|
on International Trade |
| By: | Chen, Natalie (University of Warwick, CAGE and CEPR); Juvenal, Luciana (International Monetary Fund) |
| Abstract: | This paper investigates the heterogeneous response of exporters to real exchange rate ‡uctuations due to product quality. We combine a unique data set of highly disaggregated Argentinean …rm-level wine export values and volumes between 2002 and 2009 with experts wine ratings as a measure of quality. In response to a real depreciation, we …nd that …rms signi…cantly increase more their markups and less their export volumes for higher quality products, but only when exporting to high income destination countries. These results remain robust to di¤erent measures of quality, samples, speci…cations and to the potential endogeneity of quality. To motivate our …ndings we extend the model of Corsetti and Dedola (2005) with local distribution costs and allow …rms to export multiple products with heterogeneous levels of quality. The model shows that the elasticity of demand perceived by exporters decreases with a real depreciation and with quality, leading to more pricing-to-market and to a smaller response of export volumes to a real depreciation for higher quality goods. Overall our results help to explain the low exchange rate pass-through that is typically observed in aggregate data. |
| Keywords: | Exchange rate pass-through, pricing-to-market, quality, unit values, exports, …rms, wine. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:165&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:wacage:180&r=int |
| By: | José Ramón García (Faculty of Economics, University of Barcelona); Fabio Manca (IPTS- JRC European Commission and Faculty of Economics, University of Barcelona); Jordi Suriñach (Faculty of Economics, University of Barcelona) |
| Abstract: | Globalisation and technological advances have made possible to offshore specific productive tasks (that do not require physical proximity to the actual location of the work unit) to foreign countries where these are usually performed at lower costs. We analyse the effect of task trade (i.e. task offshorability) on Spanish regional and national employment levels correlating a newly built index of task-delocalisation index to key variables such as the region’s wealth, the worker’s age and level of education, the importance of the service sector and the technological level of the economic activities undertaken in that particular geographical area. We conclude that approximately 25% of Spanish occupations are potentially affected by task trade/offshoring and that this is likely to benefit Spanish economy (and the performance of specific regions, categories of workers and sectors) being Spain a potential recipient of tasks offshored from abroad. Also we obtain that Spain’s trade in tasks correlates strongly with the above variables, presenting significant regional differences. |
| Keywords: | task trade, offshore, occupations, national/regional offshoring, tasks. JEL classification: F14, F16, J23, J24, J62 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:aqr:wpaper:201407&r=int |
| By: | Sato, Hitoshi; Zhu, Lianming |
| Abstract: | International production fragmentation has been a global trend for decades, becoming especially important in Asia where the manufacturing process is fragmented into stages and dispersed around the region. This paper examines the effects of input and output tariff reductions on labor demand elasticities at the firm level. For this purpose, we consider a simple heterogenous firm model in which firms are allowed to export their products and to use imported intermediate inputs. The model predicts that only productive firms can use imported intermediate inputs (outsourcing) and tend to have larger constant-output labor demand elasticities. Input tariff reductions would lower the factor shares of labor for these productive firms and raise conditional labor demand elasticities further. We test these empirical predictions, constructing Chinese firm-level panel data over the 2000--2006 period. Controlling for potential tariff endogeneity by instruments, our empirical studies generally support these predictions. |
| Keywords: | China, Tariff, International trade, Labor market, Labor demand elasticities, Tariff reductions, Intermediate inputs |
| JEL: | F14 F16 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper463&r=int |
| By: | Mazumder, Debojyoti |
| Abstract: | In a general equilibrium framework, an economy, with one non-traded final good and two traded intermediate goods, is modeled in this paper. It is shown that even if the economy consists of one frictionless labor market and a labor market with the search-friction, a status-conscious preference can yield unemployment in equilibrium. If such an economy opens up to trade then comparative advantage can be generated through the difference in the degree of the labor market imperfection even between two otherwise very similar countries. This setup rejects the possibility of complete specialization. Wage inequality persists within the country, for both home and foreign, in spite of free trade and, free trade does not guarantee the reduction of unemployment. |
| Keywords: | Trade; Search Unemployment; Inheritance Distribution |
| JEL: | E24 F10 F11 F16 J64 |
| Date: | 2013–12–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55250&r=int |
| By: | Hisanaga, Makoto |
| Abstract: | This paper investigates trade patterns and the gains from trade in a Chamberlinian-Ricardian model with a CES type of upper-tier utility function. It is shown that a strong tendency toward complete specialization emerges under free trade and that free trade is preferable to autarky from the viewpoint of each country’s welfare. This paper also considers the trade regime called semi-autarky, in which one sector is under free trade, while the other is closed. The analysis demonstrates that free trade does not necessarily attain higher welfare in all countries relative to semi-autarky if cross-sector substitution in consumption is elastic. |
| Keywords: | Chamberlinian-Ricardian model, Trade patterns, Gains from trade, |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:hok:dpaper:267&r=int |
| By: | Anne-Célia Disdier (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA)); Lionel Fontagné (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, Department of Economics - European University Institute); Olivier Cadot (UNIL - Université de Lausanne - Université de Lausanne) |
| Abstract: | Recent years have seen a surge in economic integration agreements (EIAs) and the development of non-tariff measures (NTMs). As a consequence, a growing number of EIAs include provisions on NTMs. However, little attention has been given in the literature to the effects of NTM liberalization in the context of EIAs. In this paper, we focus on provisions for technical regulations and analyze whether the North-South harmonization of technical barriers affects international trade. Using a gravity equation, we test whether, as a result of the deep integration associated with standards provisions included in the EIA, the Southern partners' trade expands with the North, but at the expense of their trade with non-bloc Southern partners. Empirical results provide strong support for this conjecture. Moreover, harmonization on the basis of regional standards negatively impacts the exports of developing countries to the North. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00975529&r=int |
| By: | Antonio Baez (Faculty of Economics, University of Barcelona) |
