|
on International Trade |
| By: | Stefano Bolatto (University of Turin and CERIS-CNR) |
| Abstract: | Multi-sector versions of the international trade model of Eaton and Kortum (2002) usually re- strict trade elasticities to be identical across sectors, with potentially distorting effects on the estimates of the model parameters. This paper allows for heterogeneous sectoral trade elasticities and quanti.es them by estimating an equation for bilateral market shares, with tariffs and standard gravity variables used to model trade barriers. Results show that sectors differ significantly in the size of trade elasticities. The paper proves that this heterogeneity matters at least in three different respects. First, it matters when inferring measures of relative productivity from trade and production data. Secondly, it matters when considering the trade-induced reallocations of production within and between sec- tors. When assessing their relative contribution to the productivity gains that each country obtains from opening to trade, gains turn out to be largely due to the reallocation within sectors, especially for richer countries. Finally, accounting for the heterogeneity in elasticities is crucial when running general equilibrium counterfactual studies, such as that performed in this paper, which assesses the effects on aggregate of sector-specific technology shocks. |
| Keywords: | Eaton-Kortum model; technological heterogeneity; gravity equations; trade elasticities; export costs; productivity gains from trade; reallocation between and within sectors. |
| JEL: | F10 D24 C50 L60 O40 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:360&r=int |
| By: | Marc J. Melitz; Stephen J. Redding |
| Abstract: | The theoretical result that there are welfare gains from trade is a central tenet of international economics. In a class of trade models that satisfy a "gravity equation," the welfare gains from trade can be computed using only the open economy domestic trade share and the elasticity of trade with respect to variable trade costs. The measured welfare gains from trade from this quantitative approach are typically relatively modest. In this paper, we suggest a channel for welfare gains that this quantitative approach typically abstracts from: trade-induced changes in domestic productivity. Using a model of sequential production, in which trade induces a reorganization of production that raises domestic productivity, we show that the welfare gains from trade can become arbitrarily large. |
| JEL: | F10 F11 F15 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19810&r=int |
| By: | Silvia Del Prete (Bank of Italy); Stefano Federico (Bank of Italy) |
| Abstract: | Using unique matched bank-firm data on export, import and ordinary loans for a large sample of Italian manufacturing exporters for the years 2007-2010, this paper investigates the role of trade finance in a credit shock. We find that the credit shock faced by exporters in the aftermath of the Lehman Brothers' collapse was due more to a diminished availability of ordinary loans than to specific constraints in trade finance. We also show that the credit shock had a negative impact on exports: firms, especially financially distressed ones, that borrowed from banks which were more exposed to a negative funding shock exported less compared with firms that borrowed from less exposed intermediaries. |
| Keywords: | trade finance, trade collapse, credit shocks, export loans |
| JEL: | G21 F14 F30 G30 L20 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_948_14&r=int |
| By: | Muendler, Marc-Andreas (University of California) |
| Abstract: | This paper proposes a proximity-concentration tradeoff in product space as a determinant of horizontal foreign direct investment (FDI). Firms that enter a foreign market by exporting are able to capture consumer surplus from introducing a differentiated product with characteristics that the incumbent cannot match. In relatively globalized product space, in contrast, consumers perceive an entrant’s difference to existing products as less pronounced, so a consumer’s virtual distance costs in product space are lower and a merger with an incumbent (horizontal FDI) offers pricing power that allows the entrant to extract consumer rent. Lower physical trade costs of shipping make Bertrand price competition fiercer in differentiated product space and can provide an additional incentive for a merger. A basic product space model with a linear Hotelling setup can therefore explain why FDI has become more frequent in recent periods in the presence of falling trade costs. Cross-border merger and acquisitions data support the model’s prediction that horizontal FDI grows relatively faster than exports in differentiated goods industries, compared to homogeneous-goods industries. |
| Keywords: | Horizontal foreign direct investment; trade under imperfect competition; differentiated product space; monopolization strategies; oligopoly in imperfect markets |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:179&r=int |
| By: | Arman Mazhikeyev (Loughborough University); T.Huw Edwards (Loughborough University); Marian Rizov (Middlesex University) |
| Abstract: | Previous studies characterize some of the Former Soviet Central Asian countries (CACs) as “more open” (Kazakhstan, Kyrgyzstan) and others as “more isolated” (Tajikistan, Turkmenistan and Uzbekistan) depending on their trade-over-GDP level. Being an open or isolationist economy has resulted respectively in more or less suitable environment for business and investment. We investigate this by measuring contributions of country-specific properties and networking factors in 185 bilateral CACs trade flows over the period 1995-2011. We find that, even though all CACs’ trade has increased greatly since 1995, for the more open economies (Kazakhstan and Kyrgyzstan) trade changes are mainly explained by networking (bilateral) factors while for isolationist economies (Turkmenistan, Uzbekistan and Tajikistan) changes in trade are mostly explained by country-specific properties. |
| Keywords: | Trade performance, gravity models, transition, Central Asia, FSU |
| JEL: | F14 F15 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:lbo:lbowps:2014_02&r=int |
| By: | Volker Tjaden |
