Pub 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":"2026-01-26","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 : 2026-01-24DOI: 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":"2026-01-24","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}
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":"2026-01-23","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 : 2026-01-12DOI: 10.1016/j.jinteco.2025.104205
JaeBin Ahn, Chan Kim, Nan Li, Andrea Manera
This paper examines how foreign direct investment (FDI) affects cross-border knowledge diffusion by linking firm-level FDI events to patent citations. We assemble a global panel that merges utility patents with project-level greenfield and M&A investments in 60 countries over two decades. Using a new local-projection difference-in-differences methodology, we find that FDI raises bidirectional citation flows between investor and hosts, with stronger effects for greenfield than for M&A. Spillovers are heterogeneous—larger where host absorptive capacity is higher and where investor–host technologies are closer. At the country–industry level, diffusion extends beyond the targeted sector, propagating to technologically related industries and along production input–output linkages. Mode of entry matters: greenfield projects generate robust intra- and inter-industry diffusion, whereas M&A exhibits limited horizontal effects but notable forward (downstream) spillovers consistent with learning-by-using.
{"title":"Knowledge diffusion through FDI: Worldwide firm-level evidence","authors":"JaeBin Ahn, Chan Kim, Nan Li, Andrea Manera","doi":"10.1016/j.jinteco.2025.104205","DOIUrl":"10.1016/j.jinteco.2025.104205","url":null,"abstract":"<div><div>This paper examines how foreign direct investment (FDI) affects cross-border knowledge diffusion by linking firm-level FDI events to patent citations. We assemble a global panel that merges utility patents with project-level greenfield and M&A investments in 60 countries over two decades. Using a new local-projection difference-in-differences methodology, we find that FDI raises bidirectional citation flows between investor and hosts, with stronger effects for greenfield than for M&A. Spillovers are heterogeneous—larger where host absorptive capacity is higher and where investor–host technologies are closer. At the country–industry level, diffusion extends beyond the targeted sector, propagating to technologically related industries and along production input–output linkages. Mode of entry matters: greenfield projects generate robust intra- and inter-industry diffusion, whereas M&A exhibits limited horizontal effects but notable forward (downstream) spillovers consistent with learning-by-using.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"160 ","pages":"Article 104205"},"PeriodicalIF":4.0,"publicationDate":"2026-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145979952","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 : 2026-01-08DOI: 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":"2026-01-08","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 : 2026-01-02DOI: 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":"2026-01-02","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 : 2026-01-01DOI: 10.1016/j.jinteco.2025.104208
James E. Anderson
Intense US–China commercial rivalry is quantified in this paper with novel non-parametric relative resistance sufficient statistics. China’s manufacturing seller incidence falls (seller price rises) 8.2% yearly as China’s sales share quadruples over 2000-14. US seller incidence rises 6.3% yearly as US sales share halves. A 10% rise in US (China) 2014 sales share reduces seller incidence 10.05% (9.74%) and raises average seller incidence of others. Trade elasticities very close to one fit trade shares to revealed relative resistances. Trade elasticities identified off variation in observable buyer prices or trade costs are biased upward by omitted variation in unobservable buyer frictions.
{"title":"Commercial rivalry as seller incidence shifting: Non-parametric accounting of the China shock","authors":"James E. Anderson","doi":"10.1016/j.jinteco.2025.104208","DOIUrl":"10.1016/j.jinteco.2025.104208","url":null,"abstract":"<div><div>Intense US–China commercial rivalry is quantified in this paper with novel non-parametric relative resistance sufficient statistics. China’s manufacturing seller incidence falls (seller price rises) 8.2% yearly as China’s sales share quadruples over 2000-14. US seller incidence rises 6.3% yearly as US sales share halves. A 10% rise in US (China) 2014 sales share reduces seller incidence 10.05% (9.74%) and raises average seller incidence of others. Trade elasticities very close to one fit trade shares to revealed relative resistances. Trade elasticities identified off variation in observable buyer prices or trade costs are biased upward by omitted variation in unobservable buyer frictions.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"159 ","pages":"Article 104208"},"PeriodicalIF":4.0,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145880567","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 : 2026-01-01DOI: 10.1016/j.jinteco.2025.104209
Ryan B. Edwards
This paper measures the impacts of Indonesia’s palm oil export expansion on district poverty and household expenditure from 2002 to 2015. Identification exploits geographic variation in agro-climatic suitability in a long difference instrumental variable framework. The main result is that a 10 percentage point increase in district area under cultivation for oil palm corresponds to around six percentage points faster poverty reduction and nine percent faster expenditure growth. The expenditure gains are principally explained by rising returns to agricultural labor. I find no evidence of labor reallocation across sectors: new farmland absorbed labor saved from palm adoption. The expansion increased local government revenues, spending and public goods, while increasing deforestation, forest fires, certain health problems and conflict. Indonesian palm oil thus provides a striking modern illustration of some of the trade-offs inherent in large changes in trade and land use.