| Abstract: | The objective of this paper is to examine whether informal labor markets affect the flows of Foreign Direct Investment (FDI), and also whether this effect is similar in developed and developing countries. With this aim, different public data sources, such as the World Bank (WB), and the United Nations Conference on Trade and Development (UNCTAD) are used, and panel econometric models are estimated for a sample of 65 countries over a 14 year period (1996-2009). In addition, this paper uses a dynamic model as an extension of the analysis to establish whether such an effect exists and what its indicators and significance may be. While the results shows that informal labor markets are significant and do positively affect the flow of FDI, these effects are felt up to a certain level of informality, above which the effect becomes negative. The results are similar for developed and developing countries and are robust to several checks. |
| Keywords: | Foreign Direct Investment, Informal labor markets, Institutions. JEL classification: F16, F23, J8, M5 |
| Date: | 2014–02 |
| URL: | http://d.repec.org/n?u=RePEc:aqr:wpaper:201402&r=int |
| By: | Sirimal Abeyratne (International University of Japan); Nawalage S. Cooray (International University of University) |
| Abstract: | Trade leads to an acceleration of economic growth as well as to its spatial concentration. While tradegrowth nexus has been the primary focus in trade analyses, until the recent past spatial growth concentration has received little space there. It appears that the simplifying assumptions of trade models and analyses have become the main stumbling blocks that push spatial growth away from trade theory. It is the rapid change in the shape of the world economy led by trade liberalization and global integration that have created this space to place intra-national economics within the premises of international economics. Spatial growth within trade analyses was, however, not bizarre to trade theory. Bertil Ohlin as well as his teacher, Eli Heckscher ? the coauthors of the Heckscher-Ohlin theory of comparative advantage ? did not miss the point that comparative advantage is based on location-specific factors. The analyses of the locations of production and economic geography seem to have missed the early contribution to the subject by Ohlin and Heckscher who were not confined themselves by the simplifying assumptions of their own trade theory. The paper derives from its literature review that the benefits of agglomeration, the costs of connectivity, the degree of factor mobility, and the size of the markets are essential components that form centripetal forces of spatial growth concentration. |
| Keywords: | Economic geography, International trade, Regional development, Spatial economy |
| JEL: | F12 F13 F15 F16 R11 R12 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iuj:wpaper:ems_2014_04&r=int |
| By: | Carlo Altomonte; Tommaso Aquilante; Gábor Békés; Gianmarco I. P. Ottaviano |
| Abstract: | We use a representative and cross-country comparable sample of manufacturing firms (EFIGE) to document patterns of interaction among firm-level internationalization, innovation and productivity across seven European countries (Austria, France, Germany, Hungary, Italy, Spain, United Kingdom). We find strong evidence of positive association among the three firm-level characteristics across countries and sectors. We also find that the positive correlation between internationalization and innovation survives after controlling for productivity, with some evidence of causality running from the latter to the former. Our analysis suggests that export promotion per se is unlikely to lead to sustainable internationalization because internationalization goes beyond export and because, in the medium-to-long term, internationalization is driven by innovation. We recommend coordination and integration of internationalization and innovation policies 'under one roof' at both the national and EU levels, and propose a bigger coordinating role for EU institutions. |
| Keywords: | Internationalization, innovation, firm-level data, exports, foreign direct investment, outsourcing |
| JEL: | F13 F23 O31 O38 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepsps:032&r=int |
| By: | Aliyev, Khatai |
| Abstract: | World Trade Organization (WTO) is the largest trade organization which is supposed to open the international trade for the benefit of all countries through liberalization or removing impediments over trade. It may directly impact import and export and indirectly other macroeconomic variables. In this context, Azerbaijan’s accession process to WTO has been subject to many discussions in terms of what impacts are expected for the economy in case of the accession. This thesis attempts to do an empirical analysis of the expected macroeconomic impacts of the membership on Azerbaijan economy through application of VAR model. In this thesis, central question is what overall macroeconomic impact is expected for Azerbaijan’s economy if Azerbaijan join to WTO. In this context, I hypothesize that macroeconomic impact of the membership over Azerbaijan economy is expected to be negative. To test my hypothesis, I benefit from the membership experience of Georgia and Armenia and use VAR model to estimate time series data for Georgia and Armenia individually, and panel data consisted of Georgia, Armenia and Azerbaijan’s time series data. After all, I conclude that WTO membership increases import much more than export. However, the research fails to find enough evidence to say that overall impact of WTO membership is statistically significant. After taking Azerbaijan’s economic characteristics into consideration, the research concludes that overall macroeconomic impact of WTO membership is expected to be negative for Azerbaijan. |
| Keywords: | Azerbaijan, WTO membership, Macroeconomic impacts, VAR model |
| JEL: | F13 F14 F55 |
| Date: | 2014–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55096&r=int |
| By: | Angela Cheptea (SMART - Structures et Marché Agricoles, Ressources et Territoires - Agrocampus Ouest - Institut national de la recherche agronomique (INRA) : UMR1302); Lionel Fontagné (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, Banque de France - -); Soledad Zignago (Centre de recherche de la Banque de France - Banque de France) |
| Abstract: | Using an econometric shift-share decomposition, we explain the redistribution of world market shares at the level of the product variety and by technological content. We decompose changes in market shares into structural eff ects (geographical and sectoral) and a pure performance e ffect. We regard the EU-27 as an integrated economy, excluding intra-EU trade. Revisiting the competitiveness issue in such a perspective sheds new light on the impact of emerging countries on the reshaping of world trade. Since 1995 the EU-27 withstood the competition from emerging countries better than the United States and Japan. The EU market shares for high-technology products, as well as in the upper price range of the market, proved comparatively resilient, though less so since the crisis. |
| Keywords: | International Trade, Export Performance, Competitiveness, Market Shares, Shift-Share, European Union. |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00975534&r=int |
| By: | Lake, James (Southern Methodist University); Millimet, Daniel L. (Southern Methodist University) |
| Abstract: | Even if free trade creates net welfare gains for a country as a whole, the associated distributional implications can undermine the political viability of free trade. We show that trade-related redistribution increases the political viability of free trade in the US. We do so by assessing the causal effect of expected redistribution associated with the US Trade Adjustment Assistance program on US Congressional voting behavior on eleven Free Trade Agreements (FTAs) between 2003 and 2011. We find that a one standard deviation increase in redistribution leads to more than a 3% point increase in the probability of voting in favor of an FTA for the median representative. In addition, a one standard deviation decrease in redistribution across the entire US would have precluded passage of two of the eleven FTAs in our sample. |
| Keywords: | free trade agreements, trade adjustment assistance, political economy, redistribution |
