A frequently stated objective of regional and multilateral trade agreements is to stabilize trade and reduce volatility in trade flows. We examine whether trade agreements accomplish this goal. Using a structural gravity approach we identify two potential channels through which international trade institutions may influence the volatility of bilateral trade flows: by affecting the variance of trade barriers and by affecting the covariance of economic outcomes between the trading partners. We then use a panel of bilateral industry-level trade data to empirically examine the effects of regional trade agreements and GATT/WTO membership on export earnings volatility. We find some evidence that joining a multilateral trade agreement such as the GATT does make export earnings less volatile. However, regional trade agreements increase measured volatility in bilateral exports, and this rise in volatility increases as the agreement becomes deeper and more integrated.
{"title":"Do Trade Agreements Actually Reduce Trade Volatility?","authors":"Josh Ederington, Yoonseon Han, Jenny Minier","doi":"10.2139/ssrn.3906019","DOIUrl":"https://doi.org/10.2139/ssrn.3906019","url":null,"abstract":"A frequently stated objective of regional and multilateral trade agreements is to stabilize trade and reduce volatility in trade flows. We examine whether trade agreements accomplish this goal. Using a structural gravity approach we identify two potential channels through which international trade institutions may influence the volatility of bilateral trade flows: by affecting the variance of trade barriers and by affecting the covariance of economic outcomes between the trading partners. We then use a panel of bilateral industry-level trade data to empirically examine the effects of regional trade agreements and GATT/WTO membership on export earnings volatility. We find some evidence that joining a multilateral trade agreement such as the GATT does make export earnings less volatile. However, regional trade agreements increase measured volatility in bilateral exports, and this rise in volatility increases as the agreement becomes deeper and more integrated.","PeriodicalId":14394,"journal":{"name":"International Political Economy: Trade Policy eJournal","volume":"46 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85940970","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Although increasing literature has evaluated the benefits, drawbacks, and consequences of the BRI, few academics investigated the potential influence of the program on international and regional advantages and disadvantages. But it is true that the BRI projected to have an influence on a huge geopolitical region owing to China's dominance in the world in the coming days. Obviously, that will redefine global trade, which gives the globe a new current concept. Nepal, being a tiny nation close to China, cannot remain astray from bilateral and multilateral economic connections with China, even though it impacts the national policy. Nepal alone is not powerful enough to respond to BRI in the world community but rather country should focus on mass benefiting from this global commercial strategy preparing plan. The different problems and issues related to BRI has been raised in this articles that needs to be address and researched.
{"title":"Understanding China's Belt and Road Initiative: How Nepal Should Respond to It?","authors":"Jyoti Koirala, Suman Acharya, Madhu Neupane, Nimananda Rijal","doi":"10.2139/ssrn.3887693","DOIUrl":"https://doi.org/10.2139/ssrn.3887693","url":null,"abstract":"Although increasing literature has evaluated the benefits, drawbacks, and consequences of the BRI, few academics investigated the potential influence of the program on international and regional advantages and disadvantages. But it is true that the BRI projected to have an influence on a huge geopolitical region owing to China's dominance in the world in the coming days. Obviously, that will redefine global trade, which gives the globe a new current concept. Nepal, being a tiny nation close to China, cannot remain astray from bilateral and multilateral economic connections with China, even though it impacts the national policy. Nepal alone is not powerful enough to respond to BRI in the world community but rather country should focus on mass benefiting from this global commercial strategy preparing plan. The different problems and issues related to BRI has been raised in this articles that needs to be address and researched.","PeriodicalId":14394,"journal":{"name":"International Political Economy: Trade Policy eJournal","volume":"7 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88174799","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The present study investigates the trade performance and competitiveness of textile industry of India and its competitors namely China and Vietnam by using revealed comparative advantage developed by Balassa, and other trade parameters given by World Bank in terms of growth, diversification and sophistication for 1988 to 2016. Data has been taken from World Integrated Trade Solution (WITS) based on harmonised system (HS-2) including 11 products ranging from HS-50 to HS-60. Results indicate that India has attained comparative advantage from 7 products to only 8 Products While Vietnam has shown drastic improvement in textile products and has achieved comparative advantage from 2 products to 7 products during 2000 to 2016. Moreover, China has improved its comparative advantage from 9 products to all products. The study con cluded that there are immense opportunities for Indian textile industry in world market as most of the products have shown positive growth of export
