Pub Date : 2025-03-19DOI: 10.1016/j.jinteco.2025.104064
Mélina London , Maéva Silvestrini
This paper provides empirical evidence on the impact of US monetary policy surprises on firm-to-firm trade credit in emerging markets, using a proprietary firm-level database. We show that trade credit acts as a buffer against the adverse effects of US monetary tightening, which, by constraining global financial conditions, increases reliance on trade credit as an alternative financing source. This effect is more pronounced for buyers with poor credit quality, who are primarily affected when financial conditions tighten. This later effect only exists in pre-existing relationships, where trust can be more readily established, compared to new partnerships. Given the widespread use of trade credit in emerging markets, this buffering role is crucial for mitigating financial pressures in these economies.
{"title":"US monetary policy spillovers to emerging markets: The role of trade credit","authors":"Mélina London , Maéva Silvestrini","doi":"10.1016/j.jinteco.2025.104064","DOIUrl":"10.1016/j.jinteco.2025.104064","url":null,"abstract":"<div><div>This paper provides empirical evidence on the impact of US monetary policy surprises on firm-to-firm trade credit in emerging markets, using a proprietary firm-level database. We show that trade credit acts as a buffer against the adverse effects of US monetary tightening, which, by constraining global financial conditions, increases reliance on trade credit as an alternative financing source. This effect is more pronounced for buyers with poor credit quality, who are primarily affected when financial conditions tighten. This later effect only exists in pre-existing relationships, where trust can be more readily established, compared to new partnerships. Given the widespread use of trade credit in emerging markets, this buffering role is crucial for mitigating financial pressures in these economies.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104064"},"PeriodicalIF":3.8,"publicationDate":"2025-03-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143682278","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-18DOI: 10.1016/j.jinteco.2025.104081
Volodymyr Lugovskyy , Alexandre Skiba , David Terner
We assess the expected impact of the upcoming International Maritime Organization’s CO emissions cap on global maritime shipping. Using detailed data on U.S. imports—covering vessels, routes, emissions, and trade—we estimate a model that allows for substitution between maritime, air, and land transport. Our findings show that the cap will drive a shift to more carbon-intensive air and land transport, leading to an overall increase in transportation-related CO emissions in both the short- and long-run. Additionally, it will cause significant welfare losses. Our findings support a case for more efficient alternative policy options.
{"title":"Unintended consequences of environmental regulation of maritime shipping: Carbon leakage to air shipping","authors":"Volodymyr Lugovskyy , Alexandre Skiba , David Terner","doi":"10.1016/j.jinteco.2025.104081","DOIUrl":"10.1016/j.jinteco.2025.104081","url":null,"abstract":"<div><div>We assess the expected impact of the upcoming International Maritime Organization’s CO<span><math><msub><mrow></mrow><mrow><mn>2</mn></mrow></msub></math></span> emissions cap on global maritime shipping. Using detailed data on U.S. imports—covering vessels, routes, emissions, and trade—we estimate a model that allows for substitution between maritime, air, and land transport. Our findings show that the cap will drive a shift to more carbon-intensive air and land transport, leading to an overall increase in transportation-related CO<span><math><msub><mrow></mrow><mrow><mn>2</mn></mrow></msub></math></span> emissions in both the short- and long-run. Additionally, it will cause significant welfare losses. Our findings support a case for more efficient alternative policy options.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104081"},"PeriodicalIF":3.8,"publicationDate":"2025-03-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143644220","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 : 2025-03-18DOI: 10.1016/j.jinteco.2025.104077
Elton Beqiraj , Qingqing Cao , Ralph De Haas , Raoul Minetti
We study how the organizational structure of global banks shapes their impact on macroeconomic stability. We develop a two-country dynamic general equilibrium model in which global banks can either delegate loan monitoring to local affiliates or exert control over affiliates’ monitoring activities, hiring loan officers centrally. Moreover, we allow global banks to transfer liquidity between parents and local affiliates through internal capital markets. We show that global banks with a centralized business model (with loan officers hired centrally by the parent and an intense use of internal capital markets) help mitigate the impact of financial shocks on the host economy. However, they may become a destabilizing factor following real shocks that hit the quality of firms’ investments. The model predictions are consistent with bank-level evidence from a large set of countries that host global bank affiliates.
