Increasing returns, multinationals and geography of preferential trade agreements

This paper uses a model of horizontal multinational enterprises to explore the relationship between transportation costs and trade policy cooperation. Tariffs have the effect of attracting foreign direct investment to the benefit of consumers in the host country. As transport costs fall, the incentive to impose tariffs falls and the benefits to cooperation rise. Thus, in a repeated game in which cooperation is limited by a self-enforcement constraint, a reduction in transport costs facilitates free trade. This logic is applied to a three-country model to examine preferential trade agreements. It is found that if any country is too distant from the others, then global free trade is not attainable. Rather, if two of the countries are within a critical distance of each other and distant from the third country, then the unique outcome is an exclusive free trade agreement between the two adjacent countries. Thus, the model predicts a strong regional bias in preferential trade agreements.     

Overlapping free trade agreements and international trade: A network approach

In our work, we have analysed the effect of the hub‐and‐spoke nature of free trade agreements (FTA s) on trade. Contrary to previous analyses, we have considered the effects of the country's position in the FTA network on the bilateral trade of the hub country. We have conducted an in‐depth analysis of the global network of FTA s, focusing particularly on its evolution in the last 15 years. We have utilised a panel data set covering the period 1960–2010 to investigate the effects of the hub‐and‐spoke on trade. Our results show that the countries that are more connected to FTA s export more than those that are less involved, although not all the partner countries you can connect with are the same. An increase in the number of spokes that have no link between them has, on average, a negative effect on the trade of the hub, which indicates that signing FTA s with every country is not the optimal strategy for increasing trade. However, if we consider the way new FTA s change the relative position of a country, we can see that if new FTA s make the country more central or less constrained in the network, these new agreements have a strongly positive and significant pro‐trade effect.     

Delay and dynamics in labor market adjustment: Simulation results

We simulate numerically a trade model with labor mobility costs added, modeled in such a way as to generate gross flows in excess of net flows. Adjustment to a trade shock can be slow with plausible parameter values. In our base case, the economy moves 95% of the distance to the new steady state in approximately eight years. Gross flows have a large effect on this rate of adjustment and on the normative effects of trade. Announcing and delaying the liberalization can build – or destroy – a constituency for free trade. We study the conditions under which these contrasting outcomes occur.     

Towards an ecological technology for global growth in a North-South trade model

In a world of rapid and cheap communication, where countries are not isolated, ideas and information spread quickly across international borders. Technological progress, leading to more efficient productive processes, in terms of the required amount of natural resources, seems to be the key to overcoming the conflict between environmental concerns and economic growth. This paper investigates the relationship between natural resources and sustainable economic growth in a North-South trade model. We assume that a process of capital transfer from North to South is performed in two different scenarios depending on the effect of this transfer upon the Southern economy. Within a game theory framework, we characterize the optimal paths of global economic growth which respects the sustainable use of natural resources.     

Trade liberalization,free trade agreements,and the value of firms: Stock market evidence from Singapore

We examine the effects of the United States–Singapore Free Trade Agreement (FTA) on the value of firms listed in the Singapore Exchange using event study analysis. Despite the predictability of the FTA negotiations, we find that one event – the removal of the last obstacle to the free trade deal in January 2003 – increases the value of firms in some industries by 1–11% on average. These results indicate that trade liberalization and FTAs do increase the value of firms.     

Non-traded goods and optimal trade policy in a cash-in-advance economy

This paper develops a standard trade model of a small open monetary economy with two traded and one non-traded goods. Money is introduced through a generalized cash-in-advance constraint where the share of goods purchases that must be made using cash, varies across sectors. We find that free trade may be harmful so that alternative policy instruments may be considered to improve welfare. In addition, we study and compare the optimal tariff formula and the optimal consumption tax structure. In the presence of a monetary distortion of the non-traded good, a consumption tax may not Pareto dominate a tariff although the latter bears an additional production burden. This corroborates the theory of second best.     

Gains from trade in used goods: Evidence from automobiles

I investigate the welfare effects of trade liberalization by exploiting a natural policy experiment in the economy of Cyprus. A 1993 law relaxed import restrictions on used vehicles and enabled the importation of second-hand Japanese automobiles into the country. This led to a dramatic shift of consumer purchases from new to used cars and a substantial expansion of the overall market. Welfare gains computed from a structural demand system average $2000 per purchaser per year over a four-year period after the policy change. The findings are suggestive of the potential for substantial gains from liberalizing trade in used goods.     

