The effect of natural gas discoveries in Israel on the strength of its currency

In light of the natural gas discoveries in the Mediterranean Sea and their impact on the Israeli economy, I must assess the change in the exchange rate and its impact on the foreign exchange market. There are numerous positive social impacts resulting from the gas discoveries including optimising Israel's energy security and its move to cleaner energy. However, not all of the consequences of discovering natural resources may be positive. One possibly negative outcome could be the well-known phenomenon called the “Dutch disease” in which the discovery of a natural resource can cause a country's currency to spike. To investigate whether the strengthening of the Israeli currency in recent years is a symptom of the “Dutch disease” I used daily and intraday event study methodology to explore the changes in the real exchange rate of the Israeli shekel and the US dollar between 2008 and 2017, according to announcements related to the gas discoveries published during this period. In addition, I examined whether an increase in the real exchange rate was a result of the publication of announcements about natural gas harming the manufacturing and industrial sectors. I found that announcements related to gas discoveries did affect the real exchange rate and caused an appreciation of the Israeli shekel. Investors could analyse the announcements and achieve an abnormal return in the foreign exchange market. In addition, investors' expectations of an appreciation in the real exchange rate causes damage to various manufacturing and industrial sectors.     

SAVING DOLPHINS: BOYCOTTS,TRADE SANCTIONS,AND UNOBSERVABLE TECHNOLOGY*

Consumers boycott some goods because they do not approve the ways they are manufactured. I examine the efficacy of boycotts and the role of trade policy in influencing the foreign exporter's technology choice. Even when its technology choice is unobservable, boycott threats can prompt the foreign firm to adopt the technology consumers prefer. Import policy can augment this effect, but when boycotts can have a substantial impact on demand, a use of ad valorem tariffs yields the unintended result. Specific tariffs and quotas are free of this defect, but specific tariffs are more effective than quotas in addressing consumers' concern.     

Advertiser pressure and control of the news: The decline of muckraking revisited

Many scholars argue that advertiser influence prevents commercial news media from reporting truthfully on harmful business practices. Yet overt evidence of advertiser influence on the news can be elusive, partly because fear of offending advertisers may lead news organizations to censor themselves. An apparent departure from self-censorship, however, is the anti-business reporting that characterized the muckraking era of the early 20th century. We therefore examine muckraking's demise as a case study of potential advertiser influence. As alternative hypotheses of muckraking's decline, our tests seek to distinguish between an advertising boycott and a fall in reader demand for muckraking content. The tests involve comparing market performances of muckraking and non-muckraking magazines, and estimating the determinants of advertising in muckraking magazines. We generally find no evidence to support the hypothesis of an advertising boycott.     

Sea turtle interactions with Hawaii's longline fishery: an extended multi-objective programming model incorporating spatial and seasonal dimensions

The numerous discussions regarding the advantages and disadvantages of Turkey's becoming a member of the Customs Union has been inconclusive. The empirical analysis that mostly focus on the changes in the volume of trade without much regard to the conjectural changes have also been insufficient. This study attempts to shed light on this issue in a formal analysis of Turkey's international trade by empirically accounting for the changes before and after the Customs Union Agreement (CUA). In doing so, we explicitly account for the concurrent changes in the macroeconomic environment that may have affected Turkey's trade with the rest of the world. Our empirical findings indicate that CUA has not only positively impacted on Turkey's trade, but also led to changes in the behaviour of both exports and imports with regards to their responsiveness to underlying variables.     

Impacts of business environment changes on global manufacturing in the Chinese Greater Pearl River Delta: a supply chain perspective

Business operating conditions have changed substantially in the Chinese Greater Pearl River Delta (GPRD) due to the Chinese currency appreciation, rising labour costs, highly volatile oil prices and new processing trade policies. Such changes have triggered manufacturers to rethink their global operations. This article studies potential global manufacturing trends from a supply chain perspective. A mixed integer programming model suggests that these changes have negatively affected the region's competitive advantages as its labour-intensive production mainly targets at the mass market and competes on low costs. Three production relocation trends are affirmed, i.e. the relocation to lower-cost areas within China, lower-cost Asian countries and areas near end markets. However, it is also discovered that the GPRD region still attracts businesses with its formation of industrial clusters, the enhanced comparative advantage against competing regions in inland China or Asian lower-cost countries under high oil prices, and Hong Kong's being a robust location choice to host trade operations.     

