Should retail stores locate close to a rival?

Journal of Economic Interaction and Coordination - I simulate firms competing in an urban landscape that is segregated by income level. Some firms are located close to wealthy neighborhoods and far...     

Will Brexit speed a seismic shift in UK trade patterns?

• The UK's trade pattern has shifted significantly away from the EU since the 1990s. Our analysis suggests that this shift will continue in the decades to come, with the EU share in UK goods exports potentially slipping to around 35% by 2035. Shifts in relative prices from moves in tariff and especially non‐tariff barriers could lower the share further.
• Over 60% of UK goods exports went to the EU in the late 1990s but this has fallen to around 45%. Slow EU growth is partly to blame, with UK exports to the EU barely expanding since 2007. But our analysis also shows that a 1% rise in EU GDP leads to only around half the rise in UK exports to the EU that a 1% rise in GDP in the rest of the world induces in UK exports to non‐EU countries.
• Based on our findings and OE forecasts of long‐term growth in the EU and the world, the EU share of UK goods exports could fall to 37% by 2035 and around 30% by 2050 – back to its 1960 level. The share of services exports to the EU has held up better but is lower than for goods, at around 40%.
• Weakening growth of UK exports to the EU has taken place despite the development of the EU single market since the early 1990s. Indeed, based on our projections UK goods exports to the single market could drop below 5% of UK GDP by 2050. These projections make no allowance for Brexit effects, but the declining importance of exports to the EU single market could colour prospective Brexit negotiations.
• Simple income‐based projections of potential country shares in future UK exports suggest a further swing towards emerging countries (EM) in the decades ahead, especially China and India. Exports to EM could approach 40% of the total by 2035. A shift in the pattern of trade preferences and restrictions faced by the UK post‐Brexit could spark even larger shifts in the structure of UK exports.

     

Tailings facility failures in the global mining industry: Will a ‘transparency turn’ drive change?

In this article, we critically analyse emerging regulatory controls around the design and management of tailings facilities in the global mining industry. Following several high profile, catastrophic tailings facility failures, a Global Tailings Review (GTR) was established to develop a new industry Standard. We describe the precursors to the GTR and review the public disclosure requirements of 19 separate industry-endorsed standards and certification schemes. On several criteria, the GTR Standard requires unprecedented levels of public disclosure by mining companies. Does this amount to a ‘transparency turn’ in tailings management? We argue that while improved disclosure provisions may provide visibility for investors, regulators and other stakeholders, the socialisation of transparency norms is a highly complex, contingent and ultimately fragile endeavour. Using indicators relevant to achieving transparency, we demonstrate the contextual variability into which mining companies will be disclosing information. Our analysis highlights the sheer number of tailings facilities in locations with multi-dimensional complexity, including low levels of literacy and governance, with correspondingly high levels of inequality and corruption. We discuss these conditionalities in relation to the GTR Standard, and conclude by outlining future research priorities.     

Industry trade between Canada and Mexico: Will a weakening peso help Mexican manufacturing in the long run?

Mexico has longed served as one of Canada's major trade partner, but the plunging peso has had drastic effects across North America. This study investigates the bilateral trade relationship between Canada and Mexico for 27 individual industries, from 1973 to 2006. Cointegration analysis shows that overall sensitivity to the real exchange rate is weak, but that the trade balances of certain manufacturing industries do indeed improve after a currency depreciation. The “J-curve” effect is present for certain electrical and mechanical industries, suggesting that the recent decline of the peso may currently be having a negative impact on Mexican trade—but that it might eventually be beneficial, particularly for the Machinery and Transport Equipment sector.     

Is a co-jump in prices a sparse jump?

Systematic co-jumps in asset prices are generally thought to account for only a small proportion of overall jumps. In actual observations, however, jumps in asset prices are often persistent, and the time of persistence varies. In this context, we develop a new rule to identify co-jumps and improve traditional tests by considering different sampling frequencies and different sampling starting points to re-evaluate the occurrence rate of systematic co-jumps in financial assets. We conduct a simulation experiment to show that the current test procedures generally underestimate the number of co-jumps when considering persistence, but that the proposed procedure can identify co-jumps more accurately. We also perform an empirical analysis using price data from the Shanghai 50 Index and its 25 constituent stocks in China’s stock market. The average proportion of systematic co-jumps detected by the improved s-BNS is approximately 30%, which shows that the co-jump and even the systematic co-jump are not sparse jumps. The results also reveal the shortcomings of traditional jump tests in estimating persistent jumps and demonstrate that the proposed method can better detect the possible nondiversifiable risks between market indices and their constituent stocks, thereby contributing to financial risk management.     

