The signaling power of trade protection

This paper proposes an empirical analysis to provide new insight into the trade diversion effects of antidumping (AD) policy. Trade diversion is the shift in trade from named countries in an AD investigation to non-named countries. Previous studies have concluded that AD action causes a considerable drop in exports from named countries, however the extent to which trade is diverted to non-named countries is still an open debate. This paper examines to see whether AD action on named countries can have signaling effects on non-named countries. To examine the trade effects on non-named countries, a time series data at an 8-digit product level is constructed for all cases initiated between 1997 and 2003 in the European Union. The paper provides evidence that antidumping policy has signaling effects on non-named imports.     

反倾销措施的贸易救济效果评估

本文利用1997—2004年中国反倾销案例8位数税则号的涉案产品数据,考察了反倾销措施引起的指控对象国和非指控对象国的贸易模式的变化,在此基础上提出了反倾销行为贸易救济效果的证据。检验结果表明,中国反倾销措施对指控对象国的进口有明显的“贸易限制效应”;不仅征税案例,即使是无损害结案的反倾销指控仍然对指控对象国的进口贸易有重要影响,即反倾销具有“调查效应”;但是涉案产品可能在指控对象国和非指控对象国之间转移,这种“贸易转移效应”部分削弱了反倾销措施的保护效果;总体上看,反倾销仍然起到了救济本国产业的作用,因为无论是指控对象国还是非对象国的进口价格都会上升,从而控制了中国涉案产品的进口总量。     

Does the reduction of regional trade policy uncertainty increase Chinese enterprises' outward foreign direct investment? Evidence from the China−ASEAN Free Trade Area

Regional trade policy uncertainty is an important factor affecting enterprises' outward foreign direct investment (OFDI). This paper uses the China?ASEAN Free Trade Area as the research object. The research uses the “China Industrial Firm Database” from 2001 to 2013 and the “List of Chinese Overseas Investment Enterprises (Institutions)” to match micro‐enterprise data. Using the difference‐in‐difference (DID) approach to construct quasi‐natural experiments, we study the impact of the reduction in regional trade policy uncertainty on Chinese enterprises' OFID. The results show that the free trade agreement strategy implemented by China has reduced the regional trade policy uncertainty, which has had a significant positive impact on Chinese enterprises' OFDI. The establishment of the China?ASEAN Free Trade Area has significantly increased Chinese enterprises' OFID in ASEAN countries. The study further finds that enterprises of different ownership types, in different regions and of different factor intensities display heterogeneous effects in this process. The empirical results of the paper provide new ideas for promoting OFDI from the standpoint of reducing regional trade policy uncertainty, and also provide a new perspective for explaining the increase in foreign investment in China in recent years.     

The Gain from International Trade in Pool Goods and Private Goods

It is well known that perfectly competitive free trade is potentially beneficial for all countries if all goods are both rivalrous and excludable in consumption (“private goods”) and recently (2011) the proposition has been modified to accommodate non‐rivalrous and non‐excludable goods (“public goods”), as well as non‐rivalrous and excludable goods (“club goods”). In the present paper the proposition is modified again, to accommodate rivalrous and non‐excludable goods (“pool goods”). The primary focus is on ocean fisheries, access to which is shared (not necessarily equally) by all countries. However the central proposition to be established is valid for all international pool goods.     

A PROTECTIONIST BIAS IN MAJORITARIAN POLITICS: AN EMPIRICAL INVESTIGATION

Do politics affect trade policy? Despite an extensive literature examining the relationship between trade policy and some political factors, relatively few studies have explored the role of a country's electoral system, arguably one of the most fundamental characteristics of a nation's political landscape. This paper examines the empirical relationship between tariffs and electoral systems across countries and over time. The broad theoretical framework is provided by Grossman and Helpman, which predicts a bias towards a non‐zero average tariff, i.e. a “protectionist bias”, in countries with majoritarian systems, since politicians in a majoritarian system aim to maximize the welfare of their home districts, as opposed to the welfare of the nation as a whole. I compare average tariffs of countries with majoritarian systems to those with proportional systems, using methods that address the omitted variables/sample selection problem inherent to this analysis. I find that countries with majoritarian systems do indeed appear to have higher average tariffs than do countries with proportional systems. This result holds after controlling for other country‐specific characteristics, such as a country's legal origins, colonial history, and geographic location.     