| Abstract: | I present a dynamic fixed cost model of export participation extended by a capital theoretic concept of the customer stock. Plants that want to start exporting have to invest into a market specific factor which serves as input into a decreasing returns to scale technology generating sales demand. Customer capital, like phyical capital, depreciates over time and its accumulation is subject to adjustment costs. It allows the model to reproduce the empirical fact that new exporters show above average revenue growth rates and a declining exit hazard in the years after entry. I structurally estimate the model on a rich panel data set of German manufacturing plants between 1995 and 2008. During the observed time span, plants in the sample saw a strong increase in export activity which provides a suitable case study for the predictive power of the model. Unlike a pure fixed cost version, the model correctly forecasts a steep rise in exports after 2003. It is also able to reconcile a strong export reaction to trade liberalizations with a low elasticity of aggregate exports to exchange rate movements. Customer capital accumulation therefore offers a potential resolution to the elasticity puzzle in international economics. |
| Keywords: | customers as capital, firm entry, firm heterogeneity, export dynamics, sunk costs, international business cycles |
| JEL: | E32 F14 F17 F40 F41 F44 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:bon:bonedp:bgse06_2013&r=int |
| By: | Diaz-Lanchas, Jorge (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Llano, Carlos (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Zofío, José Luis (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.) |
| Abstract: | Recent research has determined the existence of a border effect on trade flows within a country associated to agglomeration economies, the size of the spatial unit of reference, as well as to alternative measures of transport costs. Using a micro-database on road freight shipments within Spain for the period 2003-2007, we consistently decompose the total value of municipal freight flows into the extensive and intensive margins at the European Nuts-5 (municipal), 3 (provincial) and 2 (regional) levels and study the impeding effect of actual generalized transport costs (as opposed to proxies given by the standard measures of distance and travel time). Establishing the superiority of this generalized measure of transport costs, we confirm the accumulation of trade flows up to a transport cost value of 330 euros, and conclude that this high density is not explained by the existence of administrative limits (border effects) but to significant changes in the trade flows-transport costs relationship. While this high density of trade coincides with low level administrative borders (municipal and provincial) as there is a positive and significant effect associated to them on all trade decomposition, it is not significant, or even negative, at a larger regional level. To support this hypothesis, we identify significant thresholds in the trade flows-transport costs relationship that are calculated by way of the Chow test of structural change. These breakpoints allow us to split the sample and control for successive administrative borders in both the extensive and intensive margins. Relying on these thresholds we define relevant market areas corresponding to specific transport costs values that portrait a consistent urban hierarchy system of the largest Spanish cities within a radius of about 330 euros, thereby providing clear evidence of the predictions made by the central place theory. |
| Keywords: | Municipal Freight Flows; Transport Costs; Breakpoints; Market Areas; Urban Hierarchy; Central Place Theory. |
| JEL: | F14 F15 O18 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:uam:wpaper:201310&r=int |
| By: | Hélène LATZER (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Alexandre SIMONS (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)) |
| Abstract: | We provide a North-South Schumpeterian growth model endogenously generating demand-driven patterns of vertical intra-industrial trade. More precisely, we build a model featuring non-homothetic preferences and income differences, and show that such conditions guarantee the endogenous emergence of multi-location, multi-quality firms. The existence of such firms and wealth heterogeneity among consumers both across and within countries then generate and shape rich patterns of intra-industrial vertical trade and FDI, with the extent of income disparities also conditioning the incentives to invest in R&D of both incumbents and challengers, and by extension the long-run growth rate. We then investigate the impact of within-region redistribution and trade integration policies on the endogenous wage gap across regions, the length of the quality-life cycle and long-run growth. We particularly find that a larger income gap within regions contributes to lowering growth and increasing the inter-regional inequality level. We also find that trade integration boosts long run growth but increases the North-South wage gap. |
| Keywords: | Income distribution, vertical trade in quality, growth, FDI |
| JEL: | D63 F43 O31 O41 |
| Date: | 2014–01–17 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2014003&r=int |
| By: | Cebeci, Tolga |
| Abstract: | This paper evaluates the role of export destinations on productivity, employment, and wages of Turkish firms by comparing the performance of firms that export to low-income destinations and high-income destinations with firms that do not export. A combination of propensity score matching and difference-in-differences methods are employed on a rich set of firm observables, including sector, region, employment, total factor productivity (TFP), capital intensity, wages, support from government, ownership, and the research and development intensity of firms. Four sets of findings emerge from the analysis: i) Export entry has a positive causal effect on firm TFP and employment and this effect is strengthened as a firm continues to export. ii) In contrast, export entry has a moderate wage effect that emerges only with a lag. iii) Unlike exporting to high-income destinations, exporting to low-income destinations does not result in significantly higher firm TFP and wages. iv) The employment effect of exporting to low-income destinations is comparable to that of exporting to high-income destinations. |
| Keywords: | Economic Theory&Research,Microfinance,Labor Policies,E-Business,Tax Law |
| Date: | 2014–01–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6743&r=int |
| By: | Ansgar Belke; Anne Oeking; Ralph Setzer |