{"title":"Analysing competitiveness and trade performance: evidence from Indian textile industry and its select competitors","authors":"Hugh Dang","doi":"10.2139/ssrn.3883715","DOIUrl":"https://doi.org/10.2139/ssrn.3883715","url":null,"abstract":"The present study investigates the trade performance and competitiveness of textile industry of<br>India and its competitors namely China and Vietnam by using revealed comparative advantage<br>developed by Balassa, and other trade parameters given by World Bank in terms of growth,<br>diversification and sophistication for 1988 to 2016. Data has been taken from World Integrated<br>Trade Solution (WITS) based on harmonised system (HS-2) including 11 products ranging from<br>HS-50 to HS-60. Results indicate that India has attained comparative advantage from 7 products<br>to only 8 Products While Vietnam has shown drastic improvement in textile products and has<br>achieved comparative advantage from 2 products to 7 products during 2000 to 2016. Moreover,<br>China has improved its comparative advantage from 9 products to all products. The study con cluded that there are immense opportunities for Indian textile industry in world market as most<br>of the products have shown positive growth of export","PeriodicalId":14394,"journal":{"name":"International Political Economy: Trade Policy eJournal","volume":"5 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"78582007","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study aims to evaluate the the effects of maritime transport on the Turkish economy. Due to its geographical location advantage, the length of the seacoasts, and the fact that a large part of the population and industry is located on the shores, Turkey has the potential to meet its resource needs. The geostrategic location of Turkey dictates the utilization of this productive resource. Freight transport on sea routes, which are the veins of the economy, has a special importance for Turkey with its 8,333 km of coastline and 180 ports. With its strategic location in the Mediterranean, Aegean and Black Sea regions, Turkey serve as a commercial bridge between Asia, Africa and Europe. Our ports in the Marmara Sea, our inland sea, also make an important contribution to trade. In conclusion, the Turkish economy benefits so much from the maritime transport on the cargo carried by sea. The economic contribution of maritime transport to Turkey is not only with its maritime economic value, but it also actually contributes directly to the entire trade and economy of Turkey. Therefore, it is necessary to achieve the economic value of maritime transport, which keeps the economy dynamic and will continue to do so, especially with more national contributions.
{"title":"The Effects of Maritime Transport on the Turkish Economy","authors":"Oral Erdoğan, Oktay Cetin","doi":"10.2139/ssrn.3880804","DOIUrl":"https://doi.org/10.2139/ssrn.3880804","url":null,"abstract":"This study aims to evaluate the the effects of maritime transport on the Turkish economy. Due to its geographical location advantage, the length of the seacoasts, and the fact that a large part of the population and industry is located on the shores, Turkey has the potential to meet its resource needs. The geostrategic location of Turkey dictates the utilization of this productive resource. Freight transport on sea routes, which are the veins of the economy, has a special importance for Turkey with its 8,333 km of coastline and 180 ports. With its strategic location in the Mediterranean, Aegean and Black Sea regions, Turkey serve as a commercial bridge between Asia, Africa and Europe. Our ports in the Marmara Sea, our inland sea, also make an important contribution to trade. In conclusion, the Turkish economy benefits so much from the maritime transport on the cargo carried by sea. The economic contribution of maritime transport to Turkey is not only with its maritime economic value, but it also actually contributes directly to the entire trade and economy of Turkey. Therefore, it is necessary to achieve the economic value of maritime transport, which keeps the economy dynamic and will continue to do so, especially with more national contributions.","PeriodicalId":14394,"journal":{"name":"International Political Economy: Trade Policy eJournal","volume":"32 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83783512","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
India has one of the most advanced pharmaceutical industries among developing countries. Yet India is critically dependent on China for supplies of bulk drugs and drug intermediates with China accounting for about two-thirds of the total imports. In the early 1990s, China was relatively a minor source of bulk drugs imports for India. Imports increased since then and sharply accelerated after the early 2000s. By the mid-1990s, India was able to successfully develop a pharmaceutical industry. The policies that India pursued till then significantly influenced the transformation. The mid-1990s however saw the beginning of a series of policy changes in India in the pharmaceutical industry. Unlike China where the government intervened strongly, the role of the government was consciously diminished in India. As a result, India became increasingly dependent on bulk drugs supplied from China. India’s critical dependence on China for bulk drug supplies was flagged from time to time in different circles. The government has been slow in responding to the situation but has now announced major schemes for promoting local production of bulk drugs, drug intermediates and key starting materials. These are expected to have a major impact. But the paper argues that these deal with only a part of the problem and suggests the other policy steps that need to be taken.
