On trade creation and regional trade agreements: does depth matter?

Regional trade agreements (RTAs) are usually classified according to their form into four broad categories: preferential arrangements, free trade agreements, customs unions and common markets. This paper investigates whether the form/depth of RTAs matters concerning their effect on trade. I use a proper specification of the gravity model with panel data on the 1960–2000 period, which specifically control for self-selection into agreements. Results show that creating any kind of RTAs providing trade preferences to their member countries significantly increases bilateral trade. Nevertheless, their average treatment effect on bilateral trade does not significantly differ according to the depth of agreements.

The importance of deep integration in preferential trade agreements: the case of a successfully implemented Ukraine–Turkey free trade agreement

Review of World Economics - We construct a 45-sector model of Ukraine with Turkey and seven other regions to estimate the impacts on Ukraine of effectively implementing the deep Free Trade...     

Regional indentities and inter‐regional dialogue: The European union and the ASEM process

ASEM highlights the importance of looking at inside and outside, not as separate domains, but as parts of the same whole. This leads us to the broader lessons for the study of regionalization in the global political economy and for inter‐regional relations in particular. There is obviously a place for reading processes such as ASEM in terms of complex bargains that emerge from the material interests of the participants. After all, it is apparent from the literature emerging from (the former) DGI that this is what the actors think is going on. But this leads us to think about the possibilities for acquiring a broader understanding. The strategy proposed here suggests that there is some utility in applying techniques of ‘double reading.’     

The U.S.–China trade war: Tariff data and general equilibrium analysis

The current trade war between the United States and China is unprecedented in modern history. This study introduces a database of tariff increases resulting from the trade war and quantifies the impacts using the canonical GTAPinGAMS model calibrated to the recently released GTAP version 10 accounts. We find that the remaining tariff increases as of March 2020 after the phase one trade deal decrease welfare in China by 1.7% and welfare in the United States by 0.2%. Impacts on sectoral revenue are reported for both countries. China's exports to and imports from the United States are reduced by 52.3% and 49.3%. The trade flow between the United States and China will be diverted to their major trade partners resulting in higher welfare in those countries, including many Asian countries. The estimated impacts are robust to using alternative trade elasticities and are amplified in the absence of the phase one tariff reductions.     

Liberalization of Russia’s trade with the European Union,BRICS, and Trans-Pacific Partnership countries

The general trade effects and changes in the commodity and geographical trade structures for Russia under the condition of integrating trade with countries of the European Union, BRICS and Trans-Pacific Partnership have been estimated in the article. It has been stated that it is preferable for the Russian economy to approach European Union countries in order to obtain the maximum values of the welfare effect and trade-creation effect, and to proportionally increase the export and import volumes with the BRICS countries. Based on the prolongation of the shortterm tendencies, the long-term challenges to the Russian economy and possibilities of liberalizing trade with the mentioned trade unions have been specified.     

“Weak” Trade,European States in the International Arms 1920–1937: The impact of external threats,market forces,and domestic constraints

Abstract

This article analyses the small- and medium-size arms trade behaviour of nine “weak” (that is, limited political and economic influence) European states in the interwar period: Belgium, Czechoslovakia, Finland, the Netherlands, Norway, Portugal, Spain, Sweden, and Switzerland. In particular, the significance of external threats, market forces and domestic constraints is assessed for these states' military trade. Firstly, the hypothesis that there might be fewer domestic constraints on the military trade behaviour of these states was not supported by the analysis. The increased military spending of the 1930s seemed to benefit the domestic producers. Secondly, most of these countries were dependent on their aggregate military trade, especially military exports. Thirdly, the hypothesis that the differences between these states might be explained by geographical, strategic or economic factors was found too simplistic. Only proximate groupings could be developed based on various types of categories. Fourthly, “weak” states were found to benefit from the intense international political and economic competition of the 1930s, enabling the pursuit of new military export markets amidst increasing threats.     

Finland and the question of West European economic integration, 1947–1961

Abstract

The study deals, on one hand, with the international politics connections, and, on the other, the endogenous economic policy implications of Finland's relationship with West European economic arrangements from the Marshal! Plan up to the FINN-EFTA Agreement. In the 1950s, the Finnish economy was, in fact, a closed economy, albeit highly dependent on foreign trade. Finland's international position in the Soviet sphere of influence imposed restraints with regard to participation in international economic integration. Finland, for example, remained outside the Marshal! Plan and the Organization for European Economic Cooperation (OEEC), and even Nordic cooperation was a delicate matter from the point of view of relations with the Soviets. However, the protectionist foreign trade policies, consisting of both tariffs and quantitative restrictions, explain at least as much of the relative isolation of the Finnish economy. In these circumstances, Finland's participation in EFTA cooperation, within the framework of the FINN-EFTA agreement, from 1961 onwards was the decisive turning point towards an opening economy.     

