Can the Canadian Wheat Board Extract Monopoly Rents? The Case of the Spring Wheat Market

The Canadian Wheat Board (CWB) is a monopoly seller of wheat, durum and malting barley from western Canada. This paper examines the question whether the CWB monopoly can extract a premium in the international market place. Using actual transaction data (i.e. actual transaction prices) we estimate that the CWB charged importers an average price premium of $13.35/tonne for wheat over the period 1980-94. In periods when high quality wheat was in short supply the CWB was able to charge higher premiums.We also show that during the period of export subsidies the CWB earned farmers a premium by avoiding subsidized markets.     

Market presence, contestability, and the terms-of-trade effects of regional integration

This paper examines the impact of market presence and contestability on the price behavior of US exporters in Brazil’s market when MERCOSUR and MFN trade liberalization take place. Using detailed panel data on trade and tariff rates, we find that both the preferred supplier’s market presence and threat of entry lower (raise) the US price reaction to MFN (preferential) trade liberalization, with similar quantitative effects. Thus, presence in, or threat of entry into, partners’ markets implies lower optimal MFN tariffs, and regional agreements can have pro-competitive effects in contestable markets. We also examine the ‘symmetry’ hypothesis between the effect of tariffs and exchange rates.     

Time consistent export quotas in an oligopolistic world market

We investigate the strategic behavior between exporting countries that face endogenous terms of trade on the world market. In a non-cooperative setting, if production decisions occur before consumption decisions, the ex-ante optimal export quota is not time consistent as the ex-post elasticity of the residual foreign import demand curve is lower than the ex-ante elasticity. However, we show that the exporters’ inability to irrevocably commit to their quota may be welfare superior to the precommitment solution. If exporters can sell forward a proportion of their exports before production decisions are made, they will do so even though, in equilibrium, it may decrease welfare compared to a situation in which forward markets do not exist. Moreover, the equilibrium with forward markets is welfare inferior to the commitment equilibrium for exporters.     

论开放经济中的战略性贸易政策:一个基于国际租金耗散的分析框架

传统的战略性贸易政策理论是建立在封闭经济基础上的。本文力图把开放经济中的国际租金耗散问题纳入到分析框架之中,通过研究表明此时战略性贸易政策严格弱。同时由于利润转移政策的外溢效应,两国政府有进行串谋的激励。     

Comparative Advantage and the Gains from Financial Trade: A Reappraisal

Emerging market crises have suggested that a national benefit‐cost assessment of external financial liberalisation could well prove unfavourable. This paper re‐examines the principle of comparative advantage in its application to financial trade to seek guidance on measures that might permit a fuller realisation of the potential benefits involved. Drawing a parallel with Balasubramanyam's work on the gains from FDI and international migration we distinguish between those arising in financial trade from the net transfer of capital, and those deriving from the contemporaneous exchange of financial claims or services of equivalent value. In the first interpretation a country's comparative advantage is manifested by its role in ‘intertemporal’ trade (as a borrower or lender). Our alternative emphasis is on the contractual risk‐return characteristics of the financial claims exchanged. This perspective is applied firstly to portfolio diversification gains arising from further international stock market integration. Secondly, price risk management for developing countries in international primary commodity trade is discussed. Both applications imply the need for significant institutional development but could realise approximately contemporaneous gains reminiscent both of those involved in merchandise trade and in the skills and product (or service) flows that Balasubramanyam has emphasised in relation to FDI and international migration.     

Productivity, terms of trade and the ‘home market effect’

This paper analyzes the international transmission and welfare implications of productivity gains and changes in market size when macroeconomic adjustment occurs both along the intensive margin of trade (changes in the relative price of existing varieties of tradable goods) and the extensive margin (creation and destruction of varieties). We draw a distinction between productivity gains that enhance manufacturing efficiency and gains that lower the cost of firms' entry and of product differentiation. Countries with lower manufacturing costs have higher GDP but supply their products at lower international prices. Instead, countries with lower entry costs supply a larger array of goods at improved terms of trade. Output growth driven by demographic expansions, as well as government spending, is associated with an improvement in international relative prices and firms' entry. While trade liberalization may result in a smaller array of goods available to consumers, efficiency gains from deeper economic integration benefit consumers via lower goods prices. The international transmission mechanism and the welfare spillovers vary under different asset market structures, depending on trade costs, the elasticity of labor supply, and consumers' taste for varieties.     

On the international transmission of technology shocks

Using vector autoregressions on U.S. time series and an aggregate of industrialized countries, we find that technology shocks appreciate the terms of trade and lower the trade balance; they induce an ‘S’-shaped cross-correlation function for both variables (the S-curve). In calibrating a prototypical international business cycle model under complete and incomplete financial markets, we find two distinct sets of parameter values. While both model specifications deliver the S-curve, the underlying transmission mechanism of technology shocks is fundamentally different. Most importantly, only in the incomplete markets economy the terms of trade appreciate and thus amplify the relative wealth effects of technology shocks—as suggested by the evidence.     

