China's Trade Slowdown: Cyclical or Structural?

This paper analyzes whether the slowdown of China's trade in 2012–2015 was cyclical or structural, and further discusses the effects of structural factors, including trade structure, trade protectionism and global value chain participation. Using the national panel data from 2000 to 2015, based on the error correction model and import‐intensity‐adjusted demand model, our results show that the slowdown of China's trade growth in 2012–2015 was mainly a result of cyclical factors. Using 2000–2015 industry‐level data, we also find that the structure of trade goods had an inhibitory effect on the import slowdown but a positive effect on the export slowdown. Trade protectionism had an adverse effect on the trade growth slowdown. The global value chain participation marginally contributed to the slowdown in trade growth. Therefore, the impacts of structural factors on trade growth slowdown cannot be ignored, and related policies should receive greater attention from policy‐makers.     

World Bank: IDA Loans or IDA Grants?

This paper discusses President Bush's July 2001 proposal to convert a major share of IDA lending to grants. It presents arguments in favor of the proposal but also notes difficulties and points where other donor countries and supporters of the World Bank have reservations. It identifies issues which should be addressed in any final agreement among the donor countries.     

Are Financial Development and Trade Openness Complements or Substitutes?

This article studies the long‐ and short‐run relationships between financial development and trade openness. Using the pooled mean group estimator of Pesaran, Shin, and Smith (1999) for unbalanced panel data for 87 countries over the 1960–2005 period, our empirical results indicate that long‐run complementarity between financial development and trade openness coexists with short‐run substitutionarity between the two policy variables. But when splitting the data into OECD and non‐OECD country groups, this finding can be observed only in non‐OECD countries. For OECD countries, financial development has negligible effects on trade. In addition, we find nonlinearity in the relationship in that long‐run responses of trade decrease with financial development. The article further finds coexistence of negative trade effects of financial fragility and positive trade impacts of financial depth.     

Trade Policy Versus Competition Policy: Substitutes or Complements?

This paper deals with the difference between trade policy and competition policy for domestic prices, wages, and employment when product and labour markets are imperfectly competitive. We show that in the presence of country-specific institutions like trade unions, trade policy and competition policy are no longer substitutes in disciplining product and labour market distortions. While both domestic entry and foreign imports affect domestic price-cost margins, they differ in their effectiveness and their impact on the domestic labour market. The results in this paper suggest that enforcement of competition policy without a sufficient degree of openness to imports is typically not a first-best outcome. While domestic entry increases union welfare, foreign imports reduce it. Competition policy in the presence of labour unions is insufficient to reduce labour market distortions, while international competition reduces both labour and product distortions.     

Trade and wage inequality: Are they related?

The objective of this paper is to investigate the relationship between net exports and wage inequality in the U.S. The short- and long-run analyses of the U.S. trade and wage data are undertaken. Cointegration test results indicate that net exports and wage inequality are related in the long run. The main contribution of this paper lies in its focus on the short-run investigation of the relationship between net exports and wage inequality. This investigation was conducted using the vector error correction (VEC) testing framework. Contrary to the prevailing view, the VEC test results indicate that trade has no statistically significant impact on wage inequality in the U.S. Instead, the empirical evidence shows a negative causal impact of wage inequality on net exports.     

Is Globalization Reducing Poverty and Inequality?

Over the past 20 years or so India, China, and the rest of East Asia, experienced fast economic growth and falls in the poverty rate, Latin America stagnated, the former Soviet Union, Central and Eastern Europe, and sub-Saharan Africa regressed. But what are the net trends? The neoliberal argument says that world poverty and income inequality fell over the past two decades for the first time in more than a century and a half, thanks to the rising density of economic integration across national borders. The evidence therefore confirms that globalization in the context of the world economic regime in place since the end of Bretton Woods generates more “mutual benefit” than “conflicting interests.” This paper questions the empirical basis of the neoliberal argument.     

Income-Related Biases in International Trade: What Do Trademark Registration Data Tell Us?

Rich countries trade more among themselves than with poor economies due to a closer match of exporter supply structures and importer preferences. In the literature, the closeness of supply and demand has traditionally been determined by the quality of products—as expressed in the Linder hypothesis. This paper examines an extension of the hypothesis by considering the extent of brand differentiation as another determinant of the closeness of supply and demand. The analysis employs information on international trademark registrations to test whether richer countries import more from countries exporting products of higher quality and greater brand differentiation. The hypothesis is confirmed in most consumer goods sectors. JEL no. F 10, O 34     

Whether to Abolish or Introduce Dual Regulation as Trade and Environmental Policy?

