Pub Date : 2025-07-01DOI: 10.1016/j.jinteco.2025.104133
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":"Reprint of: Global banking and macroeconomic stability. Liquidity, control, and monitoring","authors":"Elton Beqiraj , Qingqing Cao , Ralph De Haas , Raoul Minetti","doi":"10.1016/j.jinteco.2025.104133","DOIUrl":"10.1016/j.jinteco.2025.104133","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":"156 ","pages":"Article 104133"},"PeriodicalIF":4.0,"publicationDate":"2025-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144889622","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 : 2025-07-01DOI: 10.1016/j.jinteco.2025.104134
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":"Reprint of: Regional trade policy uncertainty","authors":"Céline Poilly , Fabien Tripier","doi":"10.1016/j.jinteco.2025.104134","DOIUrl":"10.1016/j.jinteco.2025.104134","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":"156 ","pages":"Article 104134"},"PeriodicalIF":4.0,"publicationDate":"2025-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144889623","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 : 2025-07-01DOI: 10.1016/j.jinteco.2025.104104
Miguel Acosta-Henao , Laura Alfaro , Andrés Fernández
With a new quarterly dataset on the intensive margin of priced-based capital controls, complemented with extensive measures (restrictions, prohibitions, and authorizations) constructed using text analysis, we document that capital controls are “sticky”. Changes to price-based controls do not occur frequently; and when they do, they display high autocorrelation. Extensive measures also show considerable persistence. We then augment a model of capital controls relying on pecuniary externalities with an cost of implementing such policies, and illustrate how this friction goes a long way toward bringing the model closer to the data. When the extended model is calibrated to the countries in the new dataset, we find that the size of these costs is large, substantially reducing the welfare-enhancing effects of capital controls in the frictionless Ramsey benchmark without costs. This calls for a richer set of policy constraints when modeling the optimal use of capital controls.
{"title":"Sticky capital controls","authors":"Miguel Acosta-Henao , Laura Alfaro , Andrés Fernández","doi":"10.1016/j.jinteco.2025.104104","DOIUrl":"10.1016/j.jinteco.2025.104104","url":null,"abstract":"<div><div>With a new quarterly dataset on the intensive margin of priced-based capital controls, complemented with extensive measures (restrictions, prohibitions, and authorizations) constructed using text analysis, we document that capital controls are “sticky”. Changes to price-based controls do not occur frequently; and when they do, they display high autocorrelation. Extensive measures also show considerable persistence. We then augment a model of capital controls relying on pecuniary externalities with an <span><math><mrow><mo>(</mo><mi>S</mi><mo>,</mo><mi>s</mi><mo>)</mo></mrow></math></span> cost of implementing such policies, and illustrate how this friction goes a long way toward bringing the model closer to the data. When the extended model is calibrated to the countries in the new dataset, we find that the size of these costs is large, substantially reducing the welfare-enhancing effects of capital controls in the frictionless Ramsey benchmark without <span><math><mrow><mo>(</mo><mi>S</mi><mo>,</mo><mi>s</mi><mo>)</mo></mrow></math></span> costs. This calls for a richer set of policy constraints when modeling the optimal use of capital controls.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104104"},"PeriodicalIF":3.8,"publicationDate":"2025-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144563995","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 : 2025-06-28DOI: 10.1016/j.jinteco.2025.104127
Carlos Carvalho , Andrea Ferrero , Felipe Mazin , Fernanda Nechio
We explore implications of demographic trends for real interest rates across countries and over time in a tractable multicountry model with imperfect capital mobility. We calibrate it to examine how the interaction of international financial integration and both domestic and foreign demographics shapes low-frequency movements in a country’s real rate. In more financially integrated countries, real rates are more sensitive to global developments than to domestic factors. We estimate panel error-correction models relating real rates to various drivers, imposing some structure informed by the model. Empirical results confirm global factors and domestic demographics are robust determinants of real rates. Alternative specifications highlight the importance of accounting for time-varying financial integration and a broad set of real rate drivers. Both model and empirical results suggest demographic trends explain a meaningful share of the global decline in real rates. Given projections, demographics should continue to exert downward pressure on real rates.
