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on International Trade |
| By: | Bergantino, Angela Stefania; Spiru, Ada |
| Abstract: | Trade is becoming increasingly fragmented and global value chains (GVCs) more complex. Although GVCs are often considered a defining feature of the current wave of globalization, little is known about what drives GVC participation. This yields to the question what separate less successful countries from successful ones. The increased geographic spread of production processes induces an increasing importance of physical transportation of input and output goods. For emerging economies, increasing international trade and enhancing the participation in global value chains (GVC) are high priority objectives (Percoco, 2014; Bensassi et al., 2015; Rao & Dhar, 2018). In order to achieve them it is necessary to improve the national transportation system and its performance as accessibility is considered an important driver of a country’s attractiveness in today’s globalized production network (Memedovic et al., 2008; Bosker and Westbrock, 2014). This work aims to investigate the determinants of the integration in international production networks of both emerging and developed markets in a transport economic perspective. Starting from the assumption that trade between two countries is conditional on several characteristics of the countries involved that can either enhance or hinder bilateral business activities (Zwinkels & Beugelsdijk, 2010), by implementing an augmented gravity equation (Santos Silva and Tenreyro, 2011; Correia et al., 2019), we investigate the role of the national transportation system in moderating the effects of different betweencountry distance dimensions on GVC-related trade flows. We take into consideration, with a trade policy focus, various aspects of “distance”: geographical, institutional, cultural and economic. We argue that additional costs arising from the different distance dimensions are partly moderated by the host country's national transportation system. Using information provided by the World Input-Output Database (WIOD) for the period 2000-2014, integrated with other data sources, we bring empirical evidence in support of the hypothesis that the national transportation system moderates the effects of between-country distances and reduces the “remoteness” of emerging economies in the global production network participation. Physical gravity factors are found to be significant drivers of vertical trade. We also find evidence confirming that the national transportation system plays an important role in determining countries’ vertical trade integration. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:sit:wpaper:21_1&r= |
| By: | Erbahar, Aksel; Rebeyrol, Vincent |
| Abstract: | This paper shows that Turkish manufacturing exporters export goods that they have not pro-duced and thus also act as trade intermediaries. This exporting of “sourced” products is ubiquitous across firms, products, and destinations. Beyond these facts, the main contribution of the paper is to show that sourced exports are more sensitive to gravity determinants than produced exports at the aggregate level, but at the firm level, this relationship is reversed. We rationalize these findings by allowing producers to act as intermediaries in a model where profitability at the product-destination level is stochastic and correlated across markets. We provide empirical evidence for the model’s core mechanism. |
| Keywords: | international trade; intermediaries; carry-along trade; multi-product firms |
| JEL: | F12 F14 L2 |
| Date: | 2021–11–18 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:126178&r= |
| By: | Chen, Natalie (University of Warwick); Novy, Dennis (University of Warwick, CEP/LSE, CESifo and CEPR) |
| Abstract: | How do trade costs a¤ect international trade? This paper o¤ers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this framework to popular trade cost variables such as currency unions, trade agreements, and WTO membership. While we estimate that these variables are associated with increased bilateral trade on average, we find substantial heterogeneity. Consistent with the predictions of our framework, trade cost e¤ects are strong for ‘thin’ bilateral relationships characterised by small import shares, and weak or even zero for ‘thick’ relationships. |
| Keywords: | Currency Unions ; Euro; Gravity ; Heterogeneity ; RTA ; Trade Costs ; Trade Elasticity ; Translog ; WTO JEL Classification: F14 ; F15 ; F33 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:wrk:warwec:1385&r= |
| By: | Marco Albori (Bank of Italy); Flavia Corneli (Bank of Italy); Valerio Nispi Landi (Bank of Italy); Alessandro Schiavone (Bank of Italy) |
