Institutional quality and the effectiveness of aid for trade

Trade policy barriers and high transaction costs hinder developing countries from taking the full advantages of the global trading system. In order to help developing countries overcome the problem, the World Trade Organization (WTO) launched the Aid for Trade (AFT) initiatives in its Ministerial Conference held in Hong Kong in 2005. We examine the effects of AFT inflows on bilateral trade costs facing 133 developing countries while accounting for differences in their location on the contours of various measures of institutional quality. Our results from the estimation of a mixed effects (random-intercept and random-coefficient) model indicate that institutional quality significantly affects the extent to which AFT reduces bilateral trade costs. An important policy implication of our findings is that an economically robust and sustainable reduction in bilateral trade costs facing developing countries requires the presence of both promulgated and effectively functioning institutions such as regulatory power and the rule of law.     

Older adult pedestrian injuries in the United States: causes and contributing circumstances

As the US population ages, more older adults will face transportation and mobility challenges. This study examines the characteristics and contributing circumstances of nonfatal older adult pedestrian injuries. Data were obtained from the National Electronic Injury Surveillance System-All Injury Programme (NEISS-AIP) for the years 2001 through 2006. Cases included persons aged 65 years and older who were nonfatally injured on a public roadway. The results indicated that on average, an estimated 52,482 older adults were treated in emergency departments each year for nonfatal pedestrian injuries. Falling and being hit by a motor vehicle were the leading mechanisms of injury, resulting in 77.5% and 15.0% of older adult pedestrian injuries, respectively. More than 9000 older pedestrian fall-related injuries each year involved a kerb. It is concluded that the growth in the older adult population could add to the overall burden of these nonfatal pedestrian injuries. Making transportation and mobility improvements, including environmental modifications, is important for preventing these injuries.     

Food Aid, Food Prices, and Producer Disincentives in Ethiopia

Although the short-term aims of food aid are well conceived, strong concerns have been voiced regarding the long-term impacts of such aid on incentives for agricultural producers in recipient countries. This article examines the statistical link between food aid shipments and food prices in Ethiopia over the period 1996–2006. Monthly data from three markets and three commodities are used to estimate a system of seemingly unrelated regression models for food prices. Results indicate that previous year food aid shipments reduce prices in all producer and consumer markets. These effects, however, appear to be limited to the set of internationally traded commodities that are domestically marketed. A recursive regression procedure is used to identify the food aid threshold at which a negative aid effect emerges. Food aid shipments that constitute less than 10% of domestic production appear to be benign, but shipments above this level show signs of being disruptive to local markets. We use a simple policy simulation to argue that production-sensitive targeting, e.g., conditioning food aid on local food production, would help to circumvent disincentive effects.     

Does Cultural Distance Hinder Trade in Goods? A Comparative Study of Nine OECD Member Nations

We examine the effect of cultural distance, a proxy for the lack of a minimum reservoir of trust necessary to initiate and complete trade deals, on bilateral trade flows. Employing data for 67 countries that span the years 1996–2001, we estimate a series of modified gravity specifications and find that cultural dissimilarity between nations has an economically significant and consistently negative effect on aggregate and disaggregated trade flows; however, estimated effects vary in magnitude and economic significance across measures of trade and our cohort of OECD reference countries. The consistently negative influence of cultural distance indicates that policymakers may wish to consider mechanisms that enhance the build-up of trust and commitment when seeking to facilitate the initiation and completion of international trade deals. Our findings also imply that coefficient estimates from related studies that do not account for the trade-inhibiting effect of cultural distance may be biased.     

The effects of refugee and non-refugee immigrants on US trade with their home countries

Employing data on US immigrants and trade with 59 home countries for the years 1996–2001, we compare the extent to which refugee and non-refugee immigrants affect US trade with their home countries and provide the first evidence of variation in the US immigrant–trade relationship across immigrant types. We also consider the abilities of refugee and non-refugee immigrants to offset the trade-inhibiting influence of cultural distance. Our results show that while immigrants, in general, exert positive influences on US imports from – and exports to – their home countries, the influence of refugee immigrants is quite minimal when compared with that of non-refugee immigrants. For both immigrant types, however, evidence supporting the notion that immigrants act to offset cultural distance is observed. To conceptualize the economic meaning of our results, we provide estimates of the extent to which each type of immigrants offset transport costs.     