| Abstract: | Traditional specifications of export equations incorporate foreign demand as a demand pull factor and the real exchange rate as a relative price variable. However, such standard export equations have failed to explain the export performance of euro area countries during the crisis period. In particular, the significant gains in export market shares in a number of vulnerable euro area crisis countries did not coincide with an appropriate improvement in price competitiveness. This paper argues that, under certain conditions, firms consider export activity as a substitute of serving domestic demand. The strength of the link between domestic demand and exports is dependent on capacity constraints. Our econometric model for six euro area countries suggests domestic demand pressure and capacity constraint restrictions as additional variables of a properly specified export equation. As an innovation to the literature, we assess the empirical significance through the logistic and the exponential variant of the non-linear smooth transition regression model. In the first case, we differentiate between positive and negative changes in capacity utilization and in the second case between small and large changes of the same transition variable. We find that domestic demand developments are relevant for the short-run dynamics of exports when capacity utilization is low. For some countries, we also find evidence that the substitution effect of domestic demand on exports turns out to be stronger the larger is the deviation of capacity utilization from its average value over the cycle. |
| Keywords: | domestic demand pressure, error correction models, asymmetry, playhysteresis; modeling techniques; switching/spline regression; smooth transition models; exports; sunk costs yields |
| JEL: | F14 C22 C50 C51 F10 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:rmn:wpaper:201313&r=int |
| By: | Singh, Ajit |
| Abstract: | This paper explores the connections between globalization, competition, competition policy and competitiveness. These concepts and the relationships between them have emerged as important issues in the current development debate at both national and international levels. The significance at the national level arises from the privatization and liberalization policies which have been adopted by many developing countries in recent decades. The international significance is directly related to globalization and the continuing deep integration of the world economy through multinational companies and fast growth of global trade. |
| Keywords: | Competition, competition policy, globalisation, developing countries, advanced countries, MNCs |
| JEL: | F0 G3 |
| Date: | 2013–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:53027&r=int |
| By: | Zaouali, Amira |
| Abstract: | Economists have a long argue that institutions and implementation of good governance are important for economic growth. The main objective of this research is to demonstrate that one of positive institutions effects is its ability to mitigate the negative effect of economic vulnerability linked to terms of trade fluctuations on economic growth. The impact of the economic vulnerability and implementation of good governance are estimated for a panel of 15 Sub-Saharan-Africa countries over the period 1996-2011. The results show that good institutional quality helps to undermine the negative effects of economic vulnerability on economic growth. It is also clear from this analysis that the interaction terms between trade openness and institutions can reduce the negative effects of economic vulnerability and that trade openness has a positive effect on economic growth only until a certain level of institutional quality. |
| Keywords: | Economic vulnerability, instability of terms of trade, economic growth, institutions. |
| JEL: | C23 O43 O47 |
| Date: | 2014–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52939&r=int |
| By: | Rudolph, Alexandra (Heidelberg University); Schneider, Friedrich (University of Linz) |
| Abstract: | Worldwide human trafficking (HT) is the third most often registered international criminal activity, ranked only after drug and weapon trafficking. The aim of the paper is to measure the extent of HT inflows to destination countries. It proposes the application of the Multiple Indicators Multiple Causes (MIMIC) structural equation model in order to include potential causes and indicators in one model and generate an index of the intensity of HT in destination countries. Thus, we account for the unobservable nature of the crime as well as for visible aspects that both shape the extent of it. By including both dimensions of the trafficking process the model is applied over a period of ten years. The resulting measure orders 142 countries between 2000 and 2010 according to their potential of being a destination country based on characteristics of the trafficking process. The results are that OECD countries are the most likely destination countries while developing countries are less likely. |
| Keywords: | human trafficking, MIMIC models, latent variable, structural equation models |
| JEL: | C39 F22 K42 K49 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7867&r=int |
| By: | Peiteng Shi; Jiang Zhang; Bo Yang; Jingfei Luo |
| Abstract: | With globalization, countries are more connected than before by trading flows, which currently amount to at least 36 trillion dollars. Interestingly, approximately 30-60 percent of global exports consist of intermediate products. Therefore, the trade flow network of a particular product with high added values can be regarded as a value chain. The problem is weather we can discriminate between these products based on their unique flow network structure. This paper applies the flow analysis method developed in ecology to 638 trading flow networks of different products. We claim that the allometric scaling exponent $\eta$ can be used to characterize the degree of hierarchicality of a flow network, i.e., whether the trading products flow on long hierarchical chains. Then, the flow networks of products with higher added values and complexity, such as machinery&transport equipment with larger exponents, are highlighted. These higher values indicate that their trade flow networks are more hierarchical. As a result, without extra data such as global input-output table, we can identify the product categories with higher complexity and the relative importance of a country in the global value chain solely by the trading network. |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1401.3103&r=int |
| By: | Catia Batista (Nova University of Lisbon); Gaia Narciso (Trinity College Dublin) |
| Abstract: | Do information flows matter for remittance behavior? We design and implement a randomized control trial to quantitatively assess the role of communication between migrants and their contacts abroad on the extent and value of remittance flows. In the experiment, a random sample of 1,500 migrants residing in Ireland was offered the possibility of contacting their networks outside the host country for free over a varying number of months. We find a sizable, positive impact of our intervention on the value of migrant remittances sent. Our results exclude that the remittance effect we identify is a simple substitution effect. Instead, our analysis points to this effect being a likely result of improved information via factors such as better migrant control over remittance use, enhanced trust in remittance channels due to experience sharing, or increased remittance recipients’ social pressure on migrants |