Making Sense of the Comparative Advantage Gains from Trade: Comment on Batra

This paper addresses Ravi Batra’s (2002 ) criticism of the basic comparative advantage gains‐from‐trade model. While Batra’s criticism is based on the selection view interpretation of real income, the gains from trade can only be properly understood from the options view interpretation of real income. I also show how a recent empirical implementation of the gains‐from‐trade model defies Batra’s claim that “the consumption gain . . . is not subject to measurement” (2002, p. 642).     

The chilling trade effects of antidumping proliferation

Advocates of antidumping (AD) laws downplay their negative effects by arguing that the trade flows that are subject to AD are small and their distortions negligible. But while the adverse effect of AD on product-level trade has long been established, the question remains whether there are trade effects at the aggregate level. The recent proliferation wave of AD laws and their use provides us with a unique policy change to estimate the true trade effects of adopting and enforcing AD laws. For this purpose, we estimate the effect of AD on bilateral trade flows between the “new adopters” of AD laws and their trade partners. Using a gravity model of annual observations (1980-2000) our estimates show that AD has trade chilling effects on aggregate import volumes but the impacts are heterogeneous across sectors. We find that new tough users experience a chilling of their aggregate imports of 14 billion US$ a year (or 5.9%) as a result of AD measures. For some countries like Mexico and India, the dampening effects of AD laws on trade flows are found to substantially offset the increase in trade volumes derived from trade liberalization.     

Economic Performance, Trade Restrictiveness, and Efficiency

The paper addresses the question of whether trade restrictiveness impacts economic performance, via a trade restrictiveness index that is decomposable into a trade distortion and a domestic distortion component. The paper builds on the Anderson and Neary price index measure of trade distortion, in evaluating trade restrictiveness via a distance function approach. This is accomplished by adding a “dual” version to their trade restrictiveness price index, based on distance functions that scale output quantities. The authors compute the trade restrictiveness quantity index (TRQI) using a parametric frontier approach to model the production side of the economy, and a panel of information on the agricultural sector of a set of European Community countries. The results suggest that the use of TRQI makes a considerable difference to interpretations of the efficiency impact of agricultural trade policies in EC countries, as compared to policy‐oriented aggregates or result‐oriented measures of trade restrictiveness.     

Trade, Skills and Adjustment Costs: A Study of Intra-Sectoral Labor Mobility

The relationship between the ability of workers to change job, sector or industry and the short‐run adjustment costs associated with a reallocation of labor is the subject of lively debate among academics. This paper examines recent sector and industry level labor market adjustment in the UK using data from the Quarterly Labour Force Survey. We explore the link between the nature of UK trade patterns and labor adjustment within the manufacturing sector and employ a multinomial logit approach to examine the determinants of “within” and “between” industry mobility. By controlling for individual skill specificity we find some evidence of a link between intra‐industry trade and intra‐industry labor adjustment.     

The growth effects of tax rates in the OECD

This paper explores the merits of macro‐ and micro‐based tax rate measures within an open economy “fiscal policy and growth” model. Using annual data for 15 OECD countries we find statistically small, non‐robust long‐run growth effects of macro‐based average tax rates on capital income and consumption, but some evidence for average labour income tax effects. Changes in “micro” marginal income tax rates at both the personal and corporate levels yield statistically robust GDP responses of modest size. Both domestic and foreign corporate taxes appear relevant. In general, tax effects on GDP operate largely via factor productivity rather than factor accumulation.     