{"title":"Global banking and macroeconomic stability. Liquidity, control, and monitoring","authors":"Elton Beqiraj , Qingqing Cao , Ralph De Haas , Raoul Minetti","doi":"10.1016/j.jinteco.2025.104077","DOIUrl":"10.1016/j.jinteco.2025.104077","url":null,"abstract":"<div><div>We study how the organizational structure of global banks shapes their impact on macroeconomic stability. We develop a two-country dynamic general equilibrium model in which global banks can either delegate loan monitoring to local affiliates or exert control over affiliates’ monitoring activities, hiring loan officers centrally. Moreover, we allow global banks to transfer liquidity between parents and local affiliates through internal capital markets. We show that global banks with a centralized business model (with loan officers hired centrally by the parent and an intense use of internal capital markets) help mitigate the impact of financial shocks on the host economy. However, they may become a destabilizing factor following real shocks that hit the quality of firms’ investments. The model predictions are consistent with bank-level evidence from a large set of countries that host global bank affiliates.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104077"},"PeriodicalIF":3.8,"publicationDate":"2025-03-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143644221","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 : 2025-03-17DOI: 10.1016/j.jinteco.2025.104063
Callum Jones , Pau Rabanal
We use a two-country model with financial frictions and fiscal policy to study the role that changes in credit and fiscal positions play in explaining current account fluctuations. We estimate the model using data for the U.S. and a “rest-of-the-world” aggregate. We find that about 32 percent of U.S. current account balance fluctuations are due to domestic credit shocks, while fiscal shocks explain about 21 percent. Simple macroprudential rules that react to domestic credit conditions and countercyclical fiscal policy can help reduce global imbalances, and lead to a smaller and less volatile U.S. current account deficit.
{"title":"Credit Cycles, fiscal policy, and global imbalances","authors":"Callum Jones , Pau Rabanal","doi":"10.1016/j.jinteco.2025.104063","DOIUrl":"10.1016/j.jinteco.2025.104063","url":null,"abstract":"<div><div>We use a two-country model with financial frictions and fiscal policy to study the role that changes in credit and fiscal positions play in explaining current account fluctuations. We estimate the model using data for the U.S. and a “rest-of-the-world” aggregate. We find that about 32 percent of U.S. current account balance fluctuations are due to domestic credit shocks, while fiscal shocks explain about 21 percent. Simple macroprudential rules that react to domestic credit conditions and countercyclical fiscal policy can help reduce global imbalances, and lead to a smaller and less volatile U.S. current account deficit.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104063"},"PeriodicalIF":3.8,"publicationDate":"2025-03-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143738782","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 : 2025-03-13DOI: 10.1016/j.jinteco.2025.104078
Céline Poilly , Fabien Tripier
Higher trade policy uncertainty has recessionary effects on U.S. states. To demonstrate this, we first build a novel empirical measure of regional trade policy uncertainty based on the volatility of national import tariffs at the sectoral level and on the sectoral composition of imports in U.S. states. We find that a state that is more exposed to an unanticipated increase in tariff volatility suffers from a larger drop in real GDP and employment than the average U.S. state. We then build a two-region open-economy model and find that the precautionary saving behavior is the main driver of the recession, although this effect is reinforced by high exposure to import tariffs. The feedback effect resulting from trade connections with the Foreign country primarily influences the persistence of these dynamics.
{"title":"Regional trade policy uncertainty","authors":"Céline Poilly , Fabien Tripier","doi":"10.1016/j.jinteco.2025.104078","DOIUrl":"10.1016/j.jinteco.2025.104078","url":null,"abstract":"<div><div>Higher trade policy uncertainty has recessionary effects on U.S. states. To demonstrate this, we first build a novel empirical measure of regional trade policy uncertainty based on the volatility of national import tariffs at the sectoral level and on the sectoral composition of imports in U.S. states. We find that a state that is more exposed to an unanticipated increase in tariff volatility suffers from a larger drop in real GDP and employment than the average U.S. state. We then build a two-region open-economy model and find that the precautionary saving behavior is the main driver of the recession, although this effect is reinforced by high exposure to import tariffs. The feedback effect resulting from trade connections with the Foreign country primarily influences the persistence of these dynamics.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104078"},"PeriodicalIF":3.8,"publicationDate":"2025-03-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143644219","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 : 2025-03-11DOI: 10.1016/j.jinteco.2025.104067
Martina Miotto , Luigi Pascali
The chronometer, one of the greatest inventions of the modern era, allowed for the first time for the precise measurement of longitude at sea. We examine the impact of this innovation on navigation and urbanization. Our identification strategy leverages the fact that the navigational benefits provided by the chronometer varied across different sea regions depending on the prevailing local weather conditions. Utilizing high-resolution data on climate, ship routes, and urbanization, we argue that the chronometer significantly altered transoceanic sailing routes. This, in turn, had profound effects on the expansion of the British Empire and the global distribution of cities and populations outside Europe.