{"title":"India’s Import Dependence on China in Pharmaceuticals: Status, Issues and Policy Options","authors":"S. Chaudhuri","doi":"10.2139/ssrn.3906479","DOIUrl":"https://doi.org/10.2139/ssrn.3906479","url":null,"abstract":"India has one of the most advanced pharmaceutical industries among developing countries. Yet India is critically dependent on China for supplies of bulk drugs and drug intermediates with China accounting for about two-thirds of the total imports. In the early 1990s, China was relatively a minor source of bulk drugs imports for India. Imports increased since then and sharply accelerated after the early 2000s. By the mid-1990s, India was able to successfully develop a pharmaceutical industry. The policies that India pursued till then significantly influenced the transformation. The mid-1990s however saw the beginning of a series of policy changes in India in the pharmaceutical industry. Unlike China where the government intervened strongly, the role of the government was consciously diminished in India. As a result, India became increasingly dependent on bulk drugs supplied from China. India’s critical dependence on China for bulk drug supplies was flagged from time to time in different circles. The government has been slow in responding to the situation but has now announced major schemes for promoting local production of bulk drugs, drug intermediates and key starting materials. These are expected to have a major impact. But the paper argues that these deal with only a part of the problem and suggests the other policy steps that need to be taken.","PeriodicalId":14394,"journal":{"name":"International Political Economy: Trade Policy eJournal","volume":"1 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"81950193","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
As the framing chapter of a forthcoming volume on Artificial Intelligence and International Economic Law, this paper introduces three cross-cutting themes that illustrate the relationship between artificial intelligence (AI) and international economic law (IEL): disruption, regulation, and reconfiguration. We explore the theme of disruption along the trifecta of AI-related technological, economic, and legal change. We observe that the increasing adoption of AI leads to political, economic, and social pressures across jurisdictions and levels of governance. Policy makers and stakeholders engage in different governance venues to debate regulatory design choices: whether to regulate, why to regulate, when to regulate, whom or what to regulate, how to regulate, and who should regulate? We argue that IEL is increasingly shaping and influencing the regulatory discourse around AI and vice versa. In this context, we explore the extent to which IEL is being reconfigured and examine the need for further reconfiguration. We conclude by bringing the contributions we assembled in this volume into conversation with one another and identify topics that warrant further research.
{"title":"Artificial Intelligence and International Economic Law: A Research and Policy Agenda","authors":"Shin-yi Peng, Ching-Fu Lin, Thomas Streinz","doi":"10.2139/ssrn.3877055","DOIUrl":"https://doi.org/10.2139/ssrn.3877055","url":null,"abstract":"As the framing chapter of a forthcoming volume on Artificial Intelligence and International Economic Law, this paper introduces three cross-cutting themes that illustrate the relationship between artificial intelligence (AI) and international economic law (IEL): disruption, regulation, and reconfiguration. We explore the theme of disruption along the trifecta of AI-related technological, economic, and legal change. We observe that the increasing adoption of AI leads to political, economic, and social pressures across jurisdictions and levels of governance. Policy makers and stakeholders engage in different governance venues to debate regulatory design choices: whether to regulate, why to regulate, when to regulate, whom or what to regulate, how to regulate, and who should regulate? We argue that IEL is increasingly shaping and influencing the regulatory discourse around AI and vice versa. In this context, we explore the extent to which IEL is being reconfigured and examine the need for further reconfiguration. We conclude by bringing the contributions we assembled in this volume into conversation with one another and identify topics that warrant further research.","PeriodicalId":14394,"journal":{"name":"International Political Economy: Trade Policy eJournal","volume":"56 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-06-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73999022","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Anindya S. Chakrabati, Kanika Mahajan, Shekhar Tomar
How does trade within a country respond to aggregate shocks? Using novel administrative plant and product level data, we show that COVID-19 induced shutdown in March 2020 led to a collapse in domestic trade across regions in India. Well after the movement restrictions were lifted, trade continues to suffer while GDP recovers. We show that regional realignment, a shift from inter- to intra-region sales and input-sourcing, led by plants more dependent on inter-region sales (inputs) before the shock, drives the trade collapse. On the product side, those with a higher pre-pandemic scope to expand into the home market witness greater realignment, accounting for 7.6 percent of the sales growth in the last quarter of 2020. Our results control for other competing channels like changes in demand and are robust to a variety of specifications.