Carbon emissions,trade liberalization,and the Japan–ASEAN interaction: A group-wise examination

As in any modern economy, trade is central to the progress of the economy in the Association of Southeast Asian Countries (ASEAN) region, but environmental degradation occurs with globalization. Using panel data from the period 1970–2006, this study examines the interaction between trade and the environment in terms of carbon emissions for the group of ASEAN countries. The results demonstrate that CO₂ emissions display an inverted-S shape in the region. In general, exports as a percentage of the gross domestic product (GDP) are main contributors to carbon emissions in the developed, developing and late-developing ASEAN countries. The study found no evidence for the Foreign Direct Investment’s (FDI) deteriorating impact on environmental quality. Moreover, Japan’s imports from the region do not cause pollution while China’s imports stimulate the pollution per capita.     

Mites and merchants: the crisis of English wool and textile trade revisited,c. 1275–1330†

On the basis of 7,871 manorial accounts from 601 sheep-rearing demesnes and 187 tithe receipts from 15 parishes, this article addresses the origins, scale, and impact of the wool and textile production crisis in England, c. 1275–1350. The article argues that recurrent outbreaks of scab disease depressed sheep population and wool production levels until the early 1330s. The disease, coupled with warfare and taxation, also had a decisive role in depressing the volumes of wool exports. Despite this fact, wool merchants were still conducting business with major wool producers, who desperately needed access to the capital to replenish their flocks.     

Distribution and Differences. Stratification and the System of Reproduction in a Swedish Peasant Community 1620–1820

Abstract

The emphasis placed on growth as the objective of economic policy since World War II is conspicuous not only at the national and international level but also so far as the more limited regional unit is concerned. This increased desire for a more intensive exploitation of territorial resources is the result partly of a new and unprecedentedly widespread ‘growth consciousness’, and partly of the greater need for regional planning in rapidly changing economic and social conditions. Not unnaturally, interest has also grown in the problems of territorial development and in research into regional growth.     

Between Malthus and the industrial take-off: regional inequality in Sweden, 1571–1850

The causes and extent of regional inequality in the process of economic growth are at the core of historical economic research. So far, much attention has been devoted to studying the role of industrialization in driving regional divergence. However, empirical studies on relatively unequal countries such as Italy and Spain show that inequality was already high at the outset of modern industrialization. Using new estimates of Swedish regional GDP, this article looks for the first time at regional inequality in a pre-industrial European economy. Its findings show that inequality increased dramatically between 1571 and 1750 and stayed high until the mid-nineteenth century. This result refutes the classical view that the industrial take-off was the main driver of regional divergence. Decomposing the Theil index for GDP per worker, we find that the bulk of inequality from 1750 onwards was driven by structural differences across sectors rather than different regional productivity within sectors. We show that counties with higher agricultural productivity followed a classic Malthusian pattern when experiencing technological advancement, while those with higher industrial productivity did not. We suggest that institutional factors, such as the creation of the Swedish Empire, Stockholm's trading rights, and a protective industrial policy, amplified this exceptional pattern.     

On the difference between the keynesian,knightian and the ‘classical’ analysis of uncertainty and the development of a more general monetary theory

Summary In this article it is shown that Keynes concept of uncertainty is not identical with that of Knight, as is often argued. The identification of Keynesian with Knightian uncertainty has contributed to the neglect of an aspect of Keynesian uncertainty that is important in understanding the functioning of a monetary economy. Therefore, it is concluded that monetary theory can benefit from the development of an analytical apparatus that incorporates all aspects of Keynesian uncertainty.I am indebted to Mr. J. de Haan, Professor J.A. Kregel, Professor S.K. Kuipers, Professor J. Pen, Dr. J. Snippe and Mr. A. van Witteloostuijn for their comments on an earlier version of this paper. It goes without saying that they cannot be blamed for any remaining errors.     

