Fighting the forces of gravity - Seapower and maritime trade between the 18th and 20th centuries

How have large naval powers affected international commerce in history? Using a panel gravity model, we investigate the interactions of wars, alliances, naval power and trade from the 18th to mid-20th centuries. Striking an alliance with a naval power helps a country’s interstate commerce. Fighting a naval power on the other hand limits a country’s interstate commerce. Further, we split this effect on trade between an extensive effect (effect on a country’s trade when fighting a naval power) and an intensive effect (effect of that power gaining more naval strength). We conclude that the intensive effect is a powerful one - large navies have historically been destroyers of trade when mobilized to combat.     

China's domestic trade during the Treaty-Port Era

We employ a new, commodity-level dataset on the flow of goods between fifteen major treaty ports to estimate a general-equilibrium trade model for China in the late Qing era. The distribution of welfare effects depends critically on each port's productivity, China's economic geography as it influences trade costs, as well as the degree of regional diversity in production, which increases the potential gains from trade. We utilize this framework to quantify the size and distribution of welfare effects resulting from new technology and lower trade costs that emerged during the Treaty-Port Era. Our results suggest that the new trade with foreign countries led to significant changes in domestic trade relationships. There was a limit to how much could be gained through increased domestic trade, however, because differences in productivity across regions were relatively low.     

Breaking up a customs union: The case of the Austro-Hungarian Empire in 1919

Breaking Up a Customs Union: The Case of the Austro-Hungarian Empire in 1919. — This study has used new estimates of the gravity model to analyze the effects on European trade patterns in the mid-1920s of the break-up of the Austro-Hungarian Empire and its customs union after World War I. The gravity equation has been found to explain 70 percent of the variance of the trade flows of the principal trading nations in 1924–26. Moreover, the ties between the former members of the Austro-Hungarian Empire remained stronger than any other commercial relationship in Europe. They were second only in intensity — given economic and demographic factors — to those of the British Empire.     

China's WTO Commitments in Agriculture and Impacts of Potential OECD Agricultural Trade Liberalizations*

After accession to the WTO, China's agriculture is affected by the implementation of its WTO commitments and will be impacted by any multilateral liberalization (actions by the rich OECD economies in particular) resulting from the Doha negotiations. Using the actual commitment data, our computable general equilibrium simulation results show that China's WTO commitments will lead to increased agricultural imports and slightly declined outputs in China. The resulting efficiency gains will be negated by terms‐of‐trade losses, leading to quantitatively small welfare impacts. Furthermore, sectoral results depend critically on correctly representing the more complex policy measures, such as the tariff rate quotas. The negative output effects on Chinese agriculture can be alleviated/reversed if the rich OECD countries commit to reform their agriculture policies. The present paper concludes that trade liberalization should be carried out in both developing and developed countries. Reforming the latter will be particularly helpful in easing the problems facing those developing countries that are carrying out ambitious trade reforms.     

REFRIGERATION AND DISTRIBUTION: NEW ZEALAND LAND PRICES AND REAL WAGES 1873–1939

The responses in New Zealand to the opportunities of refrigeration transformed farming in the Dominion during the half-century from 1890. Closer settlement and the extension of the cultivated area combined with more intensive farming methods to increase land productivity and real gross domestic product capita to the extent that living standards in New Zealand measured by the Human Development Index ranked first in the world by 1913. In contrast, real wages in the Dominion stagnated. The refrigeration-related trade boom had powerful income distribution effects that increased sharply the land rental–wage ratio during the years to 1920. Widely diffuse land ownership in New Zealand tempered the rise in income inequality, to set the Dominion apart from other land-abundant economies of the periphery.     

Trade openness and income inequality in China and the SAARC Region

The paper empirically examines the effects of trade liberalisation on income inequality in China and the South Asian Association for Regional Cooperation countries. Panel data analysis is conducted for the period of 1973 to 2012. The results show that liberal trade policies have increased income inequality in these countries. These results are robust to alternative liberalisation measures. The control variables used have differing effects on income distribution. Per capita income has an increasing effect on income inequality, while education, financial development, financial openness, democracy, and government size are shown to reduce income inequality. These outcomes can be expected to have important policy implications for the use of trade liberalisation in these countries.     

FOREIGN TRADE, COMMERCIAL POLICIES AND THE POLITICAL ECONOMY OF THE SONG AND MING DYNASTIES OF CHINA

The paper presents a framework to explore the trade-off between pro-authority and pro-efficiency foreign trade policy. The former is exemplified by the tributary foreign trade system in Imperial China, while the latter by the government-supervised private foreign trade. In the Song Dynasty (960–1276), a strong external enemy compelled the monarchy to choose a pro-efficiency trade policy to finance the army, whereas during the early Ming Dynasty (1368–1644) when China was strong a pro-authority trade policy was favoured. During the late Ming, as the dynasty weakened, accompanied by external threats and internal mismanagement, the imperial government once again chose a pro-efficiency trade policy.     