{"title":"Aggregate Shocks, Regional Trade Collapse and Supply Chain Realignment","authors":"Anindya S. Chakrabati, Kanika Mahajan, Shekhar Tomar","doi":"10.2139/ssrn.3869005","DOIUrl":"https://doi.org/10.2139/ssrn.3869005","url":null,"abstract":"How does trade within a country respond to aggregate shocks? Using novel administrative plant and product level data, we show that COVID-19 induced shutdown in March 2020 led to a collapse in domestic trade across regions in India. Well after the movement restrictions were lifted, trade continues to suffer while GDP recovers. We show that regional realignment, a shift from inter- to intra-region sales and input-sourcing, led by plants more dependent on inter-region sales (inputs) before the shock, drives the trade collapse. On the product side, those with a higher pre-pandemic scope to expand into the home market witness greater realignment, accounting for 7.6 percent of the sales growth in the last quarter of 2020. Our results control for other competing channels like changes in demand and are robust to a variety of specifications.","PeriodicalId":14394,"journal":{"name":"International Political Economy: Trade Policy eJournal","volume":"113 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-06-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80598742","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Cet article se penche sur le règlement des différends internationaux économiques en Amérique du Nord après l’Accord Canada-États-Unis-Mexique (ACÉUM). Ce nouvel accord remplace l’Accord de libre-échange nord-américain (ALÉNA), mais il reproduit les trois mêmes mécanismes de règlement des différends que son prédécesseur, avec certaines modifications notables, surtout en matière de travail, d’environnement et d’investissement. L’ALÉNA prévoyait un mécanisme général de règlement des différends, mais aussi un mécanisme spécial d’examen des droits antidumping ou compensateurs par des groupes spéciaux binationaux, ainsi qu’un mécanisme de règlement des différends entre investisseur et État (RDIE) dans son célèbre chapitre 11. La première partie examine les améliorations apportées au mécanisme général de règlement des différends. La deuxième partie étudie le maintien du mécanisme des groupes spéciaux binationaux en matière de dumping et de subventionnement. La troisième partie met en lumière le relâchement du mécanisme de RDIE dans l’ACÉUM. L’article conclut qu’une continuité s’observe entre l’ACÉUM et l’ALÉNA en matière de règlement des différends, en ce qui concerne le mécanisme général et le mécanisme spécial pour le dumping et le subventionnement, alors qu’une rupture nette s’opère en matière d’investissement avec le mécanisme de RDIE.
{"title":"Le règlement des différends internationaux économiques en Amérique du Nord après l’Accord Canada – États-Unis – Mexique (International Economic Disputes Settlement in North America after the United States - Mexico - Canada Agreement)","authors":"Charles-Emmanuel Côté","doi":"10.7202/1090926ar","DOIUrl":"https://doi.org/10.7202/1090926ar","url":null,"abstract":"Cet article se penche sur le règlement des différends internationaux économiques en Amérique du Nord après l’Accord Canada-États-Unis-Mexique (ACÉUM). Ce nouvel accord remplace l’Accord de libre-échange nord-américain (ALÉNA), mais il reproduit les trois mêmes mécanismes de règlement des différends que son prédécesseur, avec certaines modifications notables, surtout en matière de travail, d’environnement et d’investissement. L’ALÉNA prévoyait un mécanisme général de règlement des différends, mais aussi un mécanisme spécial d’examen des droits antidumping ou compensateurs par des groupes spéciaux binationaux, ainsi qu’un mécanisme de règlement des différends entre investisseur et État (RDIE) dans son célèbre chapitre 11. La première partie examine les améliorations apportées au mécanisme général de règlement des différends. La deuxième partie étudie le maintien du mécanisme des groupes spéciaux binationaux en matière de dumping et de subventionnement. La troisième partie met en lumière le relâchement du mécanisme de RDIE dans l’ACÉUM. L’article conclut qu’une continuité s’observe entre l’ACÉUM et l’ALÉNA en matière de règlement des différends, en ce qui concerne le mécanisme général et le mécanisme spécial pour le dumping et le subventionnement, alors qu’une rupture nette s’opère en matière d’investissement avec le mécanisme de RDIE.","PeriodicalId":14394,"journal":{"name":"International Political Economy: Trade Policy eJournal","volume":"9 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-06-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86528082","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Using a narrative account of quarterly discretionary changes in tax liabilities from 1974Q4 to 2018Q2 in a VAR setting, we study whether legislative tax changes affect the trade balance in the United States, Germany, and the United Kingdom. As legislative tax changes we consider (i) all changes, (ii) personal income tax changes, (iii) business tax changes, (iv) indirect tax changes in Germany and the UK, (v) spillovers of US tax changes into Germany and the UK, and (vi) asymmetric reactions after tax hikes and cuts. Generally, we find that after a reduction in aggregated tax liabilities, imports and exports in the US and Germany react quite similarly: imports tend to rise; exports do not change much. Consequently—and fostered by growing output—the net-exports-to-GDP ratio decreases. We find no clear net effect in the UK. Instead, UK imports only increase after cuts to indirect taxes. However, employing normal variations of the tax changes as a yardstick, the economic magnitude of the estimated effects on the trade variables is not particularly large. Thus, there remain doubts as to whether tax policy is an effective in-strument for addressing trade imbalances.