| JEL: | F13 H50 J65 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8086&r=int |
| By: | Lanzona, Leonardo Jr. A. |
| Abstract: | The Philippines is currently negotiating a free trade agreement (FTA) with the European Union (EU). This paper is expected to shed light on these negotiations in terms of the possible effects of the FTA on the employment in particular. Conceptually, the effects of FTA on the labor market may come from two sources. The first is the intensification of free trade which can either be an opportunity or a threat to the workers, depending on whether the trading of goods and services are complementary or substitutable to the goods and services produced in the country. The second source is the proposed set of core labor standards which the EU can impose given the previous FTAs it has forged with other countries. These standards can result in making the country less competitive. Analyzing the experience of the country with its previous FTAs with the ASEAN and Japan, the paper found that FTAs as a whole have a positive impact on employment. While there may be unemployment caused by the entry of more imports from other countries, the effect of the trade commitments found in FTAs is essentially to mitigate such negative effects. It is then proposed that the country should negotiate within the same rules and standards that are set in their previous FTAs and that appropriate taxes and subsidies should be imposed in order to counteract the negative effects of further trade and labor standards. |
| Keywords: | Philippines, employment, ASEAN Free Trade Agreement (AFTA), Philippines-Japan Economic Partnership Agreement (PJEPA), Philippine labor market, core labor standards |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:phd:dpaper:dp_2014-21&r=int |
| By: | Carbone, Anna; Henke, Roberto; Pozzolo, Alberto Franco |
| Abstract: | We study the performance of the so called Made in Italy agri-food exports over the last fifteen years, merging the strand of analysis that estimated price and demand elasticities with that considering more explicitly the role of product quality. We proceed in three steps. First, we estimate the elasticities of exports with respect to world imports, export prices and the competitors? prices, both at aggregate and product level. Second, we calculate an index of sophistication capturing the position of each product in different layers of world markets. Finally, we compare the outcomes of the estimates of the long-run elasticities with the changes in sophistication levels. The picture we got is a coherent synthesis of the tendencies and forces shaping world competition in the agri-food sector. Our results show that the strategy of Italian exporters varies according to the type of product and to the degree of market completion. In some cases, Italian exports contrast increasing world competition by increasing quality levels (i.e. their sophistication content); in other cases, price competition is chosen by keeping average unit values at lower levels than those of the competitors. All considered, in many cases, these strategies are successful in allowing Italy to defend and sometimes even to increase its positions in the world markets, in spite of a growing world competition. |
| Keywords: | export elasticities, export sophistication, Made in Italy, world demand |
| JEL: | Q17 F14 |
| Date: | 2014–03–11 |
| URL: | http://d.repec.org/n?u=RePEc:mol:ecsdps:esdp14072&r=int |
| By: | Sato, Hitoshi |
| Abstract: | This paper examines the extent to which electricity supply constraints could affect sectoral specialization. For this purpose, an empirical trade model is estimated from 1990-2008 panel data on 15 OECD countries and 12 manufacturing sectors. We find that along with Ricardian technological differences and Heckscher-Ohlin factor-endowment differences, productivity-adjusted electricity capacity drives sectoral specialization in several sectors. Among them, electrical equipment, transport equipment, machinery, chemicals, and paper products will see lower output shares as a result of decreases in productivity-adjusted electricity capacity. Furthermore, our dynamic panel estimation reveals that the effects of Ricardian technological differences dominate in the short-run, and factor endowment differences and productivity-adjusted electricity capacity tend to have a significant effect in only the long-run. |
| Keywords: | Developed countries, Electric power, Manufacturing industries, Technology, Productivity, International trade, Factor endowments, GDP function, Comparative advantage, Electricity |
| JEL: | F1 F11 Q40 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper462&r=int |
| By: | Accinelli Gamba, Elvio; Sánchez Carrera, Edgar J. |
| Abstract: | We claim that economic agents driven by imitative behavior may impact the industrial specialization of national economies. We use a simple two-country model, where workers and firms decide to be skilled (or unskilled) and innovative (or non-innovative). We show that comparative advantages and international trade, under the assumption of a rational strategic behavior of the economic agents, can lead countries towards either an equilibrium with high-social performance or a poverty trap. |
| Keywords: | Imitation theory and games; population games; trade strategy. |
| JEL: | F13 |
| Date: | 2014–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55209&r=int |
| By: | Cecilia Bellora (THEMA and INRA - UMR Economie Publique); Jean-Marc Bourgeon (THEMA and INRA - UMR Economie Publique, Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X) |
| Abstract: | We examine the importance of production risks in agriculture due to biotic elements such as pests in determining the pattern of trade and the distribution of prices in a Ricardian two-country setup. These elements create biodiversity eff ects that result in an incomplete specialization at the free trade equilibrium. Their influence on idiosyncratic production risks evolves depending on the countries' openness to trade. Pesticides allow these eff ects to diminish but they are damaging for the environment and human health. When regulating farming practices, governments have to counterbalance these side-eff ects with the competitiveness of their agricultural sector on international markets. Nevertheless, restrictions on pesticides under free trade are generally more stringent than under autarky. |
| Keywords: | agricultural trade, food prices, agrobiodiversity, pesticides |
| Date: | 2014–04–02 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-00969083&r=int |
| By: | Oyamada, Kazuhiko |
| Abstract: | This paper shows how an Armington-Krugman-Melitz encompassing module based on Dixon and Rimmer (2012) can be calibrated, and clarifies the choice of initial levels for two kinds of number of firms, or parameter values for two kinds of fixed costs, that enter a Melitz-type specification can be set freely to any preferred value, just as the cases we derive quantities from given value data assuming some of the initial prices to be unity. In consequence, only one kind of additional information, which is on the shape parameter related to productivity, just is required in order to incorporate Melitz-type monopolistic competition and heterogeneous firms into a standard applied general equilibrium model. To be a Krugman-type, nothing is needed. This enables model builders in applied economics to fully enjoy the featured properties of the theoretical models invented by Krugman (1980) and Melitz (2003) in practical policy simulations at low cost. |
| Keywords: | Economics, Applied general equilibrium, Monopolistic competition, Firm heterogeneity, Calibration, Neutrality |
| JEL: | C63 C68 D58 F12 L11 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper465&r=int |
| By: | L. Kamran Bilir; Davin Chor; Kalina Manova |
