António Afonso, Florence Huart, João Tovar Jalles, Piotr Stanek
We analyze the role of international reserves and sovereign debt in the determination and international transmission of interest rates. We develop a model that describes the money market equilibrium with capital account openness. It predicts that higher levels of international reserves lead to lower interest rates whereas the effect of higher government debt is ambiguous. We then test empirically these predictions on a panel of 128 countries over 1985–2019. We find that: (i) the transmission of U.S. interest rates to domestic interest rates is stronger in emerging market economies (EMEs) than in advanced economies (AEs) for short‐term interest rates (STIR), and vice versa for long‐term interest rates (LTIR); (ii) international reserves help counteract the transmission of the U.S. policy rate on STIR in EMEs; (iii) a higher sovereign debt level is associated with lower interest rates in EMEs (liquidity effect), but higher interest rates in developing economies (risk premium effect).
{"title":"Determinants and international transmission of interest rates: Do foreign reserves and sovereign debt matter?","authors":"António Afonso, Florence Huart, João Tovar Jalles, Piotr Stanek","doi":"10.1111/roie.12776","DOIUrl":"https://doi.org/10.1111/roie.12776","url":null,"abstract":"We analyze the role of international reserves and sovereign debt in the determination and international transmission of interest rates. We develop a model that describes the money market equilibrium with capital account openness. It predicts that higher levels of international reserves lead to lower interest rates whereas the effect of higher government debt is ambiguous. We then test empirically these predictions on a panel of 128 countries over 1985–2019. We find that: (i) the transmission of U.S. interest rates to domestic interest rates is stronger in emerging market economies (EMEs) than in advanced economies (AEs) for short‐term interest rates (STIR), and vice versa for long‐term interest rates (LTIR); (ii) international reserves help counteract the transmission of the U.S. policy rate on STIR in EMEs; (iii) a higher sovereign debt level is associated with lower interest rates in EMEs (liquidity effect), but higher interest rates in developing economies (risk premium effect).","PeriodicalId":47712,"journal":{"name":"Review of International Economics","volume":"26 1","pages":""},"PeriodicalIF":1.0,"publicationDate":"2024-08-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142182851","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this article, I study export quality as a channel through which immigrant workers affect the export prices and markups of French manufacturing firms. I find that the share of immigrant workers in a local labor market is positively associated with firm‐level export prices and quality and that this quality advantage translates to higher markups. I present evidence for the mechanism accounting for these relationships and find that the presence of immigrant workers is positively associated with firms importing higher‐price (higher‐quality) intermediate inputs, which are key to producing higher‐price (higher‐quality) exports. The hypothesized economic mechanism is that immigrant workers help firms overcome informational barriers to sourcing higher‐price (higher‐quality) inputs from abroad. I provide evidence consistent with immigrant workers having specialized knowledge of the upstream market.
{"title":"Firm‐level prices, quality, and markups: The role of immigrant workers","authors":"Giulia Sabbadini","doi":"10.1111/roie.12772","DOIUrl":"https://doi.org/10.1111/roie.12772","url":null,"abstract":"In this article, I study export quality as a channel through which immigrant workers affect the export prices and markups of French manufacturing firms. I find that the share of immigrant workers in a local labor market is positively associated with firm‐level export prices and quality and that this quality advantage translates to higher markups. I present evidence for the mechanism accounting for these relationships and find that the presence of immigrant workers is positively associated with firms importing higher‐price (higher‐quality) intermediate inputs, which are key to producing higher‐price (higher‐quality) exports. The hypothesized economic mechanism is that immigrant workers help firms overcome informational barriers to sourcing higher‐price (higher‐quality) inputs from abroad. I provide evidence consistent with immigrant workers having specialized knowledge of the upstream market.","PeriodicalId":47712,"journal":{"name":"Review of International Economics","volume":"37 1","pages":""},"PeriodicalIF":1.0,"publicationDate":"2024-07-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141585538","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The paper presents a unified framework for analyzing the impact of corporate taxation on R&D and exporting, considering firm productivity heterogeneity and sunk costs. We empirically examine three hypotheses using data from 7819 European firms spanning 2001–2014. We propose that: (a) an increase in corporate tax reduces the likelihood of innovation, (b) an increase in corporate tax reduces the likelihood of exporting, and (c) firms that innovate are more likely to enter foreign markets. On average, a high Effective Average Tax Rate (EATR) lowers the probability of investing in R&D and exporting by 2.3% and 1.41%, respectively. For firms with low Total Factor Productivity (TFP), the adverse effect of taxation on R&D investment ranges from 3.71% in our baseline analysis to 12.9% in our sensitivity analysis. Interestingly, while EATR positively influences the export decisions of high‐TFP firms, a higher EATR can reduce the export probability by up to 25.5% for firms at the lower end of the TFP distribution. Our findings demonstrate a causal relationship between firm heterogeneity and their capacity to mitigate the distortions caused by higher taxes. From a policy perspective, our results suggest that fostering innovation is essential for firms aiming to expand into international markets.
