A framework for analysis in international macroeconomics

Zusammenfassung Ein System für Analysen auf dem Gebiet der makro?konomischen Auβenwirtschaftstheorie. — In dieser Arbeit wird ein System von fünf Gleichungen entwickelt, aus dem eine Anzahl unterschiedlicher theoretischer Standardmodelle abgeleitet werden kann, je nachdem welche Variablen jeweils als endogen bzw. exogen angenommen werden. Es werden L?sungen für neun solche Modelle beschrieben, einschlie\lich des Zwei-L?nder-Modells und des IS-LM-Modells sowohl bei Vollbesch?ftigung als auch bei Unterbesch?ftigung sowie bei festen und flexiblen Wechselkursen. Zwei Modelle mit festen Wechselkursen und ohne Sterilisierung von ?nderungen in den W?hrungsreserven werden ebenfalls untersucht. Für jedes Modell werden so unterschiedliche Probleme wie die in- und ausl?ndischen Wirkungen der Stabilit?tspolitik, der Abwertung, des Transferproblems und exogener Preis?nderungen dargestellt und mit den entsprechenden Ergebnissen anderer Modelle verglichen.

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Resumen Un marco de análisis en la macroeconomfa international. — Este artículo présenta un marco de cinco ecuaciones a partir del cual se pueden derivar una variedad de modelos teóricos standard variando la selección de variables endógenas y exógenas. Se describen soluciones para nueve modelos de este tipo, incluyendo las repercusiones externas y modelos de ahorro/inversión-preferencia por liquidez/ oferta de moneda (AI-LM) con pleno empleo y menos que pleno empleo, y con tasas de cambio fijas y flexibles. Se examinan también dos modelos con tasas de cambio fijas sin esterilización de réservas. Se examinan y comparan los resultados entre los modelos para problemas tan diversos como los efectos externos y domésticos de politicas de estabilización, devaluación, el problema de transferencia y los efectos de cambios de precios exógenos.

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Résumé Un cadre pour l’analyse en macroéconomie internationale. — Le papier présente un cadre de cinq équations duquel on peut dériver un nombre des modèles de standard théoretiques en variant la sélection des variables endogènes et exogènes. Nous décrivons des solutions pour neuf tels modèles en incluant les répercussions étrangères et les modèles IE-LA avec plein emploi aussi bien qu’avec moins que plein emploi et avec des taux de change fixes aussi bien que flexibles. Nous examinons aussi deux modèles de taux de change fixe avec la nonstérilisation des reserves. Nous examinons les résultats et les comparons parmi des modèles suivant tels problèmes divers comme les effets étrangers et locaux des politiques de stabilisation, de la dévaluation, du problème de transfert, et les effets des changes des prix exogènes.

     

Exempted sectors in free trade agreements

Almost all participants in free trade agreements (FTAs) exclude at least a few products or sectors from complete tariff removal on the exports of their FTA partners. The positive tariffs that remain within an FTA are often the highest tariffs that the countries apply on an MFN basis. It seems plausible that such exclusions may be chosen because the domestic producers of these products are viewed as especially vulnerable to competition from imports from the partner country. In brief, they are especially “sensitive sectors.” We develop this idea theoretically and then test it empirically on data from 37 countries in 240 importer–exporter pairs within FTAs. We find support for the sensitive‐sector hypothesis only in the high‐income countries. We find that low‐income countries, in contrast, exempt sectors where bilateral tariff removal would be more likely trade‐diverting and therefore harmful. Our explanation for this, supported empirically, is not that they are following the advice of trade economists, but rather that they are avoiding loss of tariff revenue and may also perhaps be influenced by the greater bargaining power of richer and/or larger partners in their FTAs.     

Exploring the limits of comparative advantage

Exploring the Limits of Comparative Advantage. - The paper examines extensions of the Law of Comparative Advantage to several situations that have not been adequately covered before. The basic result is the positive one that a country’s pattern of trade will be negatively correlated with its relative autarky prices. The first extension is to situations of unbalanced trade. The second extension is to an economy with domestic distortions. Finally, the third extension is to a lumpy country model, in which regions of a country may differ in various ways, including differences in factor prices.     

How Robust is Comparative Advantage?

This paper reviews the theoretical development of the concept of comparative advantage, starting with the two‐good model of Ricardo and the two‐good extension and reinterpretation by Haberler. In both, the presence of comparative advantage provides the scope for countries to gain from trade by specializing, and the pattern of that trade is explained by the pattern of comparative advantage. These strong results of the two‐good model can be extended under certain circumstances to multiple goods and countries, but under more general assumptions such strong results no longer are assured. Instead one can derive much weaker results, usually in the form of correlations between comparative advantage and trade, and these weaker results hold in a much wider variety of circumstances. The paper examines those assumptions that permit such generalizations, but then also examines when those assumptions are most likely to fail, and what happens as a result.     