| Abstract: | In the 1990s and 2000s, most countries – including many emerging economies – lifted some barriers to FDI together with trade liberalization; this trend has slowed since the global financial crisis. In this paper, we assess the impact of FDI restrictions on gross inflows by exploiting the sectoral dimension of FDI flows and of the Regulatory Restrictiveness Index (RRI) reported in the OECD databases. In a sample of 17 OECD countries and 23 sectors covering the years 2012-2018, we find that FDI restrictions significantly dampen foreign investments in the manufacturing and service sectors, particularly when they limit foreign equity acquisitions. We also take into account restrictions motivated by national security considerations, which are not scored in the RRI; similarly to other restrictions involving screening schemes, they have not had a significant impact on the size of FDI flows so far. |
| Keywords: | foreign direct investment, capital controls, national security |
| JEL: | F21 F38 F52 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:opques:qef_656_21&r= |
| By: | Odhiambo; Saungweme |
| Abstract: | In this study, the relationship between tourism development and trade in 12 sub-Saharan African (SSA) countries is examined during the period 1995-2019. Three proxies of trade are used, namely the total trade, total exports, and total imports of goods and services to examine this linkage, thereby leading to three separate model specifications. A wide range of modern econometric techniques were also employed to examine the relationship between the various proxies of trade and tourist arrivals. These include i) cross-sectional dependence tests based on Breusch-Pagan (1980) LM, Pesaran (2004) scaled LM, Baltagi et al. (2012) bias-corrected scaled LM, and Pesaran (2004) CD; ii) a slope homogeneity test based on Pesaran and Yamagata (2008); iii) an ECM panel cointegration test based on Westerlund (2007); and iv) a heterogeneous panel causality model based on Dumitrescu and Hurlin (2012), among others. Using the dynamic ordinary least squares (DOLS) and the fully modified ordinary least squares (FMOLS), the study found that, overall, international tourism has a positive and significant impact on trade in SSA countries. This finding is also corroborated by the heterogeneous Granger causality test, which found a distinct unidirectional causal flow from international tourism arrivals to trade. The study, therefore, recommends that SSA countries should implement policies aimed at promoting international tourism in order to increase their international trade and boost their overall trade balance. |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:afa:wpaper:aeri0721&r= |
| By: | Odhiambo |
| Abstract: | In this paper, the causal relationship between trade openness and energy consumption in 20 sub-Saharan African (SSA) countries during the period 1990-2019 is examined. Trade openness is derived from three components, namely total trade, total exports, and total imports, all expressed as a percentage of GDP. In order to account for the omission-of-variable bias, economic growth and urbanisation have been incorporated as intermittent variables between the various components of trade openness and energy consumption. The study first examines the presence of cross-sectional dependence among the countries employed using four cross-sectional dependence tests. Thereafter, both the first- and second-generation unit root tests are used to examine the order of integration. In addition, three panel cointegration tests are used to examine the cointegration among the variables included in the study. Using a multivariate ECM-based panel Granger-causality test, the study found that there is a unidirectional causal flow from trade openness to energy consumption, but only when the exports are used as a proxy for trade openness. When total trade and total imports are used as proxies, no causality is found to exist between trade openness and energy consumption in either direction, irrespective of whether the causality test is conducted in the short run or in the long run. This finding, though contrary to some of the previous studies, is not surprising given the disparity in trade balance and energy challenges facing many SSA countries. |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:afa:wpaper:aeri0821&r= |
| By: | Kazem Biabany Khameneh; Reza Najarzadeh; Hassan Dargahi; Lotfali Agheli |
| Abstract: | The expansion of trade agreements has provided a potential basis for trade integration and economic convergence of different countries. Moreover, developing and expanding global value chains (GVCs) have provided more opportunities for knowledge and technology spillovers and the potential convergence of production techniques. This can result in conceivable environmental outcomes in developed and developing countries. This study investigates whether GVCs can become a basis for the carbon intensity (CI) convergence of different countries. To answer this question, data from 101 countries from 1997 to 2014 are analyzed using spatial panel data econometrics. The results indicate a spatial correlation between GVCs trade partners in terms of CI growth, and they confirm the GVCs-based conditional CI convergence of the countries. Moreover, estimates indicate that expanding GVCs even stimulates bridging the CI gap between countries, i.e., directly and indirectly through spillover effects. According to the results, GVCs have the potential capacity to improve the effectiveness of carbon efficiency policies. Therefore, different dimensions of GVCs and their benefits should be taken into account when devising environmental policies. |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2111.00566&r= |
