AID TIED TO THE DONOR'S EXPORTS

Abstract.  The existing theory of tied aid presupposes that trade and aid are conducted in terms of private consumption goods. However, in such a world aid can be effectively tied only if the recipient government somehow prevents its households from reselling the aid basket on world markets. That weakness of existing theory is here removed by extending the theory to accommodate non-tradable public consumption goods. The most striking result of existing theory – that, even in a world of just two trading countries, the donor might benefit and the recipient suffer from the tying of aid – is preserved.     

Trade and Tradability: Exports, Imports, and Factor Markets in the Salter-Swan Model

We extend the Salter-Swan model to include both factor markets and semi-traded goods. In our model, changes in relative factor prices depend on changes in world commodity prices, factor endowments, and the trade balance. In contrast, only changes in world commodity prices can affect factor prices in the neoclassical trade model. The inclusion of semi-traded goods weakens the magnification effect in both the Stolper-Samuelson and Rybczynski theorems. When imports and domestic goods are poor substitutes, a characteristic of some commodities in developing countries, the sign of the Stolper-Samuelson theorem is reversed.     

International risk sharing and commodity prices

Abstract Cole and Obstfeld (1991) exposited a classic result where equilibrium movements in the terms of trade could make ex ante risk‐sharing arrangements unnecessary: a unity elasticity of substitution across goods and production specialization. This paper extends their model to N countries and M commodities (N > M). Here the terms of trade provides insurance against commodity‐specific shocks, not country‐specific shocks. Using commodity‐level production data at the national level and world commodity prices, we document significant terms of trade variability and positive responses of nation‐specific production to terms of trade improvements. The endogenous terms of trade insurance mechanism highlighted in CO is virtually non‐existent.     

AUSTRALIAN COMMODITY EXPORT PASS-THROUGH AND FEEDBACK CAUSALITY FROM COMMODITY PRICES TO THE EXCHANGE RATE

Commodity export pass-through is examined for Australia in an attempt to determine whether Australia is a price-taker in its commodity export trade. This is undertaken for seven categories of Australia's main commodity good exports. We also determine if there is feedback causality from particular world commodity prices back to the exchange rate as is often hypothesised for commodity good intensive exporting countries. It is found that Australian commodity good export pass-through is complete for the goods which are relatively less important in its export trade but is incomplete (although high) for the goods which are most important in its export trade. There is significant feedback causality to the exchange rate from the world price of coal and wheat, two of Australia's most important commodity good exports over the 1980s and early 1990s.     

The Welfare Cost of Autarky: Evidence from the Jeffersonian Trade Embargo, 1807–09

The United States came close to complete autarky in 1808 as a result of a self‐imposed embargo on international shipping from December 1807 to March 1809. Monthly prices of exported and imported goods reveal the embargo's striking effect on commodity markets and allow a calculation of its welfare effects. A simple general‐equilibrium calculation suggests that the embargo cost about 5 percent of America's 1807 GNP, at a time when the trade share was about 13 percent (domestic exports and shipping earnings). The welfare cost was lower than the trade share because the embargo did not completely eliminate trade and because domestic producers successfully shifted production toward previously imported manufactured goods.     

Trade Theory and Factor Intensities: An Interpretive Essay

Since Heckscher's 1919 pioneering contribution to international trade theory, the concept of "factor intensity" has played a key role in explanations of trade patterns and the consequences of international trade for local income distribution. This essay discusses the uses that have been made of the concept and its applicability to problems that are couched in higher dimensions. The author suggests that it has an important role to play in "new" trade theory in which the strong link between commodity prices and costs of production may be removed by the existence of imperfectly competitive markets.     

