US dollar appreciations can inflict sizable negative cross-border spillovers. We investigate such spillovers from flight-to-safety shocks and the accompanying “global dollar cycle”. Our results show that negative real sector spillovers from US dollar appreciations fall disproportionately on emerging markets. In contrast, effects on advanced economies are small and short-lived. Emerging market commodity exporters historically experienced larger negative spillovers than commodity importers, reflecting a strong negative link between the US dollar and commodity prices. In terms of policies, more anchored inflation expectations can mitigate the initial negative spillovers, while more flexible exchange rates can speed up the subsequent economic recovery.
{"title":"Demand for safe assets and spillovers from the global dollar cycle","authors":"Cían Allen , Rudolfs Bems , Lukas Boer , Racha Moussa","doi":"10.1016/j.jinteco.2026.104223","DOIUrl":"10.1016/j.jinteco.2026.104223","url":null,"abstract":"<div><div>US dollar appreciations can inflict sizable negative cross-border spillovers. We investigate such spillovers from flight-to-safety shocks and the accompanying “global dollar cycle”. Our results show that negative real sector spillovers from US dollar appreciations fall disproportionately on emerging markets. In contrast, effects on advanced economies are small and short-lived. Emerging market commodity exporters historically experienced larger negative spillovers than commodity importers, reflecting a strong negative link between the US dollar and commodity prices. In terms of policies, more anchored inflation expectations can mitigate the initial negative spillovers, while more flexible exchange rates can speed up the subsequent economic recovery.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"160 ","pages":"Article 104223"},"PeriodicalIF":4.0,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147397617","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-01-26DOI: 10.1016/j.jinteco.2026.104221
Yichuan Hu , Chang Li , Shu Lin
We study how two significant conflicts between China and the U.S.—the Korean War and the current trade war—affect global supply chains. Using hand-collected data, we find that the death toll from the Korean War in a chairperson's city of origin strongly influences Chinese firms' selection of U.S. suppliers today. Moreover, the current trade tensions reactivate memories of wartime trauma, significantly amplifying their negative effects. We identify two key mechanisms driving this change: Chinese retaliatory tariffs and increased media coverage of the Korean War within China. A variety of empirical tests suggest that our findings are causal and are not a result of U.S. suppliers' choice.
{"title":"Historical military conflict, current trade tensions, and global supply chains","authors":"Yichuan Hu , Chang Li , Shu Lin","doi":"10.1016/j.jinteco.2026.104221","DOIUrl":"10.1016/j.jinteco.2026.104221","url":null,"abstract":"<div><div>We study how two significant conflicts between China and the U.S.—the Korean War and the current trade war—affect global supply chains. Using hand-collected data, we find that the death toll from the Korean War in a chairperson's city of origin strongly influences Chinese firms' selection of U.S. suppliers today. Moreover, the current trade tensions reactivate memories of wartime trauma, significantly amplifying their negative effects. We identify two key mechanisms driving this change: Chinese retaliatory tariffs and increased media coverage of the Korean War within China. A variety of empirical tests suggest that our findings are causal and are not a result of U.S. suppliers' choice.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"160 ","pages":"Article 104221"},"PeriodicalIF":4.0,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146078891","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-02-06DOI: 10.1016/j.jinteco.2026.104228
Mathilde Le Moigne , Simon Lepot , Marcos Ritel , Dora Simon
We use a quantitative international trade model with climate policies to explore the distributional effects of carbon pricing across countries. Our analysis addresses two key questions facing global climate action: which countries bear the greatest burden of climate policies, and how these policies can be designed to ensure fairness. We present three main findings. First, efficient climate policies that disregard distributional concerns significantly exacerbate between-country inequality. Second, equity can be achieved alongside efficiency when climate policies are complemented by economically feasible international transfers, either equalizing carbon tax costs or accounting for historical emissions, with minimal economic impact on high-income countries. Third, carbon tax schemes with heterogeneous pricing – featuring lower rates for low- and middle-income countries – do not necessarily result in fairer outcomes.
