Pub Date : 2025-06-16DOI: 10.1016/j.jinteco.2025.104117
Yoon Joo Jo
I examine the cyclical properties of nominal wage change distributions across time and US states using nationally representative household surveys from 1979 to 2018. The novel finding is that the share of workers with no wage changes, which accounts for the large spike at zero in the nominal wage change distribution, is more countercyclical than the share of workers with wage cuts. I analyze heterogeneous agent models with six alternative wage-setting schemes and conclude that the model with downward nominal wage rigidity is the most consistent with empirical findings regarding the shape and cyclicality of wage change distributions.
{"title":"Beyond the spike at zero: Understanding nominal wage rigidity through empirical and model-based approaches","authors":"Yoon Joo Jo","doi":"10.1016/j.jinteco.2025.104117","DOIUrl":"10.1016/j.jinteco.2025.104117","url":null,"abstract":"<div><div>I examine the cyclical properties of nominal wage change distributions across time and US states using nationally representative household surveys from 1979 to 2018. The novel finding is that the share of workers with no wage changes, which accounts for the large spike at zero in the nominal wage change distribution, is more countercyclical than the share of workers with wage cuts. I analyze heterogeneous agent models with six alternative wage-setting schemes and conclude that the model with downward nominal wage rigidity is the most consistent with empirical findings regarding the shape and cyclicality of wage change distributions.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104117"},"PeriodicalIF":3.8,"publicationDate":"2025-06-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144489485","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 : 2025-06-07DOI: 10.1016/j.jinteco.2025.104115
Yao Chen , Felix Ward
This paper presents empirical evidence for the violation of nominal exchange regime neutrality. We find that fixing the exchange rate is associated with real output losses among countries with a high pre-peg inflation rate. In particular, ten years after fixing the exchange rate a country with a +1 percentage point (ppt) pre-peg wage inflation differential has a 2% lower real GDP per capita level and a 1% lower TFP level. The tradable sector is more affected than the non-tradable sector, which accords with the former’s greater exposure to international arbitrage.
{"title":"Output divergence in fixed exchange rate regimes","authors":"Yao Chen , Felix Ward","doi":"10.1016/j.jinteco.2025.104115","DOIUrl":"10.1016/j.jinteco.2025.104115","url":null,"abstract":"<div><div>This paper presents empirical evidence for the violation of nominal exchange regime neutrality. We find that fixing the exchange rate is associated with real output losses among countries with a high pre-peg inflation rate. In particular, ten years after fixing the exchange rate a country with a +1 percentage point (ppt) pre-peg wage inflation differential has a 2% lower real GDP per capita level and a 1% lower TFP level. The tradable sector is more affected than the non-tradable sector, which accords with the former’s greater exposure to international arbitrage.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104115"},"PeriodicalIF":3.8,"publicationDate":"2025-06-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144262552","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 : 2025-06-07DOI: 10.1016/j.jinteco.2025.104114
Daniel M. Rees
In the aftermath of the Covid pandemic rising commodity prices went hand-in-hand with a strengthening US dollar. This was a sharp contrast to the usual relationship between commodity prices and the dollar. This paper presents evidence that post-Covid correlation patterns could become more common in the future. This conclusion rests on two observations. First, the US dollar exhibits a close and stable relationship with the US terms of trade. Second, the United States’ shift from being a net oil importer to a net oil exporter means that higher commodity prices now tend to raise the US terms of trade, rather than lowering them. Changes in the relationship between commodity prices and the US dollar will have implications for commodity exporters and importers alike.