{"title":"Demographics and real interest rates across countries and over time","authors":"Carlos Carvalho , Andrea Ferrero , Felipe Mazin , Fernanda Nechio","doi":"10.1016/j.jinteco.2025.104127","DOIUrl":"10.1016/j.jinteco.2025.104127","url":null,"abstract":"<div><div>We explore implications of demographic trends for real interest rates across countries and over time in a tractable multicountry model with imperfect capital mobility. We calibrate it to examine how the interaction of international financial integration and both domestic and foreign demographics shapes low-frequency movements in a country’s real rate. In more financially integrated countries, real rates are more sensitive to global developments than to domestic factors. We estimate panel error-correction models relating real rates to various drivers, imposing some structure informed by the model. Empirical results confirm global factors and domestic demographics are robust determinants of real rates. Alternative specifications highlight the importance of accounting for time-varying financial integration and a broad set of real rate drivers. Both model and empirical results suggest demographic trends explain a meaningful share of the global decline in real rates. Given projections, demographics should continue to exert downward pressure on real rates.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104127"},"PeriodicalIF":3.8,"publicationDate":"2025-06-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144549438","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 : 2025-06-27DOI: 10.1016/j.jinteco.2025.104126
Jean Imbs , Laurent Pauwels
We introduce a model-based approximation for assessing foreign exposure via direct and indirect trade. In the model, exposure can be approximated by the fraction of production sold abroad, either directly or indirectly. Simulations show that this ratio accurately reflects the responses of value added to foreign supply shocks across most of the parameter space. It also effectively captures the responses of value added to foreign demand or trade shocks for a more restricted range of parameters. Conversely, other well-known metrics of foreign exposure do not perform well in the simulations. Data show that our measure of foreign exposure correlates significantly with various measures of economic activity, even in service sectors generally thought to be insulated from foreign influences. In contrast, these correlations are either insignificant or incorrectly signed when alternative measures of foreign exposure are used.
{"title":"Measuring foreign exposure","authors":"Jean Imbs , Laurent Pauwels","doi":"10.1016/j.jinteco.2025.104126","DOIUrl":"10.1016/j.jinteco.2025.104126","url":null,"abstract":"<div><div>We introduce a model-based approximation for assessing foreign exposure via direct and indirect trade. In the model, exposure can be approximated by the fraction of production sold abroad, either directly or indirectly. Simulations show that this ratio accurately reflects the responses of value added to foreign supply shocks across most of the parameter space. It also effectively captures the responses of value added to foreign demand or trade shocks for a more restricted range of parameters. Conversely, other well-known metrics of foreign exposure do not perform well in the simulations. Data show that our measure of foreign exposure correlates significantly with various measures of economic activity, even in service sectors generally thought to be insulated from foreign influences. In contrast, these correlations are either insignificant or incorrectly signed when alternative measures of foreign exposure are used.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104126"},"PeriodicalIF":3.8,"publicationDate":"2025-06-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144587840","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 : 2025-06-27DOI: 10.1016/j.jinteco.2025.104122
Timothy Meyer
U.S. equity outperformance and sustained dollar appreciation have led to large valuation gains for the rest of the world on the U.S. external position. I construct their global distribution, carefully accounting for the role of tax havens. Valuation gains are concentrated and large in developed countries, while developing countries have been mostly bypassed. To assess the welfare implications of these capital gains, I adopt a sufficient statistics approach. In contrast to the large wealth changes, most countries so far did not benefit much in welfare terms. This is because they did not rebalance their portfolios and realize their gains. In contrast, direct welfare effects from the dollar appreciation on import and export prices are an order of magnitude larger.