A note on Johansen's cointegration procedure when trends are present

This note discusses some issues that arise when Johansen's (1991) framework is used to analyze cointegrating relationships among variables with deterministic linear time trends. We cistinguish “stochastic” and “deterministic” cointegration, arguing that stochastic cointegration is sufficient for the existence of an error correction representation and that it is often the hypothesis of interest in empirical applications. We show that Johansen's (1991) method, which includes only a constant term in the estimated regession system, does not allow for stochastic cointegration. We propose to modify Johansen's method by including a vector of deterministic linear trends in the estimated model. We present tabulated critical values of the maximal eigenvalue and trace statistics appropriate for this case. We discuss the circumstances under which our modification may be useful.     

What made Economists so Politically Influential? Governance-related Ideas and Institutional Entrepreneurship in the Economic Liberalisation of Israel and beyond

Liberal economists are known to be one of the driving forces behind economic liberalisation in various countries, but how did they become so politically influential? Constructivists generally suggest that during economic crises liberal economists persuaded decision-makers to adopt pro-market policy ideas as solutions for economic turbulence. While this answer is true, it is also only partial because it disregards the role played by governance-related ideas and institutional entrepreneurship in the political actions of liberal economists. I argue that ideas regarding decision-making mechanisms provided liberal economists with the basis for creatively exploiting pre-liberalisation institutions, such as central banks and central budget offices, through which these economists enhanced their long-term political influence. An in-depth examination of a paradigmatic case of economic liberalisation driven by liberal economists – Israel's Stabilisation Plan – exemplifies that argument. The existence of like-minded economists and similar pre-liberalisation policy-making institutions in many other countries hints that the Israeli experience is not unique.     

Foreign Trade of Manufactures and Men and Women’s Employment and Earnings in Germany and Japan

Using factor content analysis, this paper provides estimates of the effects of manufacturing trade expansion on men and women's employment in Germany and Japan, with breakdowns by world, OECD, and non-OECD trade. Evidence is found that foreign trade expansion had a more negative effect on women's than men's manufacturing employment in Japan and a roughly equal effect in Germany, with the difference between the countries driven by non-OECD trade. In spite of this, demand shifted away from women's manufacturing employment in Germany after the early-1970s, for both the manufacturing sector as a whole and for manufacturing industries with high female shares of employment, while no such labor demand shifts occurred in Japan. In the face of these differences in labor demand and of very similar increases in female labor supply, male-female hourly wage differences narrowed in Germany and widened in Japan, for both manufacturing and non-agricultural employees. It is concluded that shifts in neither labor supply nor labor demand fit with observed trends of male-female wage differences in Germany and Japan.     

Slow Growth,Trade Liberalisation and the Mexican Disease: A medium-term macroeconomic model with an application to Mexico

The purpose of this paper is to analyse Mexico's medium-term macroeconomic outlook, from the vantage point of the country's recent development. The analysis is carried out within a formal model for the determination of the rates of employment and inflation under conditions of external and internal balance. In equilibrium, the real wage and the rates of employment and inflation depend inter alia on the level of labour productivity, the ratio of foreign debt to domestic output, and the foreign trade regime. Econometric tests based on Mexican data support the model's basic postulates and, in addition, reveal the presence of structural change, linked to trade reform, in the trade balance and the manufactures' productivity growth equations. The macroeconomic implications of such parameter changes are discussed with the help of the analytical model developed.     