Trade liberalization and wage inequality: Evidence from Korea

This paper investigates the heterogeneous income distribution effects of trade liberalization using Korean survey data from years of 2000–2015. Following the Stolper-Samuelson theorem most of previous research studying the effects of trade liberalization on wage differences focus on workers’ characteristics (e.g., skilled or unskilled) while heterogeneity within the same worker group has not been yet substantially investigated. To fill this gap, this paper provides empirical evidence of wage inequality across firms within the same group of workers caused by trade liberalization, potentially implied in the new-new trade models with firm heterogeneity. Employing a difference-in-differences (DID) specification, we find that the wages of unskilled workers in Korea have increased since its FTAs with more advanced countries, such as members of EU and the US, came into effect, while the effects on the wages of skilled workers are negative but not statistically significant. We also show that wage effects are heterogeneous across firms within unskilled and skilled worker groups, while the positive effects are statistically significant and largest for unskilled workers in medium-large sized firms. These findings are in line with both traditional and new-new trade models.     

Heterogeneous workers and international trade

In this paper, I survey the recent theoretical literature that incorporates heterogeneous labor into models of international trade. The models with heterogeneous labor have been used to study how talent dispersion can be a source of comparative advantage, how the opening of trade affects the full distribution of wages, and how trade affects industry productivity and efficiency via its impact on sorting and matching in the labor market. Some of the most recent contributions also introduce labor market frictions to study the effects of trade on structural unemployment and on mismatch between workers and firms.     

The effect of trade on earnings--evidence from Swedish micro data

Using a large longitudinal data set, we study the effects ofincreased trade on earnings in the Swedish labor market. Earningsrespond significantly to changes in industry sales, whethergenerated by domestic market forces or international trade:Swedish exports (imports) raise (lower) annual earnings, butchanges in trade affect earnings just as any other shift inmarket conditions. We also examine whether the effects of tradevary by skill. We do not find systematic differences in theeffects of trade across the skill distribution.     

International trade and income distribution: reconsidering the evidence

This article reassesses the link between international trade and income distribution. We argue that one way to assess the influence of international trade upon income distribution is to take account of each country’s specific trade patterns by measuring the changes in the factor content of trade. The econometric specification is based on changes in Gini indices (over non-overlapping 4-year intervals), computed exclusively from series drawn from the same source. Our results show that a change in the factor content of trade has a significant impact on income distribution. The sign and magnitude of this impact is conditional on the national income level. We find that an increase in the labor content of trade raises income inequality in poor countries, but reduces it in rich countries (the reverse is true for the capital content of trade). In particular, we show that in the 1980s and 1990s, international trade may have contributed significantly to widening income inequalities in developing countries.     

Exchange Rate Pass-through in a Small Open Economy: the Importance of the Distribution Sector

The degree of exchange rate pass-through to domestic goods prices has important implications for monetary policy in small open economies with floating exchange rates. Evidence indicates that pass-through is faster to import prices than to consumer prices. Price setting behaviour in the distribution sector is suggested as one important explanation. If distribution costs and trade margins are important price components of imported consumer goods, adjustment of import prices and consumer prices to exchange rate movements may differ. We present evidence on these issues for Norway by estimating a cointegrated VAR model for the pricing behaviour in the distribution sector, paying particular attention to exchange rate channels likely to operate through trade margins. Embedding this model into a large scale macroeconometric model of the Norwegian economy, which inter alia includes the pricing-to-market hypothesis and price-wage and wage-wage spirals between industries, we find exchange rate pass-through to be quite rapid to import prices and fairly slow to consumer prices. We show the importance of the pricing behaviour in the distribution sector in that trade margins act as cushions to exchange rate fluctuations, thereby delaying pass-through significantly to consumer prices. A forecasting exercise demonstrates that exchange rate pass-through to trade margins has not changed in the wake of the financial crises and the switch to inflation targeting. We also find significant inflationary effects of exchange rate changes even in the short run, an insight important for inflation targeting central banks.     

Taking technology to task: The skill content of technological change in early twentieth century United States

This paper uses new data on the task content of occupations to present a new picture of the labor market effects of technological change in pre-WWII United States. I show that, similar to the recent computerization episode, the electrification of the manufacturing sector led to a “hollowing out” of the skill distribution whereby workers in the middle of the distribution lost out to those at the extremes. OLS estimates show that electrification increased the demand for clerical, numerical, planning and people skills relative to manual skills while simultaneously reducing relative demand for the dexterity-intensive jobs which comprised the middle of the skill distribution. Thus, early twentieth century technological change was unskill-biased for blue collar tasks but skill-biased on aggregate. These results are in line with the downward trend in wage differentials within U.S. manufacturing up to 1950.     