Anticipatory effects of voluntary export restraints: a study of home video cassette recorders market, 1978-86

This paper investigates the impact of voluntary export restraints (VERs) at the pre-implementation stage when exporters have a good prospect for the VERs. Distinctive features of the VCR market in 1978-86 provide a testable hypothesis to analyze the effect of the EC-Japan VERs, which were implemented in the fiscal years of 1983-85. The paper finds consistent evidence that the VERs affected firms’ pricing behavior in the U.S. market prior to the VER period, as a result of Japanese exporters’ anticipation of the VERs.     

政府行为与产业国际竞争力:一个分析框架

本文尝试建立一个分析政府行为影响产业国际竞争力的框架。分析产业国际竞争力问题的起点是成本与差异化两个范畴,而比较产业国际竞争力的两类指标是显示性指标和决定性指标,确定政府影响产业国际竞争力的领域则是存在市场失灵的地方,区分政府行为影响产业国际竞争力的两类途径是贸易政策与产业环境,在这些范畴基础上建立的分析框架,能够显现政府如何通过一种影响机制,实现产业国际竞争力的提高。     

Trade interdependence, the international financial institutions, and the recent evolution of sovereign-debt renegotiations

This paper analyzes the effect of a debtor country’s pattern of trade with commercial creditors’ home countries on the outcome of debt-rescheduling negotiations. The analysis reveals that a debtor country with more market power has greater leverage in a three-way debt-rescheduling negotiation that includes the debtor country, its creditors and the International Financial Institutions (IFIs). The paper also considers the effects of the IFI sovereign-debt policy on the bargaining power of the parties in debt-rescheduling negotiations. Two bargaining frameworks analyzed and compared in the paper represent the negotiation mechanism at different stages of the IFI sovereign-debt policy evolution.     

The rise of the machines: Capital imports and real manufacturing wages in 57 nations

Outward-oriented policy reform has attracted a large number of academics to the study of the trade-labour market nexus. One of these fields has focused on capital intensive (machinery) imports and its effect on manufacturing wages. The skill-enhancing-trade (SET) hypothesis was put forth to explain a potential relationship where an inflow of capital imports results in increased demand for skilled labour and decreased that of unskilled labour, and thus resulted in a rise in skilled wages and a decrease in their unskilled counterparts. This study revisits this hypothesis with a panel from the manufacturing sector of 57 nations. We improve upon previous studies in a number of ways. We add developed nations to the sample and examine capital imports from rich countries as well as the rest of the world. This takes into account the prominence of vertical production networks in international trade. We adhere closely to the neo-classical trade model and employ definitions of skilled and unskilled workers that capture the production process of particular items. Finally, we fit a robust dynamic panel data model that accounts for the endogeneity of the determinants of trade and wages. In this way we test whether the SET hypothesis is generally applicable as opposed to previous studies which use an ad hoc selection of countries and variables. We find that the SET hypothesis is not driving changes in manufacturing wages. Instead, worker productivity and GDP per capita explain these labour market outcomes.     

Vertical Intra-Industry Trade and Product Fragmentation in the Auto-Parts Industry

A distinctive feature of present globalization is the development of international production sharing activities, i.e. production fragmentation. The increased importance of fragmentation in world trade has created an interest among trade economists in explaining the determinants of intra-industry trade (IIT) in intermediate goods. In this study, the extent of IIT in Austria’s auto-parts trade is analyzed by decomposing Austria’s auto-parts trade into one-way trade, vertical IIT, and horizontal intra-industry trade IIT. Then, the development of vertical IIT in the auto-parts industry is examined as an indicator for international fragmentation of the production process between Austria and its 29 trading partners, and various country-specific factors suggested by the fragmentation literature are tested using panel econometrics as well as more recent data from 1996 to 2006. The results show that a substantial portion of IIT in the Austrian auto-parts industry is vertical IIT, and the econometric results mainly support the hypothesis drawn from the fragmentation theory. In particular, the findings show that the extent of Austria’s vertical IIT in auto-parts is positively correlated with average market size, differences in per capita GDP, and foreign direct investment, while it is negatively correlated with distance.     

大国国内贸易需求提升产品国际竞争力的机理分析

关于产品国际竞争力相关理论的研究受到了众多学者的关注,但却鲜有学者从国内贸易需求的角度对其进行系统分析,以致人们在某种程度上忽视了通过拓展国内贸易需求来提升产品国际竞争力的做法。文章探讨了国内贸易需求提升产品国际竞争力的内在机理,为拓展我国国内贸易,利用国内市场提升我国产品国际竞争力寻求理论支持。     

Does trade raise income?: Evidence from the twentieth century

Efforts to estimate the effects of international trade on a country’s real income have been hampered by the failure to account for the endogeneity of trade. Frankel and Romer recently use a country’s geographic attributes — notably its distance from potential trading partners — to construct an instrument to identify the effects of trade on income in 1985. Using data from the pre-World War I, the interwar, and the post-war periods, we find that the main result of Frankel and Romer is confirmed throughout the whole century: countries that trade more as a proportion of their GDP have higher incomes even after controlling for the endogeneity of trade. We also find that the OLS estimate of trade’s effect on income is biased downwards in almost every sample year. However, this result is not robust to the inclusion of distance from equator (latitude).     