{"title":"Export agriculture and rural poverty: Evidence from Indonesian palm oil","authors":"Ryan B. Edwards","doi":"10.1016/j.jinteco.2025.104209","DOIUrl":"10.1016/j.jinteco.2025.104209","url":null,"abstract":"<div><div>This paper measures the impacts of Indonesia’s palm oil export expansion on district poverty and household expenditure from 2002 to 2015. Identification exploits geographic variation in agro-climatic suitability in a long difference instrumental variable framework. The main result is that a 10 percentage point increase in district area under cultivation for oil palm corresponds to around six percentage points faster poverty reduction and nine percent faster expenditure growth. The expenditure gains are principally explained by rising returns to agricultural labor. I find no evidence of labor reallocation across sectors: new farmland absorbed labor saved from palm adoption. The expansion increased local government revenues, spending and public goods, while increasing deforestation, forest fires, certain health problems and conflict. Indonesian palm oil thus provides a striking modern illustration of some of the trade-offs inherent in large changes in trade and land use.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"159 ","pages":"Article 104209"},"PeriodicalIF":4.0,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145924515","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 : 2026-01-01DOI: 10.1016/j.jinteco.2025.104206
Xiaohua Bao , Bruce A. Blonigen , Zhi Yu
This paper uses detailed firm–product–country-level export data to examine how an AD action, a very targeted trade policy against a specific product in a specific export destination, affects a multiproduct firm’s price and quantity decisions across its other products and export destinations. We find robust evidence for substantial interdependencies across a multiproduct firm’s products and markets, including a new phenomenon we call within-firm cross-product trade deflection whereby an AD action against one of the firm’s products in one of its export destinations is associated with increased sales of its other products across all markets. These effects are generally stronger for private (versus state-owned) firms and larger firms, and for deflection from a firm’s non-core products to core product. Our highly detailed data and analytical approach allow us to disentangle the extent to which these cross-product effects stem from cost and/or demand interdependencies within the multiproduct firm.
{"title":"Cross-product and cross-market adjustments within multiproduct firms: Evidence from antidumping actions","authors":"Xiaohua Bao , Bruce A. Blonigen , Zhi Yu","doi":"10.1016/j.jinteco.2025.104206","DOIUrl":"10.1016/j.jinteco.2025.104206","url":null,"abstract":"<div><div>This paper uses detailed firm–product–country-level export data to examine how an AD action, a very targeted trade policy against a specific product in a specific export destination, affects a multiproduct firm’s price and quantity decisions across its other products and export destinations. We find robust evidence for substantial interdependencies across a multiproduct firm’s products and markets, including a new phenomenon we call within-firm cross-product trade deflection whereby an AD action against one of the firm’s products in one of its export destinations is associated with increased sales of its other products across all markets. These effects are generally stronger for private (versus state-owned) firms and larger firms, and for deflection from a firm’s non-core products to core product. Our highly detailed data and analytical approach allow us to disentangle the extent to which these cross-product effects stem from cost and/or demand interdependencies within the multiproduct firm.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"159 ","pages":"Article 104206"},"PeriodicalIF":4.0,"publicationDate":"2026-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145880568","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 : 2025-12-17DOI: 10.1016/j.jinteco.2025.104202
Nesma Ali , Joel Stiebale
This paper uses a rich panel dataset of Indian manufacturers to analyze the effects of foreign direct investment (FDI) on domestic firms. Detailed product-level information on prices and quantities allows us to estimate physical productivity and marginal costs. In line with the previous literature, we find little evidence of horizontal spillovers based on commonly used measures of revenue productivity. In contrast, we measure sizable efficiency gains using measures that are not affected by pricing heterogeneity. Our results indicate that domestic firms do benefit from the ability of multinational subsidiaries to produce high-quality products at relatively low cost.
{"title":"Foreign direct investment, prices and efficiency: Evidence from India","authors":"Nesma Ali , Joel Stiebale","doi":"10.1016/j.jinteco.2025.104202","DOIUrl":"10.1016/j.jinteco.2025.104202","url":null,"abstract":"<div><div>This paper uses a rich panel dataset of Indian manufacturers to analyze the effects of foreign direct investment (FDI) on domestic firms. Detailed product-level information on prices and quantities allows us to estimate physical productivity and marginal costs. In line with the previous literature, we find little evidence of horizontal spillovers based on commonly used measures of revenue productivity. In contrast, we measure sizable efficiency gains using measures that are not affected by pricing heterogeneity. Our results indicate that domestic firms do benefit from the ability of multinational subsidiaries to produce high-quality products at relatively low cost.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"159 ","pages":"Article 104202"},"PeriodicalIF":4.0,"publicationDate":"2025-12-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145836616","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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