Impulse response analysis and Orcutt’s hypothesis in trade: evidence from developing countries

Orcutt’s hypothesis in international economics implies that trade flows respond to exchange rate changes faster than to changes in relative prices. Most previous studies used import and export demand models and tested the hypothesis by imposing and comparing lag lengths on the exchange rate and relative prices. One recent study, however, employed impulse response of trade flows to one SD shock to the nominal exchange rate and one SD shock to relative prices and tested the Orcutt’s hypothesis for several industrial countries. In this article we follow this study and test the hypothesis for six developing countries using impulse response analysis. Like the other study for industrial countries, we do not find much support for the hypothesis.     

Commodity trade between Pakistan and the US: is there evidence of the J-curve?

A few studies that have attempted to estimate the short-run (J-curve) and long-run impact of exchange rate depreciation on Pakistan’s trade balance are either based on aggregate trade data between Pakistan and the rest of the world or between Pakistan and her bilateral trading partners. The findings are mixed at best. Considering the trade balance between Pakistan and the US, as one of its major partners, no significant effects have been discovered. Suspecting that the trade flows between the two countries could suffer from another aggregation bias, we disaggregate their trade flows by commodity and consider the trade balance of 45 industries that trade between the two countries. We find significant short-run effects of currency depreciation on the trade balance of 17 industries. The short-run effects last into the long run in 15 cases. The largest industry that account for more than 10% of the trade seems to benefit from real depreciation in the long run.     

Evaluating Russia’s trade patterns

This article offers empirical evidence on the major trends in the nature of Russia’s trade and on the determinants of the different types of trade: horizontal intra-industry trade (HIIT), vertical intra-industry trade (VIIT) and inter-industry trade (INT). The estimation results of gravity-type log-linear models suggest that the combined economic size of Russia and the trading partner has a positive effect, while the distance between the two countries has a negative effect for all types of trade. They also suggest that FDI has a significant effect on all types of trade; however, the effect varies according to whether the partner country is a member of the CIS/CU or not, and whether the FDI is outward or inward.     

Turkish trade unionists and Turkey’s membership of the European Union

In all the discussions regarding Turkey’s accession to the EU, little attention has been paid to the views of workers. This paper provides a statistical analysis of the views of over 6000 Turkish trade union members on Turkey’s EU membership. Parameters are estimated using multilevel probit models where the nested structures of workers into trade unions and federations were taken into account since they shared some joint characteristics because of belonging to these organisations. It confirms the extensive disillusion with the EU found elsewhere in Turkish society but more interestingly it disconfirms an idea that those inside the EU may too easily assume to be the case: that it is those with what might be considered modernist characteristics among the Turkish population who are most likely to be in favour of EU entry. The idea seems to chime well with assumptions that the EU is a progressive, modern force. But whatever the validity of such a view, EU entry is not in fact found to be the favoured goal of the young and the best educated: it is older workers who are the most likely to support entry and those who are educated to the highest level the most likely to oppose it. Amongst the main three trade union federations there is also a greater propensity of members of trade unions affiliated to Hak Is (the Islamic federation) to support entry than those in Turk Is (centre right) or DISK (historically the most militant).     

The trade effects of Albania’s trade agreements with CEFTA members

Since the Central European Free Trade Agreement (CEFTA) was signed in 2006, Albanian exports to CEFTA member countries have increased four-fold. Applying a trade growth decomposition methodology, we show that Albanian firms that did not export to CEFTA countries before the agreement account for a large share of this export growth. Exports also increased among goods that were the least traded before the agreement. Estimating a gravity equation, we find that the CEFTA increased Albanian exports between 34% and 144%, depending on how the previous bilateral agreements with CEFTA countries are accounted for. Additional regression analyses conclude that the CEFTA fostered exports through the reduction of tariffs.     

Comparison of indicators of women’s labour between Turkey and EU member states by employing multidimensional scaling analysis and clustering analysis

At present, because of social, cultural and economic changes, women support the economies of their countries by their status as workers. In this research, we aim at comparing the status of Turkey in terms of indicators of women in the labour force with that of EU countries, thereby revealing the similarities and differences. The variables indicating women in the labour forces of the 28 EU countries and Turkey were analysed utilizing multidimensional scaling analysis (MDSA) and clustering analysis (CA).