{"title":"The distributional effects of carbon pricing across countries","authors":"Mathilde Le Moigne , Simon Lepot , Marcos Ritel , Dora Simon","doi":"10.1016/j.jinteco.2026.104228","DOIUrl":"10.1016/j.jinteco.2026.104228","url":null,"abstract":"<div><div>We use a quantitative international trade model with climate policies to explore the distributional effects of carbon pricing across countries. Our analysis addresses two key questions facing global climate action: which countries bear the greatest burden of climate policies, and how these policies can be designed to ensure fairness. We present three main findings. First, efficient climate policies that disregard distributional concerns significantly exacerbate between-country inequality. Second, equity can be achieved alongside efficiency when climate policies are complemented by economically feasible international transfers, either equalizing carbon tax costs or accounting for historical emissions, with minimal economic impact on high-income countries. Third, carbon tax schemes with heterogeneous pricing – featuring lower rates for low- and middle-income countries – do not necessarily result in fairer outcomes.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"160 ","pages":"Article 104228"},"PeriodicalIF":4.0,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147397620","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Estimates of Grossman and Helpman (1994) Protection For Sale (PFS) model yield unrealistically high estimates of the weight governments put on social welfare relative to lobbying contributions. Estimates of the former are often close to 1. We argue this is due to the level of aggregation at which the model is estimated. While protection is determined at the tariff line level, production data are only available at the industry level. Using a new production dataset at the tariff level, our estimates show that the average weight on social welfare in a sample of 142 countries declines by 77 percent.
{"title":"Protection for sale without aggregation bias","authors":"Jean-Marc Solleder , Fulvio Silvy , Marcelo Olarreaga","doi":"10.1016/j.jinteco.2026.104222","DOIUrl":"10.1016/j.jinteco.2026.104222","url":null,"abstract":"<div><div>Estimates of Grossman and Helpman (1994) <em>Protection For Sale</em> (PFS) model yield unrealistically high estimates of the weight governments put on social welfare relative to lobbying contributions. Estimates of the former are often close to 1. We argue this is due to the level of aggregation at which the model is estimated. While protection is determined at the tariff line level, production data are only available at the industry level. Using a new production dataset at the tariff level, our estimates show that the average weight on social welfare in a sample of 142 countries declines by 77 percent.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"160 ","pages":"Article 104222"},"PeriodicalIF":4.0,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146078892","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-01-02DOI: 10.1016/j.jinteco.2025.104210
Ziwei Mei , Liugang Sheng , Zhentao Shi
Panel local projection (LP) with fixed-effects (FE) is widely adopted for evaluating the economic consequences of financial crises across countries. This paper highlights a fundamental methodological issue: the presence of the Nickell bias in the panel FE estimator due to inherent dynamic structures of predictive specifications, even if the regressors have no lagged dependent variables. The Nickell bias invalidates the standard inferential procedure based on the -statistic. We propose a split-panel jackknife (SPJ) estimator as a simple, easy-to-implement, and yet effective solution to eliminate the bias and restore valid statistical inference. We revisit four influential empirical studies on the impact of financial crises, and find that the FE method underestimates the economic losses of financial crises relative to the SPJ estimates. Replication files are available at https://metricshilab.github.io/panel-lp-replication/, with links to R and Stata packages.
{"title":"Nickell bias in panel local projection: Financial crises are worse than you think","authors":"Ziwei Mei , Liugang Sheng , Zhentao Shi","doi":"10.1016/j.jinteco.2025.104210","DOIUrl":"10.1016/j.jinteco.2025.104210","url":null,"abstract":"<div><div>Panel local projection (LP) with fixed-effects (FE) is widely adopted for evaluating the economic consequences of financial crises across countries. This paper highlights a fundamental methodological issue: the presence of the Nickell bias in the panel FE estimator due to inherent dynamic structures of predictive specifications, even if the regressors have no lagged dependent variables. The Nickell bias invalidates the standard inferential procedure based on the <span><math><mi>t</mi></math></span>-statistic. We propose a split-panel jackknife (SPJ) estimator as a simple, easy-to-implement, and yet effective solution to eliminate the bias and restore valid statistical inference. We revisit four influential empirical studies on the impact of financial crises, and find that the FE method underestimates the economic losses of financial crises relative to the SPJ estimates. Replication files are available at <span><span>https://metricshilab.github.io/panel-lp-replication/</span><svg><path></path></svg></span>, with links to R and Stata packages.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"160 ","pages":"Article 104210"},"PeriodicalIF":4.0,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145903897","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-02-18DOI: 10.1016/j.jinteco.2026.104232
Ilhwan Song , Gabriel Mihalache
Private agents do not internalize the impact of their investment decisions on the sovereign’s bond prices and default risk. Therefore, a standard externality argument implies that investment is insufficient and that a subsidy can improve welfare, if financed by non-distortionary means. We contrast this logic with a countervailing force. When the sovereign is impatient relative to households, plausibly due to political economy factors, it finds laissez-faire capital accumulation excessive and might prefer instead to tax it. We embed both mechanisms in a sovereign default model with decentralized capital investment, long-term public debt, and stochastic trend growth, calibrated to salient features of the Spanish economy. We find that the impatience channel dominates quantitatively, to such an extent that laissez-faire is preferable to the government’s ideal fiscal policy, based on households’ welfare.