Where Will Life Take You?

<正>有的人崇拜奢华。有的人却崇拜心灵的奢华。当无数拜金者还在为LV在今年春夏推出的如五彩糖果一般将少女玩味与高尚光荣结合的登峰造极的配饰而极度疯狂的时候,当无数梦想着成为拜金者的准拜金者还在为六大国际名模     

Will export taxes replace VERs?

Some economists use an export tax, which alters the domestic relative price of exports, to model a voluntary export restraint, which is a restriction on the quantity of exports with restriction-induced rents accruing to the exporting country. Implicit in this approach is the presumption that the two policies are equivalent. In a very general model that allows for a finite number of goods and factors and intermediated goods and joint production, we demonstrate that, in general, this is, in fact, not the case. Specifically, from the exporting country’s perspective, the real income effects of the two policies are nonequivalent.     

Will the Euro be Stable?

In this article Francis Breedon and Michael Chui look at the impact of EMU on exchange rate volatility. Although theoretical evidence is mixed, their empirical evidence suggests that $/Euro volatility will be significantly higher on average than $/DM volatility has been historically, largely because the ECB will put less weight on the exchange rate in their policy deliberations than the Bundesbank has done. This result suggests that EMU-outs such as the UK may have to cope with potentially larger exchange rates swings until they make a more formal commitment to EMU.     

What is the potential impact of a taxation system reform on carbon abatement and industrial growth in China?

Economists have long argued that market-based environmental policy such as an environmental tax is beneficial to abate pollution emissions. This study aims at investigating the impact of carbon tax levy on carbon dioxide (CO₂) abatement and industrial growth in China. To this end, the marginal abatement cost (MAC) of industrial CO₂ emissions is estimated as the benchmark of setting the carbon tax rate by using the directional distance function (DDF). This paper employs the polynomial dynamic panel model to forecast the impact of carbon tax levy on target variables such as sectoral value-added and CO₂ intensity. The results reveal that the levy of a CO₂ tax has a negative impact on industrial output only in the short term. In the long term, the impact of CO₂ tax levy on output will become positive. The levy of a CO₂ tax is always beneficial to reduce CO₂ intensity. Corresponding policy suggestions for an environmental taxation system reform are given in the concluding section.     

Will Social Institutions Mediate Economic Trends?

This comment is in response to Frederic L. Pryor (2000). The Millennium Survey: How Economists View the U.S. Economy in the 21^st Century. The American Journal of Economics and Sociology. 59 (January), pp. 3-33.     

Will the strength of Sterling slow growth?

Sterling has now appreciated by over 25% since the second half of 1996. A key issue affecting the UK economy is the extent to which this will reduce growth this year and in 1999. When can we expect to see the net trade position deteriorate and to what extent? In this article, Paul Robson and James Nixon argue that business survey evidence implies that the current strength of Sterling is likely to lead to falling manufacturing exports over the course of this year. This combined with increased import penetration should be sufficient to cool the economy and remove the need for a further interest rate rise.     

Decentralized Welfare: Will There Be Underprovision?

This paper develops an Asymmetric Nash Equilibrium model of welfare provision by states when the benefit payment is a local public good and a fixed population of welfare recipients distributes itself between states with logistic “migration” function. The model shows that state size is an important demand shifter across states because it alters the supply elasticity of recipients. The model provides estimates of how the degree of benefit under provision varies with this migration elasticity. Other demand instruments (such as taxpayer resources and “generosity”) likewise generate positive correlation between benefits and recipients, while supply shifters generate negative correlation between benefits and recipients. The model's predictions are closely matched empirically, when examining the reduced form impact of these instruments on the pattern of welfare benefits and recipients across states. Using these impacts to assign the instruments to either supply or demand sides of the model, it is possible to estimate the model's structural elasticities. These turn out to be high enough so that simulated solutions to the model generate considerable welfare underprovision and thus raise concern about a race to the bottom with decentralized control over AFDC.