生产分工视角的中国对美国货物出口竞争力验证

考虑生产分工对中美间经贸联系程度、贸易规模和结构的影响,基于生产分工下价值链视角,构建出口竞争力测度指标体系,验证中国对美国货物出口竞争力。结果显示:2016年及之前,中国仅在杂项制品大类上,对美国显示出较强出口竞争力,机械和运输设备、动物和植物油、油脂和蜡我国具有比较优势,化学成品及有关产品、按原料分类的制成品双方竞争性较强,其余大类上,中国对美国出口竞争力不具优势。引入其他国家作对比的分析结果表明:中国对对比国家均无显著出口竞争力,而且对美国出口具有单价优势的资本技术密集型产品,对这些国家出口多缺乏单价优势,而2017年以来对美国和对比国家的贸易变化,进一步勾画出中国对美国货物出口竞争力不足。在生产分工主导全球产业发展背景下,提升我国在全球生产分工中的参与地位,宜强化自主技术研发、提升外资质量和技术外溢、加快"走出去"学习先进技术。     

South African trade policy mattersTrade performance and trade policy*

South African trade policy has exerted a major influence on the composition and aggregate growth of trade. In the Apartheid period, South Africa developed a comparative advantage in capital‐intensive primary and manufactured commodities partly because of its natural resource endowments, but also because the pattern of protection was particularly detrimental to exports of non‐commodity manufactured goods. By contrast, trade liberalization from 1990 not only increased imports, but by reducing both input costs and the relative profitability of domestic sales also boosted exports. This evidence suggests that additional trade liberalization and policies that afford South African firms access to inputs at world prices could well be part of the strategy to enhance export diversification.     

Trade liberalization in environmental goods

Trade negotiations have started to pay attention to liberalization in environmental goods (EGs), whose production may require dirty intermediate goods. We construct a two-country trade model to explore the effects of trade liberalization in EGs on the local pollution, the global environment and welfare in the presence of such an environmental conundrum. We find that countries do not necessarily benefit from trade liberalization in EGs in the absence of an environmental policy. With the assistance of an upstream pollution tax, trade liberalization in EGs improves each country's welfare. This result holds independent of whether the upstream market is competitive or not, or whether we have upstream trade across countries. For asymmetric countries, trade liberalization in EGs improves the world welfare and the welfare for the country if it has a smaller demand for EGs; or experiences less damage from the production of dirty inputs; or values environment improvement more.     

人民币汇率对我国对外贸易结构的影响分析

作者利用贸易特定化系数衡量了我国2005年7月21日人民币汇率形成机制改革之后的对外贸易结构，结果显示随着人民币汇率的爬行式缓慢升值，我国大部分资源密集型商品的净出口减少，劳动密集型商品和资本、技术密集型商品的净出口增加，竞争力增强，进出口商品的贸易结构得到优化。因此，进一步完善人民币汇率形成机制，推动人民币汇率稳步升值对我国进出口商品贸易结构是长期利好的。     

Sector and importer determinants of prices for traded intermediates

While the literature on traded goods prices emphasizes final goods prices and related consumer theory to explain variation in goods prices with importer characteristics, trade in intermediates actually constitutes about two thirds of total trade. We propose a mechanism for explaining variations in the prices of intermediates as a function of importer characteristics, wherein production is vulnerable to failure and the probability of failure declines in the quality of intermediates. Higher wages mean a greater opportunity cost of failure, leading to a stronger demand for high-quality intermediates where firms face higher wages. We find empirical support for this mechanism in the case of intermediate goods using IV regressions. In addition, our findings indicate that while the cost of labour explains about one fifth of variation in imported intermediate prices, it is a non-significant determinant of imported final goods prices.     

金融发展促进了对外贸易吗?——来自中国的证据

Using China’s panel data of 30 provinces during 1990–2003, this paper attempts to explore a possible link between financial development and China’s foreign trade. Four indicators are used to identify the role of financial development, which capture both the scale and efficiency feature of China’s regional financial development. The effects of other variables are also investigated, including traditional factor endowments, foreign direct investment, infrastructure and institutional quality, etc. In general, the estimation results suggest that financial development has a quantitatively large and robust effect on China’s manufactured goods trade, among which the financial efficiency indicators play a more significant role in promoting manufactured goods trade than those scale indicators. Sensitivity estimations show that the effect of financial development on China’s total trade essentially differs from that on trade in manufactured goods.     

Does complexity explain the structure of trade?