{"title":"Insufficient or excessive investment under sovereign default risk","authors":"Ilhwan Song , Gabriel Mihalache","doi":"10.1016/j.jinteco.2026.104232","DOIUrl":"10.1016/j.jinteco.2026.104232","url":null,"abstract":"<div><div>Private agents do not internalize the impact of their investment decisions on the sovereign’s bond prices and default risk. Therefore, a standard externality argument implies that investment is insufficient and that a subsidy can improve welfare, if financed by non-distortionary means. We contrast this logic with a countervailing force. When the sovereign is impatient relative to households, plausibly due to political economy factors, it finds laissez-faire capital accumulation excessive and might prefer instead to tax it. We embed both mechanisms in a sovereign default model with decentralized capital investment, long-term public debt, and stochastic trend growth, calibrated to salient features of the Spanish economy. We find that the impatience channel dominates quantitatively, to such an extent that laissez-faire is preferable to the government’s ideal fiscal policy, based on households’ welfare.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"160 ","pages":"Article 104232"},"PeriodicalIF":4.0,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147397622","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-01-24DOI: 10.1016/j.jinteco.2026.104224
Donald R. Davis , Eric Mengus , Tomasz K. Michalski
Labor market polarization is among the most important features in recent decades of advanced country labor markets. Yet key spatial aspects of this phenomenon remain under-explored. We develop four key facts that document the universality of polarization across cities, a city-size difference in the shock magnitudes, a skew in the types of middle-paid jobs lost, and the role of polarization in the great urban divergence of skills. Existing theories cannot account for these facts. Hence we develop a parsimonious theoretical account that does so by integrating elements from the literatures on labor market polarization and systems of cities with heterogeneous labor in spatial equilibrium.
{"title":"Labor market polarization and the great urban divergence","authors":"Donald R. Davis , Eric Mengus , Tomasz K. Michalski","doi":"10.1016/j.jinteco.2026.104224","DOIUrl":"10.1016/j.jinteco.2026.104224","url":null,"abstract":"<div><div>Labor market polarization is among the most important features in recent decades of advanced country labor markets. Yet key spatial aspects of this phenomenon remain under-explored. We develop four key facts that document the universality of polarization across cities, a city-size difference in the shock magnitudes, a skew in the types of middle-paid jobs lost, and the role of polarization in the great urban divergence of skills. Existing theories cannot account for these facts. Hence we develop a parsimonious theoretical account that does so by integrating elements from the literatures on labor market polarization and systems of cities with heterogeneous labor in spatial equilibrium.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"160 ","pages":"Article 104224"},"PeriodicalIF":4.0,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146078893","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-02-04DOI: 10.1016/j.jinteco.2026.104229
Trang Hoang, Carter Mix
We use a general equilibrium dynamic trade model to study the effects of the U.S.–China tariff hikes on the global economy. Our model captures key trade patterns since the tariff hikes, such as the pace of the decline in U.S.–China bilateral trade and the reallocation of global imports from the U.S. toward China. The welfare losses from the tariff hikes are much larger in our dynamic model than implied by static trade models. Expectations about the persistence of the tariff hikes shape aggregate dynamics in the short to medium run.