Sectoral effects of reductions in NATO military expenditures in the major industrialized and developing countries

We use the Michigan Model of World Production and Trade to assess the sectoral effects of (1) a 25 percent unilateral reduction of military expenditures in the individual NATO countries and (2) a 25 percent multilateral reduction of military expenditures in all of the NATO countries combined. Our principal findings suggest that the overall effects of the unilateral and multilateral reductions are not substantial and that the results of the two reductions are qualitatively similar. The sectoral results, which are also broadly similar in the two experiments, suggest that sectors such as basic metals and metal products, durable goods, and community, social, and personal services might be in need of transitional adjustment assistance for displaced workers in the event that the reductions in military expenditures would in fact be carried out.     

Local Import Competition in a Lumpy Country

This paper examines the effects of a fall in the price of an imported good in a region of a country that is specialized in producing that good. The context is a “lumpy country” model in which factors are unable to move between locations, although in this case I assume that only labor is immobile, and that the other factor, capital, is perfectly mobile between regions. With mobile capital, the lumpy-country equilibrium can be anywhere in the factor-price equalization set, but my focus is on a region that initially produces only one good, on the border of that set. When the price of that good falls due to import competition, it would be possible for both factors to reallocate partially into production of the other good, but I assume instead that some capital simply leaves the region, so that it continues to produce only the same good that it did before. The result of this is a fall in the real wage of labor, just as under Stolper-Samuelson assumptions. I then look at production also of a non-traded good, and find that the same import competition that cheapened the traded good also cheapens the nontraded good. The result is that the region shrinks, losing capital and producing less of both goods unless the substitution in favor of the nontraded good expands its consumption out of a smaller income.     

Estimates of the elasticities of substitution between imports and home goods for the United States

Zusammenfassung Sch?tzungen der Substitutionselastizit?t zwischen Importen und heimischen Gütern für die Vereinigten Staaten. - Dieser Aufsatz enth?lt Sch?tzungen der Importnachfrage- und Substitutionselastizit?ten für 122 dreistellige SIC-Industrien der USA, wobei j?hrliche Daten der Periode 1962–1978 und eine Variante der zweistufigen Methode der kleinsten Quadrate benutzt werden. Sch?tzungen aufgrund einer Variante der dreistufigen Methode der kleinsten Quadrate, die simultan für eine Untergruppe dieser Industrien vorgenommen werden, liefern einige Hinweise auf eine Korrelation der Residuen aus den Importfunktionen für die verschiedenen Industriezweige. Obwohl auch sie mit Ungenauigkeiten behaftet sind, bieten die gesch?tzten Elastizit?ten doch einen wertvollen Anhaltspunkt für einzelne Industrien und für die Wahl von Parametern in Computermodellen und anderen Analysen des Au\enhandels mit hoher Disaggregation.

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Résumé Estimations des élasticités de substitution entre des importations et des produits locaux pour les Etats Unis. - Dans cet article les auteurs présentent des estimations des élasticités de demande importatrice et de substitution pour 122 3-digit SIC industries dans les Etats Unis en utilisant des données annuelles pour 1962–1978 et une variante des moindres carrés à deux degrés. Des estimations basées sur une variante des moindres carrés à trois degrés et obtenues simultanément pour un sous-groupe de ces industries révèlent quelque évidence de corrélation entre les perturbances des différentes équations. Bienque soumises à l’imprécision les élasticités estimées donnent un point de repère pour des industries individuelles et pour le choix des paramètres à l’usage en modèles de commerce computables et en autres analyses de commerce extérieur au niveau désagrégé.

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Resumen Estimaciones de las elasticidades de sustitución entre importaciones y bienes nacionales no comerciados para los Estados Unidos. - Este trabajo présenta estimaciones de elasticidades de demanda de importaciones y de sustitución para 122 ramas industriales al nivel de très dígitos de la CIUU para los EEUU, utilizando datos anuales para 1962–1978 y una variante del método de cuadrados mínimos de dos etapas. Estimaciones basades en una variante del método de très etapas, obtenidas para un subgrupo de estas ramas, dieron evidencia de correlacion entre los residuos de las ecuaciones del modelo. A pesar de estar sujetas a imprecisiones, las elasticidades estimadas constituyen un dato útil para las ramas industriales y para la electión de parámètres para modelos computacionales de comercio internacional y otros análisis del comercio a nivel desagregado.