Terms‐of‐Trade Shocks and Exchange Rate Regimes in a Small Open Economy*

We examine the impact of terms‐of‐trade shocks on key macroeconomic variables by numerically solving a dynamic stochastic general equilibrium model of a small open economy. The model considers nominal price rigidity under different exchange rate regimes. The numerical solutions obtained are consistent with the empirical regularities documented by Broda (2004), in which output responses to shocks are smoother in floats than in pegs; in moving from pegs to floats, the rise in nominal exchange rate volatility is coupled by the rise in real exchange rate volatility; and in both exchange rate regimes, net foreign assets is the most volatile variable.     

Inflation‐Growth Profiles Across Countries: Evidence from Developing and Developed Countries

There is growing evidence from multi‐country studies indicating that there is a turning point in the relationship between inflation and economic growth beyond which the detrimental effects of high inflation offset the stimulating effects of mild inflation on growth. However, it is not clear whether it is appropriate to assume an identical turning point in the inflation and growth relation across countries at various stages of development. Using a non‐linear specification and the data from four groups of countries at various stages of development, this paper examines the possibility for a family rather than a single inverted U relation across countries at various stages of development. The estimated turning points are found to vary widely from as high as 15% per year for the lower‐middle‐income countries to 11% for the low‐income countries, and 5% for the upper‐middle‐income countries. No statistically detectable, long‐run relationship between inflation and growth is evident for the OECD countries. The results indicate the potential bias in the estimation of inflation–growth nexus that may result from combining various countries at different levels of development. The existence of such a degree of heterogeneity across countries at various stages of development also suggests the inappropriateness of setting a single, uniform numerical policy target applicable to all (developing) countries.     

Credible Power-Sharing Agreements: Theory with Evidence from South Africa and Lebanon

Ipresent a simple model to examine the structure of credible post-conflictpower–sharing agreements. I first show that power–sharingis necessary to induce warring factions to choose democraticrule over the status-quo. When warring factions have commitmentproblems, I show that the agreements require a restructuringof the coercive institutions of the state. The theoretical resultsare supported by a wide ranging empirical study by Hartzell (1999)on the stability of negotiated settlements of civil wars foughtduring the post World War II era. I illustrate the results withcase studies on Lebanon and South Africa.     

WTO accession,trade expansion,and air pollution: Evidence from China’s county‐level panel data

This study provides evidence that trade expansion has contributed to the degradation of air pollution in China. On the basis of different responses of counties’ trade to China's World Trade Organization accession at the end of 2001, we exploit air pollution data from NASA to construct a difference‐in‐differences predicted trade as an instrument for our identification. We document statistically significant and robust evidence on trade expansion, which accounts for approximately 60% and 20% for the increase of PM_2.5 and SO₂, respectively, in China. Findings on trade pollution relation are robust to various tests. Deterioration in the environment is mainly driven by scale and trade in polluting sectors.     

发展中国家的资本账户开放与货币危机实证研究

本文采用1985-1999年泰国、印度、印度尼西亚、韩国、马来西亚和菲律宾的季度数据,选取几个重要指标,运用面板数据的方法,从货币危机的视角进行了实证研究,认为发展中国家的资本账户开放有引发货币危机的可能,但是这种可能性与一国的经济基础条件关系密切,因此,为了避免和缓解发生货币危机的风险,发展中国家应在实现内外均衡和深化金融改革的前提下开放资本账户.     

Income Inequality and Technology Diffusion: Evidence from Developing Countries*

We study the effect of within‐country income inequality on the diffusion of mobile phones using data on market penetration in a sample of developing countries from 1985 to 1998. Mobile phones are an example of international technology, originating in industrialized countries and diffusing worldwide. We find that income inequality, as measured by the income share of the highest earning deciles, has a positive effect on the early diffusion of mobile phones and that the estimated effect becomes greater when a measure of agricultural endowments is used as an instrument. The instrumental variable results are robust to weak instruments. Our findings suggest that the diffusion of new technologies originating from industrialized countries may generate yet another channel that links inequality and development.     