| By: | Autor, David (MIT); Dorn, David (University of Zurich); Hanson, Gordon H. (University of California, San Diego) |
| Abstract: | We evaluate the duration of the China trade shock and its impact on a wide range of outcomes over the period 2000 to 2019. The shock plateaued in 2010, enabling analysis of its effects for nearly a decade past its culmination. Adverse impacts of import competition on manufacturing employment, overall employment-population ratios, and income per capita in more trade-exposed U.S. commuting zones are present out to 2019. Over the full study period, greater import competition implies a reduction in the manufacturing employment-population ratio of 1.54 percentage points, which is 55% of the observed change in the value, and the absorption of 86% of this net job loss via a corresponding decrease in the overall employment rate. Reductions in population headcounts, which indicate net out-migration, register only for foreign-born workers and the native-born 25-39 years old, implying that exit from work is a primary means of adjustment to trade-induced contractions in labor demand. More negatively affected regions see modest increases in the uptake of government transfers, but these transfers primarily take the form of Social Security and Medicare benefits. Adverse outcomes are more acute in regions that initially had fewer college-educated workers and were more industrially specialized. Impacts are qualitatively—but not quantitatively—similar to those caused by the decline of employment in coal production since the 1980s, indicating that the China trade shock holds lessons for other episodes of localized job loss. Import competition from China induced changes in income per capita across local labor markets that are much larger than the spatial heterogeneity of income effects predicted by standard quantitative trade models. Even using higher-end estimates of the consumer benefits of rising trade with China, a substantial fraction of commuting zones appears to have suffered absolute declines in average real incomes. |
| Keywords: | import competition, China trade, local labor markets, manufacturing decline, job loss |
| JEL: | E24 F14 F16 J23 J31 L60 O47 R12 R23 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp14804&r= |
| By: | James E. Anderson; Praveen Saini |
| Abstract: | This paper improves on current treatment of exchange rate variation in quantitative trade models. Exchange rate changes with heterogeneous passthrough to buyers are embedded in the structural gravity model. Quantification on two digit annual bilateral trade data reveals real effects of exchange rate changes on producers that are substantial for some country-sector-time period observations. Real national income effects are small but not always negligible. Effective exchange Rates with Gravitas (ERGs) are introduced as theory-consistent indexes to guide potential policy remedies. |
| JEL: | F1 F13 F14 F3 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29428&r= |
| By: | Jan-Luca Hennig (Trinity College Dublin) |
| Abstract: | A large literature has shown that trade shocks, such as the rise of China in the global markets, have had negative effects on employment in manufacturing both in the United States and in Europe. This paper analyzes how trade shocks interact with labor market regulations. More specifically, it investigates whether differences in labor market frictions mitigate or amplify the labor market effects of Chinese imports on European regions between 1997 and 2006. To do so, the paper constructs measures of regional exposure to China based on previous literature and on regional labor market frictions exploiting involuntary labor reallocations. The paper finds that regions more exposed to the rise of China have suffered from a reduction in manufacturing employment shares. This shock grows larger with regional labor market friction, hence it exacerbates the impact of trade shock on employment. Moreover, the paper finds that employment in public services, and not in construction or private services sector, absorbed the negative shock to the manufacturing sector. The unemployment rate, the labor force participation rate, and wages in all sectors are unresponsive to import competition from China. |
| Keywords: | Empirical Trade, Regional Labor Markets, Employment Structure, Labor Reallocation |
| JEL: | F14 F16 J21 R23 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:tcd:tcduee:tep1420&r= |
| By: | Nelly Exbrayat (Université de Lyon); Stéphane Riou (Université de Lyon); Skerdilajda Zanaj (Department of Economics and Management, Université du Luxembourg) |