{"title":"Corporate tax, R&D and export decisions: Evidence from European firms","authors":"Ioannis Bournakis, Desiderio Romero‐Jordán","doi":"10.1111/roie.12771","DOIUrl":"https://doi.org/10.1111/roie.12771","url":null,"abstract":"The paper presents a unified framework for analyzing the impact of corporate taxation on R&D and exporting, considering firm productivity heterogeneity and sunk costs. We empirically examine three hypotheses using data from 7819 European firms spanning 2001–2014. We propose that: (a) an increase in corporate tax reduces the likelihood of innovation, (b) an increase in corporate tax reduces the likelihood of exporting, and (c) firms that innovate are more likely to enter foreign markets. On average, a high Effective Average Tax Rate (EATR) lowers the probability of investing in R&D and exporting by 2.3% and 1.41%, respectively. For firms with low Total Factor Productivity (TFP), the adverse effect of taxation on R&D investment ranges from 3.71% in our baseline analysis to 12.9% in our sensitivity analysis. Interestingly, while EATR positively influences the export decisions of high‐TFP firms, a higher EATR can reduce the export probability by up to 25.5% for firms at the lower end of the TFP distribution. Our findings demonstrate a causal relationship between firm heterogeneity and their capacity to mitigate the distortions caused by higher taxes. From a policy perspective, our results suggest that fostering innovation is essential for firms aiming to expand into international markets.","PeriodicalId":47712,"journal":{"name":"Review of International Economics","volume":"44 1","pages":""},"PeriodicalIF":1.0,"publicationDate":"2024-06-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141506966","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study examines the effect of exports on worker safety and health in the US. We use foreign countries' unilateral liberalization as an instrument to capture the demand shocks on US exports. Our two‐stage estimates with establishment fixed effects suggest that a $1000 increase in exports per worker decreased the workplace injury rate by a significant 0.7%, which implies an annual reduction of about 55,000 injuries among manufacturing workers. The reduction in injuries is more salient among establishments with lower injury rates, indicating an increase of inequality in working conditions. The improvement in working conditions might come from more investment in advanced equipment and better compliance with safety and health regulations.
