Pub Date : 2010-11-01DOI: 10.1111/j.1467-9396.2010.00926.x
Luis Carranza, J. Galdon-Sanchez, Javier Gomez-Biscarri
In this paper we summarize the results of a broad exploratory empirical analysis where we relate the level of financial development with the effectiveness of monetary policy. The analysis is based on a panel of countries for which we calculate measures both of financial development and of monetary policy effectiveness. We look for statistically significant relationships between the indicators of financial development, the effectiveness coefficients, and other macroeconomic characteristics by estimating dynamic panels and performing a cluster analysis. We present our results in the form of a list of stylized facts that we consider deserve further attention.
{"title":"Understanding the Relationship between Financial Development and Monetary Policy","authors":"Luis Carranza, J. Galdon-Sanchez, Javier Gomez-Biscarri","doi":"10.1111/j.1467-9396.2010.00926.x","DOIUrl":"https://doi.org/10.1111/j.1467-9396.2010.00926.x","url":null,"abstract":"In this paper we summarize the results of a broad exploratory empirical analysis where we relate the level of financial development with the effectiveness of monetary policy. The analysis is based on a panel of countries for which we calculate measures both of financial development and of monetary policy effectiveness. We look for statistically significant relationships between the indicators of financial development, the effectiveness coefficients, and other macroeconomic characteristics by estimating dynamic panels and performing a cluster analysis. We present our results in the form of a list of stylized facts that we consider deserve further attention.","PeriodicalId":351939,"journal":{"name":"Wiley-Blackwell: Review of International Economics","volume":"25 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128247126","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2010-08-10DOI: 10.1111/j.1467-9396.2010.00893.x
M. De Stefano, Marc Rysman
The paper analyzes how countries use competition policy as a tool for strategic trade. In the model, two countries export to a third country. Each exporting country is endowed with a set of differentiated products. Each government chooses the number of exporters for its country and the products that each exporter sells in the first period, and a tax policy in the second period. Firms choose prices or quantities independently in the third period. In the unique subgame-perfect equilibrium, both countries group all their products within a single firm - the “national champion policy.” We study the implication of different assumptions about the timing of the game.
{"title":"Competition Policy as Strategic Trade with Differentiated Products","authors":"M. De Stefano, Marc Rysman","doi":"10.1111/j.1467-9396.2010.00893.x","DOIUrl":"https://doi.org/10.1111/j.1467-9396.2010.00893.x","url":null,"abstract":"The paper analyzes how countries use competition policy as a tool for strategic trade. In the model, two countries export to a third country. Each exporting country is endowed with a set of differentiated products. Each government chooses the number of exporters for its country and the products that each exporter sells in the first period, and a tax policy in the second period. Firms choose prices or quantities independently in the third period. In the unique subgame-perfect equilibrium, both countries group all their products within a single firm - the “national champion policy.” We study the implication of different assumptions about the timing of the game.","PeriodicalId":351939,"journal":{"name":"Wiley-Blackwell: Review of International Economics","volume":"35 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-08-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126539158","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2010-08-10DOI: 10.1111/j.1467-9396.2010.00904.x
Jayjit Roy
This paper provides the first empirical analysis directly comparing the effects of customs unions (CUs) and free-trade agreements (FTAs) on members’ bilateral trade, while addressing the biases arising from log-linearization of the gravity model and crucial time-invariant unobservables. Since Fiorentino et al. (2007) question the popularity of CUs relative to FTAs, considering the latter to be more practical in the current trading climate, such a comparison seems especially relevant. While Baier and Bergstrand (2007) find an FTA to approximately double members’ bilateral trade after 10 years, the results of this paper find CUs to have had a much larger impact than FTAs.
