Do trade and investment agreements lead to more FDI? Accounting for key provisions inside the black box

The previous literature provides a highly ambiguous picture on the impact of trade and investment agreements on FDI. Most empirical studies ignore the actual content of BITs and RTAs, treating them as “black boxes”, despite the diversity of investment provisions constituting the essence of these agreements. We overcome this serious limitation by analyzing the impact of modalities on the admission of FDI and dispute settlement mechanisms in both RTAs and BITs on bilateral FDI flows between 1978 and 2004. We find that FDI reacts positively to RTAs only if they offer liberal admission rules. Dispute settlement provisions play a minor role. While RTAs without strong investment provisions may even discourage FDI, the reactions to BITs are less discriminate with foreign investors responding favourably to the mere existence of BITs.     

OPPORTUNISTIC MATCHING IN THE HOUSING MARKET*

We construct a model of the housing market in which agents differ in their flow values while searching. Agents enter the market relaxed (with high flow values) but move to a desperate state (low flow values) at a Poisson rate if they have not already transacted. We characterize the equilibrium steady‐state matching pattern and the joint distribution of price and time to sale (for sellers). The expected price conditional on time to sale falls with time spent on the market, whereas the conditional variance of price first rises and then falls with time on the market.     

Gamified interactions: whether,when, and how games facilitate self–brand connections

Firms increasingly use games to interact with their customers. Yet, surprisingly little is known about whether, when, and how such “gamified” interactions engage consumers with a firm’s brand, thereby facilitating self–brand connections. Building on flow theory, we show that gamified interactions that are highly interactive and optimally challenging facilitate self–brand connections, because such games lead to emotional and cognitive brand engagement. A field study and three experiments across various product domains and game designs support our theory. We also identify conditions under which consumers do not become engaged with a brand, namely when firms restrict their decisional control either to voluntarily participate in the game (i.e., compulsory play) or to spend as much time as desired playing the game (i.e., time pressure). Our findings advance existing knowledge about the use of games in marketing and provide important implications for how marketers can harness their potential to build self–brand connections.     

Are ‘New’ Donors Different? Comparing the Allocation of Bilateral Aid Between nonDAC and DAC Donor Countries

Major DAC donors are widely criticized for weak targeting of aid, selfish aid motives, and insufficient coordination. The emergence of an increasing number of new donors may further complicate the coordination of international aid efforts. At the same time, it is open to question whether new donors (many of which were aid recipients until recently) are more altruistic and provide better targeted aid according to need and merit. Project-level data on aid by new donors, as collected by the AidData initiative, allow for empirical analyses comparing the allocation behavior of new versus old donors. We employ Probit and Tobit models and test for significant differences in the distribution of aid by new and old donors across recipient countries. We find that, on average, new donors care less for recipient need than old donors. New and old donors behave similarly in several respects, however. They disregard merit by not taking the level of corruption in recipient countries into account. Concerns that commercial self-interest distorts the allocation of aid seem to be overblown for both groups.     

Towards new agreements on international trade liberalization

Zusammenfassung Zu neuen Abkommen über Liberalisierung des internationalen Handels. — Die Vielfalt der nichttarif?ren Handelshemmnisse steht ihrem allgemeinen und linearen Abbau—analog den Zollverhandlungen der Kennedy-Runde — bislang entgegen. In der vorliegenden Studie wird daher vorgeschlagen, für jedes Land einen ?Zolltarif der nichttarif?ren Handelshemmnisse? zu berechnen, indem auβertarif?re Maβnahmen in Form von Zoll?quivalenten quantifiziert werden. Dabei ist die zentrale Hypothese, daβ jedes Handelshemmnis die Differenz zwischen heimischen Erzeugerpreisen und Importpreisen vergr?βert; diese Differenz—gemessen in vom Hundert des Importpreises—ist das Zoll?quivalent. Die Methode der Quantifizierung sollte je nach Art der statistischen Daten gew?hlt werden. Drei M?glichkeiten werden vorgeführt, und zwar für homogene Produkte ein direkter Preisvergleich am Beispiel des Steinkohlebergbaus, für heterogene Produkte ein Elastizit?tsansatz am Beispiel der feinkeramischen Industrie und ein Vergleich von Warenk?rben am Beispiel der Textilindustrie. Abschlieβend werden m?gliche Divergenzen zwischen Protektionswirkungen und Protektionsabsichten untersucht.

