Journal of International Economics最新文献

This paper investigates how firms prepare their workforce to export. We employ a novel identification strategy to isolate how a firm’s hiring decision at home responds to export opportunities that arise from exogenous changes to product demand abroad. Combining Brazilian exporter and linked employer–employee data, we show that firms act on better chances to export by hiring workers with prior experience at exporting firms. We find that firms concentrate this preparatory hiring of experts in skilled blue-collar occupations and that firms separate from the previously hired experts when the predicted export-market participation fails to materialize. The evidence is consistent with the tenet that a few exporting experts in select occupations shape a firm’s competitive advantage.

We show that the US dollar response to trade policy uncertainty (TPU) is key to assessing the impact of US trade policy. Employing structural vector autoregressive models, we find that TPU shocks supported a multilateral USD appreciation during the 2018–19 trade tensions between the US and some of its major trading partners. We rationalize this in a two-country New Keynesian model with financial frictions that links the increase in TPU to rising demand for safe USD assets. Our findings suggest that the TPU-induced appreciation of the USD in 2018–19 significantly counteracted US trade policy attempts to raise US competitiveness.

A convenience yield represents a difference between yield on a safe bond and yield on a synthetic safe bond, constructed by combining a risky bond with a CDS contract. We explain the shapes of eurozone sovereign convenience curves using a model in which arbitrageurs face higher funding costs on bonds with credit risk and bond demand shocks induce funding risk. We provide novel causal evidence for our mechanism using variation in funding costs generated through exogenous haircut category changes. Changes in convenience yields represent a key transmission channel of unconventional monetary policy to bond yields.

I present a dynamic trade model spanning many countries to explore the transitional paths of trade-induced inequality. By incorporating capital-skill complementarity, human capital accumulation, and capital accumulation, this paper examines the exact transitional path following a shift from autarky to trade. It reveals that trade increases the skill premium, skill share, and real wages for both skilled and unskilled workers in the majority of countries at the steady state. However, the short-term impact of trade on inequality is more pronounced. The exact transitional path indicates that the dynamic of trade-induced inequality is influenced by the flexibility in adjusting factor supplies during the transition at different stages, and education alleviates approximately 50% of trade-induced inequality in the long run. Furthermore, the analysis illuminates the observed patterns of skill premium in recent trade liberalization episodes in Mexico, China, and South Korea, and raises the possibility that globalization may intensify intergenerational inequality.

This paper suggests a rationale for the GATT/WTO ban on export subsidies by showing that, in a linear Cournot profit-shifting model in which countries invest in a policy infrastructure before imposing trade policy, an agreement banning export subsidies tends to be more self-enforcing than one banning tariffs. Oligopoly introduces asymmetry between import tariffs and export subsidies: terms-of-trade and profit-shifting effects run in the same direction for import tariffs but in opposite directions for export subsidies. This asymmetry and the fact that it takes time for countries to change their trade policy infrastructure imply that the payoffs on the off-equilibrium path under an import-tariff-only agreement tend to be lower than those on the off-equilibrium path under an export-subsidy-only agreement. Specifically, punishment with tariffs is harsher than punishment with subsidies. When the set of instruments is restricted to import tariffs, a trade agreement needs to neutralize both the terms-of-trade and profit-shifting externalities.

How does optimal capital-flow management change with prevailing trade policies? We study the joint optimal determination of capital controls and trade tariffs in a two-country, two-good model with trade in goods and assets. Because countries are large in both markets, a country-planner can achieve higher domestic welfare by departing from free trade in addition to levying capital controls, despite the cooperative optimal allocation being efficient. However, time variation in the optimal tariff induces households to over- or under-borrow through its effects on the path of the real exchange rate. As a result, optimal capital controls are generally smaller when trade policy is constrained (i.e., by a Free-Trade Agreement), but, absent retaliation, can be larger depending on the paths of underlying fundamentals.

I develop a two-country open economy model featuring asymmetric financial frictions to explain two puzzling observations during the 2008 global financial crisis: (1) real consumption growth declined more in foreign countries than in the US, despite the crisis originating in the US, and (2) the US dollar appreciated against foreign currencies despite a significant deterioration in the US net foreign asset position. Subject to a less stringent financial constraint, the US tends to hold more risky assets relative to foreign countries in tranquil times, thereby exposing itself more to financial risks. As the crisis unfolds, the US incurs greater capital losses and is forced to liquidate its risky asset holdings to deleverage. This deleveraging process triggers a capital retrenchment in the US, thereby smoothing US consumption and prompting a US dollar appreciation. Consequently, this model challenges the “exorbitant duty” hypothesis and provides insights into the “reserve currency paradox”.

We present a model of trade, global innovation, and diffusion, inspired by Eaton and Kortum (1999). The specific structure for innovation and diffusion we propose, which leverages general results developed in our previous work (Lind and Ramondo, 2023a), allows us to measure the flow of ideas across countries and over time. By deriving tractable expressions for productivity and expenditure, we can use easily-available international trade data to estimate both innovation and diffusion rates across countries and over time. We find that, although innovation is correlated with economic growth, there are many high income countries that primarily produce using diffused ideas from foreign sources.

To study inflation expectations and associated risk premia in emerging bond markets, we provide estimates for Mexico based on an arbitrage-free dynamic term structure model of nominal and real bond prices that accounts for their liquidity risk. Beyond documenting the existence of large and weakly correlated liquidity premia in nominal and real bond prices, our results indicate that long-term inflation expectations in Mexico are well anchored close to the Bank of Mexico’s inflation target. Furthermore, Mexican inflation risk premia are larger and more volatile than those in Canada and the United States.

I jointly study the optimal bailout policy and monetary policy in open economies that borrow in foreign currency from international lenders. A policy dilemma emerges during financial crises. Policymakers trade off the benefit of more bailouts alleviating firms’ financial constraints against the cost of larger currency devaluation, which tightens firms’ financial constraints. I embed the optimal bailout in an otherwise standard “sudden stop” model with nominal rigidities. The model sheds light on the role of bailouts and currency mismatch in driving the exchange rate dynamics, firms’ balance sheets and economic recovery. Quantitatively, the model matches key business cycle moments. A welfare evaluation shows that there are in general welfare gains from the systemic bailout policy despite ex ante moral hazard problems of firms.