{"title":"Do Customs Union Members Engage in More Bilateral Trade than Free-Trade Agreement Members?","authors":"Jayjit Roy","doi":"10.1111/j.1467-9396.2010.00904.x","DOIUrl":"https://doi.org/10.1111/j.1467-9396.2010.00904.x","url":null,"abstract":"This paper provides the first empirical analysis directly comparing the effects of customs unions (CUs) and free-trade agreements (FTAs) on members’ bilateral trade, while addressing the biases arising from log-linearization of the gravity model and crucial time-invariant unobservables. Since Fiorentino et al. (2007) question the popularity of CUs relative to FTAs, considering the latter to be more practical in the current trading climate, such a comparison seems especially relevant. While Baier and Bergstrand (2007) find an FTA to approximately double members’ bilateral trade after 10 years, the results of this paper find CUs to have had a much larger impact than FTAs.","PeriodicalId":351939,"journal":{"name":"Wiley-Blackwell: Review of International Economics","volume":"114 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-08-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127944429","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2010-07-19DOI: 10.1111/j.1467-9396.2010.00887.x
S. Anwar
This paper examines the impact of increased competition and trade liberalization on skilled–unskilled wage inequality in the short run as well as the long run. It is shown that an increase in the number of firms in the producer services sector increases wage inequality in the short run even if the income shares of capital in the industrial and agricultural sectors were identical. A decrease in the services sector's fixed cost decreases wage inequality in the short run if the income share of capital in the agricultural sector is relatively large. Owing to the presence of external economies, a decrease in the services sector's fixed cost increases wage inequality in the long run. A decrease in import duty on the agricultural good increases wage inequality in the short as well as the long run but its effect in the long run is stronger due to the presence of external economies in the industrial sector.
{"title":"Wage Inequality, Increased Competition, and Trade Liberalization: Short Run vs Long Run","authors":"S. Anwar","doi":"10.1111/j.1467-9396.2010.00887.x","DOIUrl":"https://doi.org/10.1111/j.1467-9396.2010.00887.x","url":null,"abstract":"This paper examines the impact of increased competition and trade liberalization on skilled–unskilled wage inequality in the short run as well as the long run. It is shown that an increase in the number of firms in the producer services sector increases wage inequality in the short run even if the income shares of capital in the industrial and agricultural sectors were identical. A decrease in the services sector's fixed cost decreases wage inequality in the short run if the income share of capital in the agricultural sector is relatively large. Owing to the presence of external economies, a decrease in the services sector's fixed cost increases wage inequality in the long run. A decrease in import duty on the agricultural good increases wage inequality in the short as well as the long run but its effect in the long run is stronger due to the presence of external economies in the industrial sector.","PeriodicalId":351939,"journal":{"name":"Wiley-Blackwell: Review of International Economics","volume":"52 Pt A 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-07-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"121203216","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2010-07-19DOI: 10.1111/j.1467-9396.2010.00889.x
Hikari Ban
This paper examines the effects of factor endowments on factor prices in a three-factor, two-commodity general-equilibrium model with endogenous commodity demand and prices. Unlike the conventional small open-economy model that assumes constant commodity prices, factor substitution influences the direction of these effects. When a factor endowment increases, complementarity with the expanding factor benefits an unchanged factor, but substitutability harms it. If the unchanged factors are complements, there is a possibility of a rise in the expanding factor's price. A comparison of this closed-economy model with the small open-economy model reveals the role of international trade, which dampens the effect on the expanding factor's price.
{"title":"Factor Substitution and Relative Factor Prices","authors":"Hikari Ban","doi":"10.1111/j.1467-9396.2010.00889.x","DOIUrl":"https://doi.org/10.1111/j.1467-9396.2010.00889.x","url":null,"abstract":"This paper examines the effects of factor endowments on factor prices in a three-factor, two-commodity general-equilibrium model with endogenous commodity demand and prices. Unlike the conventional small open-economy model that assumes constant commodity prices, factor substitution influences the direction of these effects. When a factor endowment increases, complementarity with the expanding factor benefits an unchanged factor, but substitutability harms it. If the unchanged factors are complements, there is a possibility of a rise in the expanding factor's price. A comparison of this closed-economy model with the small open-economy model reveals the role of international trade, which dampens the effect on the expanding factor's price.","PeriodicalId":351939,"journal":{"name":"Wiley-Blackwell: Review of International Economics","volume":"35 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-07-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123660847","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2010-07-19DOI: 10.1111/j.1467-9396.2010.00911.x
Litao Zhong, S. Lahiri
This paper suggests a new approach to the determination of profit allocation between the partners in international joint ventures (IJVs). We also examine the issue of partnership choice. The foreign firm gives a large share of profits to its partner and in return receives a better tax treatment from the host government. Under linearity of costs and demand functions, it would choose the more efficient domestic firm as an IJV partner, and the domestic firms would happily accept the offer of partnership from the foreign firm. However, the host government, under certain situations, may persuade the foreign firm, by a suitable lump-sum transfer, to form a partnership with the less efficient firm.