China, which has already introduced an environmental tax in an effort to decarbonize, has recently begun emissions trading and is using two environmental policies in tandem, but there are concerns about the impact on growth and trade. Trade and environmental policies affect firms' entry and exit, resulting in changes in aggregate productivity and pollution emissions. This study compares the impacts of single regulation and dual regulation on welfare, using a research-and-development based growth model with heterogeneous firms. Under single regulation, the cleansing effect of trade liberalization could be undermined. Under dual regulation, trade liberalization decreases pollution and improves average productivity whereas decreasing total permits reduces pollution. From the perspective of improving welfare it is desirable to choose dual regulation because trade liberalization can reduce total pollution emissions via the cleansing effect of trade liberalization.     

Do Trade Unions Deteriorate International Competitiveness? Reconciliation of the Discrepancy Between Theory and Practice

Brander and Spencer (Journal of International Economics 24:217–234, 1988) and Mezzetti and Dinopoulos (Journal of International Economics 31:79–100, 1991) provide different theoretical viewpoints on the following issue: Do trade unions deteriorate international competitiveness? Some discrepancies have been found to exist between their arguments and empirical findings. This paper attempts to provide plausible explanations and solutions to reconcile these discrepancies.     

Earthquakes and Economic Outcomes: Does Central Bank Independence Matter?

Open Economies Review - This study explores whether the degree of central bank independence influences the economic performance in the period immediately following an earthquake. Earthquakes create...     

Convergence or Convenience? International Conservation NGOs and Development Assistance in Tanzania

International conservation NGOs and development agencies have historically operated independently of one another. Recently, their agendas have converged to consider both environmental and human needs, with an emerging focus on private sector involvement in conservation. New funding from international finance institutions has become available for NGO initiatives, and today there is little difference between the environmental strategies of international development agencies and those of the major conservation NGOs operating in Tanzania. While this is due in part to independent shifts in both sectors, NGOs may also be serving to carry out and legitimate the neoliberal policies of development institutions.     

Effort and Performance: What Distinguishes Interacting and Noninteracting Groups from Individuals?

We study how group membership affects behavior both when group members can and cannot interact with each other. Our goal is to isolate the contrasting forces that spring from group membership: a free‐riding incentive leading to reduced effort and a sense of social responsibility that increases effort. In an environment with varying task difficulty and individual decision making as the benchmark, we show that the free‐riding effect is stronger. Group members significantly reduce their effort in situations where they share the outcome but are unable to communicate. When group members share outcomes and can interact, they outperform groups without communication and individuals. We show that these groups do as well as the best constituent member would have done on his or her own.     

Voluntary Disclosure and Equity Offerings: Reducing Information Asymmetry or Hyping the Stock?*

We examine corporate disclosure activity around seasoned equity offerings and its relationship to stock prices. Beginning six months before the offering, our sample issuing firms dramatically increase their disclosure activity, particularly for the categories of disclosure over which firms have the most discretion. The increase is significant after controlling for the firm's current and future earnings performance and tends to be largest for firms with selling shareholders participating in the offering. However, there is no change in the frequency of forward‐looking statements prior to the equity offering, something that is expressly discouraged by the securities law. Firms that maintain a consistent level of disclosure experience price increases prior to the offering, and only minor price declines at the offering announcement relative to the control firms, suggesting that disclosure may have reduced the information asymmetry inherent in the offering. Firms that substantially increase their disclosure activity in the six months before the offering also experience price increases prior to the offering relative to the control firms, but suffer much larger price declines at the announcement of their intent to issue equity, suggesting that the disclosure increase may have been used to “hype the stock” and the market may have partially corrected for the earlier price increase. Firms that maintain a consistent disclosure level have no unusual return behavior relative to the control firms subsequent to the announcement, while the firms that “hyped” their stock continue to suffer negative returns, providing further evidence that the increased disclosure activity may have been hype, and suggesting that the hype may have been successful in lowering the firms' cost of equity capital.     

Impact of China-ASEAN Free Trade Area on China＇s International Agricultural Trade and Its Regional Development

This study aims to examine the impact of the China‐ASEAN Free Trade Area (CAFTA) on China's international agricultural trade and its regional agricultural development, using the Global Trade Analysis Project model and the China Agricultural Decision Support System. Our analysis showed that: (i) CAFTA will improve resource allocation efficiencies for both China and ASEAN and will promote bilateral agricultural trade and, hence, will have positive effects on the economic development of both sides; (ii) CAFTA will accelerate China's export of the agricultural commodities in which it has comparative advantages, such as vegetables, wheat and horticultural products, but at the same time bring about a large increase in imports of commodities such as vegetable oil and sugar; and (iii) CAFTA will have significantly varying impacts on China's regional agricultural development because of large differences in the agricultural production structure in each region. Our results indicate that agriculture in the northern, northeastern and eastern regions of China will benefit from CAFTA, whereas agriculture development in southern China will suffer. Those regional specific impacts are quite different from the effects brought by multilateral free trade treaties, such as those of the WTO, which usually have positive effects on south China but negative impacts on the northern and western parts of China.