Predator–prey dynamics in general equilibrium and the role of trade

We examine the implications of trade in an economy with two interrelated natural resources, focusing on the case of a simple predator–prey relationship. We derive a three-sector general equilibrium model where production functions are linked via the ecological dynamics of the natural system. Under autarky, this economy exhibits a steady-state equilibrium that overexploits the prey stock, reducing the linked predator population and overall welfare in the absence of harvesting controls. When two economies engage in trade, differences in the dynamics of the two resource systems can become the basis for comparative advantage. In this case, the predator–prey relationship leads to a source of comparative advantage in harvesting prey for a country with a lower autarky steady-state proportion of predators to prey. This feature has not been noticed in the literature and leads to a counterintuitive implication: free trade can help conserve predator and prey stocks in the country with the higher autarkic steady-state proportion of predators to prey. To illustrate the relevance of our analytic findings, we present the stylized empirical example of the effect of Chinook salmon imports on killer whale populations.     

A model of trust in quality and North–South trade

Why do some countries produce higher quality goods than other countries? This paper suggests that one reason is self-perpetuating reputations, modelling the idea with a Klein–Leffler reputation model embedded in a general equilibrium model of trade. Reputation differences are particularly interesting because reputation is a form of “social capital”. Like product differentiation, it can explain why countries might trade even if their technologies and endowments are identical, why firms could profit from exports even if the foreign price is no higher than the domestic one, and why governments like to have “high-value” sectors. Ideally, a developing country would shift its own producers to a high-quality equilibrium; if that is not possible, the next best thing is to import experience goods and substitute to home production of goods for which reputation is not important.     

Why did the terms of payment in international trade change so much?

This article examines factors contributing to the substantial change in the terms of payment, such as letter of credit (LC) and cash terms, in Korean export transactions during the period 1997–2015, using the Autoregressive Distributed Lag bounds test approach. We find that high competition in the world market, the expansion of exports of information technology products and intra-firm trade, and the improvement of information and communication technology (ICT) decrease the share of exports on LC terms in total exports in the long run. However, the increase in exports to developing countries raises the use of LC terms. On the other hand, the increase in intra-firm trade and ICT improvement raise the share of exports settled in cash, and higher trust between trading partners increases the use of cash terms.     

The dynamics of international trade integration: 1967–2004

This article explores how trade integration has advanced over the last four decades and what the foreseeable future holds, among other related questions. To this end, we consider certain methods which have scarcely been used in the literature on trade integration. First, we measure trade integration through a set of indicators which control not only for how open economies are, but also for their degrees of connectedness in the World Trade Web. Second, we assess how these indicators have evolved over time, what the likely steady state distribution might be, and whether results could differ depending on a variety of weighting schemes (GDP, population). The results show that, under current trends, future world trade will be much more trade-integrated, especially for the most heavily populated countries. However, there is still a long way to go before reaching the hypothetical scenario of geographically neutral trade.     

A Takayama–Judge activity model applied to the analysis of allocation and trade in Sweden

The purpose of this article is to formulate a numerical general equilibrium model of the Swedish economy, and to use the model for a quantitative evaluation of the pattern of comparative advantages. The model is essentially a Leontief type of input-output model, extended with linear demand functions for final commodities, foreign trade activities and capacity and resource constraints. Due to the linearity the model can easily be reformulated and solved as a quadratic programming model. The evaluation of the pattern of comparative advantages of the Swedish economy is carried out as an analysis of the choice between inport and domestic production in a temporary equilibrium framework with exogenously given world market prices, exports and domestic production capacities.     

A monetary model of China–US trade relations

This paper develops a general equilibrium monetary model to study China–US trade relations. The model captures two main features of China–US trade: China's fixed exchange rate regime and the use of the US dollar as the international medium of exchange. The main conclusions of this paper are threefold. First, an improvement in the productivity of China's tradable sector would benefit both China and the US. Second, a RMB appreciation would reduce consumption in the US and increase consumption in China, and would likely reduce China's trade surplus. It would also lead to a contraction in China's tradable sector and an expansion in US's tradable sector. Third, a monetary expansion in the US would hurt China because it would lead to a transfer of wealth from China to the US, a fall in China's relative wage rate and terms of trade, and an artificial expansion in China's tradable sector. A US monetary expansion would also increase China's trade surplus.     

A dynamic analysis of the Korea–Japan free trade area: simulations with the G‐cubed Asia–Pacific model

This paper explores the effects of the proposed free trade agreement between Japan and Korea. Our experiments are based on a new dynamic simulation model, called the Asia‐Pacific G‐cubed Model, which incorporates the rational expectations and intertemporal optimizing behaviour of agents. The simulations show that both Korea and Japan benefit from the bilateral FTA although other countries lose. The output gains from the FTA are estimated to be larger when trade liberalization is undertaken by a tariff reduction that is more gradually phased‐in than rapid.

JEL Classification: F15     

Dynamic factor demands under imperfect competition: the Greek manufucturing industry 1958–1981

The intertemporal maximization problem of the firm under adjustment costs for its factors of production and imperfect competition in the output market is considered. The first-order conditions, with respect to capital and labour, the production function and the demand equation have been jointly estimated using Greek manufacturing data and values for the structural parameters have been obtained. The estimates are plausible and most of them significant. Tests of the overidentifying restirctions are unable to reject the overall specification of the model at conventional levels of significance.     

Optimal taxation in the Uzawa–Lucas model with externality in human capital

In this paper we study the optimal policy in the Uzawa–Lucas model with externality in human capital when agents value both consumption and leisure. We find that the government pursuing the first best can achieve its goal by a subsidy which depends on foregone earnings while studying and which is financed through a lump sum tax. Anyway, the optimal policy, that should be designed to provide incentives for agents to devote more time to schooling and cut both on leisure and working, is not unique. There exists an infinite number of combinations of consumption, capital income, labor income and lump sum taxes that can decentralize the first best.     