{"title":"Can exports be pain relievers? The effect of exports on workplace safety and health","authors":"Ling Li, Yang Liang","doi":"10.1111/roie.12765","DOIUrl":"https://doi.org/10.1111/roie.12765","url":null,"abstract":"This study examines the effect of exports on worker safety and health in the US. We use foreign countries' unilateral liberalization as an instrument to capture the demand shocks on US exports. Our two‐stage estimates with establishment fixed effects suggest that a $1000 increase in exports per worker decreased the workplace injury rate by a significant 0.7%, which implies an annual reduction of about 55,000 injuries among manufacturing workers. The reduction in injuries is more salient among establishments with lower injury rates, indicating an increase of inequality in working conditions. The improvement in working conditions might come from more investment in advanced equipment and better compliance with safety and health regulations.","PeriodicalId":47712,"journal":{"name":"Review of International Economics","volume":"13 1","pages":""},"PeriodicalIF":1.0,"publicationDate":"2024-05-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"141196947","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article investigates the Linder hypothesis for foreign direct investment (FDI) within the three‐way gravity framework, utilizing a newly compiled and extensive dataset encompassing greenfield and brownfield investment activities across diverse sectors from 2003 to 2018. The Linder hypothesis posits that multinational firms invest in countries with comparable income levels to their home country. Our primary findings affirm the relevance of the Linder hypothesis in the context of horizontal FDI. The influence of the Linder effect varies among sectors, with the service sector exhibiting the most pronounced effect, while no detectable effect is observable for the manufacturing sector. We also find that the Linder effect depends on the sector's position within the value chain and the degree of quality differentiation. Sectors closer to final consumer demand and those characterized by higher product differentiation exhibit greater exposure to the Linder effect. Additionally, our analysis reveals that the Linder effect is subject to variations based on the income levels of the host country and highlights the significance of consumer preferences in shaping FDI patterns. Our article underscores the pivotal role of industry dynamics, product quality considerations, and value chain positioning in influencing the Linder effect on FDI.
{"title":"The Linder hypothesis for foreign direct investment revisited","authors":"Dongin Kim, Sandro Steinbach","doi":"10.1111/roie.12758","DOIUrl":"https://doi.org/10.1111/roie.12758","url":null,"abstract":"This article investigates the Linder hypothesis for foreign direct investment (FDI) within the three‐way gravity framework, utilizing a newly compiled and extensive dataset encompassing greenfield and brownfield investment activities across diverse sectors from 2003 to 2018. The Linder hypothesis posits that multinational firms invest in countries with comparable income levels to their home country. Our primary findings affirm the relevance of the Linder hypothesis in the context of horizontal FDI. The influence of the Linder effect varies among sectors, with the service sector exhibiting the most pronounced effect, while no detectable effect is observable for the manufacturing sector. We also find that the Linder effect depends on the sector's position within the value chain and the degree of quality differentiation. Sectors closer to final consumer demand and those characterized by higher product differentiation exhibit greater exposure to the Linder effect. Additionally, our analysis reveals that the Linder effect is subject to variations based on the income levels of the host country and highlights the significance of consumer preferences in shaping FDI patterns. Our article underscores the pivotal role of industry dynamics, product quality considerations, and value chain positioning in influencing the Linder effect on FDI.","PeriodicalId":47712,"journal":{"name":"Review of International Economics","volume":"24 1","pages":""},"PeriodicalIF":1.0,"publicationDate":"2024-05-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140938543","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper investigates the impact of macroprudential policies, capital controls, and their joint effect on income inequality. Using a panel dataset covering 60 countries from 2000 to 2019, we find that macroprudential policies and capital controls can mitigate income inequality, which are robust to various subsets of policy indexes. However, the effectiveness of macroprudential policies on income inequality depends on the tightness of capital controls. We verify that macroprudential policies affect income inequality through private sector leverage, and both capital controls and macroprudential policies have significant influences on gross capital flows and net capital flows to affect income inequality.