The clash of liberalizations: Preferential vs. multilateral trade liberalization in the European Union

Preferential trade agreements (PTAs) are characterized by liberalization with respect to only a few partners and thus they can potentially clash with, and retard multilateral trade liberalization (MTL). Yet there is almost no systematic evidence on whether the numerous existing PTAs actually affect MTL. We provide a model showing that PTAs hinder MTL unless they entail accession to a customs union with internal transfers. Using product-level tariffs negotiated by the European Union (EU) in the last two multilateral trade rounds we find that several of its PTAs have clashed with its MTL. However, this effect is absent for EU accessions. Moreover, we provide new evidence on the political economy determinants of trade policy in the EU.     

服务贸易能平缓经济冲击吗——基于美国经济波动跨国传导的研究

服务贸易在经济波动跨国传递中的冲击分解为需求冲击、供给冲击和名义冲击后,并运用美国与各东道国的双边服务贸易数据进行考察。结果发现:服务贸易占总贸易额的比例以及东道国对服务贸易的开放程度对于服务贸易是否可以成为经济波动的跨国传导机制至关重要;服务贸易对东道国的需求冲击效应(反向冲击)占了主导地位,明显大于供给冲击(正向冲击)与名义冲击(正向冲击)效应的总和;服务贸易对东道国经济的净冲击方向与其他经济波动传导机制的冲击方向刚好相反,大小基本相同,而服务贸易冲击相对滞后。据此,可充分发挥服务贸易的逆向冲击作用,构筑缓和外部经济冲击的服务贸易"稳定器"政策。     

Paying a visit: The Dalai Lama effect on international trade

Is political compliance a precondition for healthy trade relations with China? The Chinese government frequently threatens that meetings between its trading partners' officials and the Dalai Lama will be met with animosity and ultimately harm trade ties. We run a gravity model of exports to China from 159 partner countries between 1991 and 2008 to test the extent to which bilateral tensions affect trade with autocratic China. In particular, we empirically investigate whether countries that receive the Dalai Lama despite China's opposition experience a significant reduction in their exports to China. In order to account for the potential endogeneity of meetings with the Dalai Lama, the number of Tibet Support Groups and the travel pattern of the Tibetan leader are used as instruments. Our empirical results support the idea that countries officially receiving the Dalai Lama at the highest political level are punished through a reduction of their exports to China. However, this ‘Dalai Lama Effect’ is only observed for the Hu Jintao era and not for earlier periods. Furthermore, we find that this effect is mainly driven by reduced exports of machinery and transport equipment and that it disappears in the second year after a meeting took place.     

贸易保护政策的动态不一致性 ——以我国出口退税政策为例

本文从企业与政府之间博弈的视角,揭示贸易保护政策的动态不一致性问题。理论分析表明,在理性预期与信息不对称的假设前提下,政府在与私人企业的博弈中,往往处于劣势地位,容易受企业行为的牵引,其结果将导致贸易保护政策的动态不一致性。本文以我国出口退税政策的实施作为上述论断的经验证据,结果表明,出口企业的策略性行为可能是导致我国出口退税政策频繁变动的内在原因之一。     

国内技术性贸易壁垒研究评述:1990-2005

技术性贸易壁垒已经成为影响国际贸易的最重要因素,中国也面临着越来越多的技术性贸易壁垒约束。文章回顾了1990-2005年国内对于技术性贸易壁垒的相关研究,并对技术性贸易壁垒的形成、经济效应及其影响、应对及突破等问题作了较全面的评述,并对进一步的研究作了简要展望。     

Intra-national versus international trade in the European Union: why do national borders matter?

The first objective of this paper is to estimate border effects among European Union countries. In this context, the specification of the gravity equation, together with the choice of the distance measure, are shown to be crucial for assessing the size of the border effect. The second objective is to evaluate the determinants of the cross-commodity variation in national border effects. Contrary to previous findings reported in the literature, we show that trade barriers do provide an explanation. In particular, technical barriers to trade, together with product-specific information costs, increase border effects, whereas non-tariff barriers are not significant. Our results further suggest that these barriers are not the only cause since the spatial clustering of firms is also found to matter.     

Trade liberalization and rising wage inequality in Latin America: Reconciliation with HOS theory

The paper puts forward the hypothesis that the transitory effects of trade liberalization on wage inequality can differ from the long-run outcome. In cases where the HOS theory predicts a decline in wage inequality in the long run, a temporary rise can, nevertheless, occur due to (i) the asymmetries in the speed of contraction in the import sector and expansion in other sectors, and (ii) the capital-skill complementarity in production. The asymmetric contraction and expansion causes a transitory capital accumulation that boosts the relative and the real wage of skilled labor due to capital-skill complementarity. Although the long-run HOS fundamentals are, therefore, dominated in the short run by the transient effects arising due to capital-skill complementarity, the observed rise in wage inequality is nonetheless consistent with the HOS theory appropriately extended to a dynamic setting.     

