THE IMPACT OF SODA SALES TAXES ON CONSUMPTION: EVIDENCE FROM SCANNER DATA

Scientific evidence on the effect of sugar consumption on obesity has propelled policy makers in several states across the United States to propose the imposition of a tax on soft drinks sales. In this article, we look at the effect of two tax events: a 5.5% sales tax on soft drinks imposed by the state of Maine in 1991 and a 5% sales tax on soft drinks levied in Ohio in 2003. We investigate this question by using sales data collected by scanner devices in the two states, where soda taxes where enacted as well as on neighboring states. We employ a difference‐in‐difference matching estimator (DIDM) that, in our setting, permits the comparison among treatment and control groups based on brand identity. Results suggest that neither sales tax had a statistically significant impact on the consumption of soft drinks. This finding is robust to several alternative specifications. (JEL D12, H22, C90, L66)     

Exchange rate uncertainty and US bilateral fresh fruit and fresh vegetable trade: an application of the gravity model

In order to analyse the effect of exchange rate uncertainty, we apply an empirical gravity equation to two sets of US bilateral trade data: fresh fruit over the period 1976–1999 for a panel of 26 countries; and fresh vegetables over the period 1976–2006 for a panel of nine countries. Based on panel estimation methods, and using both a moving SD measure and the Perée and Steinherr (1989) measure of exchange rate uncertainty, the results show that US bilateral fresh fruit trade has been negatively affected by exchange rate uncertainty. We also find some evidence that the exchange rate between the US dollar and the currencies of Latin American trading partners accounts for most of the negative impact of exchange rate uncertainty on bilateral trade flows in fresh fruit. In contrast, when using panel estimation methods and both measures of exchange rate uncertainty, we find no statistically significant evidence for any negative effect of exchange rate uncertainty on US bilateral fresh vegetable trade. However, we do find a statistically significant negative effect for exchange rate uncertainty when we estimate a US export gravity equation for fresh vegetables using the same panel of countries.     

Patent Regimes,Host Country Policies,and the Nature of MNE Activities*

This paper provides useful insights in the debate regarding the relationship between stronger patent rights, host country policies and multinational activity using panel data from US MNEs. It analyzes the impact of stronger patent protection on the exports, local affiliate sales and licensing activities by explicitly modeling the joint nature of the MNE's decision‐making process in servicing a foreign market. The key findings support the idea that the policy environment in the host country influences the impact of stronger IPRs on US MNE activities during the period 1992 to 2000. A risky environment in the host country appears, on average, to have a negative and significant impact on unaffiliated exports and affiliate sales. Increased patent protection in high‐risk countries, on average, appears to reduce licensing, and increase unaffiliated exports, suggesting a dominant monopoly effect of stronger IPRs in the former case and a dominant market expansion effect in the latter case.     

Trade diversion effects of the US–China trade war on Vietnam

This paper empirically examines the US–China trade war that began in mid-2018, focusing on the impact on a third country, Vietnam. Using regression analysis, we found that while the trade war had a negative impact on US imports from China for all targeted products, there was a partial offset from increased imports from other countries. Notably, US imports from Vietnam experienced a sharp increase, particularly after the third round of US import tariffs on Chinese goods. Additionally, our research reveals that the four rounds of tariff escalation affected US imports from China differently depending on their end-use and technology intensity.     

Aiding violence or peace? The impact of foreign aid on the risk of civil conflict in sub-Saharan Africa

This paper considers the impact of foreign aid flows on the risk of civil conflict. We improve on earlier studies on this topic by addressing the problem of the endogenous aid allocation using GDP levels of donor countries as instruments. A more structural addition to the literature is that we efficiently control for unobserved country specific effects in typical conflict onset and conflict continuation models by first differencing. The literature often overlooks the dynamic nature of these types of models, thereby forcing unlikely i.i.d. structures on the error terms implicitly.¹ As a consequence, malfunctioning institutions, deep-rooted political grievances, or any other obvious, yet unobserved and time persistent determinants of war are simply assumed away. We find a statistically significant and economically important negative effect of foreign aid flows on the probability of ongoing civil conflicts to continue (the continuation probability), such that increasing aid flows tends to decrease civil conflict duration. We do not find a significant relationship between aid flows and the probability of civil conflicts to start (the onset probability).     

Does crime deter South Africans from self-employment?

The very high crime rate in South African cities is often argued to be the main reason for the country's small share of business ownership and self-employment. This paper revisits this hypothesis. We estimate the effect of crime on business ownership and performance using a matched dataset of census, survey and police data. In contrast to previous studies, which take into account perceived rather than actual crime and often focus on specific geographic areas, we do not find robust evidence that high crime rates have a negative impact on business ownership. Even though our estimate of the effect of crime is statistically significant and negative, it is economically small. Further, we find no evidence for a negative effect of actual crime on sales, profits and investment of informal businesses. This may imply that the low share of business ownership and self-employment in South Africa must have other reasons. These results may also suggest that crime may not be in general a serious threat for small businesses in low and middle-income countries, however, this needs further empirical research.     