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Resumen Hacia un nuevo acuerdo sobre la liberalizatión del comercio international. —La diversidad de barreras no arancelarias existente se ha mostrado como obstáculo a una desarme general y lineal análogo a las reducciones arancelarias en la ronda Kennedy. En el presente trabajo los autores proponen el establecimiento, en cada pais, de un ?arancel aduanero de las trabas no arancelarias? que se obtiene mediante la calculación de equivalentes arancelarios de aquellas trabas. La premisa central es que cualquier barrera a la importatión aumenta la diferencia entre los precios industriales domésticos y los de importación; esta diferencia, expresada como porcentaje del precio de importación, corresponde al equivalente arancelario. El método de cuantificación a aplicar deberá regirse por los datos estadfsticos disponibles. Los autores presentan très posibilidades, a saber: para productos homogéneos una comparación de precios directa, tomándose como ejemplo la industria extractiva del carbón, para productos heterogéneos un concepto de elasticidad, sirviendo de ejemplo la industria de la cerámica, y una comparación de la cesta de productos, utilizándose como ejemplo la industria textil. Finalmente los autores analizan posibles divergencias entre los efectos y las intenciones de medidas proteccionistas.

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Résumé Vers de nouveaux accords sur la libéralisation du commerce international. —La diversité des barrières non-tarifaires au commerce a jusqu’ à présent empêché leur réduction universelle et linéaire—conformément aux réductions tarifaires du ?Kennedy Round?. Dans l’article que voici on propose donc de calculer pour chaque pays un tarif douanier des barrières non-tarifaires en quantifiant les mesures non-tarifaires sous forme d’équivalents de tarifs. L’hypothèse qui en sert de base soutient que chaque barrière au commerce international augmente la différence entre les prix du marché national et ceux du marché mondial; cette différence — exprimée en pourcentages des prix d’importation—représente l’équivalent du tarif douanier. La méthode de quantification doit être adaptée aux données statistiques qu’on possède. Trois possibilités sont discutées en détail: pour les produits homogènes, la comparaison directe démontrée à l’exemple de l’industrie minière du charbon; pour les produits hétérogènes, un calcul d’élasticité demontre à l’exemple de l’industrie de poterie, et la comparaison de paniers de marchandises démontrée à l’exemple de l’industrie textile. Finalement, sont examinées les divergences possibles entre les effets du protectiónnisme et l’intention protectionniste.

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Riassunto Di nuovi accordi sulla liberalizzazione del commercio internazionale. —La molteplicit à degli ostacoli commerciali non tariffari sta finora in opposizione —analogamente aile trattative doganali del Kennedy-Runde—alla sua generale e lineare demolizione. Nel presente studio viene perció proposto di calcolare per ogni Paese una ?tariffa doganale degli ostacoli commerciali non tariffari?, mentre provvedimenti extratariffari sono quantificati in forma di equivalenze doganali. Inoltre l’ipotesi centrale è che ogni ostacolo commerciale ingrandisce la differenza tra prezzi di prodotti nazionali e prezzi d’importazione; questa differenza—misurata in per cento del prezzo d’importazione—è l’equivalenza doganale. Il metodo delia quantificazione dovrebbe essere scelto a seconda del genère dei dati statistici. Tre possibilit à sono presentate, e cioè per prodotti omogenei un diretto confronto dei prezzi sull’esempio dell’industria mineraria del carbone, per prodotti eterogenei un’impiego di elasticit à sull’esempio dell’industria di cerámica fine e un confronto di canestri di merci sull’esempio dell’industria tessile. In ultimo sono analizzate possibili divergenze tra effetti di protezione e intenzioni di protezione.

     

Cross hedging under multiplicative basis risk

Cross hedging price risk in an incomplete financial market creates basis risk. We propose a new way of modeling basis risk where price risk and basis risk are combined in a multiplicative way. Under this specification, positive prudence is a necessary and sufficient condition for underhedging in an unbiased market. Using the example of cross hedging jet fuel price risk with crude oil futures, we show that the new specification is superior in describing the price series and that optimal cross hedges differ significantly from those derived under the traditional additive cross hedging model.     

Taiwan and the People's Republic of China foes or partners?

Taiwan is developing ever more perceptibly into what both Peking and Taipei consider it to be: a province of China, albeit a province sui generis—part of China and yet an independent state, enjoying world-wide recognition though denied diplomatic relations, a leading commercial power but without proper commercial treaties. The prosperity which has been generated in the island is an ever present temptation for the People's Republic. Is it tempting enough to provoke an appeal to arms? Or is Red China's perfectly legitimate interest directed primarily at the exchange of goods and technologies?     

A Model Under Siege: A Case Study of the German Retirement Insurance System

This study evaluates the positive and negative features of the German public pension system and discusses three reasons for its increasing perceived and real difficulties: maturation, negative incentive effects, and the problems of demographic change. The German system in its current form may be able to limp through the coming decades but will cease to be the exemplary Bismarckian machine that has created generous retirement incomes at reasonable tax rates. Current policy proposals are insufficient and a few but incisive design changes and some degree of prefunding could rescue the many positive aspects of the German retirement insurance system.