| Abstract: | We provide evidence that host-country financial development affects the global operations of multinational firms. Financially advanced economies attract more affiliates of U.S. multinationals. Financially developed host countries also feature higher aggregate affiliate sales to the local market, the United States and third-country destinations. By contrast, individual affiliates in such hosts sell more to the United States and other markets, but less locally. Yet, the share of local sales in total affiliate sales falls with host-country financial development both at the affiliate and aggregate levels, while the shares of U.S. and third-country sales increase. These results are amplified in sectors that depend more on the financial system for external capital. We rationalize these empirical patterns with a three-country model of multinational activity under imperfect financial markets. The data are consistent with two effects of financial development highlighted by the model: 1) a competition effect that reduces affiliates' local revenues due to increased domestic firm entry; and 2) a financing effect that encourages affiliate entry by easing borrowing constraints in the host country. |
| JEL: | F12 F23 F36 G20 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:20046&r=int |
| By: | David, Carfì; Daniele, SCHILIRO' |
| Abstract: | In the present work, we propose a coopetitive model applied to the Greek crisis, which aims both at improving the competitiveness of the Greek productive system and rebalancing the current account balance of the country. Our model of coopetition (based on normal form game theory) is conceived at a macro level, wherein there are two players: Greece and SNC (the Surplus Northern Countries of the euro area). We suggest a model that looks for a win-win solution. The win-win solution entails a cooperative bi-strategy in which SNC should contribute to re-balance its trade surplus with respect to Greece and, in addition,SNC should provide a certain amount of foreign direct investment (FDI) to improve the competitiveness and the growth in Greece. Thus we �nd a transferable utility and properly coopetitive solution, convenient for all the players. |
| Keywords: | Games and economics; Competitiveness; FDI; Trade Balance; Greek economy;cooperation; coopetition |
| JEL: | C71 C72 C78 F2 F23 F41 F42 O24 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55124&r=int |
| By: | Ito, Hiro (Asian Development Bank Institute); Chinn, Menzie (Asian Development Bank Institute) |
| Abstract: | This study investigates the determinants of currency choice for trade invoicing in a cross-country context while focusing on the link between capital account liberalization and its impact on the use of the renminbi (RMB). The authors find that while countries with more developed financial markets tend to invoice less in the US dollar, countries with more open capital accounts tend to invoice in either the euro or their home currency. These results indicate that financial development and financial openness are among the keys to challenging the US dollar dominance in general, and to internationalizing the RMB for the People’s Republic of China (PRC). The model also suggests that the share of the RMB in export invoicing should have been higher than the actually observed share of less than 10%. The underperformance of RMB export invoicing can be attributed to the inertia in the choice of currency for trade invoicing; once a currency is used for trade invoicing or settlements, it becomes difficult for traders to switch from one currency to another. This same phenomenon was also observed in the cases of the Japanese yen and the euro at their inceptions as international currencies. The model predicts that the share of RMB invoicing for the PRC’s exports will rise to above 25% in 2015 and above 30% in 2018, whether or not the PRC implements drastic financial liberalization. As the near future path of RMB use is also expected to be inertial, these forecasts are probably at the upper end of the actual path of RMB export invoicing. |
| Keywords: | RMB internationalization; capital account liberalization; US dollar; export invoicing; currency invoicing; settlement currency |
| JEL: | F32 F41 |
| Date: | 2014–04–09 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0473&r=int |
| By: | Henze, Philipp |
| Abstract: | This paper measures the impact of sectoral composition, international trade and technological progress on the rising wage gap in Germany. I find a positive effect of the increasing importance of services on the rising wage gap in Germany that is comparable to the effects of international trade and technological change. To quantify the causal relationship between the structural change of the German economy and the wage premium, I use the Establishment History Panel (in German: Betriebs-Historik-Panel - BHP), a detailed establishment-level data set provided by the German Federal Employment Office covering the period 1975-2010. This empirical work puts the focus on an important cause of the rising wage gap that so far has been largely ignored by the literature. -- |
| Keywords: | income inequality,structural change,international trade,technological change |
| JEL: | F16 J31 O15 O30 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:204&r=int |
| By: | Mandal, Biswajit |
| Abstract: | This short note tries to argue that distance is not necessarily harmful for trade. It is shown that there may be an increase in the production and volume of trade if time zones of the trading nations are non-overlapping. This implies a positive effect of distance on the volume of trade. It is also shown that exploitation of time zone difference raises welfare and ensures capital accumulation. The note builds on the emerging literature on time zones and pure theory of international trade. -- |
| Keywords: | trade,time zone |
| JEL: | F1 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201414&r=int |
| By: | Bernhard Klaus Michel |
| Abstract: | Over the last couple of decades, trade liberalisation has progressed and environmental regulations have become more stringent, in particular regarding emissions of air pollution. This has raised the fear in developed countries that emission-intensive activities are increasingly carried out abroad. This paper develops an approach for testing whether emission-intensive industries have greater shares of imported intermediate materials. The test is applied to the Belgian manufacturing sector for the years 1995-2007. Emissions of three types of air pollutants are analysed: greenhouse gases, acidifying gases and tropospheric precursor gases. The results provide evidence that industries with a high intensity in acidifying gas emissions (SO2, NOX and NH3) tend to import a greater share of intermediate materials. This is likely to be linked to the stricter enforcement of regulations for air quality, which act upon acidifying gases. There is no such evidence in the results for emissions of tropospheric precursor gases and in particular of greenhouse gases. Regarding the latter, despite stringent regulations, enforcement appears to be less strict. |
| Keywords: | Offshoring |
| JEL: | F14 F18 Q53 Q56 |
| Date: | 2013–10–11 |
| URL: | http://d.repec.org/n?u=RePEc:fpb:wpaper:1312&r=int |
| By: | durongkaveroj, wannaphong |
| Abstract: | As the world becomes interdependent in economic dimension, external sector today is widely accepted as a national economic motivator. Trade polices yield the various effects on economy. The purpose of this paper is to estimate the effects of free trade policy in Thailand to its top 5 trading partners on economic performance and the level of household income through CGE model using GTAP. The study reveals that the most worthy trading policy for Thailand, aimed at raising its national prosperity, is to remove tariff to trading partners, primarily with the E.U., followed by China and the U.S. |
| Keywords: | computable general equilibrium, trade liberalization, tariff |
| JEL: | C68 F13 |
| Date: | 2014–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55191&r=int |
| By: | Bruno, Randolph Luca (University College London); Cipollina, Maria (University of Molise) |