{"title":"Macroprudential policies, capital controls, and income inequality","authors":"Yu You, Xiaoying Hu, Zongye Huang","doi":"10.1111/roie.12756","DOIUrl":"https://doi.org/10.1111/roie.12756","url":null,"abstract":"This paper investigates the impact of macroprudential policies, capital controls, and their joint effect on income inequality. Using a panel dataset covering 60 countries from 2000 to 2019, we find that macroprudential policies and capital controls can mitigate income inequality, which are robust to various subsets of policy indexes. However, the effectiveness of macroprudential policies on income inequality depends on the tightness of capital controls. We verify that macroprudential policies affect income inequality through private sector leverage, and both capital controls and macroprudential policies have significant influences on gross capital flows and net capital flows to affect income inequality.","PeriodicalId":47712,"journal":{"name":"Review of International Economics","volume":"19 1","pages":""},"PeriodicalIF":1.0,"publicationDate":"2024-05-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140836806","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Mengting Zhang, Andreas Steiner, Jakob de Haan, Haizhen Yang
We analyze how reversals of several types of capital flows impact currency crises in emerging market and developing economies. Estimates of logit models show that reversals of (equity and debt) portfolio flows significantly increase the likelihood of currency crises in emerging market economies. In developing economies, reversals of portfolio debt flows and banking flows have a significant positive impact on currency crises. Finally, our results suggest that countries with mature financial systems and fixed exchange rate regimes are less likely to experience a currency crisis after a capital flow shock. The mediating role of capital account liberalization varies by country type.
{"title":"Capital flow reversals and currency crises: Do capital flow types matter?","authors":"Mengting Zhang, Andreas Steiner, Jakob de Haan, Haizhen Yang","doi":"10.1111/roie.12753","DOIUrl":"https://doi.org/10.1111/roie.12753","url":null,"abstract":"We analyze how reversals of several types of capital flows impact currency crises in emerging market and developing economies. Estimates of logit models show that reversals of (equity and debt) portfolio flows significantly increase the likelihood of currency crises in emerging market economies. In developing economies, reversals of portfolio debt flows and banking flows have a significant positive impact on currency crises. Finally, our results suggest that countries with mature financial systems and fixed exchange rate regimes are less likely to experience a currency crisis after a capital flow shock. The mediating role of capital account liberalization varies by country type.","PeriodicalId":47712,"journal":{"name":"Review of International Economics","volume":"16 1","pages":""},"PeriodicalIF":1.0,"publicationDate":"2024-04-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140806366","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This article analyzes the ways heterogenous firms procure their inputs in the presence of relationship‐specific investments and incomplete contracts. We first consider a closed economy in which firms decide how to structure their organization. Production is sequential and inputs (upstream and downstream) are sourced in the same order as production. While our closed‐economy setup is analogous to Antràs and Chor (Econometrica, 2013), there are two distinct features: (1) The reward to each supplier is determined through bargaining over the full revenue of the firm (as opposed to marginal contribution of the supplier), and (2) The reward structure combined with our sequential bargaining protocol gives rise to linkages across suppliers. The analysis in Antràs and Chor (Econometrica, 2013) identifies a mechanism in which upstream organizational decisions have spillover effects on downstream suppliers' investment incentives. Thanks to our novel features, we identify another mechanism: the spillover effects of downstream organizational decisions on the investment incentive of upstream suppliers. Next, we consider an open economy in which firms not only make organizational decisions but also determine where to source their inputs. We show that these decisions are connected between sequential production stages such that the sourcing location of the upstream input may affect the organizational choice in the downstream stage. We then examine how within sectoral heterogeneity and variations in industry characteristics influence the relative prevalence of firms that choose to form different organizational structures.