Export–led growth and structural change: evidence from Malaysia

Many studies have tried to establish the causal link between export expansion and economic growth. This contribution is to recognize that structural changes will change the sources of growth and this will affect the export-growth relationship. A country case study approach is used focusing on Malaysia, a country with one of the world's highest sustained growth rates and a long history of commodity trade. We use VAR analysis of Malaysian quarterly trade and GDP growth from 1965 to 1996. Trade data are disaggregated into primary and manufactures exports and causality tests are applied to the entire period as well as two subperiods #150 the 1965 #1501980 period when policy emphasis was on import substitution and the 1981#1501996 period when policies favoured export-led growth. Statistical tests confirm export-led growth for the full period and for the period to 1980 but tests on the 1981#1501996 period show growth causing exports. Primary exports had a stronger direct impact on economic growth than manufactures. The weakening support for export-led growth after Malaysia shifted to an export-oriented development strategy is associated with structural changes associated with industrialization. Interaction among trade and growth variables becomes more complex with a broadening export base and more diverse sources of growth.     

Have structural changes eliminated the out-of-sample ability of financial variables to forecast real activity after the mid-1980s? Evidence from the Canadian economy

This article evaluates how consistently reliable the information content of individual financial variables is for Canada's future output growth. We estimate the timing of structural changes in linear growth models and check robustness to specification changes, multiple breaks, and business cycle asymmetry. Our simulated out-of-sample forecast evaluation strategy, using the Mean Square Error F-type (MSE-F) and the new encompassing (ENC-NEW) tests, shows that the leading information content of most financial variables for Canada's future Gross Domestic Product (GDP) growth has deteriorated substantially after 1984:04, but the 1–3-year term spread exhibits a consistently reliable predictive ability at the 1 and 2 quarter horizons and has significant forecasting ability at the 8 quarter horizon. Also, the real M1 money growth has regained its ability to forecast output growth since 1991:01.     

Changes in Global Trade Patterns and Women's Employment in Manufacturing, 1995–2011

This study investigates the feminization and defeminization trends in manufacturing employment in thirty countries from 1995 to 2011. Utilizing two separate methods, structural decomposition analysis (SDA) and factor content analysis (FCA), the study identifies the major industries and trade partners behind the structural shifts in trade that have induced changes in employment and thus in the rates of women’s employment. The findings highlight that, as a general trend, defeminization in manufacturing has persisted in the Global North, led by a negative trade impact in low-technology industries. In the Global South, feminization and defeminization trends are not as straightforward. Despite positive changes in women’s share of employment in medium-high- and high-technology industries, negative gender bias effects of trade changes are found particularly in high-technology industries, where occupations are notably gendered.     

Asymmetric effect of exchange rate volatility on India's cross‐border trade: Evidence from global financial crisis and multiple threshold nonlinear autoregressive distributed lag model

This paper examines the asymmetric effect of exchange rate volatility on India's cross‐border trade with its major trading partners: Japan, Germany, the United States, and China. We extend previous studies in two ways. First, we examine whether global financial crisis changes the asymmetric effect of exchange rate volatility on India's cross‐border trade. Next, we divide exchange rate volatility into quintiles and examine the effect of each quintile on cross‐border trade by using the multiple threshold nonlinear autoregressive distributed lag (MTNARDL) model. Our findings from standard nonlinear ARDL (NARDL) indicate that the asymmetric relationship between exchange rate volatility and cross‐border trade changes as a result of global financial crisis. In addition, findings from MTNARDL indicate that in short‐run, exchange rate volatility symmetrically affects India's cross‐border trade with all sample countries whereas in long‐run it asymmetrically affects cross‐border trade. Overall, these findings are very important for policy implications and open a new dimension to exchange rate volatility and trade flows.     

Who Gains from Boycotts? A Welfare Analysis of Consumer Activism

This paper explores the welfare consequences of product boycotts by linking product and labor markets. Consumers' threat of boycott can affect the firm's decision such as production location, size of operation and wage rate. Such conscientious action, however, can actually result in a welfare loss of the workers of concern as well as consumers themselves. The analysis suggests that consumers set their goals by studying the labor market and coordinating with local groups rather than demanding what may seem righteous.     

Trade Liberalization or Oil Shocks: Which Better Explains Structural Breaks in International Trade Ratios?