| Abstract: | This paper investigates the multiple effects of a global carbon tax in an imperfectly competitive economy characterized by asymmetrically sized countries, mobile and heterogeneous firms, and international trade. In the short run, the global tax produces only Pigouvian effects, thereby reducing emissions, as argued in the literature. However, in the long run, when firms are mobile we uncover several less friendly impacts of the tax that crucially depend on the level of trade costs. In fact, agglomeration and relocation effects of dirty or clean firms may greatly reduce or magnify the effects of the tax. In addition, we show that a global tax instrument may actually eliminate the most environmentally-friendly spatial locations when trade costs are high. Given the urgent need for a global environmental policy that curbs emissions, our findings highlight the relevance of trade costs, which may heavily impact the effectiveness of such a policy. |
| Keywords: | Global carbon tax; Heterogeneous firms; International trade; Firm location. |
| JEL: | F12 F15 F18 Q28 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:21-17&r= |
| By: | Kerwin Kofi Charles; Matthew S. Johnson; Nagisa Tadjfar |
| Abstract: | We assess whether and why trade competition partly explains the sharp decline in U.S. workers’ attempts to organize labor unions in recent decades. We find that between 1990-2007, import competition due to the “China Shock” lowered union certification elections by 4.5% among workers in manufacturing industries directly exposed to it, and by 8.8% among workers indirectly exposed through its effect on their local labor market. Consistent with a simple model of workers’ decision to seek union representa- tion, we show that direct exposure lowered the expected wage gain from unionization, whereas indirect exposure increased the cost of job loss, both of which discourage worker organizing. |
| JEL: | F16 J41 J50 J51 J52 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29464&r= |
| By: | Ms. Kimberly Beaton; Metodij Hadzi-Vaskov; Ms. Valerie Cerra |
| Abstract: | This paper examines the impact of trade on employment, wages, and other outcomes across countries and explores the conditions and policies that help spread the gains from trade more evenly throughout the population. We exploit a large global firm-level dataset to examine the impact of import competition on employment, wages, and firm performance, as well as the firm, industry, and country factors that mitigate any negative impact of an import shock. In contrast to the results of some well-known single-country studies, we find limited adverse impact of import competition. In some countries and industries, import competition actually strengthens employment growth. In addition, import competition tends to improve average wages, investment, and firm profitability. Country characteristics, such as educational attainment, can also improve employment prospects in response to trade shocks. Finally, we find that firms experiencing greater import competition start with higher average wages; thus any relatively slower employment growth in this group of firms could lead to lower inequality. |
| Keywords: | import competition; employment growth; import shock; firm investment; firm profitability; Imports; Employment; Competition; Wages; Income inequality; Global |
| Date: | 2021–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2021/178&r= |
| By: | Guglielmo Maria Caporale; Anamaria Sova; Robert Sova |
| Abstract: | This paper analyses the impact of the Covid-19 pandemic on exports and imports in the case of 35 OECD countries during the 2019Q1-2021Q2 period using a dynamic panel approach, specifically the system Generalized Method of Moments (GMM). In contrast to earlier studies, the empirical specification incorporates not only an index for the restrictive (and fiscal) measures adopted by national governments, but also an interaction term with private credit which captures the role of the financial sector in the context of the current crisis. The findings suggest that the negative effects of the Covid-19 pandemic on international trade can be attenuated through (policies supporting) private credit, which confirms the importance of the trade-finance nexus. |
| Keywords: | Covid-19 pandemic, stringency index, overall government response index, credit to the private non-financial sector, dynamic panel models, GMM |
| JEL: | C25 E61 F13 F15 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9400&r= |
| By: | Luisito Bertinelli (Department of Economics and Management, Université du Luxembourg); Olivier Cardi (Lancaster University Management School); Romain Restout (Université de Lorraine, Université de Strasbourg, CNRS, BETA) |
| Abstract: | Motivated by recent evidence pointing at an increasing contribution of asymmetric shocks across sectors to economic fluctuations, we explore the labor market effects of technology shocks biased toward the traded sector. Our VAR evidence for seventeen OECD countries reveals that the non-traded sector alone drives the increase in total hours worked following a technology shock that increases permanently traded relative to non-traded TFP. The shock generates a reallocation of labor toward the non-traded sector which contributes to 35% on average of the rise in non-traded hours worked. Both labor reallocation and variations in labor income shares are found empirically connected with factor-biased technological change. Our quantitative analysis shows that a two-sector open economy model with flexible prices can reproduce the labor market effects we document empirically once we allow for imperfect mobility of labor, gross substitutability between home- and foreign-produced traded goods, and factor- biased technological change. When calibrating the model to country-specific data, its ability to account for the cross-country reallocation and redistributive effects we esti- mate increases once we let factor-biased technological change vary between sectors and across countries. |