{"title":"Commodity prices and the US dollar","authors":"Daniel M. Rees","doi":"10.1016/j.jinteco.2025.104114","DOIUrl":"10.1016/j.jinteco.2025.104114","url":null,"abstract":"<div><div>In the aftermath of the Covid pandemic rising commodity prices went hand-in-hand with a strengthening US dollar. This was a sharp contrast to the usual relationship between commodity prices and the dollar. This paper presents evidence that post-Covid correlation patterns could become more common in the future. This conclusion rests on two observations. First, the US dollar exhibits a close and stable relationship with the US terms of trade. Second, the United States’ shift from being a net oil importer to a net oil exporter means that higher commodity prices now tend to raise the US terms of trade, rather than lowering them. Changes in the relationship between commodity prices and the US dollar will have implications for commodity exporters and importers alike.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104114"},"PeriodicalIF":3.8,"publicationDate":"2025-06-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144272584","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 : 2025-06-04DOI: 10.1016/j.jinteco.2025.104119
Björn Imbierowicz , Arne Nagengast , Esteban Prieto , Ursula Vogel
We examine the effects of a deglobalization shock on bank lending, firm internal capital markets, and the real economy. Leveraging a unique dataset, we are able to observe both domestic and cross-border credit exposures of German banks as well as internal capital market dynamics within multinational corporations (MNCs). We analyze the response to the Brexit referendum shock. On average, banks reduced lending to United Kingdom (UK) firms following the shock due to increased uncertainty about future losses. More prudent banks reduced their credit more extensively, and less profitable subsidiaries experienced greater reductions. However, UK subsidiaries of large MNCs, with access to internal capital markets, offset this credit supply shock through internal funding, shielding them from negative real effects. Our findings underscore that while international financial frictions following deglobalization shocks can imply negative real effects, firms integrated into global networks mitigate these impacts through internal capital markets.
{"title":"Bank lending and firm internal capital markets following a deglobalization shock","authors":"Björn Imbierowicz , Arne Nagengast , Esteban Prieto , Ursula Vogel","doi":"10.1016/j.jinteco.2025.104119","DOIUrl":"10.1016/j.jinteco.2025.104119","url":null,"abstract":"<div><div>We examine the effects of a deglobalization shock on bank lending, firm internal capital markets, and the real economy. Leveraging a unique dataset, we are able to observe both domestic and cross-border credit exposures of German banks as well as internal capital market dynamics within multinational corporations (MNCs). We analyze the response to the Brexit referendum shock. On average, banks reduced lending to United Kingdom (UK) firms following the shock due to increased uncertainty about future losses. More prudent banks reduced their credit more extensively, and less profitable subsidiaries experienced greater reductions. However, UK subsidiaries of large MNCs, with access to internal capital markets, offset this credit supply shock through internal funding, shielding them from negative real effects. Our findings underscore that while international financial frictions following deglobalization shocks can imply negative real effects, firms integrated into global networks mitigate these impacts through internal capital markets.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104119"},"PeriodicalIF":3.8,"publicationDate":"2025-06-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144240636","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 : 2025-06-04DOI: 10.1016/j.jinteco.2025.104106
Weidi Yuan , Difei Ouyang
This paper studies how the elimination of trade policy uncertainty around WTO accession affects China’s manufacturing sector. We find a strong cross-sectional relationship between reduced uncertainty and input and output expansion by industry. The growth effect is particularly pronounced in the most labor-intensive industries in line with China’s comparative advantage, and more so in regions with lower shipping costs and a large manufacturing base. A decomposition reveals that the industry expansion can be traced to the extensive margin of new firm entry—consistent with firm-level evidence showing only a modest response among incumbent firms.