Preferential Liberalization,Antidumping, and Safeguards: Stumbling Block Evidence from MERCOSUR

There is not yet consensus in the trade agreements literature as to whether preferential liberalization leads to more or less multilateral liberalization. However, research thus far has focused mostly on tariff measures of import protection. We develop more comprehensive measures of trade policy that include the temporary trade barrier (TTB) policies of antidumping and safeguards; studies in other contexts have also shown how these policies can erode some of the trade liberalization gains that arise when examining tariffs alone. We examine the experiences of Argentina and Brazil during the formation of the MERCOSUR over 1990–2001, and we find that an exclusive focus on applied tariffs may lead to a mischaracterization of the relationship between preferential liberalization and liberalization toward non‐member countries. First, any “building block” evidence that arises by focusing on tariffs during the period in which MERCOSUR was only a free trade area can disappear once we also include changes in import protection that arise through TTBs. Furthermore, there is also evidence of a “stumbling block” effect of preferential tariff liberalization for the period in which MERCOSUR became a customs union, and this result tends to strengthen upon inclusion of TTBs. Finally, we also provide a first empirical examination of whether market power motives can help explain the patterns of changes to import protection that are observed in these settings.     

Networks of Free Trade Agreements among Heterogeneous Countries

The paper examines the formation of free trade agreements as a network formation game. We consider an n‐country model in which international trade occurs between economies with imperfectly competitive product markets. In each country, the labor market is either unionized or non‐unionized. We show that, if all countries are non‐unionized, the global free trade network is both the unique pairwise stable network and the unique efficient network. If all countries are unionized, the global free trade network is pairwise stable and the unique efficient network among the class of symmetric networks. If some countries are unionized while others are non‐unionized, other networks apart from the global free trade network may be pairwise stable. However, the efficient network is still the global free trade network. Thus, a conflict between stability and efficiency may occur. Moreover, starting from the network in which no country has signed a free trade agreement, all sequences of networks due to continuously profitable deviations do not lead (in most cases) to the global free trade network, even when global free trade is stable.     

Export performance of developing countries: Does landlockedness matter?

Landlockedness imposes additional costs on trade and reduces international competitiveness. This paper examines the determinants of export performance in developing countries, within a comparative perspective of landlocked developing countries (LLDCs) and non‐landlocked developing countries, by using a standard gravity modeling framework. The study covers data from 1995 to 2015. The results suggest that despite recent trade policy reforms, the overall export performance of LLDCs is lower than that of non‐landlocked developing countries due to the inherent additional trade costs associated with landlockedness. The conventional wisdom that export performance is aided by economic openness also applies to LLDCs, but distance‐related trade costs have a greater negative impact on exports from LLDCs than on other developing countries. The immediate trade policy challenge for LLDCs is therefore to create a more trade‐friendly environment by lowering tariffs, reforming exchange rates and entering into regional trade agreements.     

Estimating the effects of non‐discriminatory trade policies within structural gravity models

We propose a simple method to identify the effects of unilateral and non‐discriminatory trade policies on bilateral trade within a theoretically consistent empirical gravity model. Specifically, we argue that structural gravity estimations should be performed with data that include not only international trade flows but also intra‐national trade flows. The use of intra‐national sales allows identification of the effects of non‐discriminatory trade policies such as most favoured nation tariffs, even in the presence of exporter and importer fixed effects. A byproduct of our approach is that it can be used to recover estimates of the trade elasticity, a key parameter for quantitative trade models. We demonstrate the effectiveness of our techniques in the case of most favoured nation tariffs and “time to export” as representative non‐discriminatory determinants of trade on the importer and on the exporter side, respectively. Our methods can be extended to quantify the impact on trade of any country‐specific characteristics as well as any non‐trade policies.     