{"title":"Asset price changes, external wealth and global welfare","authors":"Timothy Meyer","doi":"10.1016/j.jinteco.2025.104122","DOIUrl":"10.1016/j.jinteco.2025.104122","url":null,"abstract":"<div><div>U.S. equity outperformance and sustained dollar appreciation have led to large valuation gains for the rest of the world on the U.S. external position. I construct their global distribution, carefully accounting for the role of tax havens. Valuation gains are concentrated and large in developed countries, while developing countries have been mostly bypassed. To assess the welfare implications of these capital gains, I adopt a sufficient statistics approach. In contrast to the large wealth changes, most countries so far did not benefit much in welfare terms. This is because they did not rebalance their portfolios and realize their gains. In contrast, direct welfare effects from the dollar appreciation on import and export prices are an order of magnitude larger.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104122"},"PeriodicalIF":3.8,"publicationDate":"2025-06-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144523444","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 : 2025-06-25DOI: 10.1016/j.jinteco.2025.104123
Shumin Qiu , Claudia Steinwender , Pierre Azoulay
We investigate the phenomenon of home bias in scientific citations, where researchers disproportionately cite work from their own country. We develop a benchmark for expected citations based on the relative size of countries, defining home bias as deviations from this norm. Our findings reveal that China exhibits the largest home bias across all major countries and in nearly all scientific fields studied. This stands in contrast to the pattern of home bias for China’s trade in goods and services, where China does not stand out from most industrialized countries. After adjusting citation counts for home bias, we demonstrate that China’s apparent rise in citation rankings is overstated. Our adjusted ranking places China fourth globally, behind the US, the UK, and Germany, tempering the perception of China’s scientific dominance.
{"title":"Paper tiger? Chinese science and home bias in citations","authors":"Shumin Qiu , Claudia Steinwender , Pierre Azoulay","doi":"10.1016/j.jinteco.2025.104123","DOIUrl":"10.1016/j.jinteco.2025.104123","url":null,"abstract":"<div><div>We investigate the phenomenon of home bias in scientific citations, where researchers disproportionately cite work from their own country. We develop a benchmark for expected citations based on the relative size of countries, defining home bias as deviations from this norm. Our findings reveal that China exhibits the largest home bias across all major countries and in nearly all scientific fields studied. This stands in contrast to the pattern of home bias for China’s trade in goods and services, where China does not stand out from most industrialized countries. After adjusting citation counts for home bias, we demonstrate that China’s apparent rise in citation rankings is overstated. Our adjusted ranking places China fourth globally, behind the US, the UK, and Germany, tempering the perception of China’s scientific dominance.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104123"},"PeriodicalIF":3.8,"publicationDate":"2025-06-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144518013","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 : 2025-06-21DOI: 10.1016/j.jinteco.2025.104118
Bulent Guler , Yasin Kürşat Önder , Temel Taskin
This paper studies debt and default dynamics under alternative disclosure arrangements in a sovereign default model. The government can access both observable and hidden debt. We show that when debt is not fully disclosed, the government does not internalize the full effects of hidden debt choices on bond prices, thereby reducing the cost of holding hidden debt. We find that switching to a full disclosure regime shifts the portfolio from hidden to observable debt, exacerbating the debt dilution problem. Thus, contrary to conventional wisdom, this switch generates welfare losses.
{"title":"Sovereign Debt Disclosure","authors":"Bulent Guler , Yasin Kürşat Önder , Temel Taskin","doi":"10.1016/j.jinteco.2025.104118","DOIUrl":"10.1016/j.jinteco.2025.104118","url":null,"abstract":"<div><div>This paper studies debt and default dynamics under alternative disclosure arrangements in a sovereign default model. The government can access both observable and hidden debt. We show that when debt is not fully disclosed, the government does not internalize the full effects of hidden debt choices on bond prices, thereby reducing the cost of holding hidden debt. We find that switching to a full disclosure regime shifts the portfolio from hidden to observable debt, exacerbating the debt dilution problem. Thus, contrary to conventional wisdom, this switch generates welfare losses.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104118"},"PeriodicalIF":4.0,"publicationDate":"2025-06-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144831572","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 : 2025-06-16DOI: 10.1016/j.jinteco.2025.104116
Pamina Koenig , Sebastian Krautheim , Claudius Löhnert , Thierry Verdier
NGO campaigns criticizing firms for infringements along their internationalized value chains are a salient feature of economic globalization. We argue that understanding the international patterns of NGO campaigns requires accounting for the geography of their targets’ economic activities. We propose a model of global sourcing and international trade in which heterogeneous NGOs campaign against heterogeneous firms in response to infringements along their value chains. We find that campaigns are determined by a triadic gravity equation involving the country of the NGO, the country of the firm as well as the sourcing country. Importantly, independent of the location of the NGO, trade costs between the supplier and the firm shape the patterns of NGO campaigns. We use recently available data to estimate our triadic gravity equation at the NGO level and find strong support for this prediction as well as for other predictions specific to our modeling approach.