| Keywords: | Sector-biased technology shocks; Factor-augmenting efficiency; Open economy; Labor reallocation; CES production function; Labor income share |
| JEL: | E25 E32 F11 F41 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:21-15&r= |
| By: | Vasily B. Kashin (National Research University Higher School of Economics); Alexandra D. Yankova (National Research University Higher School of Economics) |
| Abstract: | Interregional and cross-border cooperation between Russia and China is not only an important part of bilateral interactions, but also an incentive for the accelerated development of border territories. Studying the results of Russian-Chinese cross-border cooperation over the past 30 years makes it possible to track the institutional changes of the two countries, as well as the overall dynamics of their foreign trade and investment activities. The main feature of the current state of Russian-Chinese cross-border cooperation is the gradual fading of interest in it on both sides, which is in contradiction with the growing number of state programs, framework agreements and initiatives with serious political support. In order to understand the reasons for such an imbalance, this paper consistently analyzes the main dimensions and indicators of Russian-Chinese cross-border cooperation, as well as the regulatory framework and the results of the implementation of state programs and projects. On the example of successful and failed cases, an attempt is made to identify the deep obstacles to the development of interregional cooperation at different levels and compare them with the problems that Chinese experts highlight |
| Keywords: | cross-border cooperation, regional economy, regulatory framework, local elite, Far East, Russia, China. |
| JEL: | E60 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:hig:wpaper:42/ir/2021&r= |
| By: | Agustin S. Benetrix (Department of Economics, Trinity College Dublin); Andre Sanchez Pacheco (Department of Economics, Trinity College Dublin) |
| Abstract: | We document a robust relation between corporate tax differentials and U.S. international financial integration (IFI). While this is the case for traditional IFI based on cross-border positions, the positive link also emerges for its larger consolidated-by-nationality version. The gap between these IFI measures, the key outcome variable in our analysis, exhibits a strong positive correlation with tax differentials too. This is in part due to consolidated assets of multinational enterprises being more strongly correlated with tax differentials than their cross-border counterpart. We interpret this as indirect evidence of U.S. multinationals taking advantage of tax differentials in ways that go beyond what is captured by traditional Balance of Payments procedures. |
| Keywords: | International financial integration, financial globalisation, multinational enterprises, corporate taxation |
| JEL: | F36 F21 F23 H87 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:tcd:tcduee:tep0321&r= |
| By: | Siegmann, K.A.; Ivosevic, P.; Visser, O. |
| Abstract: | This paper engages with the translation of technological upgrading into migrant workers’ opportunities for employment and decent work in agriculture, a sector commonly disregarded in the debate about the future of work in an era of automation. Zooming in on migrant workers in Dutch horticulture, it explores how technological innovation in horticulture is connected to the scope and conditions of employment and proposes a heuristic to conceptualise the observed dynamics. Our analysis that reads interview data with actors in the Dutch agri-food sector through the lens of the global value chain (GVC) literature contrasts with the pessimistic prediction of widespread technological unemployment. We find product upgrading, e.g., into high value-added products, and process upgrading, e.g., through climate control in greenhouses, to offer potential for more and secure employment. However, workers’ higher work intensity and the dismantling of entitlements to rest and reproduction in an attempt to ‘make people work like machines’ represent the underbelly of these dynamics. |
| Keywords: | Employment, global value chains, horticulture, migrant labour, the Netherlands, precarious work, technological change |
| Date: | 2021–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:ems:euriss:137005&r= |
| By: | Mary Amiti; Sebastian Heise; Aidan Wang |
| Abstract: | The prices of U.S. imported goods, excluding fuel, have increased by 6 percent since the onset of the COVID-19 pandemic in February 2020. Around half of this increase is due to the substantial rise in the prices of imported industrial supplies, up nearly 30 percent. In this post, we consider the implications of the increase in import prices on U.S. industry inflation rates. In particular, we highlight how rising prices of imported intermediate inputs, like industrial supplies, can have amplified effects through the U.S. economy by increasing the production cost of goods that rely heavily on these inputs. |