| Abstract: | This paper combines, explains and summarizes recent findings from the empirical literature focusing on the FDI's effect on firms' performances by collecting all the relevant firm level quantitative studies to run a regression of regressions focused on Enlarged Europe. The results show that there exists a positive indirect impact of FDI on productivity and ultimately on economic growth in EU, but it is limited in magnitude. Moreover, the effect of FDI on growth is stronger for New EU Members after 2001. |
| Keywords: | firm performance, Enlarged Europe, meta-regression analysis |
| JEL: | C81 F23 O52 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp8085&r=int |
| By: | de la Torre, Augusto; Didier, Tatiana; Pinat, Magali |
| Abstract: | This paper discusses the theoretical arguments in favor of and against economic globalization and, with a view to ascertaining whether Latin America may be able to capture the globalization upside, examines the trends and salient features of Latin America's globalization as compared with that of Southeast Asia. The paper focuses on trade and financial integration as well as the aggregate demand structures (domestic demand-driven versus external demand-driven) that underpin the globalization process. It finds that Latin America is mitigating some bad side effects of financial globalization by moving toward a safer form of international financial integration and improving its macro-financial policy frameworks. Nonetheless, Latin America's progress in raising the quality of its international trade integration has been scant. The region's commodity-heavy trade structures and relatively poor quality of trade connectivity can hinder growth potential to the extent that they are less conducive to technology and learning spillovers. Moreover, Latin America's domestic demand-driven growth pattern (a reflection of relatively low domestic savings) may become an additional drag to growth by accentuating the risk of a low savings-low external competitiveness trap. |
| Keywords: | Emerging Markets,Currencies and Exchange Rates,Economic Theory&Research,Debt Markets,Banks&Banking Reform |
| Date: | 2014–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6837&r=int |
| By: | Amighini, Alessia (Università del Piemonte Orientale); Cozza, Claudio (Università di Trieste); Rabellotti, Roberta (Università di Pavia); Sanfilippo, Marco (European University Institute) |
| Abstract: | The empirical literature on China’s outward foreign direct investment (OFDI) mainly relies on aggregate data from official statistics, whose international reliability is currently a matter of concern, and that do not take account of some relevant features such as the industry breakdowns, ownership structures and modes of entry. A novel firm-level database (EMENDATA), compiled by matching data from several available sources, on various types of cross-border deals, and including information on group structure, enables new empirical analyses and provides new insights into the rapidly increasing presence of Chinese companies abroad. In this paper, exploring the potential of these data we offer an informative and comprehensive assessment of the geographical and specialization patterns of Chinese outward FDI into Europe and suggest new avenues for further research on this highly policy relevant issue. |
| Keywords: | China; FDI; firm-level data; MNEs |
| JEL: | F21 F23 |
| Date: | 2014–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2014_002&r=int |
| By: | Arimura, Toshihide; Iguchi, Hakaru; Michida, Etsuyo |
| Abstract: | Voluntary environmental actions, such as the adoption of ISO 14001, are gaining increasing attention in developing countries. This study examines the mechanism of ISO 14001 diffusion in a developing economy on the basis of a unique corporate survey of manufacturing sectors in Malaysia. Product-related environmental regulations, such as REACH, are contributing to this diffusion indirectly by promoting quality control standards such as ISO 9001. The importance of foreign direct investment and global value chains for ISO 14001 diffusion is also confirmed. |
| Keywords: | Malaysia, Environmental protection, Environmental policy, Industrial standards, International trade, PRERs (product-related environmental regulations), REACH, RoHS, ISO 14001, ISO 9001, Global value chain |
| JEL: | F18 Q56 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper454&r=int |
| By: | Sarker, Rakhal; Ratnesena, Shashini |
| Abstract: | While the competitiveness of the Canadian agri-food sector attracted significant research attention since the mid 1980s, no study has measured competitiveness using longitudinal data and determined empirically the drivers of competitiveness. This article contributes to the competitiveness literature by measuring the international competitiveness of wheat, beef and pork sectors in Canada using data from 1961 to 2011 and by determining the drivers of competitiveness. Our results demonstrate that Canada enjoys competitiveness in the wheat sector but not in the beef or pork sectors. Empirical results also suggest that the competitiveness of the Canadian wheat sector can be enhanced if the cost seed in Canada relative to that in the United States is lower. Similarly, if the relative labour cost of meat processing is lower, the competitiveness of both beef and pork sectors in Canada will be enhanced. Exchange rates are important drivers of international competitiveness of beef and pork sectors in Canada. The decoupled farm policies in Canada do not have a significant impact on the competitiveness of wheat and pork sectors in Canada. Our empirical results also highlight cases of significant policy failures in Canada. |
| Keywords: | Competitiveness, Measurement, Normalized Revealed Comparative Advantage, Wheat, beef and pork sectors, Drivers of Competitiveness, Agribusiness, Agricultural and Food Policy, International Relations/Trade, |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:ags:catpwp:165675&r=int |
| By: | Lee, Il Houng (Asian Development Bank Institute); Park, Yung Chul (Asian Development Bank Institute) |
| Abstract: | This paper develops a multilateral currency system where national currencies are used for trade settlement in East Asia, comprising the Association of Southeast Asian Nations (ASEAN) member countries, the People’s Republic of China, Japan, and the Republic of Korea (ASEAN+3). The currency scheme is expected to mitigate the risks associated with independent attempts at internationalization in non-convertible currency countries. It could also reduce dependence on the US dollar, safeguard against financial spillovers from outside, and deepen trade and financial integration in the region. The patterns and structure of trade and financial openness suggest that East Asia has already established an economic base upon which it could launch such a system. The experience with renminbi internationalization will help the Republic of Korea and ASEAN-5 to emulate this strategy. |
| Keywords: | currency internationalization; RMB internationalization; trade invoicing and settlement |
| JEL: | F15 F36 F42 |
| Date: | 2014–04–13 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbiwp:0474&r=int |
| By: | Chen, Yu-Fu (University of Dundee); Görg, Holger (Kiel Institute for the World Economy); Görlich, Dennis (Kiel Institute for the World Economy); Molana, Hassan (University of Dundee); Montagna, Catia (University of Aberdeen); Temouri, Yama (Aston University) |