This paper analyzes whether complexity, measured by the number of skilled tasks that are performed in production, explains countries’ commodity trade structure. We modify the Romalis ( 2004 ) model to incorporate advantage differences in complexity across commodities together with differences in the number of mistakes made by workers in the production process in developed and developing countries as a source of comparative advantage. Our model predicts that the share of developed countries in world trade increases with products’ complexity. Empirical tests confirm this prediction. Moreover, we find that complexity complements the explanation provided by skill‐intensity on countries’ commodity trade structure.     

Indivisibilities in the Ricardian model of trade

The idea that goods or factors of production may not be perfectly divisible has important implications for many areas of economics. This paper introduces both types of indivisibilities into the standard Ricardian model of international trade. Indivisibilities give rise to new results compared to the standard model with perfectly divisible goods and factors of production. Both types of indivisibility may result in complete specialisation even in autarky, while goods indivisibility may result in (ex ante) identical consumers consuming different bundles of goods, and hence enjoying different levels of welfare. Both types of indivisibilities lead to efficiency losses relative to the perfectly divisible case. International trade may eliminate efficiency losses resulting from indivisibility in the factors of production, but not those resulting from goods indivisibility. This suggests that the presence of indivisibilities leads to a second-best world, with the consequent implications for policy. The results of the paper are consistent with existing empirical evidence.     

World Agricultural Trade Reform: Implications for Australia

In this paper we assess the implications of agricultural trade reform by GATT member countries. To do this, we link two general equilibrium models, a world food trade model and the ORANI model of the Australian economy. By treating the ORANI model as an integral part of the world model, we are able to focus on the implications for Australia of world agricultural trade reform.
The findings suggest that, if price distorting agricultural policies were removed by GATT member countries, world food commodity prices would rise, some by up to 30 per cent, and world food trade expand by about a third. Australia would be a major beneficiary of these international developments, the value of its agricultural exports rising by close to 15 per cent. In 1986, this would have meant for Australia additional export earnings of around SUS750 million, as well as more rapid economic growth.     

Increasing Returns and International Trade

The paper develops a model of international trade with increasing returns toscale by taking into account the possibility of cooperation among agents in an egalitarian economy. It is shown that each country gains from trade in a trading world in which there are arbitrary numbers of increasing-returns-to-scale goods, constant-returns-to-scale goods, factors of production, and countries.     

The law of one price and the modelling of disaggregated trade flows

This paper argues that the application of a differentiated good model to disaggregated commodity trade, and in particular to primary commodity trade, is feasible. Price data for as narrowly defined a commodity as wheat are shown to violate the law of one price. An Armington-type model which allows prices of a commodity to vary by supplier is then applied to world wheat trade. Two issues concerning the Armington model are addressed. First, it is shown that the theoretical implications of the model are plausible in the case of a disaggregated commodity. Second, as an example, 1973–1974 wheat trade flows and prices forecast by an Armington-type model are shown to be consistent with actual trade patterns and prices.     

Optimum Tariffs and Retaliation Revisited: How Country Size Matters

In his seminal work on tariff retaliation, Johnson ( Review of Economic Studies , 21 , 1953–1954) showed that a country will "win" a bilateral "tariff war" if its relative monopoly/monopsony power in world trade is sufficiently large. However, it is unclear from Johnson's analysis and from subsequent research on the subject how this power is determined in general economic environments. An important goal of this paper is to address this issue. With the help of a neoclassical trade model in which country size is at centre stage, it is shown that a sufficient condition for a country to prefer a non-cooperative Nash tariff equilibrium (retaliation) over free trade is that its relative size be sufficiently large. The paper also refines the structure of the general trade model and generates additional characterization results on the importance of country size for best-response tariff functions, retaliatory tariffs, and welfare.     

International treaties on trade and global pollution

The paper shows that global pollution need not rise under free trade in goods and/or emissions even in the complete absence of income effects. Differences in environmental concerns across the countries lead to differences in the pollution intensity of production and, thus, generate the possibility of increasing world output and income without increasing the world pollution by shifting the production of the polluting good from the country with higher pollution intensity of production to the country with lower one. We show that free trade in goods and/or emissions can induce precisely such a shifting of production with the country with greater environmental concern exporting the polluting good. The paper also demonstrates the possibility of a first-best international treaty on global pollution in which each country or group of countries is better-off.