| Keywords: | information flows, international migration, migrant networks, remittances, randomized control trial |
| JEL: | F22 J61 O15 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:nor:wpaper:2014001&r=int |
| By: | Giovanni Facchini (University of Nottingham, University of Milan, CEPR, CES-Ifo, CrEAM, IZA and); Tommaso Frattini (University of Milan, CrEAM, IZA and Centro Studi Luca d’Agliano); Cora Signorotto (University of Milan and Centro Studi Luca d’Agliano) |
| Abstract: | e investigate the role of constituents’ preferences in shaping the voting behavior of elected representatives on immigration and trade policy. Using a novel dataset spanning the period 1986-2004, in which we match individual opinion surveys with congressmen roll call votes, we find that greater exposure to media coverage tends to increase a politician’s accountability when it comes to migration policy making, while we find no effect for trade policy. Our results thus suggest that more information on the behavior of elected officials affects decisions only when the policy issue is perceived to be salient by the electorate. |
| Keywords: | Trade Reforms, Immigration Reforms, Individual preferences, Media exposure |
| JEL: | F22 J61 |
| Date: | 2013–10–13 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:358&r=int |
| By: | Naghsh Nejad, Maryam (IZA) |
| Abstract: | This paper investigates the effects of institutionalized gender inequality, proxied by a women's rights index, on the female high-skilled migration rates relative to that of male (the female brain drain ratio). By developing a model of migration choice I find non-linear effects of gender inequality on the female brain drain ratio as a result of effects of gender inequality on both costs and benefits of migration. At low levels of women's rights, increases in the index lead to increases in the female brain drain ratio. This is consistent with, at low levels of women's rights, prohibitively high costs of migration for females. Once a certain level of protections has been afforded to them, the costs to migration are low enough that many women then decide to leave the oppressive society and migrate where the benefits associated with their human capital are higher. However, as women's rights continue to strengthen, those benefits to migration then tend to decrease. The effect on female brain drain then turns negative. Using a panel of up to 195 countries I find evidence consistent with this model which is robust to instrumental variable approach. A one-point increase in the above average level of this index is associated with an average of about a 25-percentage point decrease in the female brain drain ratio. |
| Keywords: | high skilled female migration, women's rights, institutional quality |
| JEL: | F22 J11 J61 J16 O17 O43 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7864&r=int |
| By: | Ruist, Joakim (Department of Economics, School of Business, Economics and Law, Göteborg University) |
| Abstract: | When Romania and Bulgaria joined the EU in 2007 Sweden was one of two EU15 countries that did not restrict access to its labor market and welfare systems for Romanian and Bulgarian citizens. This article evaluates the net fiscal contribution in 2011 of Romanian and Bulgarian migrants who arrived in Sweden under this migration regime in 2007-2010. The average net contribution is found to be substantially positive: around 30,000 kronor, or onesixth of public sector turnover per capita. This result is used to discuss expected corresponding net contributions in other EU15 countries, several of which lifted their restrictions on January 1st, 2014. The United Kingdom and Ireland stand out as two countries that unambiguously have reason to expect even more positive contributions. |
| Keywords: | immigration; welfare benefits; public finances; Romania; Bulgaria; EU |
| JEL: | H20 H50 J61 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:gunwpe:0584&r=int |
| By: | Erasmus Kersting; Holger Görg |
| Abstract: | We investigate the financial implications of a multinational firm’s choice between outsourcing and integration from the perspective of the supplier. Using a simple model, we explore the extent to which an integrated supplier’s access to finance, as well as its sources of funding, change relative to a firm supplying a multinational at arm’s-length. The model predicts that integrated firms have better access to finance and cover a larger share of their costs using internal funds. Furthermore, improvements in a host country’s level of financial development have less of an impact on the financial situation of integrated suppliers. We present empirical evidence from firm-level data for over 60 countries broadly supporting the predictions |
| Keywords: | Vertical Integration; Financial Constraints; Multinational companies |
| JEL: | F23 G32 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:kie:kieliw:1894&r=int |
| By: | Christoph Böhringer (University of Oldenburg, Department of Economics); Jared C. Carbone (Department of Economics, University Drive NW, Calgary, Canada,); Thomas F. Rutherford (University of Wisconsin, Madison, USA) |
| Abstract: | Unilateral carbon policies are inefficient due to the fact that they generally involve emission reductions in countries with high marginal abatement costs and because they are subject to carbon leakage. In this paper, we ask whether the use of carbon tariffs—tariffs on the carbon embodied in imported goods—might lower the cost of achieving a given reduction in world emissions. Specifically, we explore the role tariffs might play as an inducement to unregulated countries adopting emission controls of their own. We use an applied general equilibrium model to generate the payoffs of a policy game. In the game, a coalition of countries regulates its own emissions and chooses whether or not to employ carbon tariffs against unregulated countries. Unregulated countries may respond by adopting emission regulations of their own, retaliating against the carbon tariffs by engaging in a trade war, or by pursuing no policy at all. In the unique Nash equilibrium produced by this game, the use of carbon tariffs by coalition countries is credible. China and Russia respond by adopting binding abatement targets to avoid being subjected to them. Other unregulated countries retaliate. Cooperation by China and Russia lowers the global welfare cost of achieving a 10% reduction in global emissions by half relative to the case where coalition countries undertake all of this abatement on their own. |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:old:dpaper:360&r=int |
| By: | Biavaschi, Costanza (IZA); Elsner, Benjamin (IZA) |