| Abstract: | This paper reconsiders the link between welfare state provision, globalisation and competitiveness empirically. We challenge the conventional wisdom that welfare states, large-scale public provision of social insurance and progressive systems of redistributive taxation are incompatible with economic globalisation. Our empirical analysis is motivated by recent theoretical work that looks at the effects of redistribution policies in open economies models that capture the interconnectedness of welfare states, production structures and international economic integration when goods and factor markets are imperfectly competitive and countries possess specific characteristics – e.g. demographic structure, institutional features of labour markets, and government’s preference structure. Hence, contrary to the conventional view, the efficiency gains stemming from increasing international openness strengthen the positive feed-back effects between redistribution policies and the exploitation of aggregate scale economies. We find some evidence in line with the theory, suggesting that there is indeed a positive interaction between vertical linkages and social expenditure in raising competitiveness. We also look at an important aspect of globalisation, namely the activities of multinational companies, and investigate whether social expenditure, which arguably contributes to a stable and more attractive social and economic environment for the operations of businesses, hinders or attracts inward investors. We find that social expenditure may be attractive to inward FDI and may also act to anchor firms in the home country. |
| Keywords: | welfare state, globalisation, economies of scale |
| JEL: | H5 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izapps:pp81&r=int |
| By: | Khaled Guesmi; Frédéric Teulon |
| Abstract: | This paper aims to investigate the relationship between Foreign Direct Investment (FDI) inflows and their determinants in six major countries in the South Asian Association for Regional Cooperation (SAARC) over the period from 1998 to 2010. Using panel data techniques, we account for the possible presence of both economic dependencies and structural breaks. The findings show that there are common variables of economic significance among the examined countries: macro determinants such as openness, growth rate, exchange rate, and economic instability have a long-run impact on FDI inflows in our panel. The results are submitted to a battery of tests, including panel unit root and panel cointegration tests. |
| Keywords: | Foreign Direct Investment, Economic dependencies, Structural breaks, South Asian Association for Regional Cooperation |
| Date: | 2014–04–10 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:2014-213&r=int |
| By: | Yusuf, Sulaimon Aremu |
| Abstract: | This paper used quantitative analysis with the help of pure descriptive statistics to examine the export performance of Newly Industrialized Countries; the lesson for African countries. The researcher selected Four NICs and Four African countries based on the data availability from the World Bank Development Index (2012). The NICs considered for the study are; China, India, Brazil and South Africa. While Ivory Coast, Gabon, Egypt and Kenya were selected in Africa based on data availability and geographical representation. The study reveals that the same peculiar hindrances factors that are obstacles to African countries’ export performance and economic success in the long run also applies to NICs but they were able to overcome it and drag themselves out of the poverty net. The necessary policy prescriptions were recommended by the researcher to the African countries to move near the end of “catch up " phase in order to achieve the impressive export performance that will lead to sustainable growth and development. |
| Keywords: | Export performance, Economic Growth |
| JEL: | F14 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55110&r=int |
| By: | Asonuma, Tamon |
| Abstract: | Emerging countries experience real exchange rate depreciations around defaults. In this paper, we examine this observed pattern empirically and through the lens of a dynamic stochastic general equilibrium model. The theoretical model explicitly incorporates bond issuances in local and foreign currencies, and endogenous determination of real exchange rate and default risk. Our quantitative analysis, using the case of Argentina�s default in 2001, replicates the link between real exchange rate depreciation and default probability around defaults and moments of the real exchange rate that match the data. Prior to default, interactions of real exchange rate depreciation, originated from a sequence of low tradable goods shocks with the sovereign�s large share of foreign currency debt, trigger defaults. In post-default periods, the resulting output costs and loss of market access due to default lead to further real exchange rate depreciation. |
| Keywords: | Sovereign defaults; External debt; Real exchange rate; Currency composition of debt; |
| JEL: | E43 F32 F34 G12 |
| Date: | 2014–03–23 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55133&r=int |
| By: | Diego Battiston; Richard Dickens; Alan Manning; Jonathan Wadsworth |
| Abstract: | This paper investigates the impact of immigration on the probability of being in social housing in the UK. In recent years immigrant households are slightly more likely than natives to be in social housing but once one controls for relevant household characteristics immigrants are significantly less likely to be in social housing than natives. However, there has been change over time - the immigrant penalty has fallen over time probably because of changes in allocation rules. Overall we find that the rising number of immigrants and the change in the allocation rules can explain about one-third of the fall in the probability of being in social housing with two-thirds being the result of the fall in the social housing stock. |
| Keywords: | Immigration, social housing |
| JEL: | F22 R21 H75 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1264&r=int |
| By: | Anna De Paoli (University of Milan Bicocca); Mariapia Mendola: (University of Milan Bicocca, Centro Studi Luca d\'Agliano and IZA) |
| Abstract: | This paper investigates the labor market effect of international migration on child work in countries of origin. We use an original cross-country survey dataset, which combines information on international migration with detailed individual-level data on child labor at age 5-14 in a wide range of developing countries. By exploiting both within- and cross-country variation and controlling for country fixed effects, we find strong and robust evidence on the role of international mobility of workers in reducing child labor in disadvantaged households through changes in the local labor market. |
| Keywords: | International Migration, Child Labor, Factor Mobility, Cross- |
| JEL: | F22 F1 J61 |
| Date: | 2014–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:365&r=int |
| By: | Hui Jun Zhang; Jean-Marie Dufour; John Galbraith |
| Abstract: | Understanding and measuring the relative roles of different causal channels between commodity prices and exchange rates has important implications in financial decision making, especially for market participants with short horizons. From a macroeconomic perspective, this can also be useful for interpreting exchange rate movements, financial market monitoring and monetary policy. Basic economic reasoning on currency demand suggests that the currencies of countries whose exports depend heavily on a particular commodity should be strongly influenced by its price, so commodity price movements should lead (Granger-cause) exchange rate movements (macroeconomic/trade mechanism). In contrast, the present value model of forward-looking exchange rates suggests reverse causation, i.e. exchange rates should Granger-cause commodity prices (expectations mechanism). We examine empirically the causal relationship between commodity prices and exchange rates, using data on three commodities (crude oil, gold, copper) and three countries (Canada, Australia, Chile), over the period 2000-2009. To go beyond pure significance tests of non-causality and to provide a relatively complete picture of the links, measures of the strength of causality for different horizons and directions are estimated and compared. Since low-frequency data may easily fail to capture important features