Trade policy of a free trade agreement in the presence of foreign lobbying

This paper studies the effect of foreign lobbies on trade policy of a country which is a member of a Free Trade Agreement (FTA). It uses a monopolistically competitive political economy model in which the government determines external tariffs endogenously. The effect of foreign lobbying under the FTA is examined empirically using Canadian industry-level trade data that allow differentiating of lobby groups by the country of origin. The analysis suggests that the presence of foreign lobbying has a significant effect on the domestic trade policy. The heterogeneity of foreign lobbies is also important: the presence of an organized lobbying group in an FTA partner country tends to raise trade barriers while an organized lobbying group of exporters from outside of the FTA is associated with less protection.     

Exploring sources of value destruction in international acquisitions: A synthesized theoretical lens

By synthesizing two complementary theoretical perspectives ? resource dependence theory (RDT) and the resource-based view (RBV) ? this study explores why acquirers destroy the acquisition value in international acquisitions in high-technology industries. Using a multiple case study approach, we develop a two by three matrix to present the sources of value destruction from two dimensions: environment dynamics and strategic resources, which are drawn from the RDT and RBV, respectively. Our study contributes to the acquisition literature in three respects. First, it answers the call to integrate several theoretical perspectives to examine sources of value destruction, particularly in international acquisitions. Second, it attempts to unlock the black box of why value destruction exists in post-acquisition integration. Third, it advances understanding of the basis of value destruction in terms of non-financial measures.     

Does lumpiness matter in an open economy?: Studying international economics with regional data

This paper addresses the empirical question whether the regional distribution of production factors within countries is ever so uneven that it triggers specialization of production that makes regions produce different sets of goods at different factor prices. Due to the different welfare effects of trade policy in a country with regional specialization, this is an important question. In addition, it is a question about the legitimacy of treating a country as a relatively homogenous unit. In answering these questions, I implement the concept of “lumpiness” as introduced by Courant and Deardorff [J. Polit. Econ. 100 (1992) 198]. I find that lumpiness or an uneven regional distribution of production factors that induces intranational specialization and different regional factor prices is not an issue for Japan, the United Kingdom and maybe not even for India.     

Trade liberalization, product variety and growth in a small open economy: a quantitative assessment

We develop a numerical growth model that quantifies the welfare effects of trade liberalization. Additional intermediate input varieties provide the engine of growth and dramatically magnify the welfare gains from trade liberalization. In our central model, a 10% tariff cut leads to a 10.6% estimated gain in Hicksian EV. Systematic sensitivity analysis shows that there is virtually no chance of a welfare increase less than 3%, but a 6.6% chance of a welfare gain greater than 18%. We show that complementary reforms are crucial to fully realize the potential gains from the trade reform.     

后危机时代中国外贸宏观管理的战略调整:金融经济语境的实证描述

金融经济的全球渗透业已构成后危机时代中国外贸宏观管理的内在要素。通过构造影响实体经济的新机制和增加货币市场需求管理的复杂性重塑全球市场的需求面,辅之以全球化新趋势的供给面变化,金融经济正在构建新的国际贸易政策的全球环境。有鉴于此,中国外贸宏观管理调整应关注金融经济对国际贸易发展的内生性影响,相机实施新的外贸宏观调控以适应金融经济日益深化条件下经济周期的特征变化,同时基于中国开放型经济发展阶段特征的识别,建立国内外需求的统筹调节机制以满足宏观战略和企业组织结构调整目标。近期应当注意统筹运用金融、货币和主权信用手段改进中国的出口贸易环境,整合全球分销网络以建立动态培植和调节需求的新机制,并加强新型贸易品部门监控。     

Escaping a protectionist rut: Policy mechanisms for trade reform in a democracy

This paper analyzes the dynamics of trade policy reform under democracy. In an overlapping generations model, heterogeneous agents may acquire skills when young thereby determining the skill composition of their cohort. Current and anticipated trade policies influence education decisions and thus voters' trade policy preferences. We show that there may exist two political steady states: one protectionist and one liberal. Transition from the former to the latter can be achieved by government announcements, temporary educational subsidies, or tariff liberalization by trading partners, but generally not by transfer payments to adversely affected workers. We find additionally that reform is politically feasible only if the proposed liberalization is sufficiently large, suggesting that radical reform may be necessary for escaping a protectionist political rut.