| Abstract: | Migrants are typically self-selected from the population of their home country. While a large literature has identified the causes of self-selection, we turn in this paper to the consequences. Using a combination of non-parametric econometrics and calibrated simulation, we quantify the impact of migrant self-selection on per-capita GDP in both sending and receiving countries. Two episodes of mass migration serve as examples: the migration from Norway to the US in the 1880s and the migration from Mexico to the US in the 2000s. We first estimate the degree of selection, and show that Norwegians were positively and Mexicans negatively selected. In a simulation exercise, we compare the economy under selective migration with a counterfactual in which the same number of migrants are neutrally selected. In both periods, we find virtually no aggregate effect in the US. Findings are different for the sending countries; migrant selection decreases Norwegian GDP by 0.3%, and increases Mexican GDP by almost 1%. While these effects may appear small, we demonstrate that the effect in Mexico is as large as the difference between no migration and the current level of migration. |
| Keywords: | international migration, selection, welfare |
| JEL: | D33 F22 J61 O15 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7865&r=int |
| By: | Elsner, Benjamin (IZA); Narciso, Gaia (Trinity College Dublin); Thijssen, Jacco J. J. (University of York) |
| Abstract: | Diaspora networks provide information to future migrants and influence both their decision to migrate and their success in the host country. While the existing literature explains the effect of networks on migration decisions through the size of the migrant community, we show that the quality of the network is an equally important determinant. We argue that networks that are more integrated in the society of the host country can give more accurate information about job prospects to future migrants. In a decision model with imperfect signalling we show that migrants with access to a better network are more likely to make the right decision – they migrate only if they gain – and they migrate earlier. We test these predictions empirically using data on recent Mexican migrants to the US, and exploit the geographic diffusion of Mexicans since the 1980s as well as the settlement of immigrants that came during the Bracero program in the 1950s to instrument for the quality of networks. The results provide strong evidence that connections to a better-integrated network lead to better outcomes after migration. Yet we find no evidence that the quality of the network affects the timing of migration. |
| Keywords: | diasporas, information, migration |
| JEL: | F22 J15 J61 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7863&r=int |
| By: | Hamrita, Mohamed Essaied |
| Abstract: | In this paper, we use a wavelet filtering based approach to study the econometric relationship between exports, imports, and economic growth for Tunisia, using quarterly data for the period 1961:1-2007:4. GDP is used as a proxy for economic growth. We explore the interactions between these primary macroeconomic inputs in a co-integrating framework. We also study the direction of causality between the three variables, based on the more robust Toda-Yamamoto modified Wald (MWALD) test. The much studied relationship between these three primary indicators of the economy is explored with the help of the wavelet multi-resolution filtering technique. Instead of an analysis at the original series level, as is usually done, we first decompose the variables using wavelet decomposition technique at various scales of resolution and obtain relationship among components of the decomposed series matched to its scale. The analysis reveals interesting aspects of the inter-relationship among the three fundamental macroeconomic variables. |
| Keywords: | Export, economic growth, cointegration, wavelet filtering, causality |
| JEL: | C32 F10 |
| Date: | 2014–01–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52722&r=int |
| By: | Buch, Claudia M.; Neugebauer, Katja; Schröder, Christoph |
| Abstract: | The global financial crisis has brought to an end a rather unprecedented period of banks' international expansion. We analyze the effects of the crisis on international banking. Using a detailed dataset on the international assets of all German banks with foreign affiliates for the years 2002-2011, we study bank internationalization before and during the crisis. Our data allow analyzing not only the international assets of the banks' headquarters but also of their foreign affiliates. We show that banks have lowered their international assets, both along the extensive and the intensive margin. This withdrawal from foreign markets is the result of changing market conditions, of policy interventions, and of a weakly increasing sensitivity of banks to financial frictions. -- |
| Keywords: | international banking,gravity model,financial frictions |
| JEL: | G01 F34 G21 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:14006&r=int |
| By: | Bosch, Mariano (Inter-American Development Bank); Farré, Lídia (IAE Barcelona (CSIC)) |
| Abstract: | This paper investigates the relationship between immigration and the size of the informal or underground economy. Using regional variation for the Spanish provinces we find that the massive immigration wave between 2000 and 2009 is highly correlated to the share of unregistered employment, a proxy for the size of the underground or informal labor market. We estimate that a 10 percentage points increase in the share of immigrants in a region generates between a 3 and 8 percentage points increase in unregistered employment. We also find that the controversial regularization of illegal aliens conducted in 2005 substantially reduced the number of illegal workers but did not affect the relationship between immigration and informality. |
| Keywords: | immigration, informal economy, amnesty |
| JEL: | J61 O17 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7843&r=int |
| By: | Baake, Pio; Huck, Steffen |