Aid and institutions in transition economies

We investigate whether aid contributed to institutional development in transition economies. We find that aid flows have a positive effect on democratization, especially on constraints on the executive and political participation. At the same time, total aid has no effect on overall quality of governance, while US aid appears to have a negative impact on some dimensions of governance. Aid’s differential impact on democracy and governance is consistent with uneven development of institutions and the democracy consolidation hypothesis. We also find that aid has a non-linear effect on democracy. Openness has a positive effect on both democracy and good governance. Oil resources have an adverse effect on democracy. Adult mortality, civil war and adherence to Islam are all detrimental to good governance.     

CAN SOFT DRINK TAXES REDUCE POPULATION WEIGHT?

Soft drink consumption has been hypothesized as one of the major factors in the growing rates of obesity in the United States. Nearly two-thirds of all states currently tax soft drinks using excise taxes, sales taxes, or special exceptions to food exemptions from sales taxes to reduce consumption of this product, raise revenue, and improve public health. In this paper, we evaluate the impact of changes in state soft drink taxes on body mass index (BMI), obesity, and overweight. Our results suggest that soft drink taxes influence BMI, but that the impact is small in magnitude. ( JEL I18, H75)     

Evaluating the Impact of the US–China Trade War

We evaluate the impact of the US–China trade war using a dynamic computable general equilibrium (CGE) model of global trade. We conduct ex ante simulation analysis exploring three scenarios to understand how the trade war affects import tariffs, investment, and productivity. The escalation of the trade war reduces gross domestic product (GDP) in China and the USA by ?1.41% and ?1.35%, respectively. The trade war reduces nearly all sectoral imports and outputs in both countries. To reflect the important role of global value chains (GVCs), we modify the dynamic CGE model with agent‐specific import demands, and we explore the difference between the results for the two models relating to the trade war impacts on GDP and bilateral trade. When GVCs are accounted for, the negative impacts on bilateral trade are more widespread across countries, and world GDP in the modified model is reduced by ?$US450 billion. These results suggest that the GVCs play substantial role in determining trade responses at the disaggregated level.     

Consumption patterns of food,tobacco and beverages: a cross-country analysis

This study considers the consumption patterns of food, tobacco, soft drinks, and alcohol in 43 developed and developing countries. Such an analysis is important for policy issues associated with tobacco, alcohol, and soft drinks. The results show that consumers in the developing countries spend a much higher proportion of their income on food than consumers in developed countries. The proportion of expenditure allocated to the other three commodities, tobacco, alcohol, and soft drinks, are similar in the two groups of countries. On average, people around the world allocate about one quarter of their income on food, 2.6% on tobacco, 3.2% on alcohol and 1.2% on soft drinks. The income elasticity estimates reveal that food is a necessity in most countries, while tobacco and alcohol are necessities in most of the developed countries and luxuries in a majority of developing countries. Soft drinks are a luxury in a majority of the developing as well as the developed countries. The own-price elasticities show that demand for all four commodities is price inelastic in all countries.     

Chinese firm and industry reactions to antidumping initiations and measures

China has been the subject of large numbers of both antidumping initiations and measures. This article explores the reactions of Chinese firms and industries to these actions by using dynamic system GMM estimator and industrial panel data on all Chinese firms in the industry, foreign firms operating within China and state-owned enterprises (SOEs) for aggregated firms group between 1997 and 2007. We find that antidumping actions by developed and developing countries negatively impact industrial profits and employee and firm numbers and also exports, but improve labour productivity. We also find that different kinds of firms show different responses. All firms together in an industry react to antidumping the most, and foreign and SOE firms show a much smaller response. Further, antidumping effects from different countries are different. Developed countries’ antidumping actions have more negative impact than developing countries’ actions; the effects of US actions are different from the European Union’s.     

INVESTMENT BEHAVIOUR,CORPORATE CONTROL,AND PRIVATE BENEFITS OF CONTROL: EVIDENCE FROM A SURVEY OF UKRAINIAN FIRMS

We analyse the impact of ownership and corporate control on firms’ investment using the 2001 survey of Yacoub et al. on Ukrainian firms. The model explains investment by output, financial and soft budget constraints, and corporate control (and ownership) categories potentially enjoying private benefits of control. We find that the corporate control model fits better than the ownership model, a negative relationship between state and employee control and firms’ investment, and evidence for the presence of soft budget constraints. A negative relationship between firms’ investment and the relative size of non‐monetary transactions strengthens the conclusion of private benefits of control impacting investment.     