{"title":"Solving the longitude puzzle: A story of clocks, ships and cities","authors":"Martina Miotto , Luigi Pascali","doi":"10.1016/j.jinteco.2025.104067","DOIUrl":"10.1016/j.jinteco.2025.104067","url":null,"abstract":"<div><div>The chronometer, one of the greatest inventions of the modern era, allowed for the first time for the precise measurement of longitude at sea. We examine the impact of this innovation on navigation and urbanization. Our identification strategy leverages the fact that the navigational benefits provided by the chronometer varied across different sea regions depending on the prevailing local weather conditions. Utilizing high-resolution data on climate, ship routes, and urbanization, we argue that the chronometer significantly altered transoceanic sailing routes. This, in turn, had profound effects on the expansion of the British Empire and the global distribution of cities and populations outside Europe.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104067"},"PeriodicalIF":3.8,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143682277","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-11DOI: 10.1016/j.jinteco.2025.104076
Sushant Acharya , Edouard Challe
We study optimal monetary policy in a tractable Small Open Economy Heterogeneous-Agent New Keynesian (SOE-HANK) model in which households face uninsured idiosyncratic risk and unequal bond-market access. We derive conditions under which optimal policy in our SOE-HANK economy entails domestic producer price stability, extending the ”open-economy divine coincidence” result of Galí and Monacelli (2005) beyond the Representative-Agent benchmark (SOE-RANK). Away from those conditions, inefficient fluctuations in consumption inequality generate monetary policy tradeoffs. Under plausible calibrations for the trade elasticities, the elasticity of intertemporal substitution, and the cyclicality of income risk, the central bank stabilizes output and the exchange rate more than in SOE-RANK.
{"title":"Inequality and optimal monetary policy in the open economy","authors":"Sushant Acharya , Edouard Challe","doi":"10.1016/j.jinteco.2025.104076","DOIUrl":"10.1016/j.jinteco.2025.104076","url":null,"abstract":"<div><div>We study optimal monetary policy in a tractable Small Open Economy Heterogeneous-Agent New Keynesian (SOE-HANK) model in which households face uninsured idiosyncratic risk and unequal bond-market access. We derive conditions under which optimal policy in our SOE-HANK economy entails domestic producer price stability, extending the ”open-economy divine coincidence” result of Galí and Monacelli (2005) beyond the Representative-Agent benchmark (SOE-RANK). Away from those conditions, inefficient fluctuations in consumption inequality generate monetary policy tradeoffs. Under plausible calibrations for the trade elasticities, the elasticity of intertemporal substitution, and the cyclicality of income risk, the central bank stabilizes output and the exchange rate more than in SOE-RANK.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104076"},"PeriodicalIF":3.8,"publicationDate":"2025-03-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143628658","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-03-10DOI: 10.1016/j.jinteco.2025.104066
George Alessandria , Shafaat Yar Khan , Armen Khederlarian , Kim J. Ruhl , Joseph B. Steinberg
We model trade policy as a Markov process. Using a dynamic exporting model, we estimate how expectations about U.S. tariffs on China have changed around the U.S.-China trade war. We find (i) no increase in the likelihood of a trade war before 2018; (ii) the trade war was initially expected to end quickly but its expected duration grew substantially after 2020; and (iii) the trade war reduced the likelihood that China would face Non-Normal Trade Relations tariffs in the future. Our findings imply the expected mean future U.S. tariff on China rose more under President Biden than under President Trump.