| Keywords: | inflation; import prices; inputs; supply chains |
| JEL: | F0 E31 |
| Date: | 2021–11–08 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednls:93322&r= |
| By: | Alassane Drabo |
| Abstract: | The three main financial inflows to developing countries have largely increased during the last two decades, despite the large debate in the literature regarding their effects on economic growth which is not yet clear-cut. An emerging literature investigates the dependence of their effects on some country characteristics such as human and physical capital constraint, macroeconomic policy and institutional capacity. This paper extends the literature by arguing that climate shocks may undermine the effect of Foreign Direct Investment (FDI), official development assistance (ODA) and migrants’ remittances on economic expansion. Based on neoclassical growth framework, the theoretical model indicates that FDI, ODA, and remittances improve economic growth, and the size of the effect increases with good absorptive capacity. However, climate shocks reduce this positive effect of financial flows in developing countries. Using a sample of low and middle-income countries from 1995 to 2018, the empirical investigation confirms the theoretical conclusions. Developing countries should build strong resilience to climate change. Actions are also needed at global level to reduce greenhouse gases emissions, and build strong structural resilience to climate shocks especially in developing countries. |
| Keywords: | inflows-economic growth nexus; effect of ODA; income group; role of Climate; effect of foreign direct investment; Climate change; Absorptive capacity; Foreign direct investment; Human capital; Middle East; East Asia; Asia and Pacific; North Africa; South Asia; Global |
| Date: | 2021–07–23 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2021/193&r= |
| By: | Jung Hur (Department of Economics, Sogang University, Korea); Jin Young Yoon (Department of Economics, Queen’s University, Canada) |
| Abstract: | This paper studies a role of Multinational Factoryless Goods Producers (MFGPs) on the recent expansion of the wholesale and retail industries in Korea. We empirically investigate the impacts of industry-level store entry rate of the MFGPs on labor productivity growth and storeentry and exit probabilities of Non-MFGPs which are the majority of firms in the industries. Our main results are as follows. First, the industry-level store entry rates of MFGPs are positively associated with increases in labor productivity growth of Non-MFGPs. Second, the industry-level store entry rates of MFGPs are positively related to store-entry decision of Non-MFGPs. These findings may imply that the entries of MFGP-stores contribute to the growth and expansion of the wholesale and retail industries as a whole. |
| Keywords: | Multinational Factoryless Goods Producers, Wholesale and retail industries; Labor Productivity; Store Entry and Exit |
| JEL: | F23 L81 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:sgo:wpaper:2107&r= |
| By: | Mr. Philippe Wingender; Florian Misch |
| Abstract: | This paper estimates the carbon leakage rate across countries, arguably a key parameter in the international climate policy discussion including on border carbon adjustment, but which remains subject to significant uncertainty. We propose innovations along two lines. First, we exploit recently published data on sector-country-specific changes in energy prices to identify changes in domestic carbon emissions and other flows (rather than the historically limited variation in carbon prices or adherence to international climate agreements). Second, we present a simple accounting framework to derive carbon leakage rates from reduced-form regressions in contrast to existing papers, thereby making our results directly comparable to model-based estimates of carbon leakage. We show that carbon leakage rates differ across countries and could be larger than what existing estimates suggest. |
| Keywords: | carbon leakage, CO2 content of trade, emission spillovers, competitiveness; carbon leakage; leakage rate; carbon flow; emission constraint; price data; Energy pricing; Energy prices; Greenhouse gas emissions; Consumption; Global |
| Date: | 2021–08–06 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2021/207&r= |
| By: | Jeanne Amar (Université Côte d'Azur, CNRS, GREDEG.); Jean-François Carpantier (Université Catholique de Louvain); Christelle Lecourt (Aix-Marseille University, CNRS, EHESS) |