of the relevant causal links in volatile financial markets – such as foreign exchange and commodity markets – high-frequency (daily and 5-minute) data are exploited. Both unconditional and conditional (given general stock market conditions) causality measures are considered, and allowance for “dollar effects” is made by considering non-U.S. dollar variables. We identify clear causal patterns: (1) Granger causality between commodity prices and exchange rates is visible in both directions; (2) it is stronger at short horizons, and becomes weaker as the horizon increases; (3) causality from commodity prices to exchange rates is stronger than causality in the reverse direction across multiple horizons: the ratios of causality measures in two different directions can be quite high (for example, as high as 5 or 10 in favor of causation from commodity prices to exchange rates), especially at short horizons; (4) eliminating dollar effects weakens causality from exchange rates to commodity prices, and reveals a more definite pattern where causality from commodity prices to exchange rates dominates across multiple horizons. In contrast with earlier results on the non-predictability of exchange rates, we find that the macroeconomic/trade-based mechanism plays a central role in exchange rate dynamics, despite the financial features of these markets. |
| Keywords: | multi-horizon causality, causality measures, commodity prices, exchange rates, stock prices, high-frequency data, spurious causality, financial markets, |
| JEL: | F31 G15 G17 |
| Date: | 2013–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirwor:2013s-39&r=int |
| By: | MATSUBARA, Hideto |
| Abstract: | While the advance of globalization is significant today, market-opening is often viewed pessimistically from a perspective of a huge impact on local economies in an importing country. In Japan, a critical voice is raised to Trans-Pacific Strategic Economic Partnership Agreement (TPP) from the agricultural sector, which is especially uncompetitive and placed in difficult situation in local regions. However, the influence of market-opening is not necessarily insurmountable. From a historic perspective, some producing regions survived in a liberalized competitive market. As the illustration, this research discusses Japanese orange industry and the successful producing region, Mikkabi-town, in liberalization of the orange market in Japan. |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:hit:hjbswp:180&r=int |
| By: | Blaise Gnimassoun |
| Abstract: | One of the major current concerns of economic policy in developing countries is the choice of the appropriate exchange rate regime to consolidate and accelerate the pace of economic growth. This paper aims to investigate whether the choice of a country’s exchange rate regime may affect current account imbalances for sub-Saharan African economies. To this end, we first use Bayesian model averaging (BMA) to address concerns about model uncertainty and identify the key determinants (fundamentals) of external balances. Then, estimating current account imbalances over the 1980-2012 period, we show that flexible exchange rate regimes are more effective in preventing such disequilibria. Consequently, candidates for membership of monetary unions should discuss widely the possible adjustment mechanisms before forming such unions; one potential measure being the sharing of external risks at regional level |
| Keywords: | Current account imbalances, Exchange rate regime, Bayesian model averaging, Sub-Saharan Africa. |
| JEL: | F32 F33 C11 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2014-22&r=int |
| By: | Robert Kollmann; Marco Ratto; Werner Roeger; Jan in'tVeld; Lukas Vogel |
| Abstract: | We estimate a three-country model using 1995-2013 data for Germany, the Rest of the Euro Area (REA) and the Rest of the World (ROW) to analyze the determinants of Germany’s current account surplus after the launch of the Euro. The most important factors driving the German surplus were positive shocks to the German saving rate and to ROW demand for German exports, as well as German labour market reforms and other positive German aggregate supply shocks. The convergence of REA interest rates to German rates due to the creation of the Euro only had a modest effect on the German current account and on German real activity. The key shocks that drove the rise in the German current account tended to worsen the REA trade balance, but had a weak effect on REA real activity. Our analysis suggests these driving factors are likely to be slowly eroded, leading to a very gradual reduction of the German current account surplus. An expansion in German government consumption and investment would raise German GDP and reduce the current account surplus, but the effects on the surplus are likely to be weak. |
| Keywords: | current account; intra-european imbalances; monetary union; eurozone crisis; estimated DSGE model |
| JEL: | F40 F30 F21 E30 |
| Date: | 2014–04 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/159544&r=int |
| By: | Roy, Ripon; Rahman, Md. Mokhlesur |
| Abstract: | Workers’ remittance inflows have been rising significantly over the past decade for Bangladesh. They have become one of the most stable sources of foreign exchange earnings and emerged as a crucial issue for monetary and fiscal policy. In 2012, remittances contributed to 12.3% of GDP of Bangladesh while the contribution was 6.4% in 2003. Besides lowering poverty and stimulating economic growth through different microeconomic and macroeconomics channels, remittances like other massive capital inflows can induce inflation and appreciate the real exchange rate and thereby hurt the competitiveness of the tradable sector along the lines of the Dutch Disease phenomenon. In this paper, we have empirically tested whether growing remittances cause an inflation (Model 1) as well as food inflation (Model 2) in Bangladesh using monthly data over the time period July 2003- July 2013 (post - floating exchange rate scenario). We have considered two models as the pattern of expenditure varies by consumption categories suggesting that the effect of remittances may also vary across them. Monthly data is used to better represent the changes in inflation as it is well known that inflation changes occur very quickly in response to shocks. The reason for specifically concentrating on the post-floating exchange rate scenario comes from the fact that the impact of remittances on a economy depends on the exchange rate regimes and studies not controlling for regimes may be biased as suggested by Ball, Lopez & Reyes (2013). Johansen (1988) and Johansen & Juselius (1990) cointegration technique is used to determine the long run relationship between remittances and inflation. Then, a Vector Error Correction Model (VECM) approach is applied for estimating the direction, extent and significance of the relationship. The results of both the models show that remittance inflows cause an inflationary pressure in Bangladesh while the responsiveness of food inflation is almost two and half times higher than general inflation. |
| Keywords: | Remittances, Inflation, Dutch Disease, Cointegration, VECM, Connectedness Analysis |
| JEL: | E31 F24 |
| Date: | 2014–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:55190&r=int |
| By: | Enrica De Cian (Fondazione Eni Enrico Mattei (FEEM), Italy and Euro-Mediterranean Center on Climate Change (CMCC), Italy); Ilkka Keppo (University College London, UCL Energy Institute, UK); Johannes Bollen (CPB, Den Haag, Netherlands); Samuel Carrara (Fondazione Eni Enrico Mattei (FEEM), Italy and Euro-Mediterranean Center on Climate Change (CMCC), Italy); Hannah Förster (Öko-Institut, Germany); Michael Hübler (Centre for European Economic Research (ZEW), Mannheim, Germany); Amit Kanudia (KanORS-EMR, New Delhi, India); Sergey Paltsev (Massachusetts Institute of Technology (MIT), Joint Program on the Science and Policy of Global Change, US); Ronald Sands (U.S. Department of Agriculture, Economic Research Service, USA); Katja Schumacher (Öko-Institut, Germany) |