According to the MDSA, the countries form three different groups in two-dimensional space. The clusters formed by the CA are congruent with the groups formed according to the MDSA. When compared with EU members, Turkey has very low values, particularly in terms of the ratio of working women, the ratio of jobless females who are primary or secondary school graduates and the ratio of women who are senior high school graduates.     

A young EU member’s ageing: budgetary and macroeconomic consequences of Slovenia’s demographic prospects

In this paper, we simulate a macroeconometric model of Slovenia over the period 2012–2060, using the projected demographic development as input, and determine time paths for budgetary and macroeconomic variables under alternative assumptions about Slovenian policy instruments so as to limit budgetary pressures stemming from population ageing. The main macroeconomic indicators (growth, employment, price stability, sustainable public finances) are shown to depend on the assumed long-run policy options followed. It is demonstrated that the ageing of the Slovenian population projected in the demographic forecast leads to severe budgetary problems unless increases of the retirement age, rising social security contributions or reductions of state financed pensions are implemented. A reduction of the pension replacement rate turns out to be the most effective measure to cope with the budgetary implications of population ageing. However, none of the analysed policy measures is sufficient to stabilise the debt ratio.     

The 2020 US Presidential election and Trump’s wars on trade and health insurance

The trade war initiated by the Trump administration is the largest since the US imposed the Smoot-Hawley tariffs in the 1930s and was still raging when he left office. We analyze how the trade war impacted the 2020 US Presidential election. Our results highlight the political salience of the trade war: US trade war tariffs boosted Trump’s support but foreign retaliation hurt Trump. In particular, the pro-Trump effects of US trade war tariffs were crucial for Trump crossing the recount thresholds in Georgia and Wisconsin. Even more important politically, voters abandoned Trump in counties with large expansions of health insurance coverage since the Affordable Care Act, presumably fearing the roll-back of such expansion. Absent this anti-Trump effect, Trump would have been on the precipice of re-election by winning Georgia, Arizona, Nevada, and only losing Wisconsin by a few thousand votes. These effects of the trade war and health insurance coverage expansion cross political and racial lines, suggesting the mechanism operates through the impact on local economies rather than political polarization.     

Does China’s trade defy cultural barriers?

Using annual data for China and 88 trading partners that span the period 1995–2011, we estimate whether cross-societal cultural differences influence China’s external trade flows. Our results, obtained from the estimation of a series of multi-level mixed effect random intercepts and coefficients models, indicate that China’s aggregate exports and imports are largely unaffected by the cultural distance between China and its trading partners. Examination of disaggregate trade measures and consideration of the underlying dimensions of our composite cultural distance variable produces a largely similar result. Taken collectively, our results suggest that China’s trade is less affected by cultural distance than has been reported for other countries in similar studies.     

‘Old’ Europe’s wage dynamics and trade imbalances: Is there a link?

No evidence is found that gains in relative labour productivity have had a positive effect on the trade balance/GDP ratio for the ‘old’ EU members (excluding Germany) from 1961 to 2014. Rising relative wage rate is shown to have had strong—and negative—effects on the trade balance/GDP ratio for the EU-14, at least in the longer run. It follows that external rebalancing may be achieved through a sufficiently strong fall in the relative wage rates, without productivity changes having a role to play. This is not to claim that the EU-14 (and its members suffering trade deficits in particular) ought to attempt the devastating policy of ‘internal devaluation’. A constructive alternative would be to achieve the fall in the relative wage rates through faster growth of German nominal wage rates. Whether that alternative is practicable is another matter. But it can be argued that without that alternative being followed the European Union will remain a stagnant area plagued by recurrent crises caused by imbalanced trade among its Member States.     

Macroeconomic Effects of Serbia’s Integration in the EU and the Euro Area

International Advances in Economic Research - In 2009, Serbia officially applied for European Union (EU) membership. In 2014, membership negotiations began. After joining the EU, Serbia will have...     