| Abstract: | We analyse a stylized model of the world grain market characterized by a small oligopoly of traders with market power on both the supply and demand side. Crops are stochastic and exporting countries can impose export tariffs to protect domestic food prices. Our first result is that export tariffs are strategic complements and that for poor harvests equilibrium tariffs can explode (shedding some light on recent volatility in world food prices). We also show that the strategic interplay between governments of export countries and traders can give rise to a number of peculiar comparative statics. For example, it can be in the interest of traders to have poor harvests in one of the countries. Finally, we demonstrate that traders as well as consumers in import countries can benefit from cooperation between grain exporting countries. -- In diesem Paper analysieren wir ein stilisiertes Modell des weltweiten Getreidemarktes, auf dem ein Oligopol von Händlern sowohl auf der Angebots- wie auf der Nachfrageseite über Marktmacht verfügt. Da Erntemengen stochastisch sind, können die exportierenden Länder Exportzölle festlegen, um die einheimischen Lebensmittelpreise abzusichern. Als erstes Resultat zeigt sich, dass Exportzölle strategisch komplementär sind, so dass etwa bei mageren Ernten Zölle explodieren können (dies sollte etwas Licht auf die derzeitige Volatilität bei den weltweiten Lebensmittelpreisen werfen). Weiterhin zeigt sich, dass das strategische Zusammenspiel zwischen Regierungen von Exportländern und Händlern zu einer Reihe eigentümlicher komparativ-statischer Effekte führen kann - so kann beispielsweise eine kleine Ernte in einem der Länder durchaus im Interesse der Händler sein. Schließlich zeigen wir, dass Händler wie Konsumenten in Importländern von der Kooperation zwischen getreideexportierenden Ländern profitieren können. |
| Keywords: | grain markets,food prices,export tariffs,oligopoly and oligopsony |
| JEL: | D43 F12 L13 Q17 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:wzbeoc:spii2013315&r=int |
| By: | Katariina Nilsson Hakkala; Alessandro Sembenelli |
| Abstract: | Spillovers can arise when multinational firms (MNEs) train local employees who later join domestic firms, bringing with them part of the technological, marketing and managerial knowledge they have acquired. Fosfuri et al. (2001) suggest that the direction and the intensity of the worker mobility, and its associated spillovers, are affected by the degree of product market competition. In this paper, we assess empirically the importance of this hypothesis for the first time by using the Finnish longitudinal employeer-employee data. We first quantify the importance of spillovers via worker mobility by estimating augmented production functions. Second, we analyse the impact of product market competition and absorptive capacity on worker mobility by estimating several competing risks models. We find that productivity spillovers arise only when workers move from MNEs to purely domestic firms in high-tech industries. Further, in line with predictions of Fosfuri et al, our results show that competition reduces worker mobility. This details a channel through which competition may affect total factor productivity of purely domestic plants adversely. |
| Keywords: | spillovers, labour mobility, product-market competition, linked employer-employee data |
| JEL: | D24 F23 D22 J62 |
| Date: | 2014–01–13 |
| URL: | http://d.repec.org/n?u=RePEc:fer:wpaper:54&r=int |
| By: | Prantl, Susanne (University of Cologne); Spitz-Oener, Alexandra (Humboldt University Berlin) |
| Abstract: | Does interacting product and labor market regulation alter the impact of immigration on wages of competing native workers? Focusing on the large, sudden and unanticipated wave of migration from East to West Germany after German reunification and allowing for endogenous immigration, we compare native wage reactions across different segments of the West German labor market: one segment without product and labor market regulation, to which standard immigration models best apply, one segment in which product and labor market regulation interact, and one segment covering intermediate groups of workers. We find that the wages of competing native West Germans respond negatively to the large influx of similar East German workers in the segment with almost free firm entry into product markets and weak worker influence on the decision-making of firms. Competing native workers are insulated from such pressure if firm entry regulation interacts with labor market institutions, implying a strong influence of workers on the decision-making of profit-making firms. |
| Keywords: | immigration, product market regulation, labor market regulation |
| JEL: | J61 L50 J3 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7882&r=int |
| By: | Marina Glushenkova; Marios Zachariadis |
| Abstract: | We use a panel of thousands of good-level prices before and after the euro in order to compare the determinants and understand the evolution of goods price dispersion across Europe during these two periods. We find that tradeability plays a substantially smaller role in lowering cross-country dispersion after the adoption of the euro as compared to before, and that the role of non-traded inputs in raising price dispersion is also reduced after the euro. We then compare the overall and country-level distributions of law-of-one-price (LOP) deviations at the early and late part of our sample to inform us about the degree of integration across European economies before and after the euro. Our tests reveal that the distributions after the euro are significantly different than those before, consistent with a greater degree of integration. Utilizing our panel to trace the location of individual goods in the distribution of LOP deviations, we ask how the price advantage or disadvantage of individual economies evident in these price distributions has been shifting over time, and whether goods characteristics play a role for the persistence of these LOP deviations. LOP deviations for these goods are highly correlated, on average, over five or ten year horizons, but much less so over twenty-year or longer horizons. These correlations are greater for homogeneous as compared to differentiated goods, and vary across countries. Finally, for the great majority of these European economies and goods, price advantage is typically revealed to be more persistent than price disadvantage. |
| Keywords: | micro prices, law-of-one-price, euro, integration, price advantage |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:ucy:cypeua:01-2014&r=int |
| By: | Takashi Kano (Faculty of Economics, Hitotsubashi University); |
| Abstract: | In an influential paper, Engel and West (2005) claim that the near random-walk behavior of nom- inal exchange rates is an equilibrium outcome of a variant of present-value models when economic fundamentals follow exogenous first-order integrated processes and the discount factor approaches one. Subsequent empirical studies further confirm this proposition by estimating a discount factor that is close to one under distinct identification schemes. In this paper, I argue that the unit market discount factor implies the counterfactual joint equilibrium dynamics of random-walk ex- change rates and economic fundamentals within a canonical, two-country, incomplete market model. Bayesian posterior simulation exercises of a two-country model based on post-Bretton Woods data from Canada and the United States reveal difficulties in reconciling the equilibrium random-walk proposition within the two-country model; in particular, the market discount factor is identified as being much lower than one. |