Ben‐David and Papell's (1997 ) tests for structural breaks in trade ratios over the postwar period revealed that trade ratios exhibited structural breaks in their paths and that postbreak trade averages exceeded prebreak averages. They attributed these breaks to trade liberalization measures carried out during this period. We re‐evaluate their results and find that for most countries the averages of actual postbreak ratios were below the averages of the extrapolated prebreak ratios and that a large share of the breaks coincided with the 1970s oil shocks. This would suggest that the oil shocks rather than trade liberalization may account for the breaks.     

India's trade balance in the 1980s an econometric analysis

The paper is an examination of India's trade balance in the 1980s. The approach attempted is of examining the bilateral trade balances of India with nine trading partners from the non-communist bloc. The long-run equilibrium relations are studied via two VAR models in Johansen's multivariate cointegration framework. Five hypotheses of interest are singled out for attention. The nominal and real exchange rates consistently emerge as important influences on the trade balance. However, as the exchange rates fail weak exogeneity tests, policy implications are not clear cut.     

Measuring Vertical Specialization: The Case of China

The explosive growth of Chinese trade may be due to international production fragmentation, but few have assessed these phenomena together, in part, because it is difficult to measure the vertical specialization (VS) of China's trade. Unique features of China's processing trade cause both identification of imported inputs and their allocation across sectors to vary by trade regime. This paper estimates the VS of Chinese merchandise exports, addressing these two challenges. A new method to identify Chinese imported inputs is developed, and used to calculate VS by sector and destination. VS estimates based on the official Chinese input–output table are contrasted with those based on a split table, capturing processing and normal exports separately. Last, the paper tests whether Chinese “export sophistication” can be explained by VS.     

Does the exchange rate matter to bilateral trade between Korea and Japan? Evidence from commodity trade data

This study examines the short- and long-run effects of exchange rate changes on trade flows in the context of disaggregating industry data of bilateral trade between Korea and Japan. For this purpose, an autoregressive distributed lag (ARDL) approach is used. Results show that Korea's exports and imports are relatively sensitive to the bilateral exchange rate in the short-run, but less responsive in the long-run. It is also found that income in the two countries has significant impacts on the bilateral trade flows in both the short- and long-run. Finally, exchange rate uncertainty and Japanese FDI to Korea are found to have little impacts on Korea's trade with Japan in the short- and long-run.     

Driving economic fluctuations in Peru: the role of the terms of trade

This paper uses a common trend model, following King et al. (Am Econ Rev 81:819–840, 1991), Mellander et al. (J Appl Econ 7(4):369–394, 1992), and Warne (A common trends model: identification, estimation and inference. Seminar Paper 555, Institute for International Economic Studies, Stockholm University, 1993), to evaluate, for 1994–2015, the role of the terms of trade vis-à-vis domestic productivity in explaining macroeconomic fluctuations in Peru. Our results show that Peru’s macroeconomic aggregates share two common trends: an external one, associated with the evolution of the terms of trade; and a domestic one, linked to the evolution of domestic productivity. The external common trend has a larger impact on private investment and public expenditure than on consumption and output, a result consistent with the role of investment in absorbing income volatility. The permanent terms of trade (foreign) shocks account for most of the volatility in output, consumption, private investment, and public expenditure. This result appears more pronounced as the time horizon approaches the long term.     

SECTORAL EXCHANGE RATE PASS-THROUGH: TESTING THE IMPACT OF POLICY REFORMS IN INDIA

This paper analyses the impact of India's policy reforms on exchange rate pass‐through into import and export prices, using panel data (at one‐digit SITC level) for pre‐ (1980–90) and post‐reform (1991–2001) periods. While the pass‐through into import prices has declined, the pass‐through into export prices (in USD terms) has increased during the 1990s. The results suggest that, relative to rupee depreciation, Indian exporters increased their USD prices around 20% in the 1980s, but decreased them by around 70% in the 1990s. Moreover, the number of sectors exhibiting some degree of pass‐through increased in the 1990s (six), relative to the 1980s (three). These changes may be attributable to the elimination of currency and trade controls, which increased competition among firms and fostered a concern with market share gains in the 1990s over an attempt to use depreciations to increase profits in the 1980s.