{"title":"Local global watchdogs: Trade, sourcing and the internationalization of social activism","authors":"Pamina Koenig , Sebastian Krautheim , Claudius Löhnert , Thierry Verdier","doi":"10.1016/j.jinteco.2025.104116","DOIUrl":"10.1016/j.jinteco.2025.104116","url":null,"abstract":"<div><div>NGO campaigns criticizing firms for infringements along their internationalized value chains are a salient feature of economic globalization. We argue that understanding the international patterns of NGO campaigns requires accounting for the geography of their targets’ economic activities. We propose a model of global sourcing and international trade in which heterogeneous NGOs campaign against heterogeneous firms in response to infringements along their value chains. We find that campaigns are determined by a <em>triadic</em> gravity equation involving the country of the NGO, the country of the firm as well as the sourcing country. Importantly, independent of the location of the NGO, trade costs between the supplier and the firm shape the patterns of NGO campaigns. We use recently available data to estimate our triadic gravity equation at the NGO level and find strong support for this prediction as well as for other predictions specific to our modeling approach.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104116"},"PeriodicalIF":3.8,"publicationDate":"2025-06-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144523443","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 : 2025-06-16DOI: 10.1016/j.jinteco.2025.104121
Paul R. Bergin , Kyunghun Kim , Ju H. Pyun
This paper finds that one-sided nominal exchange rate intervention in the form of “fear of appreciation” slows adjustment of current account surpluses, providing novel support for Friedman's claims of faster adjustment under flexible exchange rates. We find evidence that countries classified as more flexible have faster convergence than peggers for current account deficits, but not so for surpluses. This asymmetry is associated with a one-sided muting of exchange rate appreciations among some countries. We then develop a multi-country monetary model augmented with a “fear of appreciation” policy rule governing foreign exchange intervention, solved as an occasionally binding constraint. The model demonstrates a mechanism by which government capital flows supporting exchange rate regimes can impinge on international financial adjustment. The model accounts for substantial asymmetries in the speed of current account adjustment, based on exchange rate regime and current account sign.
{"title":"Fear of appreciation and current account adjustment","authors":"Paul R. Bergin , Kyunghun Kim , Ju H. Pyun","doi":"10.1016/j.jinteco.2025.104121","DOIUrl":"10.1016/j.jinteco.2025.104121","url":null,"abstract":"<div><div>This paper finds that one-sided nominal exchange rate intervention in the form of “fear of appreciation” slows adjustment of current account surpluses, providing novel support for Friedman's claims of faster adjustment under flexible exchange rates. We find evidence that countries classified as more flexible have faster convergence than peggers for current account deficits, but not so for surpluses. This asymmetry is associated with a one-sided muting of exchange rate appreciations among some countries. We then develop a multi-country monetary model augmented with a “fear of appreciation” policy rule governing foreign exchange intervention, solved as an occasionally binding constraint. The model demonstrates a mechanism by which government capital flows supporting exchange rate regimes can impinge on international financial adjustment. The model accounts for substantial asymmetries in the speed of current account adjustment, based on exchange rate regime and current account sign.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104121"},"PeriodicalIF":3.8,"publicationDate":"2025-06-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144338777","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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