{"title":"Industrial development and trade policy uncertainty: Evidence from China’s WTO accession","authors":"Weidi Yuan , Difei Ouyang","doi":"10.1016/j.jinteco.2025.104106","DOIUrl":"10.1016/j.jinteco.2025.104106","url":null,"abstract":"<div><div>This paper studies how the elimination of trade policy uncertainty around WTO accession affects China’s manufacturing sector. We find a strong cross-sectional relationship between reduced uncertainty and input and output expansion by industry. The growth effect is particularly pronounced in the most labor-intensive industries in line with China’s comparative advantage, and more so in regions with lower shipping costs and a large manufacturing base. A decomposition reveals that the industry expansion can be traced to the extensive margin of new firm entry—consistent with firm-level evidence showing only a modest response among incumbent firms.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104106"},"PeriodicalIF":3.8,"publicationDate":"2025-06-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144240129","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 : 2025-06-04DOI: 10.1016/j.jinteco.2025.104102
Max Marczinek , Stephan Maurer , Ferdinand Rauch
We study trade networks following the decline of the Hanseatic League, using a novel trade data set that covers cities and captains in Northern Europe over 190 years. By the time of its dissolution in 1669, trade on former Hansa routes is within predictions from a gravity framework. However, the Hansa continue to shape the composition of trade: Trade between cities in the Hanseatic network continues to be facilitated by Hanseatic captains for centuries. Our paper highlights the long-run stability of commercial and social networks, which persist when other economic effects do not.
{"title":"Networks in trade — Evidence from the legacy of the Hanseatic league","authors":"Max Marczinek , Stephan Maurer , Ferdinand Rauch","doi":"10.1016/j.jinteco.2025.104102","DOIUrl":"10.1016/j.jinteco.2025.104102","url":null,"abstract":"<div><div>We study trade networks following the decline of the Hanseatic League, using a novel trade data set that covers cities and captains in Northern Europe over 190 years. By the time of its dissolution in 1669, trade on former Hansa routes is within predictions from a gravity framework. However, the Hansa continue to shape the composition of trade: Trade between cities in the Hanseatic network continues to be facilitated by Hanseatic captains for centuries. Our paper highlights the long-run stability of commercial and social networks, which persist when other economic effects do not.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104102"},"PeriodicalIF":3.8,"publicationDate":"2025-06-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144240637","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 : 2025-05-28DOI: 10.1016/j.jinteco.2025.104105
Cían Allen , Luciana Juvenal
This paper constructs a dataset on the currency composition of external balance sheets for 50 countries from 1990 to 2020. Our findings reveal the persistent dominance of the US dollar and euro in global external positions, while many emerging markets have shifted from short to long foreign-currency exposures. This transformation, marking a departure from the “original sin” phenomenon, reflects reduced foreign-currency debt liabilities and increased foreign-currency assets. We introduce financial exchange rate indices to measure valuation effects, documenting that substantial wealth transfers across countries mitigated global imbalances during the 2008 financial crisis, yet exacerbated them during the COVID-19 shock.
{"title":"The role of currencies in external balance sheets","authors":"Cían Allen , Luciana Juvenal","doi":"10.1016/j.jinteco.2025.104105","DOIUrl":"10.1016/j.jinteco.2025.104105","url":null,"abstract":"<div><div>This paper constructs a dataset on the currency composition of external balance sheets for 50 countries from 1990 to 2020. Our findings reveal the persistent dominance of the US dollar and euro in global external positions, while many emerging markets have shifted from <em>short</em> to <em>long</em> foreign-currency exposures. This transformation, marking a departure from the “original sin” phenomenon, reflects reduced foreign-currency debt liabilities and increased foreign-currency assets. We introduce financial exchange rate indices to measure valuation effects, documenting that substantial wealth transfers across countries mitigated global imbalances during the 2008 financial crisis, yet exacerbated them during the COVID-19 shock.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104105"},"PeriodicalIF":3.8,"publicationDate":"2025-05-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144204764","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 : 2025-05-21DOI: 10.1016/j.jinteco.2025.104096
Anastasios Dosis
This paper studies how the real interest rate affects the (mis)allocation of capital in a small open economy characterized by asymmetric information in the financial market. Low interest rates allow low-productivity firms to enter the pool of borrowers, imposing an information externality that negatively impacts highly productive firms and forces them to reduce their investments. This suggests that, in some cases, although lowering the interest rate can increase total investment and output, it does not necessarily improve welfare. The results align with recent empirical evidence highlighting the adverse effects of low interest rates in southern European countries.