中国外贸的发展和变革

我国已经成为世界贸易大国,但还不是贸易强国。大而不强既有客观因素,也有主观原因。客观上我国经济发展水平还比较低,主观上与我国外贸法律法规不完善、体制机制不健全、外贸政策不配套和经营模式比较落后等有关。当前,我国外贸正处在大发展、大变革、大调整时期,既面临难得的发展机遇,也面临严峻的内外挑战,要以巩固贸易大国地位、推动贸易强国进程为主要目标,以调结构、促协调、提质量为重点,加快外贸发展方式转变,优化外贸国际市场布局和国内区域布局,推进外贸生产基地、贸易平台和国际营销网络建设。     

The Tunisia Wheat Market in the Context of World Price Volatility: A Stochastic Partial Equilibrium Approach

Food security is a key objective of agricultural and food policy in Tunisia. The 2007–2008 food crisis highlighted the negative impacts of price volatility on international markets both in terms of food insecurity and budget exposure. Tunisian food subsidy expenditures ranged from $180 million to $710 million in 2006–2010, so volatile world prices meant volatile subsidy costs. Moreover, cereal production in Tunisia still has much instability due to climate conditions, which also influences imports and, consequently, subsidy expenditures. This study applies a structural model to conduct stochastic analyses of trade and policy impacts on food security and budget expenditures in the Tunisian wheat market. The methodology disaggregates durum wheat and soft wheat markets and generates projections of import prices of durum wheat and soft wheat, using projections of world prices provided by the Food and Agricultural Policy Research Institute at University of Missouri (FAPRI-MU). The key innovation is the generated stochastic analyses of subsidy costs based on stochastic world price projections and stochastic domestic wheat yields based on historic yield variances. The analysis highlights the sensitivity of subsidy costs to world prices, volumes imported and domestic production, so that alternative policy tools can be considered.     

The quality of innovation and the extent of the market

I present a comprehensive model of international trade in technology that considers both the demand for inventions and the supply of inventions. On the demand side, domestic and foreign firms make strategic technology adoption decisions. On the supply side, inventors compete to sell licenses for their technology to domestic and foreign firms. Countries benefit from international trade in technology because they obtain the best invention from a larger pool of inventions. International trade in technology increases the extent of the market for inventions and thereby improves the quality of innovation. Technology trade lowers prices, increases outputs, and increases the volume of trade in differentiated products. When traded products are not close substitutes, international markets for technology generate gains from trade. The results of the analysis are robust to the possibility of technology transfer either through expropriation or imitation. Protection of intellectual property rights preserves incentives for entry of inventors and improves the quality of innovation.     

国际贸易影响就业的实证分析——以广东省为例

传统国际贸易理论几乎都把充分就业作为基本前提,这明显与现实不相符合.广东是外贸大省,同时也是一个就业大省.实证分析表明,广东省的进口和出口都是就业的Granger原因.广东出口增加1%,广东城镇就业增加0.76%:进口增加1%,广东城镇就业减少0.77%.就业是民生之本,我们要实行更加有利于促进就业和减少失业的对外贸易政策,将促进国内就业作为制定、调整货物和服务进出口政策以及处理贸易争端的重要依据.     

Trade Wars: The Exaggerated Impact of Trade in Economic Debate

The rules governing trade and capital flows have been at the centre of controversy as globalisation has proceeded. One reason is the belief that trade and capital flows have massive effects on the labour market – either positive, per the claims of international financial institutions and free trade enthusiasts, or negative, per the ubiquitous protestors at WTO, IMF and World Bank meetings demanding global labour standards. Comparing the claims made in this debate with the outcomes of trade agreements, this paper finds that the debate has exaggerated the effects of trade on economies and the labour market. Changes in trade policy have had modest impacts on the labour market. Other aspects of globalisation – immigration, capital flows and technology transfer – have greater impacts, with volatile capital flows creating great risk for the well-being of workers. As for labour standards, global standards do not threaten the comparative advantage of developing countries nor do poor labour standards create a ‘race to the bottom’.     

Beyond the home market effect: Market size and specialization in a multi-country world

The standard two-country model of international trade with monopolistic competition predicts a more-than-proportional relationship between a country′s share of world production of a good and its share of world demand for that same good, a result known as the ‘home market effect’. We first show that this prediction does not generally carry through to the multi-country case, as production patterns are crucially affected by third country effects. We then derive an alternative prediction that holds whatever the number of countries considered. This new prediction takes into account important features of the real world such as comparative advantage due to cross-country technological differences and lack of factor price equalization.