Currency substitution and the stability of the Italian demand for money before the entry into the monetary union, 1972–1998

A money demand function for M2 is estimated for Italy for the period 1972–1998 within an error correction framework. This period has been characterized by major structural changes in the Italian financial system and by major changes in monetary policy. This study takes these changes into account. Moreover, currency substitution, especially between Italy and Germany is incorporated into the model. By accounting for structural breaks and currency substitution a stable money demand function can be found.Financial support from the Deutsche Forschungsgemeinschaft, SFB 373, is gratefully acknowledged. We thank Uwe Hassler, Goethe Universität, Frankfurt, and Carsten Trenkler, SFB 373, Humboldt-Universität zu Berlin, for helpful comments. An earlier version has been presented at the ESEM 2001, Lausanne.     

Taxation,fiscal capacity,and credible commitment in eighteenth-century China: the effects of the formalization and centralization of informal surtaxes†

This article explores a tax reform in eighteenth-century China that formalized county-level informal surtaxes and centralized control over them in the hands of provincial governors, in an effort to strengthen provincial fiscal capacity. The findings show that this reform increased the frequency of famine relief in cases of exceptional disaster relative to other weather conditions. The study shows that the effects were driven by the new fiscal revenues—public funds—at the governors’ discretion, not by the central government's relief actions, bureaucratic control over lower officials, or other concurrent fiscal reforms. Moreover, the reform facilitated intertemporal smoothing and inter-regional risk sharing. However, the effects declined as soon as the central government broke its promise and began to appropriate provincial fiscal revenues. These findings not only provide evidence that fiscal centralization could enhance the provision of public goods in a premodern context, but also highlight that it was the lack of a credible commitment by the central government to the provincial governments that accounted for the short-lived effects of the reform.     

A salary bass: a study of bassists’ earnings in the Royal Swedish Opera, 1799–1980

The number of occupations which have hardly altered at all, thus not suffering from Schumpeterian ‘creative destruction’, is very restricted. However, one such profession is the contrabassist's. Classical music is still largely produced in the same way as when it was first performed. There is very little productivity change in the actual production of music from bygone times. This, too, is a phenomenon rare in society at large and in the economy in particular. In this study I test Baumol's Cost Disease with the Swedish Hovkapellet bass players as my focus. The disease occurs when salary increases in jobs that have seen no increase of labour are accepted. Have musicians such as bass players seen a stagnating salary development compared to professions in industries which have actually seen labour productivity growth? This, together with other related issues, is discussed based on longitudinal salary data for the Hovkapellet musicians and similar data from Copenhagen and Paris. All data are primary data collected from the orchestra archives. The data indeed verify the Baumol Cost Disease hypothesis. The open question discussed is whether that is an actual problem or not.     

Swedish Harvests, 1665–1820: Early Modern Growth in the Periphery of European Economy

Abstract

Today, one of the greatest challenges facing macroeconomic history is to quantify economic growth in the early modern period. This article presents and discusses a series of total and per capita harvest production in Sweden within present borders for the period 1665–1820. The series is based on three main indices: grain prices, subjective harvest assessments and tithes. Various sources of harvests are more reliable as indicators of relative changes than of absolute levels. For example, tithes probably only taxed between 15 and 60 per cent of the actual harvests, but seem to capture annual harvest fluctuations reasonably well. To estimate the absolute level of per capita harvests, the index of the per capita harvest production is linked to data for the early nineteenth century, which are more reliable. The article argues that harvests stagnated during the studied period, which is in line with several other studies for various European countries. The annual fluctuations were substantial.     

U.S.–Japan and U.S.–China trade conflict: Export growth,reciprocity, and the international trading system

First Japan and more recently China have pursued export-oriented growth strategies. While other Asian countries have done likewise, Japan and China are of particular interest because their economies are so large and the size of the associated bilateral trade imbalances with the United States so conspicuous. In this paper we focus on U.S. efforts to restore the reciprocal GATT/WTO market-access bargain in the face of such large imbalances and the significant spillovers to the international trading system. The paper highlights similarities and differences in the two cases. We describe U.S. attempts to reduce the bilateral imbalances through targeted trade policies intended to slow growth of U.S. imports from these countries or increase growth of U.S. exports to them. We then examine how these trade policy responses, as well as U.S. efforts to address what were perceived as underlying causes of the imbalances, influenced the evolution of the international trading system. Finally, we compare the macroeconomic conditions associated with the bilateral trade imbalances and their implications for the conclusions of the two episodes.