贸易开放与发展中国家收入差距扩大——基于中国的理论与实证分析

文章将人力资本结构因素纳入到贸易开放与发展中国家内部收入差距关系的分析框架之中,通过理论推理和实证检验考察了贸易开放、人力资本结构对发展中国家收入差距扩大的影响机制、条件与力度.研究表明,贸易开放对发展中国家收入差距扩大的影响不但与其所带来的技术进步类型有关,还与该国的产业发展战略和人力资本(人才供给)结构密切相关.就我国而言,人力资本结构升级速度慢于贸易产品结构升级速度,是贸易尤其是出口导致收入差距扩大的重要条件.     

Determinants of intra‐firm trade: Evidence from foreign affiliates in Sub‐Saharan Africa

By exploiting a unique sample of foreign affiliates in Sub‐Saharan Africa, we study previously examined and unexamined firm‐level determinants of intra‐firm trade. We document that foreign affiliates engaging in intra‐firm trade are relatively few and that the majority of these also engage in trade at arm's length, which accounts for an important fraction of their total trade. The identified firm‐level determinants of intra‐firm trade are consistent with property rights and intangible asset theories of the multinational firm, with international production hierarchy theories, as well as with theories of complex FDI and of multinational activity under credit constraints.     

Remittances and the Dutch Disease: Evidence from Panel Data for 18 Developing Countries

In this paper, using the GMM technique we attempt to empirically investigate the Dutch disease effect of remittances. The analyses are based on an annual balanced panel data set for 18 developing countries, which have remittances to GDP ratio of 5 percent and above, over the years 1999–2015. It is found that an inflow of remittances has a positive effect on economic growth, whereas it leads to a depreciation of the real effective exchange rate.     

Payment choice in international trade: Theory and evidence from cross‐country firm‐level data

When trading across borders, firms choose between different payment contracts. Theoretically, this should allow firms to trade‐off differences in financing costs and enforcement across countries. This paper provides evidence for this hypothesis employing firm‐level data from a large number of developing countries. As predicted, international transactions are more likely paid after delivery when financing costs in the source country are high and when contract enforcement is low. We extend the theory and also show empirically that the more complex an industry is, the more important is contract enforcement and the less important are financing costs for the contract choice.     

Domestic and International Sources of Inflation in Developing Countries: Some Evidence from the Monetary Approach

Using the monetary approach, this paper examines empirically the causes of inflation in twenty-five developing countries. In addition to money supply, the underlying money demand function and foreign exchange rates are taken into account in the inflationary process. The lag structures are determined by Akaike's FPE criterion and the exogeneity assumptions are assessed by Granger-type causality tests. The results suggest that the monetary approach provides adequate explanation of inflation across all countries examined. Besides changes in expected inflation and foreign exchange rates, movements in base money in these countries have significantly contributed to their inflationary pressures. [134, 431]     

Regional Trade Agreements and Cross‐border Lobbying: Empirical Evidence from the Canada–US Free Trade Agreement Negotiations

This paper documents participation of special interest groups in negotiations of the Canada–US Free Trade Agreement. Using data on the tariff reduction schedules mandated by the agreement, it shows that industries represented by strong lobby groups were faced with more favorable tariff reduction paths in both countries: phase‐out periods were longer at home and shorter in the partner country. This result provides evidence on the involvement of industry lobbying in negotiation of regional trade agreements and suggests that countries negotiating trade agreements are responsive to the interests of lobbying groups from across the border. Both results provide important implications for the political economy theory of trade agreements.     

International Consumption Patterns among High‐income Countries: Evidence from the OECD Data*

This paper examines the effect of economic integration on the product‐level consumption patterns across the OECD in the past decade. Estimation results find evidence of strong convergence in cross‐country consumption patterns with substantial heterogeneity across products and countries. The results are robust to either the benchmark choice, data selection, or the choice of model specification. In addition to documenting convergence, the paper relates the volume of international trade to cross‐country consumption patterns.     

