Tariff Structure,Trade Expansion,and Canadian Protectionism, 1870–1910

Canada's trade policy at the end of the 19th century is commonly viewed as protectionist and extremely costly. In this paper, we employ the Anderson‐Neary Trade Restrictiveness Index to re‐examine this view. Based on product‐level customs data, we show that Canadian trade policy between 1870 and 1910 was more restrictive than previously understood, but created smaller welfare losses than previously believed. These results are primarily driven by high tariffs on inelastic, non‐competing import goods. Although Canada's tariff structure becomes more restrictive over the period, our findings indicate it was not as protectionist or as costly as once thought.     

Sudden stops: Determinants and output effects in the first era of globalization, 1880-1913

We study the determinants and output effects of sudden stops in capital inflows during an era of intensified globalization from 1880 to 1913. Higher levels of exposure to foreign currency debt and large current account deficits associated with reliance on foreign capital greatly increased the likelihood of experiencing a sudden stop. Trade openness and strong reserve positions had the opposite effect. Sudden stops accompanied by financial crises are associated with drops in output per capita below trend equal to three to four percent. Frictions in the international capital markets of the day are a likely candidate for these output losses. Sudden stops connected with crises do not seem to bring trend growth downwards. Sudden stops not connected with crises appear to be associated with significant declines in trend growth.     

Risk aversion,exchange‐rate uncertainty,and the law of one price: insights from the market for online air‐travel tickets

Abstract We argue that risk aversion driven by exchange‐rate uncertainty causes a wedge between the domestic and foreign prices of a homogeneous good. We test our hypothesis using a unique micro‐data set from a market with minimum imperfections. The empirical findings validate our hypothesis, as accounting for exchange‐rate uncertainty we are able to explain a significant proportion of deviations from the law of one price. Overall, our analysis suggests the possibility of a new solution to the purchasing power parity puzzles.     

International Transmission of the 2007–2009 Financial Crisis: Evidence from Japan

We investigate the international transmission of the 2007–2009 financial crisis to Japanese firms by examining both stock returns and changes in operating performance during the crisis. Our results indicate that Japanese firms were affected by the crisis mainly through the trade channel in both stock returns and changes in operating performance. We also find that the liquidity channel played a role in the fall of stock returns in response to the crisis and in the changes in return on assets during the first year of the crisis. We obtain weak evidence for the credit crunch channel and no evidence to support the trade finance channel.     

World Human Development: 1870–2007

How has wellbeing evolved over time and across regions? How does the West compare to the Rest? What explains their differences? These questions are addressed using a historical index of human development. A sustained improvement in world wellbeing has taken place since 1870. The absolute gap between OECD and the Rest widened over time, but an incomplete catching up—largely explained by education—occurred between 1913 and 1970. As the health transition was achieved in the Rest, the contribution of life expectancy to human development improvement declined and the Rest fell behind in terms of longevity. Meanwhile, in the OECD, as longevity increased, healthy years expanded. A large variance in human development is noticeable in the Rest since 1970, with East Asia, Latin America, and North Africa catching up to the OECD, and Central and Eastern Europe and Sub‐Saharan Africa falling behind.     

Unfolding the Turbulent Century: A Reconstruction of China's Historical National Accounts, 1840–19121

This paper reconstructs China's economic development between 1840 and 1912 with an estimation of Gross Domestic Product (GDP). It provides for the first time a time series of GDP (per capita) for the late Qing Dynasty (1644–1911), based on sectoral output and value added, in current as well as in constant prices. The present estimation of per capita GDP in the late Qing period comes out higher than previous estimations, but it still suggests low average levels of Chinese living standards. The economy during the late Qing Empire was characterized by a large and growing agricultural sector and displayed only minor structural changes. Only in the beginning of the twentieth century did the economy start to show signs of growth.     

“Large” versus “Small” Players: A Closer Look at the Dynamics of Speculative Attacks

What is the role of “large players” (e.g., hedge funds) in speculative attacks? Recent work suggests that large players move early to induce smaller agents to attack. However, many observers argue that large players move late in order to benefit from interest‐rate differentials. We propose a model in which large players can do both. Using data on currency trading by foreign (large) and local (small) players, we find that foreign players moved last in three attacks on the Norwegian krone during the 1990s. During the attack on the Swedish krona after the Russian moratorium in 1998, foreign players moved early. Gains by delaying attack were small, however, because interest rates did not increase.     

Monetary integration in the ex‐Soviet Union: A ‘union of four’?*

The governments of four ex‐Soviet countries recently discussed forming a currency union. To examine the economic feasibility of this proposition, we use conventional techniques and show that the arrangement is likely to find it difficult to handle the lack of structural symmetry, the asymmetric pattern of shocks, and the lack of market flexibility among the potential participants. Moreover, the union would be a unilateral one. It would require an unusual degree of political commitment to survive. Nonetheless, there are some subtleties in the timing and pattern of mutual dependence between Russia and Kazakhstan, and to a lesser extent in Belarus, which may reduce the strain from a currency union in those countries. Otherwise, the black market will have to provide the necessary market flexibility.