{"title":"The Effect of Legislated Tax Changes on the Trade Balance: Empirical Evidence for the United States, Germany, and the United Kingdom","authors":"B. Hayo, Sascha Mierzwa","doi":"10.2139/ssrn.3866701","DOIUrl":"https://doi.org/10.2139/ssrn.3866701","url":null,"abstract":"Using a narrative account of quarterly discretionary changes in tax liabilities from 1974Q4 to 2018Q2 in a VAR setting, we study whether legislative tax changes affect the trade balance in the United States, Germany, and the United Kingdom. As legislative tax changes we consider (i) all changes, (ii) personal income tax changes, (iii) business tax changes, (iv) indirect tax changes in Germany and the UK, (v) spillovers of US tax changes into Germany and the UK, and (vi) asymmetric reactions after tax hikes and cuts. Generally, we find that after a reduction in aggregated tax liabilities, imports and exports in the US and Germany react quite similarly: imports tend to rise; exports do not change much. Consequently—and fostered by growing output—the net-exports-to-GDP ratio decreases. We find no clear net effect in the UK. Instead, UK imports only increase after cuts to indirect taxes. However, employing normal variations of the tax changes as a yardstick, the economic magnitude of the estimated effects on the trade variables is not particularly large. Thus, there remain doubts as to whether tax policy is an effective in-strument for addressing trade imbalances.","PeriodicalId":14394,"journal":{"name":"International Political Economy: Trade Policy eJournal","volume":"52 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-06-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85301743","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the relative importance of global, regional, country and idiosyncratic factors, as well as the determinants that underpin fluctuations in international trade flows across different regions of the world. Our analysis uses a two-step process, starting with a Bayesian dynamic latent factor model (BDFM) to simultaneously estimate the four dynamic factors, followed by the application of Bayesian model averaging to identify the variables that explain the shares of volatility. Our key findings are: (i) international factors are the most important in explaining fluctuations in international trade, suggesting that the interconnections between economies, and policies/shocks at the regional and global level, tend to be more important than country-level factors (ii) regional integration, particularly when the agreement goes beyond trade in goods, is positively related to the share of the regional factor, and inversely related to the importance of the global factor. Furthermore, the regional factor is more important in the case of economically large trade blocks. Overall, our analysis illustrates the usefulness of applying a BDFM model to study the co-movements of international trade series.
{"title":"International trade fluctuations: global versus regional factors","authors":"Karen Jackson, K. Beck","doi":"10.2139/ssrn.3856624","DOIUrl":"https://doi.org/10.2139/ssrn.3856624","url":null,"abstract":"This paper examines the relative importance of global, regional, country and idiosyncratic factors, as well as the determinants that underpin fluctuations in international trade flows across different regions of the world. Our analysis uses a two-step process, starting with a Bayesian dynamic latent factor model (BDFM) to simultaneously estimate the four dynamic factors, followed by the application of Bayesian model averaging to identify the variables that explain the shares of volatility. Our key findings are: (i) international factors are the most important in explaining fluctuations in international trade, suggesting that the interconnections between economies, and policies/shocks at the regional and global level, tend to be more important than country-level factors (ii) regional integration, particularly when the agreement goes beyond trade in goods, is positively related to the share of the regional factor, and inversely related to the importance of the global factor. Furthermore, the regional factor is more important in the case of economically large trade blocks. Overall, our analysis illustrates the usefulness of applying a BDFM model to study the co-movements of international trade series.","PeriodicalId":14394,"journal":{"name":"International Political Economy: Trade Policy eJournal","volume":"103 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2021-05-30","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82799658","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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