{"title":"The link between organizational choice and global input sourcing under sequential production","authors":"Bilgehan Karabay","doi":"10.1111/roie.12754","DOIUrl":"https://doi.org/10.1111/roie.12754","url":null,"abstract":"This article analyzes the ways heterogenous firms procure their inputs in the presence of relationship‐specific investments and incomplete contracts. We first consider a closed economy in which firms decide how to structure their organization. Production is sequential and inputs (upstream and downstream) are sourced in the same order as production. While our closed‐economy setup is analogous to Antràs and Chor (<jats:italic>Econometrica</jats:italic>, 2013), there are two distinct features: (1) The reward to each supplier is determined through bargaining over the full revenue of the firm (as opposed to marginal contribution of the supplier), and (2) The reward structure combined with our sequential bargaining protocol gives rise to linkages across suppliers. The analysis in Antràs and Chor (<jats:italic>Econometrica</jats:italic>, 2013) identifies a mechanism in which <jats:italic>upstream</jats:italic> organizational decisions have spillover effects on <jats:italic>downstream</jats:italic> suppliers' investment incentives. Thanks to our novel features, we identify another mechanism: the spillover effects of <jats:italic>downstream</jats:italic> organizational decisions on the investment incentive of <jats:italic>upstream</jats:italic> suppliers. Next, we consider an open economy in which firms not only make organizational decisions but also determine where to source their inputs. We show that these decisions are connected <jats:italic>between sequential production stages</jats:italic> such that the sourcing location of the upstream input may affect the organizational choice in the downstream stage. We then examine how within sectoral heterogeneity and variations in industry characteristics influence the relative prevalence of firms that choose to form different organizational structures.","PeriodicalId":47712,"journal":{"name":"Review of International Economics","volume":"87 1","pages":""},"PeriodicalIF":1.0,"publicationDate":"2024-04-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140800929","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study explores how income inequality among individuals in each country and trade costs depicting geographic distance between countries impact economic welfare and regime choice under representative democracy, comparing three trading regimes: most favored nation, customs union, and free trade agreement. We examine two cases: one in which trade costs are incurred symmetrically among all countries, and the other in which no trade costs are incurred among the potential member countries, but only between them and nonmembers. In each case, we identify the political feasibility of each regime as well as the impact on the average welfare levels.
{"title":"The politics of tariff cooperation in the presence of trade costs","authors":"Taiki Susa, Masafumi Tsubuku","doi":"10.1111/roie.12755","DOIUrl":"https://doi.org/10.1111/roie.12755","url":null,"abstract":"This study explores how income inequality among individuals in each country and trade costs depicting geographic distance between countries impact economic welfare and regime choice under representative democracy, comparing three trading regimes: most favored nation, customs union, and free trade agreement. We examine two cases: one in which trade costs are incurred symmetrically among all countries, and the other in which no trade costs are incurred among the potential member countries, but only between them and nonmembers. In each case, we identify the political feasibility of each regime as well as the impact on the average welfare levels.","PeriodicalId":47712,"journal":{"name":"Review of International Economics","volume":"126 1","pages":""},"PeriodicalIF":1.0,"publicationDate":"2024-04-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140800897","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper examines the impact of Brexit on international student migration. In a structural gravity model, we estimate student migration between 69 countries for counterfactual scenarios in which the United Kingdom leaves the European Union one year before the referendum. This exercise reveals a decrease in exchange students studying in the UK of around 3.8% to 4.9%. While the number of non‐EU students to the UK rises, a drop in EU student numbers drives this result. Similarly, 30% to 38% fewer UK students choose to study abroad. The estimated changes in international student stocks show that most other member countries lose international students and non‐EU countries host more than without Brexit. Our findings provide evidence that there may be hidden costs to Brexit affecting global student exchanges that we have yet to see.
{"title":"Brexit and foreign students in gravity","authors":"Ronald B. Davies, Lena S. Specht","doi":"10.1111/roie.12750","DOIUrl":"https://doi.org/10.1111/roie.12750","url":null,"abstract":"This paper examines the impact of Brexit on international student migration. In a structural gravity model, we estimate student migration between 69 countries for counterfactual scenarios in which the United Kingdom leaves the European Union one year before the referendum. This exercise reveals a decrease in exchange students studying in the UK of around 3.8% to 4.9%. While the number of non‐EU students to the UK rises, a drop in EU student numbers drives this result. Similarly, 30% to 38% fewer UK students choose to study abroad. The estimated changes in international student stocks show that most other member countries lose international students and non‐EU countries host more than without Brexit. Our findings provide evidence that there may be hidden costs to Brexit affecting global student exchanges that we have yet to see.","PeriodicalId":47712,"journal":{"name":"Review of International Economics","volume":"1 1","pages":""},"PeriodicalIF":1.0,"publicationDate":"2024-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"140583560","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：