ON THE OUTPUT EFFECTS OF BARRIERS TO TRADE*

We study the macroeconomic effects of international trade policy by integrating a Hecksher–Ohlin trade model into an optimal‐growth framework. The model predicts that a more open economy will have higher factor productivity. Furthermore, there is a “selective development trap” to which countries may or may not converge, depending on policy. Income at the development trap falls as trade barriers increase. Hence, cross‐country differences in barriers to trade may help explain the dispersion of per capita income observed across countries. The effects are quantified, and we show that protectionism can explain a relevant fraction of TFP and long‐run income differentials across countries.     

α‐SERIAL MECHANISMS FOR THE PROVISION OF AN EXCLUDABLE PUBLIC GOOD

We present a new class of “α‐serial mechanisms” for the provision of an excludable public good. Those mechanisms have a similar structure to the serial mechanism, but may let the non‐consumers pay a positive cost. They inherit desirable properties such as anonymity, envy‐freeness, Maskin monotonicity, and population monotonicity from the serial mechanism. We calculate the “maximal efficiency loss” and “maximal manipulation” of α‐serial mechanisms and point out a trade‐off between these two properties.     

Do Patent Rights Regimes Matter?

The paper asks whether exports are affected by importers’ patent rights regimes using a gravity trade equation. US export data to 71 countries from 1970 to 1992 are used. A two‐way random‐effects panel indicates that patent rights regimes per se do not matter; they matter with importing countries’ imitative abilities. For a country with an “average” imitative ability, US R&D‐intensive exports increase by 4–9% for a unit increase in the patent rights index; a unit increase in the patent rights index leads to a drop in US non‐R&D‐intensive exports by about 8–11%.     

Labor immobility and the transmission mechanism of monetary policy in a monetary union

It is believed that a common monetary policy in a monetary union will have identical effects on different countries as long as these countries have identical fundamentals. We show that, when there is specialization in production, the terms of trade react to the shock. The transmission mechanism of a monetary shock has in this case an additional channel, the terms of trade. This is the case even if state contingent assets can be traded across countries. For a reasonable parametrization, the differential on the transmission across countries is quantitatively significant when compared with the effect on the union's aggregates. Monetary shocks create cycles with higher volatility in “poor” countries than in “richer” ones.     

制度距离、相邻效应与双边贸易--基于“一带一路”国家空间面板模型的实证分析

制度在双边贸易中具有举足轻重的作用。文章首次将相邻效应引入传统的制度与贸易关系的分析框架,运用空间面板模型深入考察了制度距离、相邻效应对中国与“一带一路”国家双边贸易的影响。结果表明,中国与“一带一路”沿线国家之间在文化、法律、宏观经济制度以及微观经济制度方面的差异显著抑制了双边进出口贸易的发展,并且这种抑制作用在长期更为显著。进一步引入相邻效应的分析表明,中国与“一带一路”沿线国家之间的双边贸易受到中国与沿线国家邻国之间贸易的制约,即相邻效应表现为竞争关系,并且无论是针对进口贸易还是出口贸易而言,中国与沿线国家之间的制度距离均强化了相邻效应的“竞争”作用,但上述作用在不同地区具有显著差异。因此,在推进“一带一路”战略时,中国需要考虑制定相关的配套政策来平衡中国与“一带一路”国家,特别是与这些两两相邻国家之间的双边贸易利益,以促进中国与各国双边贸易关系的良性发展。     

Some Stylized Facts about International Trade Flows

Since the mid‐1990s there has been a proliferation of empirical models in the trade literature. Focus has ranged from the effect of particular explanatory variables to improved econometric techniques. However, there appears to be a lack of analyses on large international trade datasets aiming at describing the “stylized facts” of observed bilateral trade flows. Uncovering them is crucial as any empirical econometric model should reflect the basic properties of the data generating process. On the basis of a large panel dataset this paper finds that bilateral trade, despite being often unbalanced, tends to be reciprocal and persistent, and that the extensive margin of trade must not be disregarded. Moreover, bilateral trade flows are probably best modeled as a mixed panel of stationary and non‐stationary processes. The stationary vs non‐stationary separation of these flows, although not random, does not appear to be related to any common characteristics of the trading partners.