| Abstract: | This paper examines how changes in an international climate regime would affect the European decarbonization strategy and costs through the mechanisms of trade, technology, and innovation. We present the results from the Energy Modeling Forum (EMF) model comparison study on European climate policy to 2050. Moving from a no-policy scenario to an existing-policies case reduces all energy imports, on average. Introducing a more stringent climate policy target for the EU only leads to slightly greater global emission reductions. Consumers and producers in Europe bear most of the additional burden and inevitably face some economic losses. More ambitious mitigation action outside Europe, especially when paired with a well-operating global carbon market, could reduce the burden for Europe significantly. Because of global learning, the costs of wind and especially solar-PV in Europe would decline below the levels observed in the existing-policy case and increased R&D spending outside the EU would leverage EU R&D investments as well. |
| Keywords: | Climate Change, Stabilization Policy, International Participation |
| JEL: | Q5 Q54 |
| Date: | 2014–03 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2014.30&r=int |
| By: | Georges Prat; Remzi Uctum |
| Abstract: | Using Consensus Economics survey data on JPY/USD and GBP/USD exchange rate expectations for the 3- and 12-month horizons over the period November 1989 – December 2012 we first show that expectations fail to unbiasedness tests and do not exhibit a learning process towards rationality. Our approach is consistent with the economically rational expectations theory (Feige and Pearce, 1976), which states that information costs and agents’ aversion of misestimating future exchange rates determine the optimal amounts of information on which they base their expectations. The time-variability of the cost/aversion ratios justifies at the aggregate level a representation of expectations as a linear combination of the traditional extrapolative, adaptive and regressive processes augmented by a forward market component, whose parameters are allowed to change over time. This mixed expectation model with unstable heterogeneity is validated by our Kalman Filter estimation results for the two currencies and the two horizons considered. Although the chartist behavior, gathering the extrapolative and adaptive components, appears to dominate the fundamentalist behavior, described by the regressive and forward market components, the relative importance of the fundamentalists (chartists) is found to increase (decrease) with the time-horizon. |
| Keywords: | expectation formation, exchange rates, dynamic heterogeneity, survey data. |
| JEL: | D84 F31 G14 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2014-17&r=int |
| By: | Escudé, Guillermo J. |
| Abstract: | A traditional way of thinking about the exchange rate regime and capital account openness has been framed in terms of the 'impossible trinity' or 'trilemma', according to which policymakers can only have two of three possible outcomes: open capital markets, monetary independence and pegged exchange rates. The present paper is a natural extension of Escude (A DSGE Model for a SOE with Systematic Interest and Foreign Exchange Policies in Which Policymakers Exploit the Risk Premium for Stabilization Purposes, 2013), which focuses on interest rate and exchange rate policies, since it introduces the third vertex of the 'trinity' in the form of taxes on private foreign debt. These affect the risk-adjusted uncovered interest parity equation and hence influence the SOE's international financial flows. A useful way to illustrate the range of policy alternatives is to associate them with the faces of an isosceles triangle. Each of three possible government intervention policies taken individually (in the domestic currency bond market, in the foreign currency market, and in the foreign currency bonds market) corresponds to one of the vertices of the triangle, each of the three possible pairs of intervention policies corresponds to one of the three edges of the triangle, and the three simultaneous intervention policies taken jointly correspond to the triangle's interior. This paper shows that this interior, or 'possible trinity' is quite generally not only possible but optimal, since the central bank obtains a lower loss when it implements a policy with all three interventions. -- |
| Keywords: | DSGE models,small open economy,monetary and exchange rate policy,capital controls,optimal policy |
| JEL: | E58 O24 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifwedp:201413&r=int |
| By: | Jean Fouré (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique); Agnès Bénassy-Quéré (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Lionel Fontagné (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, Department of Economics - European University Institute) |
| Abstract: | Economic analysis is increasingly addressing long-term issues (such as global warming) that require a dynamic baseline for the world economy. In this article, we develop a three-factor (capital, energy, labour) macroeconometric (MaGE - Macroeconometrics of the Global Economy) model, and project growth for 147 countries to 2050. We improve on the literature by the following: (i) accounting for the energy constraint through dynamic modelling of energy productivity, (ii) modelling female participation rates consistent with education catch-up, (iii) departing from the assumptions of either a closed economy or full capital mobility (by applying a Feldstein-Horioka type relationship between saving and investment rates), and (iv) offering a fully consistent treatment of the Balassa-Samuelson effect. These innovative features have a sizeable impact on projected GDP. |
| Keywords: | GDP projections; long run; global economy |
| Date: | 2013–08–16 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-00975545&r=int |
| By: | Alexander A. Yalbulganov (National Research University Higher School of Economics) |
| Abstract: | The creation of the EurAsEC Customs Union and Russia’s ascension into the WTO has led to a radical change in Russia’s anti-dumping legislation. Anti-dumping regulation ceased to fall under national jurisdiction and was transferred to the Eurasian Economic Commission, a supranational regulator. This article analyzes the new anti-dumping legislation of the EurAsEC Customs Union, anti-dumping procedures, their principles, participants, and main stages, as well as the legal treatment of information used in the anti-dumping regulation. |
| Keywords: | EurAsEC, customs union, anti-dumping measures, anti-dumping duty |
| JEL: | F15 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:35/law/2014&r=int |
| By: | Spolaore, Enrico (Tufts University) |
| Abstract: | Europe’s monetary union is part of a broader process of integration that started in the aftermath of World War II. In this “political guide for economists” we look at the creation of the euro within the bigger picture of European integration. How and why were European institutions established? What are the goals and determinants of European Integration? What is European integration really about? We address these questions from a political-economy perspective, building on ideas and results from the economic literature on the formation of states and political unions. Specifically, we look at the motivations, assumptions, and limitations of the European strategy, initiated by Jean Monnet and his collaborators, of partially integrating policy functions in a few areas, with the expectation that more integration will follow in other areas, in a sort of chain reaction towards an “ever-closer union.” The euro with its current problems is a child of that strategy and its limits |
| Keywords: | European integration |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:wacage:141&r=int |