The impact of the ACFTA on ASEAN–PRC trade: estimates based on an extended gravity model for component trade

This article uses an extended gravity model to examine the impact of the free trade agreement between the Association of Southeast Asian Nations (ASEAN) and the People’s Republic of China (PRC) on their trade flows and patterns. New determinants are utilized to capture the growing importance of global production sharing and intraregional trade in parts and components in East Asia. We show that the free trade agreement leads to substantially higher and more pronounced bilateral trade flows between ASEAN and the PRC than what a conventional gravity model predicts and the increase is concentrated in ASEAN countries that have stronger industrial linkages with the PRC.     

Testing the Uzawa–Lucas model with OECD data

The paper tests the Uzawa–Lucas model of endogenous growth using a modified Granger-causality test and panel data for 20 OECD countries. The results favour the human capital augmented endogenous growth model against both the exogenous growth model à la Solow and endogenous growth models of the AK type.     

Vertical separation with location–price competition

While the literature has generally found that vertical separation helps buffer competition and harm consumers in a duopolistic market, we find the exact opposite. To induce the retailers to locate closer to consumers and earn a larger market share, the manufacturers set wholesale prices below marginal cost. This market share effect dominates the previously focused coordination effect under which a higher wholesale price helps coordinate the retailers’ pricing decisions. For each manufacturer, vertical separation is a dominant strategy so the endogenous determination of vertical separation versus vertical integration is a prisoner’s dilemma game.     

The evolution of competition in innovation resource: a theoretical study based on Lotka–Volterra model

This research uses the Lotka–Volterra model to analyse the competition of innovation resource between two enterprises and studies the dynamic effects of environmental changes through the change of model parameters. The research finds that there are three possible results of the competition in innovation resource. That comprises ‘crowding out effect’, ‘unstable equilibrium’ and ‘stable equilibrium’. The results of competitive evolution are determined by enterprises’ interaction parameters. However, the natural growth rates, the initial resource possessions of both enterprises and the amount of regional innovation resource have a significant impact on the evolution of competition.     

Does the role of observer countries in the regional trade agreement matter for intra-regional trade ?

This article investigates the effects of trade by observed economies on the intra-regional trade by South Asian Association for Regional Cooperation (SAARC) members using Poison pseudo maximum likelihood estimator (PPML) gravity models with panel data over the period 2008–2014. Eight SAARC members and eight observed countries, including the EU, are analysed in capturing the trade effect of observed economies on intra-regional trade in SAARC. This article provides an empirical measure of observers’ trade, FDI and Official development assistance (ODA) with SAARC if the exports and imports of observers to/from SAARC have positive or negative signs for intra-regional exports and imports. The results show that the exports and imports of observers to SAARC members have positive effects on bilateral exports among the members. The FDI of observers reduces the bilateral intra-imports in SAARC and ODA also has a negative effect on bilateral exports among the members. These results imply that the imports by SAARC members from observer countries increase intra-regional trade in the region. The FDI and ODA increase and decrease intra-regional trade in SAARC, respectively, implying that the policies for both FDI inflow from observers and efficient aid management are needed to increase regional welfare. The study also recommends that trade between SAARC members and its observers help to increase intra-regional trade in SAARC.     

Study on the use of trade barrier of anti-dumping in China

WTO allows its members to use anti-dumping barrier to combat unfair competition. Nowadays, anti-dumping barrier has been dominant protective trade measure in the world, while in China, this measure is still not fully used and at low level. For the purpose of protecting domestic industries and enhancing national welfare, China should use this barrier cautiously and construct its own anti-dumping system at the same time.     

The negative value of public information in the Glosten–Milgrom model

In the standard market-microstructure model of Glosten and Milgrom (1985), public information can have negative social value. Equivalently, an increase in informational asymmetry can raise the total surplus from trade.     

More competition to alleviate poverty? A general equilibrium model and an empirical study

In this paper, we theoretically and empirically analyze the impact of competition on poverty. We consider a general equilibrium framework with vertical preferences and compare poverty in a Monopoly setting versus a Duopoly setting considering explicitly the ownership structure. Poverty is measured by the size of the population living below an absolute poverty line. Theoretical results show that the impact of competition on poverty is contingent to the ownership structure, the poverty line and the relative dispersion of the individuals with respect to their intensity of preference for quality and sensitivity to effort: competition can improve or worsen poverty depending on the model's parameters. Empirical findings for the three existing poverty lines ($1.9, $3.2, and $5.5) are consistent to a large extent with our theoretical results.     

Depression of the deprived or eroding enthusiasm of the elites: What has shifted the support for international trade?

We use the 2003 and 2013 waves of the International Survey Program (ISSP) in order to explore the change in people’s attitudes that may be behind the recent backlash against globalization. We show that the average support for international trade has decreased in many – albeit not all – countries, and we demonstrate that these changes are related to the depth and length of the global financial crisis of 2008/09 as well as the evolution of income inequality. Moreover, our results document a declining support of those individuals who are likely to benefit from international trade: the young, high-skilled and well-off. We show that this “eroding enthusiasm of the elites” is empirically relevant even if we control for individuals’ increasing exposure to international labor-market competition.     

Multiple equilibria in the Aghion–Howitt model

We show that the simple Aghion–Howitt model exhibits oscillatory indeterminacy in the process of creative destruction as firms undertaking new research do not internalize their effect on existing firms. A simple calibration shows that indeterminacy occurs for quite plausible parametrizations of the share of the intermediate good.