{"title":"Trade war and peace: U.S.-China trade and tariff risk from 2015–2050","authors":"George Alessandria , Shafaat Yar Khan , Armen Khederlarian , Kim J. Ruhl , Joseph B. Steinberg","doi":"10.1016/j.jinteco.2025.104066","DOIUrl":"10.1016/j.jinteco.2025.104066","url":null,"abstract":"<div><div>We model trade policy as a Markov process. Using a dynamic exporting model, we estimate how expectations about U.S. tariffs on China have changed around the U.S.-China trade war. We find (i) no increase in the likelihood of a trade war before 2018; (ii) the trade war was initially expected to end quickly but its expected duration grew substantially after 2020; and (iii) the trade war reduced the likelihood that China would face Non-Normal Trade Relations tariffs in the future. Our findings imply the expected mean future U.S. tariff on China rose more under President Biden than under President Trump.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104066"},"PeriodicalIF":3.8,"publicationDate":"2025-03-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143629523","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 : 2025-03-06DOI: 10.1016/j.jinteco.2025.104075
Hamid Noghanibehambari
This paper investigates the relationship between regional exposure to trade liberalization under the North American Free Trade Agreement (NAFTA) and infant health outcomes in the U.S., focusing on differences in impact across areas with varying levels of import competition. I explore this question by implementing event studies and difference-in-difference regressions that compare birth outcomes of infants born in different years relative to NAFTA and localities with differential exposure to import competition. Using more than 88 M birth records of Natality data, I find significant negative effects on a wide range of birth outcomes. The adverse effects are much larger for infants at the lower tails of birth weight and gestational age distribution. Additional analyses using a wide range of alternative data sources suggest several potential pathways, including reductions in income-employment, decreases in housing wealth, lower health care utilization, lower health insurance use, and lower-quality health insurance.
{"title":"Revealed comparative disadvantage of infants: Exposure to NAFTA and birth outcomes","authors":"Hamid Noghanibehambari","doi":"10.1016/j.jinteco.2025.104075","DOIUrl":"10.1016/j.jinteco.2025.104075","url":null,"abstract":"<div><div>This paper investigates the relationship between regional exposure to trade liberalization under the North American Free Trade Agreement (NAFTA) and infant health outcomes in the U.S., focusing on differences in impact across areas with varying levels of import competition. I explore this question by implementing event studies and difference-in-difference regressions that compare birth outcomes of infants born in different years relative to NAFTA and localities with differential exposure to import competition. Using more than 88 M birth records of Natality data, I find significant negative effects on a wide range of birth outcomes. The adverse effects are much larger for infants at the lower tails of birth weight and gestational age distribution. Additional analyses using a wide range of alternative data sources suggest several potential pathways, including reductions in income-employment, decreases in housing wealth, lower health care utilization, lower health insurance use, and lower-quality health insurance.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104075"},"PeriodicalIF":3.8,"publicationDate":"2025-03-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143593103","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 : 2025-03-02DOI: 10.1016/j.jinteco.2025.104068
Andreas Fuchs , Lennart Kaplan , Krisztina Kis-Katos , Sebastian Leue , Felix Turbanisch , Feicheng Wang
The COVID-19 pandemic dramatically heightened global demand for critical medical goods, with China being a key supplier. This paper examines the political factors that eased global access to face masks, a vital product during the initial phase of the pandemic. Employing a triple difference-in-differences event study framework, we compare the export dynamics of face masks with those of similar products. Our findings indicate that face mask prices surged after the outbreak of the pandemic, and China’s exports increased in response. Amid global shortages, political alignment at the national and subnational levels, particularly through political ties with Chinese provinces, played a significant role in driving the increase in China’s face mask exports to partner countries. These political connections contributed to export growth at both the extensive and intensive margins. Moreover, sister city relationships appear to have assisted in mitigating the early price increases.
{"title":"Mask wars: Sourcing a critical medical product from China in times of COVID-19","authors":"Andreas Fuchs , Lennart Kaplan , Krisztina Kis-Katos , Sebastian Leue , Felix Turbanisch , Feicheng Wang","doi":"10.1016/j.jinteco.2025.104068","DOIUrl":"10.1016/j.jinteco.2025.104068","url":null,"abstract":"<div><div>The COVID-19 pandemic dramatically heightened global demand for critical medical goods, with China being a key supplier. This paper examines the political factors that eased global access to face masks, a vital product during the initial phase of the pandemic. Employing a triple difference-in-differences event study framework, we compare the export dynamics of face masks with those of similar products. Our findings indicate that face mask prices surged after the outbreak of the pandemic, and China’s exports increased in response. Amid global shortages, political alignment at the national and subnational levels, particularly through political ties with Chinese provinces, played a significant role in driving the increase in China’s face mask exports to partner countries. These political connections contributed to export growth at both the extensive and intensive margins. Moreover, sister city relationships appear to have assisted in mitigating the early price increases.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104068"},"PeriodicalIF":3.8,"publicationDate":"2025-03-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143579759","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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