| Keywords: | Exchange rates; Present-value model; Economic fundamentals; Random walk; Two- country model; Incomplete markets; Cointegrated TFPs; Debt elastic risk premium. |
| JEL: | E31 E37 F41 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:upd:utppwp:011&r=int |
| By: | C. Fred Bergsten (Peterson Institute for International Economics) |
| Abstract: | Currency manipulation—governments of foreign countries intervening to suppress the value of their currencies to lower the prices of their exports and increase the prices of their imports—has vexed the United States for many years. Because most of the intervention takes place in US dollars, the dollar has been pushed to systemically overvalued levels. The US current account deficit has averaged $200 billion to $500 billion per year higher as a result of the manipulation. Several other countries, including the weak euro area economies, emerging-market countries such as Brazil and India, and many small and poor countries, have also suffered the ill effects of currency manipulation. In light of large and widespread trade effects, Bergsten calls for addressing the issue through trade agreements, especially when the International Monetary Fund and other institutions have failed to resolve it for so long. He recommends adding a currency chapter in the Trans-Pacific Partnership (TPP), which is currently under negotiation and could be the earliest trade agreement to come before Congress for approval. Including clear obligations to avoid currency manipulation in the TPP and other future trade agreements, along with an effective dispute settlement mechanism and sanctions against violators, would very likely deter future manipulation. |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:iie:pbrief:pb14-2&r=int |
| By: | Hubert JAYET (Université Lille 1, EQUIPPE); Glenn RAYP (Ghent University, SHERPPA); Ilse RUYSSEN (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and Ghent University, SHERPPA); Nadiya UKRAYINCHUK (Université de Lille 2, EQUIPPE) |
| Abstract: | This paper analyses migratory streams to Belgian municipalities between 1994-2007. The Belgian population register constitutes a rich and unique database of yearly migrant in inflows and stocks broken down by nationality, which allows us to empirically explain the location choice of immigrants at municipality level. Specifically, we aim at separating the network effect, captured by the number of previous arrivals, from other location-specific characteristics such as local labor or housing market conditions and the presence of public amenities. We expect labor and housing market variables to operate at different levels and develop a nested model of location choice in which an immigrant first chooses a broad area, roughly corresponding to a labor market, and subsequently chooses a municipality within this area. We find that the spatial repartition of immigrants in Belgium is determined by both network effects and local characteristics. The determinants of local attractiveness vary by nationality, as expected, but for all nationalities, they seem to dominate the impact of network effects. |
| Keywords: | International migration, Location choice, Network effects, Nested logit |
| Date: | 2014–01–20 |
| URL: | http://d.repec.org/n?u=RePEc:ctl:louvir:2014004&r=int |
| By: | Jane Korinek |
| Abstract: | Demand for non-renewable natural resources is forecast to rise steadily over the coming decades. Underlying trends of long-term rising demand and falling supply of mineral resources will inevitably increase pressure on prices and intensify competition for scarce resources. This can create a substantial opportunity for development for minerals-rich countries. However, as suggested by the “resource curse” debate, broad-based economic development based on the extractive industries is far from assured. History suggests that not all countries, in particular many of those outside the OECD area, have benefitted economy-wide from their mineral resources: good governance and good policies are essential to benefit from their huge potential growth. Some countries have successfully regulated their mining sectors without resorting to highly distortive policies such as export restrictions. One such country is Botswana. This paper examines some of the policies in place in Botswana that have contributed to the governance and management of its substantial minerals sector. Lessons are drawn for minerals-rich countries keen to manage their raw materials sectors for increased economy-wide growth. |
| Keywords: | taxation, sovereign wealth funds, mining, tax revenue management, extractive industries, Botswana, beneficiation, Diamond Trading Company, SACU, royalties, resource curse debate, Debswana, gemstones, sustainable budget index, South African Customs Union, regulation, export restrictions, SWF, diamonds, De Beers, Pula fund |
| JEL: | O24 O55 Q32 Q37 Q38 |
| Date: | 2014–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:oec:traaab:163-en&r=int |
| By: | Chiswick, Barry R. (George Washington University); Miller, Paul W. (Curtin University of Technology) |
| Abstract: | This paper provides a review of the research on the ‘economics of language' as applied to international migration. Its primary focuses are on: (1) the effect of the language skills of an individual on the choice of destination among international (and internal) migrants, both in terms of the ease of obtaining proficiency in the destination language and access to linguistic enclaves, (2) the determinants of destination language proficiency among international migrants, based on a model (the three E's) of Exposure to the destination language in the origin and destination, Efficiency in the acquisition of destination language skills, and Economic incentives for acquiring this proficiency, (3) the consequences for immigrants of acquiring destination language proficiency, with an emphasis on labor market outcomes, and in particular earnings. Factors that are considered include age, education, gender, family structure, costs of migration, linguistic distance, duration in the destination, return migration, and ethnic enclaves, among others. Analyses are reported for the immigrant experiences in the US, Canada, Australia, the UK, Germany, Israel and Spain. |
| Keywords: | immigrants, language, bilingualism, human capital, earnings |
| JEL: | J15 J24 J31 J61 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7880&r=int |
| By: | Margherita Comola (Paris School of Economics (Université Paris 1 Panthéon-Sorbonne)); Mariapia Mendola (University of Milan Bicocca and Centro Studi Luca d’Agliano) |