{"title":"Trade wars and rumors of trade wars: The dynamic effects of the U.S.–China tariff hikes","authors":"Trang Hoang, Carter Mix","doi":"10.1016/j.jinteco.2026.104229","DOIUrl":"10.1016/j.jinteco.2026.104229","url":null,"abstract":"<div><div>We use a general equilibrium dynamic trade model to study the effects of the U.S.–China tariff hikes on the global economy. Our model captures key trade patterns since the tariff hikes, such as the pace of the decline in U.S.–China bilateral trade and the reallocation of global imports from the U.S. toward China. The welfare losses from the tariff hikes are much larger in our dynamic model than implied by static trade models. Expectations about the persistence of the tariff hikes shape aggregate dynamics in the short to medium run.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"160 ","pages":"Article 104229"},"PeriodicalIF":4.0,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147397621","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-01-08DOI: 10.1016/j.jinteco.2026.104211
Sarah Oliver
Trade in services is unique from goods trade in that the trade cost associated with services exports depends on whether the service is delivered in-person (via travel of producer or consumer) or remotely (via the internet). Building on the trade-in-task framework of Grossman and Rossi-Hansberg (2008), this paper develops a task-based model of services trade that explains choice of delivering intermediate services tasks to customers in foreign markets either in-person or over the internet. To test the predictions of the empirical model, I isolate average trade costs for 23 U.S. services sectors, and consider the contribution of internet technology, travel costs, and the share of employees in each sector in occupations that can only be performed in-person to total trade costs. I find that U.S. services exporters with a higher concentration of in-person only employees face significantly higher trade costs than those with employees more concentrated in occupations that can be performed online, particularly during the COVID-19 pandemic and for professional services sectors.
{"title":"Services trade and the choice of online versus in-person delivery","authors":"Sarah Oliver","doi":"10.1016/j.jinteco.2026.104211","DOIUrl":"10.1016/j.jinteco.2026.104211","url":null,"abstract":"<div><div>Trade in services is unique from goods trade in that the trade cost associated with services exports depends on whether the service is delivered in-person (via travel of producer or consumer) or remotely (via the internet). Building on the trade-in-task framework of Grossman and Rossi-Hansberg (2008), this paper develops a task-based model of services trade that explains choice of delivering intermediate services tasks to customers in foreign markets either in-person or over the internet. To test the predictions of the empirical model, I isolate average trade costs for 23 U.S. services sectors, and consider the contribution of internet technology, travel costs, and the share of employees in each sector in occupations that can only be performed in-person to total trade costs. I find that U.S. services exporters with a higher concentration of in-person only employees face significantly higher trade costs than those with employees more concentrated in occupations that can be performed online, particularly during the COVID-19 pandemic and for professional services sectors.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"160 ","pages":"Article 104211"},"PeriodicalIF":4.0,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145979953","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-03-01Epub Date: 2026-02-06DOI: 10.1016/j.jinteco.2026.104220
Sang Min Lee
This paper studies how globalization impacts structural transformation from goods to services. I construct a multi-country, multi-sector model in which the transformation occurs through changes in income, prices, comparative advantage, or input-output linkages. I parameterize it with data from 1995 to 2018 for 66 countries covering diverse stages of economic development. Decomposition exercises show that globalization outweighs productivity growth in shaping structural transformation and that globalization’s impact primarily operates through comparative advantage. Counterfactual exercises reveal globalization’s heterogeneous impact on countries’ structural transformation. I characterize the underlying factor behind this result: Globalization affected countries’ transformation to the extent that it altered their comparative advantage. In countries with sector-neutral globalization—where export trade costs relative to import trade costs changed at similar rates for goods and services—comparative advantage and structural transformation were minimally impacted. In countries with sector-biased globalization, the transformation accelerated when the globalization shifted comparative advantage toward services, but decelerated otherwise.
{"title":"Globalization and structural transformation: The role of tradable services","authors":"Sang Min Lee","doi":"10.1016/j.jinteco.2026.104220","DOIUrl":"10.1016/j.jinteco.2026.104220","url":null,"abstract":"<div><div>This paper studies how globalization impacts structural transformation from goods to services. I construct a multi-country, multi-sector model in which the transformation occurs through changes in income, prices, comparative advantage, or input-output linkages. I parameterize it with data from 1995 to 2018 for 66 countries covering diverse stages of economic development. Decomposition exercises show that globalization outweighs productivity growth in shaping structural transformation and that globalization’s impact primarily operates through comparative advantage. Counterfactual exercises reveal globalization’s heterogeneous impact on countries’ structural transformation. I characterize the underlying factor behind this result: Globalization affected countries’ transformation to the extent that it altered their comparative advantage. In countries with sector-neutral globalization—where export trade costs relative to import trade costs changed at similar rates for goods and services—comparative advantage and structural transformation were minimally impacted. In countries with sector-biased globalization, the transformation accelerated when the globalization shifted comparative advantage toward services, but decelerated otherwise.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"160 ","pages":"Article 104220"},"PeriodicalIF":4.0,"publicationDate":"2026-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147397616","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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