THE MOMENTOUS GOLD RUSHES

Gold discoveries in Australia in 1851 and New Zealand in 1861 galvanised the economic development of Australasia and had spillover effects in Britain, in ship technology, and even in the trans-Atlantic trade. The gold rushes quickly transformed economic, social, and political life. Moving around the continent in an anti-clockwise direction, they were to help found the northern port cities that grew to service the gold seekers. While the major strike in Western Australia in the 1890s out-produced the earlier period, Australia saw a third gold peak in the 1990s. The article surveys the contribution of the rushes to the development of Australasia.     

中日跨境数字贸易规模测度分析

日本作为数字贸易发展大国和发展强国,在数字贸易规则制定权和相关领域话语权方面与中国存在一定的竞争。分析中日跨境数字贸易规模,有利于理解日本数字贸易发展情况,明确日本在数字贸易格局中所处的地位。从具体构成来看,中日跨境数字订购贸易和跨境数字交付贸易规模均不断扩大,2015年开始前者占据中日跨境数字贸易主体地位,后者比重呈下降趋势。两种贸易模式下日本均处于顺差地位且顺差呈扩大趋势,说明与中国相比日本在数字贸易领域拥有较强的国际竞争力。整体看来,中日跨境数字贸易呈持续增长态势,在中日进出口贸易中的占比不断提升,契合数字经济时代国际贸易发展规律。     

The role of direct flights in trade costs

Effects of direct flights on trade costs are investigated using micro price data at the city level. After controlling for local retail/distribution costs, traded input prices are obtained to be further used in the measurement of trade costs across cities through arbitrage conditions. The existence of a direct flight enters trade costs regressions negatively and significantly. The results are shown to be robust to the consideration of many control variables, nonlinearities in the effects of distance on trade costs, possible endogeneity of having direct flights between cities and alternative definitions of the data. The direct flights that are shown to be determined by bilateral air services agreements are further shown to reduce trade costs through an endogeneity analysis; the main policy implications are twofold: (i) international trade policies through aviation services, such as Open Skies Agreements of the US, are alternative trade policy tools to reduce international trade barriers; (ii) direct flights facilitate the integration of internal markets as in the case of European Union.     

Why Chinese Exports Face So Many Trade Remedy Actions: An Empirical Study Based on Multi‐country and Multi‐industry Data

This paper offers a comprehensive analysis of the reasons for the large number of trade remedy actions taken against China. Using a multi‐country and multi‐industry dataset, the present paper shows that the macroeconomic situation of China's partners has a great influence on the probability of trade frictions arising with China. Moreover, the more powerful the industry is, the more likely it is to take trade remedy actions against China. The empirical results reveal that China has been hurt under the operating mechanism of the WTO, and the number of free trade agreements is negatively related to the initiation and approval of trade remedy actions. Basically, the determinants for countervailing and double remedy measures are identical, while they are different from determinants of antidumping measures. Accordingly, strengthening communication with trade partners will alleviate friction between China and its trade partners. Meanwhile, making use of foreign lobbies' power, actively integrating into the international trading system and participating in regional trade agreements are effective ways for China to deal with the “new normal” of trade frictions.     

The Zollverein and the Sequence of a Customs Union

The Zollverein was the first international customs union, essentially defining these particular trade agreements. This article utilizes the predictions of a game theoretic model to explain the observed sequence of accessions into this union. Coalition externalities, the effects the accession of one state has on states remaining on the outside, are the central mechanisms shaping the negotiations between Prussia, the agenda setter, and other German states. This is demonstrated by detailing these financial, strategic, and political externalities, and demonstrating their influence on trade policy decisions.     

上海合作组织框架内中国国际贸易竞争力实证分析

在经济全球化和一体化趋势下,上海合作组织的经济功能显得日益重要。基于上海合作组织这一强大的平台,中国与中亚国家的双边贸易日益增强,但竞争力依然有限。本文借助市场占有率指数和贸易竞争力优势指数（trade competitiveness,TC）等分析工具,对1996年以来中国与俄罗斯、哈萨克斯坦、吉尔吉斯斯坦三国贸易数据进行了定量分析,并衡量了中国与这三国不同产业的产业内贸易程度、比较优势和国际竞争力,得出中国的劳动密集型产业具有较强的优势,应进一步加强与中亚国家的能源开发与合作。     

工资变动对我国服务贸易与货物贸易竞争力的影响

近年来,我国物价上涨十分明显,要求增加工资的呼声不断高涨,但有人担心涨工资可能会导致我国外贸国际竞争力下降,进而会影响经济增长。在此背景下,本文实证分析工资变动对我国服务贸易、一般贸易与加工贸易竞争力的影响,以期为政府部门决策提供参考。本文的研究结论是:从长期看,工资增长有利于提升我国外贸竞争力。从短期情况看出,一方面,工资增长对我国服务贸易与一般贸易竞争力产生一定的冲击,但不久,这种冲击会转变为正面影响;另一方面,工资增长对我国加工贸易有正面影响,但其正面影响会逐渐减小,并转化为微弱的负面影响。