that prevent African countries from breaking into high-skilled, tradable service exports are identified. The paper concludes by proposing three research areas: understanding services-led integration; exploring the mechanisms of change; building the data foundations. |
| Abstract: | Cette publication explore comment la digitalisation (internet, e-commerce, services cloud, fintech) peut aider l'Afrique à mieux participer aux chaînes mondiales de valeur, notamment via les services. Alors que l'Afrique reste souvent en amont, exportant des matières premières, les technologies numériques permettent désormais d'exporter des services à distance, sans infrastructure lourde. L'étude montre que des pays comme le Ghana réussissent déjà à exporter des services à forte valeur ajoutée, grâce à des investissements, des compétences et une meilleure connectivité. Mais des obstacles restent : manque de données, régulations restrictives, infrastructures insuffisantes. La recherche propose de mieux étudier ces opportunités, surtout pour permettre à l'Afrique de se diversifier et de créer des emplois qualifiés. |
| Keywords: | Innovation, Africa, Digitisation, Services, GVCs, Trade, Economic policy, Digital transformation, Ecommerce, Fintech, Development, Economy, Afrique, Digitalisation, Economie, Transformation digitale, Politique économique |
| Date: | 2026–01–12 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05455840 |
| By: | Gimenez Perales, Victor |
| Abstract: | New importers increase their conditional survival rate and import share over time. However, a model of multi-input firms with an import entry cost and stochastic import costs cannot replicate these dynamics. I show that an extended model can be reconciled with the data. I calibrate both models and use them to identify the effects of trade shocks. The simulations show that a decrease in import prices with the new importer dynamics generates lower productivity gains, but these gains are more widespread across firms. |
| Keywords: | importer dynamics, trade shocks, gains from trade |
| JEL: | F12 F13 L11 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkwp:337450 |
| By: | Sugata Marjit; Suryaprakash Misra; Tarun Kabiraj; Lei Yang |
| Abstract: | We consider welfare impacts of prohibitive tariffs on trading partners. Initially, there is prohibitive tariff by one country and a zero tariff by its trading partner. Thereafter, the trading partner also resorts to prohibitive tariff. We demonstrate how prohibitive tariffs by the trading partners can unambiguously increase welfare for both the countries through international transfer of technology. The critical and novel proposition of the paper is that the country targeted for retaliation with a prohibitive tariff would welcome such a move for welfare reasons. |
| Keywords: | prohibitive tariffs, technology transfer, welfare |
| JEL: | F02 F12 F13 I24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12396 |
| By: | Ritsuko Iseki (UTokyo Economic Consulting); Daisuke Miyakawa (Waseda University); Shigehiro Shinozaki (Asian Development Bank) |
| Abstract: | This paper dissects the impact of United States (US) tariffs introduced in 2025 on firm exports, concentrating on heterogeneity. Using comprehensive export customs data to the US from six selected Asian countries from January 2024 to August 2025, we confirm that for the first few months after tariffs were announced, export prices fell slightly, compressing profit margins, while the values and export quantities were not largely affected. In terms of the extensive margin, there was on average no systematic increase in short-run exit from exports to the US. Second, exporters of products with higher (lower) demand elasticity lowered prices before tariffs to a larger (smaller) extent. Third, based on Philippine export customs data, micro, small, and medium-sized enterprises (MSMEs) showed more uniform and deeper price cuts that resulted in lower exit rates on average even as their market access admittedly weakened for easily substituted products. In contrast, larger firms continued participation using more flexible and product specific adjustments. Together, these results suggest that tariffs substantially compressed margins among MSMEs over the short run in order to maintain US export levels. |
| Keywords: | tariffs;firm dynamics;heterogeneity;demand elasticity;MSME exports;global supply chain |
| JEL: | D22 F13 F14 L25 |
| Date: | 2026–02–26 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:022298 |
| By: | Schiff, Maurice (Fellow, IZA Institute of Labor Economics) |
| Abstract: | I examine whether trade can improve the impact of population growth on natural resources (NR) and welfare over time. Under autarky, population growth results in NR and welfare collapse over time, irrespective of the value of the returns to scale in the manufacturing sector, Ï•. Under trade, NR and welfare are unchanged (increase) (collapse) over time for Ï•=(>)( |
| Keywords: | population growth, Renewable Natural Resources (NR), trade vs autarky, manufacturing returns to scale, impact on NR and welfare |
| JEL: | F16 F18 Q27 Q56 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18360 |
| By: | Attinasi, Maria Grazia; Boeckelmann, Lukas; Martins, Bernardo De Castro; Meunier, Baptiste; Borin, Alessandro; Conteduca, Francesco Paolo; Mancini, Michele |
| Abstract: | This paper introduces a novel methodology to enhance the granularity of Inter-Country Input-Output (ICIO) tables. While our general methodology can be applied to any products of interest, we show that the well-documented distortions caused by sectoral aggregation in ICIO tables are particularly pronounced for products with a low substitutability, such as those essential to the green transition (e.g. electric batteries, rare earths). We therefore apply our framework to construct a disaggregated ICIO table that singles out 129 products essential to the energy transition. We then simulate a hypothetical scenario of an East-West supply chain decoupling in green products through a multi-country multi-sector model calibrated with our tailored disaggregated ICIO table. Results reveal substantial economic costs: welfare losses reach 3% and trade between blocs contracts by 20%, even when accounting for trade diversion through neutral countries. We finally quantify how the green supply chain decoupling increases the intensities of greenhouse gas emissions, highlighting how trade barriers on green sectors affect both economic efficiency and climate objectives. JEL Classification: C67, F13, F18, F51, Q48 |
| Keywords: | decoupling, global trade, global value chains, green transition, sectoral granularity |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20253152 |