FDI and pollution havens: Evidence from the Norwegian manufacturing sector

This is an empirical study of the firm and country determinants of foreign direct investment (FDI) and how it is affected by the stringency of environmental regulations in host countries. We employ disaggregated data on sales by Norwegian multinationals' affiliates from 1999 to 2005 that allow such affiliates to be categorized as either efficiency-seeking (vertical) or market-seeking (horizontal) FDI. While the environmental stringency of a host country and its enforcement are found to have no effect on the average investment, we find a significant negative effect on multinationals with vertical motives. Compared to those located in lenient countries, the efficiency-seeking affiliates in more environmentally regulated countries receive less investment from their parent companies in terms of (i) equity capital, (ii) capital stock, and (iii) assets. We further find that the total exports from affiliates to parent companies in Norway decrease with the level of enforced environmental stringency in the host countries.     

Donor–recipient ideological differences and economic aid

We explore the impact of donor–recipient ideological differences on US economic aid decisions. We find that the odds and the amount of aid to left-wing recipients are higher under left-wing US administrations. The opposite result is found for center-right recipients.     

Consumer cohorts and purchases of nonalcoholic beverages

Age, period and cohort (APC) variables are included in a demand system that is used to estimate Norwegian purchases of nonalcoholic beverages. To take account of censoring, a two-step method is used. In the first step, the probabilities of purchasing milk, carbonated soft drinks and other soft drinks are estimated by probit models. The APC variables are highly significant. Older cohorts have higher probabilities of purchasing milk and lower probabilities of purchasing carbonated soft drinks than younger cohorts. In the second step, the probability density functions and the cumulative density function are used to correct for censoring. In the corrected demand system, there are positive cohort and negative age effects for milk. These effects suggest that the replacement of older by younger cohorts, in an increasingly older population, will result in reduced per capita purchases of milk. For carbonated soft drinks, there are no cohort or negative age effects, while there are positive age but no cohort effects for other soft drinks.     

The international wealth channel: a global error-correcting analysis

This article investigates empirically whether shocks to asset prices transmit into the trade balance through consumption and investment for a group of five of the world??s most industrialized countries. We refer to this transmission channel as the international wealth channel and estimate a GVAR model including 29 countries with quarterly data over the period 1981Q1?C2006Q4. Generalized impulse response functions show that after a negative stock price shock US and UK consumption decreases, followed by an improving trade balance. This pattern is also visible for France, but not for Germany and Japan. Stock price decreases are only associated with decreasing investment and an improving trade balance in the UK. For housing, we do find that a negative shock to UK housing prices decreases domestic investment and improves the trade balance. However, this pattern is not visible in the other countries. Finally, a domestic negative real exchange rate shock only has a significantly positive impact on the US trade balance.     

The energy consumption-real GDP nexus revisited: Empirical evidence from 93 countries

In this paper, we analyse the long-run relationship between energy consumption and real GDP for 93 countries. We find mixed results on the impact of energy consumption on real GDP, with greater evidence at the country level supporting energy consumption having a negative causal effect on real GDP. For the G6 panel of countries, we find significant evidence that energy consumption negatively Granger causes real GDP. This means that for countries where energy consumption has a negative long-run causal effect on real GDP, energy conversation policies should not retard economic growth. We identify these countries and regional panels. We argue that these countries/regions should play a greater role in reducing carbon dioxide emissions.     

The effect of deregulation on environmental research by electric utilities

This paper analyzes the impact of deregulation and restructuring on public-interest environmental research conducted by electric utilities in the US from 1990 to 2001. I find that deregulation has had a substantial negative impact on such expenditures, which have declined by 40%. However, restructuring has had no significant impact. In addition, the 1990 Clear Air Act Amendments have adversely affected such expenditures, contrary to the positive impact these regulations had on pollution abatement R&D as shown in the literature. Results also suggest that state and firm characteristics and regulator preferences play a strong role in the conduct of such research.      

China–US economic and trade relations,trade news,and short-term fluctuation of the RMB exchange rate

The trade war between the US and China affects the fluctuation of RMB exchange rate. We collect news on China–US trade policies and talks from January 2017 to July 2020. Results show that China–US dialogue and tariff imposition have the greatest impact on the percentage of RMB appreciation and depreciation. Additionally, tariff relaxation and increasing enterprise restrictions can cause a sharp appreciation and depreciation. “Policies” events and trade news from the US influence RMB fluctuations the most significantly. Finally, positive events cannot significantly cause RMB appreciation, but negative events can significantly cause RMB devaluation.     

The effects of soft drink taxes on child and adolescent consumption and weight outcomes

Childhood and adolescent obesity is associated with serious adverse lifetime health consequences and its prevalence has increased rapidly. Soft drink consumption has also expanded rapidly, so much so that soft drinks are currently the largest single contributors to energy intake. In this paper, we investigate the potential for soft drink taxes to combat rising levels of child and adolescent obesity through a reduction in consumption. Our results, based on state soft drink sales and excise tax information between 1989 and 2006 and the National Health Examination and Nutrition Survey, suggest that soft drink taxation, as currently practiced in the United States, leads to a moderate reduction in soft drink consumption by children and adolescents. However, we show that this reduction in soda consumption is completely offset by increases in consumption of other high-calorie drinks.