Estimating the direct impact of bank liquidity shocks on the real economy: Evidence from letter‐of‐credit import transactions in Colombia

This study identifies and provides an estimate of the impact of bank liquidity shocks on real economic activity by exploring letter‐of‐credit import transactions in Colombia during the 2008 to 2009 global financial crisis. The detailed dataset on letter‐of‐credit transactions allows for exploiting within‐importer–exporter variation across issuing banks. The study finds substantial effects of bank liquidity shocks on letter‐of‐credit import transactions: banks that were more vulnerable to adverse liquidity shocks—proxied by the ex ante reliance on wholesale funding or borrowings from foreign banks—reduced letter‐of‐credit issuances more in both intensive and extensive margins. The study also confirms that it had real effects: importer–exporter pairs that relied more on letter‐of‐credit transactions experienced a greater reduction in their total imports in response to adverse bank liquidity shocks.     

Finance–Growth Nexus and the P‐bias: Evidence from OECD Countries

Recent studies provide new empirical evidence confirming that financial development is linked to economic growth in OECD countries. Using new dynamic panel regression techniques, these appraisals indicate that within the group of high‐income countries stock market size as a measure of financial advancement contributes significantly to overall economic activity. Applying the same advanced techniques, this paper questions this conclusion by showing that the findings of these studies seem to be not only not robust with respect to adding new observations but also likely to be plagued by a severe price bias which belittles the information content of the used financial indicator (stock market capitalization). We provide evidence that anticipative price effects (i.e. expectations of future growth, reflected in current stock prices) may be driving the statistical relationship between stock market activities and economic growth in high‐income countries to a much larger extent than recent analyses of the finance– growth link in OECD countries suggest .     

Liberalization and the terms of trade in Turkey: a causal analysis

There has been extensive trade liberalization in developing countries in recent decades. Several liberalization episodes have been completed in Turkey. In this paper we evaluate the relationship between trade liberalization in Turkey and the terms of trade. Has liberalization preceded changes in the terms of trade or vice versa. Using causality analysis we investigate several hypotheses and conclude that in this case trade liberalization follows a terms of trade change, a finding which is consistent with the trade shocks hypothesis.     

Determinants of International Research Collaboration: Evidence from International Co‐Inventions in Asia and Major OECD Countries

International research collaboration has become important in recent years. This paper analyzes what gains drive the expansion of international research collaboration and what costs prevent it, with a special focus on the incidence of international co‐inventions (ICIs) in Asia and major Organisation for Economic Cooperation and Development countries. The major findings are as follows. ICIs become more prevalent in those technology sectors where scientific literature becomes important as prior art, inventor team size increases, and the relative inventor resources of the own country in the world declines. Thus, ICIs allow a country to exploit more efficiently the world stock of new knowledge and to realize the gains from combining diverse sources of knowledge and skills. Moreover, the results of estimating a gravity model centered on the USA and Great Britain suggest that language differences measured by Test of English as a Foreign Language scores matter significantly. The results also suggest that exporting from these two countries are significantly and positively associated with ICIs.     

Women Managers and The Gender-Based Gap in Access to Education: Evidence from Firm-Level Data in Developing Countries

A number of studies explore the differences in men's and women's labor market participation rates and wages. Some of these differences have been linked to gender disparities in education access and attainment. The present paper contributes to this literature by analyzing the relationship between the proclivity of a firm having a top woman manager and access to education among women relative to men in the country. The study combines the literature on women's careers in management, which has mostly focused on developed countries, with the development literature that has emphasized the importance of access to education. Using firm-level data for seventy-three developing countries in 2007–10, the study finds strong evidence that countries with a higher proportion of top women managers also have higher enrollment rates for women relative to men in primary, secondary, and tertiary education.