| Abstract: | We examine the determinants of equity shares purchased by Sovereign Wealth Funds (SWFs). Based on the literature of cross-border acquisitions and entry mode choice theory, we shed light on the real drivers of these state-owned funds when they buy small or large stakes in cross-border target firms, for example: is the decision based on the target firm's characteristics? At a country-level? Is the decision sector-oriented? Or, are there financial, economic or political motives for the entry mode choice decision? Using a two-part fractional regression model together with an original dataset of SWF acquisitions and a control group of 6551 observations over 2000-2015, we find that the decision to invest and the decision on the share of equity to be acquired are two distinct processes. Therefore, ignoring the two-stage nature of the investment decision would lead to serious misspecification problems. Our results support most hypotheses derived from cross-border acquisition theory, which indicates that SWFs take the investment decision in cross-border target firms by trying to reduce transaction costs and information asymmetry, and also by taking the legal and institutional environment of the country into consideration. However, the fact that they do not hesitate to take large shares or to acquire targeted firms that are considered to be strategic and located in politically unstable countries suggests that their motives may go beyond pure profit maximization. |
| Keywords: | Sovereign Wealth Funds; Cross-Border Acquisitions; Fractional Regression Models; Entry Mode Choice. |
| JEL: | F31 F31 G15 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:luc:wpaper:21-21&r= |
| By: | Mr. Philip Barrett |
| Abstract: | In short, yes. I use a multi-region integrated assessment model with fuel-specific endogenous technical change to examine the impact of Europe and China reducing emissions to zero by mid-century. Without international technological diffusion this is insufficient to avoid catastrophic climate change. But when innovation can diffuse overseas, long-run temperature increases are limited to 3 degrees. This occurs because policy not only encourages green innovations but also dissuades dirty innovations which would otherwise spread. The most effective policy package in emissions-reducing regions is a research subsidy funded by a carbon tax, driven in the short term by the direct effect of the carbon tax on the composition of energy, and later by innovation induced by research subsidies. Green production subsidies are ineffective because they undermine incentives for innovation. |
| Keywords: | research subsidy; policy package; green production subsidy; package in emissions-reducing region; energy-producing firm; Carbon tax; Climate policy; Greenhouse gas emissions; Spillovers; Global; Europe |
| Date: | 2021–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2021/173&r= |
| By: | H. Emre Yalcin; Cihan Yalcin |
| Abstract: | Due to environmental and energy security concerns, the efforts of countries to increase their share of renewable energy (NEW) and energy efficiency (ENVER) have become the main axis of energy policies at the global level. In addition to these concerns, these two energy sources are very important for the Turkish economy, as they have the potential to reduce the chronic current account deficit. In this study, using the country data of the World Bank for the period 1990-2018, the relations of YENI and ENVER with net imported energy share (imported energy dependence) and current account balance were tested econometrically (panel data fixed effects model) and scenario analyzes were made for Turkey. Econometric estimates reveal that the increases in NEW and ENVER are statistically related to the decrease in the share of net imported energy and the improvement in the current account balance. The effect of the increase in NEW on the net imported energy share is estimated to be stronger for the middle-income country group such as Turkey and the highly urbanized country group. It has been observed that the reducing impact of the increase in ENVER on the share of net imported energy is more pronounced in the relatively lower income and highly urbanized country groups. The improvement effect of the increase in NEW on the current account balance is more evident in the relatively high-income group and moderately urbanized countries such as Turkey. It is estimated that the improvement effect of the increase in ENVER on the current account balance is more pronounced in high and moderate urbanized countries and middle and high income country groups. The scenario analysis for Turkey, based on the estimation results, reveals that a decrease of up to 21 billion USD in Turkey's current account deficit in 2030 is possible with the reasonable increases to be provided in NEW and ENVER. |
| Keywords: | Energy efficiency, Renewable energy, Imported energy dependency, Current account balance |
| JEL: | C23 F32 O13 O24 Q4 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:2129&r= |
| By: | Ram Mohan, M.P.; Gupta, Aditya |