{"title":"Profit Share and Partner Choice in International Joint Ventures","authors":"Litao Zhong, S. Lahiri","doi":"10.1111/j.1467-9396.2010.00911.x","DOIUrl":"https://doi.org/10.1111/j.1467-9396.2010.00911.x","url":null,"abstract":"This paper suggests a new approach to the determination of profit allocation between the partners in international joint ventures (IJVs). We also examine the issue of partnership choice. The foreign firm gives a large share of profits to its partner and in return receives a better tax treatment from the host government. Under linearity of costs and demand functions, it would choose the more efficient domestic firm as an IJV partner, and the domestic firms would happily accept the offer of partnership from the foreign firm. However, the host government, under certain situations, may persuade the foreign firm, by a suitable lump-sum transfer, to form a partnership with the less efficient firm.","PeriodicalId":351939,"journal":{"name":"Wiley-Blackwell: Review of International Economics","volume":"12 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-07-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125201563","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2010-04-12DOI: 10.1111/j.1467-9396.2010.00858.x
Sven Blank, C. Buch
International bank portfolios constitute a large component of international country portfolios. Yet, banks' response to international macroeconomic conditions remains largely unexplored. We use a novel dataset on banks' international portfolios to answer three questions. First, what are the long-run determinants of banks' international portfolios? Second, how do banks' international portfolios adjust to short-run macroeconomic developments? Third, does the speed of adjustment change with the degree of financial integration? We find that, in the long-run, market size has a positive impact on foreign assets and liabilities. An increase in the interest differential between the home and the foreign economy lowers foreign assets and increases foreign liabilities. Foreign trade has a positive impact on international bank portfolios, which is independent from the effect of other macroeconomic variables. Short-run dynamics show heterogeneity across countries, but these dynamics can partly be explained with gravity-type variables.
{"title":"International Bank Portfolios: Short- and Long-Run Responses to Macroeconomic Conditions","authors":"Sven Blank, C. Buch","doi":"10.1111/j.1467-9396.2010.00858.x","DOIUrl":"https://doi.org/10.1111/j.1467-9396.2010.00858.x","url":null,"abstract":"International bank portfolios constitute a large component of international country portfolios. Yet, banks' response to international macroeconomic conditions remains largely unexplored. We use a novel dataset on banks' international portfolios to answer three questions. First, what are the long-run determinants of banks' international portfolios? Second, how do banks' international portfolios adjust to short-run macroeconomic developments? Third, does the speed of adjustment change with the degree of financial integration? We find that, in the long-run, market size has a positive impact on foreign assets and liabilities. An increase in the interest differential between the home and the foreign economy lowers foreign assets and increases foreign liabilities. Foreign trade has a positive impact on international bank portfolios, which is independent from the effect of other macroeconomic variables. Short-run dynamics show heterogeneity across countries, but these dynamics can partly be explained with gravity-type variables.","PeriodicalId":351939,"journal":{"name":"Wiley-Blackwell: Review of International Economics","volume":"45 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-04-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"114664828","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2010-04-12DOI: 10.1111/j.1467-9396.2010.00876.x
J. Reimer, T. Hertel
This study examines whether nonhomothetic preferences underlie the “missing trade” problem associated with factor content of trade models. We first find that per capita income goes a long way in explaining differences in goods consumption across countries. We then find a striking correlation between the factor content of consumption and per capita income, and show that accounting for this is a key part of resolving the case of the missing trade. However, nonhomothetic preferences over broad categories of expenditure play only a small role in this phenomenon. Rather, we find that as income grows, spending is directed towards the relatively capital-intensive version of a given good. Since recent research shows that capital intensity is correlated with quality (Schott, 2004), our results suggest that within-product quality differences are likely important for explaining the factor content of trade, whereas nonhomothetic preferences over broad categories of expenditure are much less so.