{"title":"Low interest rates, capital misallocation and welfare","authors":"Anastasios Dosis","doi":"10.1016/j.jinteco.2025.104096","DOIUrl":"10.1016/j.jinteco.2025.104096","url":null,"abstract":"<div><div>This paper studies how the real interest rate affects the (mis)allocation of capital in a small open economy characterized by asymmetric information in the financial market. Low interest rates allow low-productivity firms to enter the pool of borrowers, imposing an information externality that negatively impacts highly productive firms and forces them to reduce their investments. This suggests that, in some cases, although lowering the interest rate can increase total investment and output, it does not necessarily improve welfare. The results align with recent empirical evidence highlighting the adverse effects of low interest rates in southern European countries.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104096"},"PeriodicalIF":3.8,"publicationDate":"2025-05-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144108028","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 : 2025-05-21DOI: 10.1016/j.jinteco.2025.104103
Juan Herreño , Carlos Rondón-Moreno
We study the interaction between imperfect information and financial frictions and their role in financial crises in small open economies. We use a model where households observe income growth but cannot distinguish whether the underlying income shocks are permanent or transitory, and borrowing is subject to a collateral constraint. We show that the combination of imperfect information and a borrowing constraint is a significant source of economic instability. Optimal macroprudential policy helps stabilize the economy by actively taxing debt. Furthermore, the interaction between the collateral constraint and the information friction reshapes the correlation between the optimal tax and the underlying components of income.
{"title":"Overborrowing and systemic externalities in the business cycle under imperfect information","authors":"Juan Herreño , Carlos Rondón-Moreno","doi":"10.1016/j.jinteco.2025.104103","DOIUrl":"10.1016/j.jinteco.2025.104103","url":null,"abstract":"<div><div>We study the interaction between imperfect information and financial frictions and their role in financial crises in small open economies. We use a model where households observe income growth but cannot distinguish whether the underlying income shocks are permanent or transitory, and borrowing is subject to a collateral constraint. We show that the combination of imperfect information and a borrowing constraint is a significant source of economic instability. Optimal macroprudential policy helps stabilize the economy by actively taxing debt. Furthermore, the interaction between the collateral constraint and the information friction reshapes the correlation between the optimal tax and the underlying components of income.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104103"},"PeriodicalIF":3.8,"publicationDate":"2025-05-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144138700","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 : 2025-05-15DOI: 10.1016/j.jinteco.2025.104097
Wanyu Chung , Carlo Perroni
Focusing on the 1989 Canada-United States Free Trade Agreement (CUSFTA), we examine how regional content requirements in Free Trade Areas (FTAs) affect competition and prices in intermediate goods markets. Content requirements in FTAs shelter firms from competition more than an equivalent trade-protection tariff would. We document patterns in US industry-level census data and Canadian product-level export data that align with theoretical predictions: stricter and binding content requirements are linked to higher prices and more firm entry. These results underscore the role of content requirements in shaping market structure and market power, with implications for the choice of preferential trade arrangements.
{"title":"Regional content requirements and market power: Lessons from CUSFTA","authors":"Wanyu Chung , Carlo Perroni","doi":"10.1016/j.jinteco.2025.104097","DOIUrl":"10.1016/j.jinteco.2025.104097","url":null,"abstract":"<div><div>Focusing on the 1989 Canada-United States Free Trade Agreement (CUSFTA), we examine how regional content requirements in Free Trade Areas (FTAs) affect competition and prices in intermediate goods markets. Content requirements in FTAs shelter firms from competition more than an equivalent trade-protection tariff would. We document patterns in US industry-level census data and Canadian product-level export data that align with theoretical predictions: stricter and binding content requirements are linked to higher prices and more firm entry. These results underscore the role of content requirements in shaping market structure and market power, with implications for the choice of preferential trade arrangements.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"157 ","pages":"Article 104097"},"PeriodicalIF":3.8,"publicationDate":"2025-05-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144147369","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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