Are bilateral and multilateral aid‐for‐trade complementary?

Using the first comprehensive estimates of ad valorem tariff equivalent bilateral trade costs spanning the time period 2002–10, we examine whether the aid‐for‐trade (AFT) inflows reduce bilateral trade costs facing aid recipients. If so, we ask whether the trade costs reduction effects of AFT from bilateral and multilateral sources are complementary. By showing the extent to which the observed trade cost reduction effects of AFT from bilateral (multilateral) sources correlate with the magnitudes of AFT disbursements from multilateral (bilateral) sources, we present plausible explanation for the cross‐country variations in the extent to which AFT promotes trade flows. Our findings have, thus, important policy implications for shaping future discourses on the coordination of disbursements for enhancing the effectiveness of AFT.     

Imperfect Price Transmission: Is Market Power Really to Blame?

Several studies in the literature have argued that price transmission in vertically‐related markets is imperfect, i.e. that farm input price changes are not fully passed‐through to the final product price. Market power, notably oligopoly, is presumed to be the principal source of imperfect price transmission. To date, the impact of oligopsony (buyer) power on the degree of price transmission has not been evaluated using a formal theoretical model. Moreover, neither has the combination of oligopoly and oligopsony despite the fact that its influence has been formally acknowledged in both the UK and some European food markets. This paper makes a contribution to the literature by developing a model of price transmission where both oligopoly and oligopsony power co‐exist and where industry technology is assumed to be characterised by variable input proportions. It shows that taking the degree of price transmission in a perfectly competitive market as a benchmark, oligopoly and oligopsony power do not necessarily lead to imperfect price transmission, although they can. Indeed, they may counteract each other's impact on the degree of price transmission. The key to these outcomes is to be found in the functional forms for retail demand and farm supply.     

Volatility in Exchange Rate Components and the Volume of International Trade

By decomposing the changes in the real exchange rate series into fundamental and transitory components (market microstructure and stochastic element) and modeling the volatility in each via a GARCH process, this paper examines how volatility in exchange rate affects the volume of aggregate and disaggregate US trade with Canada, Germany, and Hong Kong during the 1989–2002 period. The results indicate significantly different impacts of volatility due to the fundamental and transitory components of the exchange rate series on US bilateral trade. While the findings suggest heterogeneous responses of traders to volatilities arising from different components of the real exchange rate, the impact of the volatility due to the fundamental component is also found to vary across commodities, implying disparities in the inter- and intra-trading arrangements made by traders of different goods in counteracting foreign exchange risk arising from changes in the economic fundamentals.     

Explaining changes in the racial digital divide in the United States from 1997 to 2007

This paper explores the dissemination of access to home Internet among Whites and Blacks in the US, the inequalities observed between the groups (known as the digital divide), the trends exhibited by the two groups in the acquisition of Internet access, and the factors contributing to these disparities. The study focuses on the large and growing digital divide observed among Whites and Blacks in the period 1997–2007. Both the standard and a variant of the Blinder–Oaxaca decomposition techniques are employed to identify and quantify the factors that contribute to this gap. In all decompositions, differences in education, family income, household composition, and access to the Internet outside the home are found to be the primary factors that explain the racial digital gap.     

Consolidation, scale economies and technological change in Japanese banking

The paper examines the technological structure of the Japanese banking sector before the onset of the banking crisis and structural reforms of the 1990s in order to shade light on the logic of the recent trend to consolidation in the industry. While diseconomies of scale are shown to be pervasive in the large banks, defying the rationale for consolidation, the paper presents evidence of an underlying technological progress that operates to significantly increase the industry's efficient minimum size, generating economies at larger banks, thus justifying the ongoing trend in consolidation. The results suggest that, to the extent that consumers can benefit from lower costs of bank production, policies that promote a more concentrated banking structure might be consistent with public interest.