| Abstract: | This paper provides the first direct evidence on the determinants of link formation among immigrants in the host society. We use a purposely-designed survey on a representative sample of Sri Lankan immigrants living in Milan to study how migrants form social links among them and the extent to which this network provides them material support along three different dimensions: accommodation, credit, job-finding. Our results show that both weak and strong ties are more likely to exist between immigrants who are born in close-by localities at origin. The time of arrival has a U-shaped effect: links are more frequent between immigrants arrived at the same time, and between long-established immigrants and newcomers. Once the link is formed, material support is provided mainly to relatives while early migrant fellows are helpful for job finding. |
| Keywords: | Migration, Networks, Sri-Lanka, Milan |
| JEL: | J15 D85 C45 |
| Date: | 2013–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:353&r=int |
| By: | de Coulon, Augustin; Radu, Dragos; Steinhardt, Max Friedrich |
| Abstract: | This paper addresses the potentially causal link between native attitudes and migrants' intended duration of stay. We exploit the variation in perceived anti-immigrant sentiments using information on the media exposure of Romanian migrants in Italy. A unique shock in public attitudes towards Romanian migrants allows us to identify the impact of a change in attitudes on out-migration plans. Our results suggest a significant impact of native attitudes on settlement intentions in Italy. The subgroup analysis indicates a particularly pronounced impact for low-skilled migrants, which has important consequences for the integration prospects of migrants in Italy. -- |
| Keywords: | return migration,public attitudes,media consumption,crime |
| JEL: | F22 J61 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:hwwirp:146&r=int |
| By: | Facchini, Giovanni (University of Nottingham); Patacchini, Eleonora (Syracuse University); Steinhardt, Max (Helmut Schmidt University, Hamburg) |
| Abstract: | Using novel information from the German Socio-Economic Panel for the period 1996-2011, we document that migrants with a German friend are more similar to natives than those without a local companion along several important dimensions, including engagement in social activities, concerns about the economy, interest in politics and broad policy issues like the environment, crime and xenophobia. When looking at the determinants of friendship acquisition, we find that the acquisition of a new job is the cause (rather than the product) of social network variations. Other factors driving the acquisition of a native friend include the number of years the migrant has spent in the country, the birth of a child, residential mobility and additional education in the host country. |
| Keywords: | culture, migration, friendship formation, ethnic minorities |
| JEL: | A14 J15 J61 |
| Date: | 2014–01 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7881&r=int |
| By: | Lucia Rizzica (University College of London) |
| Abstract: | This paper analyzes the effects of parental migration on children left behind in order to understand whether and how the effects of migration on children depend on which of their parents migrates. I describe the migration of one of the spouses as a sequential game in which the spouse who migrated chooses how much to send back to the spouse left behind in the form of remittances and then the latter decides how to allocate his total available budget within the household. A similar mechanism generates no difference in the share of total household income devoted to investment on children no matter which of the parents migrates, even when the two spouses have different preferences. These predictions are tested using data from Indonesia, where female migration is particularly widespread. To solve the selection problems entailed in the comparison between households with migrant fathers and households with migrant mothers, I focus on households that have at least one migrant parent and develop a model in which the decision about whether to send the man or the woman eventually depends on the expected returns and risk associated to each of the two choices. These measures will provide me with a set of instrumental variables to test the theoretical model. In accordance with the predictions of the model I find that the difference in children related expenditure is not significant between households in which mothers migrate and households in which fathers do. On the other hand I find that in households with migrant mother a significantly larger share of income is devoted to adult goods consumption; this difference reflects the difference in tastes for investment on children between men and women. |
| Keywords: | Migration, Gender, Human Capital |
| JEL: | F22 O15 J13 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:361&r=int |
| By: | Rajmund Mirdala |
| Abstract: | Origins and implications of twin deficits occurrence in a large scale of countries seems to be a center of rigorous empirical as well as theoretical investigation for decades. The reality of persisting fiscal and current account deficits became obvious in many advanced as well as advancing, emerging and low-income countries seemingly without a direct association with the phase of business cycle or trends in key fundamental indicators. European transition economies experienced current account deficits during the most of the pre-crisis period. Despite generally improved economic environment and high rates of economic growth it seems that countries with weaker nominal anchor experienced periods of persisting fiscal imbalances during the most of the pre-crisis period. Crises period affected both fiscal stance of government budgets and current account pre-crisis levels and trends in all countries from the group. As a result, leading path of both indicators significantly changed. In the paper we analyze effects of fiscal policies on current accounts in the European transition economies. Our main objective is to investigate causal relationship between fiscal policy discretionary changes and associated current account adjustments. We identify episodes of large current account and fiscal policy changes to provide an in-depth insight into frequency as well as parallel occurrence of deteriorations (improvements) in current accounts and fiscal stance of government budgets. From employed VAR model we estimate responses of current accounts in each individual country to the cyclically adjusted primary balance shocks. |
| Keywords: | fiscal imbalances, current account adjustments, economic crisis, vector autoregression, impulse-response function |
| JEL: | C32 E62 F32 F41 H60 |
| Date: | 2013–11–15 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2013-1065&r=int |