China’s welfare gain from involved mega-regional trade agreements

This article draw upon a 29-country numerical general equilibrium model with trade cost and endogenous trade imbalance to simulate China’s welfare gain from negotiating mega-regional trade agreements (mega-RTAs). We introduce elasticity of substitution distributions instead of normally definite values in the model and generate a distribution of impact results ranging among some specific intervals, which injects a new kind of effect presentation style to existing literature. The results of our article reveal that China will gain from all undergoing negotiation mega-RTAs we mentioned in this article, comparatively Regional Comprehensive Economic Partnership will benefit China the most.     

China’s international trade development and opening-up policy design over the past four decades

ABSTRACT

China’s opening-up in the past four decades has gone through three waves: the extensive margin of opening-up (1978–2001), the intensive margin of opening-up (2001–2017), and all-around opening-up (since 2017). This paper explores these three stages of the country’s economic reform. China’s gains from trade have been inspired by different economic factors. Before the turn of the century, the large trade volume was due to the realization of comparative advantage based on the country’s factor endowment. However, after its accession to the World Trade Organization, China’s gains from trade have been due, in large part, to the realization of economic scale effects associated with the larger market.     

Upgrading in China’s apparel industry: international trade,local clusters and institutional contexts

This article focuses on the concept of upgrading, and seeks to move away from a firm-centred approach of industrial upgrading towards a framework that recognises not only a firm’s integration into global value chains, but also its embeddedness within local networks and the context of wider institutional arrangements. Based on one firm-level database, this article measures upgrading in China’s apparel industry at the firm level, which allows us not only to evaluate the extent of upgrading in the industry as a whole and to compare its extent among individual firms and selected groups of firms, but also to differentiate and measure different types of upgrading. Empirical results confirm that the heterogeneity of firms, global and local linkages and the wider historical, political, institutional and economic context have all played a critical role in the process of upgrading, suggesting that a focus on dynamics of firm upgrading alone is insufficient.     

Expectations,Strategies and Prospects of Farmers in View of Croatia’s Pending EU Accession

In Croatia, farmers prepare themselves for the impending EU accession and consider their future economic opportunities in and outside agriculture. This study on farmer's strategies reviews empirical evidence of a unique household survey conducted in early 2007 in Croatia. The main objective of this paper is to present new insights on the transition dynamics in one of the EU candidate states with good prospects to accede within the coming years. Based on empirical data we present a multinomial regression model on drivers of farm household’s livelihood strategies. Farm exit, farm expansion and the combination of farm and non-farm incomes are the main strategies which are tested against socio-economic variables with a potential influence on them.     

Does the exchange rate matter to bilateral trade between Korea and Japan? Evidence from commodity trade data

This study examines the short- and long-run effects of exchange rate changes on trade flows in the context of disaggregating industry data of bilateral trade between Korea and Japan. For this purpose, an autoregressive distributed lag (ARDL) approach is used. Results show that Korea's exports and imports are relatively sensitive to the bilateral exchange rate in the short-run, but less responsive in the long-run. It is also found that income in the two countries has significant impacts on the bilateral trade flows in both the short- and long-run. Finally, exchange rate uncertainty and Japanese FDI to Korea are found to have little impacts on Korea's trade with Japan in the short- and long-run.     

Cap and trade to solve environmental problems ——an analysis of approach in the EU

Environmental problem is a global problem, which has been emphasized by many countries all over the world. To handle the climate change, international community has tried many means. This paper will focus on the approach called "cap and trade", and analyze its application in the EU—the EU Emissions Trading System (EU ETS). The effectiveness of the EU ETS in different phases will be analyzed in detail, as well as the benefits of the EU ETS comparing with other means of reducing greenhouse gas. It can be found that "cap and trade" is a successful mechanism to reduce the greenhouse gas s and other countries are supposed to learn from the experience of the EU ETS.     

Commodity market stabilisation and ‘North-South’ income transfers: An empirical investigation

Commodity stabilisation agreements have often been suggested as a means of stabilising producers' revenues and redistrubuting productive resources to less developed economies (from ‘North’ to ‘South’). But no empirical estimates of how much may be expected from such agreements, nor of what they would cost to operate, have appeared. This paper examines, in the context of one market, how far prices can be stabilised by buffer stock interventions. the costs of that stabilisation, and whether any redistribution would be achieved. We find pure stabilisation leads to transfers away from the South, and that supply restrictions which force redistribution are extremely expensive. However, it is relatively cheap to protect producers on the South against the uncertainty of future revenues.