{"title":"Nonhomothetic Preferences and International Trade","authors":"J. Reimer, T. Hertel","doi":"10.1111/j.1467-9396.2010.00876.x","DOIUrl":"https://doi.org/10.1111/j.1467-9396.2010.00876.x","url":null,"abstract":"This study examines whether nonhomothetic preferences underlie the “missing trade” problem associated with factor content of trade models. We first find that per capita income goes a long way in explaining differences in goods consumption across countries. We then find a striking correlation between the factor content of consumption and per capita income, and show that accounting for this is a key part of resolving the case of the missing trade. However, nonhomothetic preferences over broad categories of expenditure play only a small role in this phenomenon. Rather, we find that as income grows, spending is directed towards the relatively capital-intensive version of a given good. Since recent research shows that capital intensity is correlated with quality (Schott, 2004), our results suggest that within-product quality differences are likely important for explaining the factor content of trade, whereas nonhomothetic preferences over broad categories of expenditure are much less so.","PeriodicalId":351939,"journal":{"name":"Wiley-Blackwell: Review of International Economics","volume":"44 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-04-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132748436","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2010-01-18DOI: 10.1111/j.1467-9396.2009.00879.x
T. Rutherford, David G. Tarr
In this paper, the authors develop a 10-region comparative static computable general-equilibrium model of Russia to assess the impact of accession to the World Trade Organization on the regions of Russia. The model allows for foreign direct investment in business services and endogenous productivity effects from additional varieties of business services and goods produced under imperfect competition. The authors then show that these features are crucial to the results, as the welfare gains are about 20 times greater than in a constant-returns-to-scale model. The results for the estimated gains vary considerably across the regions; this is principally explained by the ability of the different regions to benefit from a reduction in barriers against foreign direct investment.
{"title":"Regional Impacts of Liberalization of Barriers Against Foreign Direct Investment in Services: The Case of Russia's Accession to the WTO","authors":"T. Rutherford, David G. Tarr","doi":"10.1111/j.1467-9396.2009.00879.x","DOIUrl":"https://doi.org/10.1111/j.1467-9396.2009.00879.x","url":null,"abstract":"In this paper, the authors develop a 10-region comparative static computable general-equilibrium model of Russia to assess the impact of accession to the World Trade Organization on the regions of Russia. The model allows for foreign direct investment in business services and endogenous productivity effects from additional varieties of business services and goods produced under imperfect competition. The authors then show that these features are crucial to the results, as the welfare gains are about 20 times greater than in a constant-returns-to-scale model. The results for the estimated gains vary considerably across the regions; this is principally explained by the ability of the different regions to benefit from a reduction in barriers against foreign direct investment.","PeriodicalId":351939,"journal":{"name":"Wiley-Blackwell: Review of International Economics","volume":"21 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-01-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"128264793","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2010-01-18DOI: 10.1111/j.1467-9396.2009.00855.x
C. Balding
Research has called into question the impact of the World Trade Organization (WTO) on trade. This research, however, has been called into question on both modeling grounds for and failing to utilize comprehensive fixed effects. Others have found that when these factors are accounted for, imports rise by significant amounts. This paper seeks to reconcile these findings. I find that the WTO has a larger, though uneven, impact on exports than imports. The results indicate that the WTO frequently causes imports and exports to move in opposite directions negating any increase in overall trade. The regressions with and without fixed country effects generally demonstrate pattern consistency for generalized results that are robust to change. Owing to the finding that imports rise modestly or even fall without country effects while exports rise, the results imply that countries may not be as interested in liberalizing trade as selling to the world.
{"title":"Joining the World Trade Organization: What is the Impact?","authors":"C. Balding","doi":"10.1111/j.1467-9396.2009.00855.x","DOIUrl":"https://doi.org/10.1111/j.1467-9396.2009.00855.x","url":null,"abstract":"Research has called into question the impact of the World Trade Organization (WTO) on trade. This research, however, has been called into question on both modeling grounds for and failing to utilize comprehensive fixed effects. Others have found that when these factors are accounted for, imports rise by significant amounts. This paper seeks to reconcile these findings. I find that the WTO has a larger, though uneven, impact on exports than imports. The results indicate that the WTO frequently causes imports and exports to move in opposite directions negating any increase in overall trade. The regressions with and without fixed country effects generally demonstrate pattern consistency for generalized results that are robust to change. Owing to the finding that imports rise modestly or even fall without country effects while exports rise, the results imply that countries may not be as interested in liberalizing trade as selling to the world.","PeriodicalId":351939,"journal":{"name":"Wiley-Blackwell: Review of International Economics","volume":"32 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2010-01-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"129846595","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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