| Abstract: | Introduced in 2016, the Insolvency and Bankruptcy Code overhauled the Indian insolvency regime. Five years young, the work in progress Code is now in the process of adopting the Cross-Border insolvency, which was omitted from its original mandate. In 2018, a legislatively appointed committee suggested that the Code should adopt the UNCITRAL Model Law on Cross Border Insolvency. However, the Committee overlooked a crucial jurisprudential guideline, which coloured the interpretation of the Model Law, which was delivered in a cross-border insolvency dispute between American and German regimes. An American bankruptcy court subjected the German administration of American Intellectual Property assets to a protection exclusively available within the American Bankruptcy Code. This paper studies the American judicial decisions in the Samsung v. Jaffe dispute to identify and underline the importance of its directive. The study reveals that there is virtually no guidance on how an intellectual property license is treated within the Indian insolvency regime. The authors underline the importance of such guidance considering the proposed adoption of the Model Law and suggest legislative inquiry in the issue. |
| Date: | 2021–11–19 |
| URL: | http://d.repec.org/n?u=RePEc:iim:iimawp:14668&r= |
| By: | Ana Kristel Lapid (Asian Development Bank); Rogelio Jr Mercado (Asian Development Bank); Peter Rosenkranz (Asian Development Bank) |
| Abstract: | Cross-border bank positions in the Asia and the Pacific region remain highly concentrated to few counterparties, exposing the region to financial risks and policy spillovers. Consequently, assessing the determinants and impacts of the region’s cross-border banking concentration is relevant in designing appropriate policies to promote financial development and safeguard financial stability. To this end, we construct cross-border bank concentration measures for 47 economies in Asia and the Pacific from 2000 to 2019. The results show that higher capital account and trade openness as well as per capita income are significantly associated with lower cross-border bank concentration. Moreover, elevated cross-border bank concentration tends to lower domestic credit growth and nonperforming loans, while we find no impact on bank profitability for the region. |
| Keywords: | cross-border bank exposures, cross-border bank concentration, credit growth, non-performing loans, bank profitability, Asia and the Pacific |
| JEL: | E44 F36 G21 O16 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:tcd:tcduee:tep0121&r= |
| By: | Pablo Garcia; Pascal Jacquinot; Crt Lenarcic; Matija Lozej; Kostas Mavromatis |
| Abstract: | This paper analyses the effects of the COVID-19 pandemic shock on small open economies in a monetary union with an application to the euro area. Accounting for a high degree of openness and a strong dependence on intra and extra union trade, we focus on the size and the direction of international spillovers – both from the shock itself and from the ensuing fiscal response. To do so, we use a unified modelling framework: The Euro Area and the Global Economy (EAGLE) model. Furthermore, within this general framework, we assess the extent to which specific modelling features shape the dynamic responses to the COVID-19 pandemic. The main messages are as follows. First, fiscal spillovers from the rest of the monetary union do matter. Second, the effective lower bound amplifies the size of the spillovers. Third, the design of wage negotiations leads to wage subsidies having negative international fiscal policy spillovers. Fourth, import content of government spending interacts with the effective lower bound, strongly affecting the size and sign of spillovers. Fifth, when households have finite lifetimes, the responses of output and inflation are amplified compared to the case with infinitely lived households. Finally, a next generation EU instrument is more effective when financed using a tax on consumption. |
| Keywords: | DSGE Modelling, International Spillovers, Monetary Union, Euro Area, COVID-19 |
| JEL: | C53 E32 E52 F45 |
| Date: | 2021–10 |
| URL: | http://d.repec.org/n?u=RePEc:bcl:bclwop:bclwp156&r= |
| By: | Agustin S. Benetrix (Department of Economics, Trinity College Dublin); Beren Demirolmez (Department of Economics, Trinity College Dublin); Martin Schmitz (European Central Bank) |
| Abstract: | We present a comprehensive analysis of the shock absorption role of external positions using the currency exposures dataset by Bénétrix, Gautam, Juvenal, and Schmitz (2020). While the literature has frequently studied how the net international investment position and its currency composition determine the direction and scale of valuation effects, we focus on their amplitude. This is of central importance for global financial stability given the large and increasing scale of external balance sheets. To that end, we propose an indicator showing the extent to which external positions absorb or amplify exchange rate shocks. Analysing a set of 50 countries over the period 1990-2017, we find the external shock absorption role to be present for advanced economies, while this was initially not the case for emerging markets economies (EMEs). In recent years, however, EMEs' external positions increasingly showed a shock absorption capacity. Our regression-based analysis reveals that the level of economic and financial development is associated with a greater capacity to absorb exchange rate shocks. |
| Keywords: | Currency composition, international investment position, foreign currency exposures, valuation effects, global imbalances |
| JEL: | F21 F31 F32 F41 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:tcd:tcduee:tep0421&r= |