Australia is a leading exporter of primary and agricultural commodities like iron ore, coal, wool and beef. Industry stakeholders point out that exchange rate fluctuations remain a key determinant of export revenue. This article investigates the exchange rate pass-through to export prices using the recently proposed impulse responses by the local projections technique. Employing export prices in all destination markets and trade-weighted exchange rates, there is substantial evidence that 17 SITC industry and sub-industry level prices experience moderate to high exchange rate pass-through to export prices. These industry categories include sectors like minerals and natural resources products, which are homogenous in nature, and Australia enjoys a comparative advantage in the export of such goods. However, this competitive edge does not necessarily lead to higher export prices, as currency invoicing plays an important role in determining the extent of the pass-through effect. Our findings have important policy implications, especially regarding the invoicing currency strategy for exporters selling homogenous items.
{"title":"Pass-through to export prices: Evidence from Australia†","authors":"Prasad Sankar Bhattacharya","doi":"10.1111/twec.13554","DOIUrl":"https://doi.org/10.1111/twec.13554","url":null,"abstract":"Australia is a leading exporter of primary and agricultural commodities like iron ore, coal, wool and beef. Industry stakeholders point out that exchange rate fluctuations remain a key determinant of export revenue. This article investigates the exchange rate pass-through to export prices using the recently proposed impulse responses by the local projections technique. Employing export prices in all destination markets and trade-weighted exchange rates, there is substantial evidence that 17 SITC industry and sub-industry level prices experience moderate to high exchange rate pass-through to export prices. These industry categories include sectors like minerals and natural resources products, which are homogenous in nature, and Australia enjoys a comparative advantage in the export of such goods. However, this competitive edge does not necessarily lead to higher export prices, as currency invoicing plays an important role in determining the extent of the pass-through effect. Our findings have important policy implications, especially regarding the invoicing currency strategy for exporters selling homogenous items.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"51 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-02-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139752762","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}
Foreign direct investment (FDI) has grown dramatically as a major form of international capital transfer over the past decades. The unprecedented growth of cross-country FDI flows has been attributed to a rich set of economic, geographical and institutional factors. In this paper, Ι examine the role of financial system heterogeneity as a potential detrimental factor to FDI flows across OECD economies. To do so, Ι use a panel dataset of the most recently updated bilateral FDI data at the country level according to OECD BMD4 definition and construct measures of financial distance using a broad set of financial indicators. The econometric approach consists of a gravity-style model, estimated according to the latest advancements in econometric techniques in order to avoid omitted variable bias. The results indicate that financial system similarity is associated with increased bilateral FDI flows, a conclusion that is robust across different estimation strategies and financial distance measures. This insightful policy implication for advanced economies is that the restructuring of the financial system and harmonisation to best practices can contribute to economic recovery through the FDI channel as well. Finally, the results highlight the importance for the full implementation of the Banking Union and the Capital Markets Union in the EU.
{"title":"Financial distance and FDI flows: Evidence from OECD economies","authors":"Konstantinos Dellis","doi":"10.1111/twec.13552","DOIUrl":"https://doi.org/10.1111/twec.13552","url":null,"abstract":"Foreign direct investment (FDI) has grown dramatically as a major form of international capital transfer over the past decades. The unprecedented growth of cross-country FDI flows has been attributed to a rich set of economic, geographical and institutional factors. In this paper, Ι examine the role of financial system heterogeneity as a potential detrimental factor to FDI flows across OECD economies. To do so, Ι use a panel dataset of the most recently updated bilateral FDI data at the country level according to OECD BMD4 definition and construct measures of financial distance using a broad set of financial indicators. The econometric approach consists of a gravity-style model, estimated according to the latest advancements in econometric techniques in order to avoid omitted variable bias. The results indicate that financial system similarity is associated with increased bilateral FDI flows, a conclusion that is robust across different estimation strategies and financial distance measures. This insightful policy implication for advanced economies is that the restructuring of the financial system and harmonisation to best practices can contribute to economic recovery through the FDI channel as well. Finally, the results highlight the importance for the full implementation of the Banking Union and the Capital Markets Union in the EU.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"169 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-02-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139752946","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}
Does state‐owned enterprise (SOE) prevalence affect the employment adjustments of firms after trade liberalisation? This paper estimates the role of the prevalence of SOEs in the labour market in import competition by using city‐industry level panel data in China from 2000 to 2006. Our results indicate that import competition decreases employment in the manufacturing industry and that SOE prevalence could partially offset the negative effect on employment. This offsetting effect is demonstrated at both extensive and intensive margins. Moreover, SOE prevalence has a positive externality for the employment of non‐SOEs under the import competition shock. Therefore, we verify the positive externality of SOEs in labour market adjustment in response to import competition.
{"title":"Import competition, state‐owned enterprise prevalence and employment: Evidence from China","authors":"Ting Zhu, Tan Li","doi":"10.1111/twec.13550","DOIUrl":"https://doi.org/10.1111/twec.13550","url":null,"abstract":"Does state‐owned enterprise (SOE) prevalence affect the employment adjustments of firms after trade liberalisation? This paper estimates the role of the prevalence of SOEs in the labour market in import competition by using city‐industry level panel data in China from 2000 to 2006. Our results indicate that import competition decreases employment in the manufacturing industry and that SOE prevalence could partially offset the negative effect on employment. This offsetting effect is demonstrated at both extensive and intensive margins. Moreover, SOE prevalence has a positive externality for the employment of non‐SOEs under the import competition shock. Therefore, we verify the positive externality of SOEs in labour market adjustment in response to import competition.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"12 4","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-02-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139867021","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}
Does state‐owned enterprise (SOE) prevalence affect the employment adjustments of firms after trade liberalisation? This paper estimates the role of the prevalence of SOEs in the labour market in import competition by using city‐industry level panel data in China from 2000 to 2006. Our results indicate that import competition decreases employment in the manufacturing industry and that SOE prevalence could partially offset the negative effect on employment. This offsetting effect is demonstrated at both extensive and intensive margins. Moreover, SOE prevalence has a positive externality for the employment of non‐SOEs under the import competition shock. Therefore, we verify the positive externality of SOEs in labour market adjustment in response to import competition.
{"title":"Import competition, state‐owned enterprise prevalence and employment: Evidence from China","authors":"Ting Zhu, Tan Li","doi":"10.1111/twec.13550","DOIUrl":"https://doi.org/10.1111/twec.13550","url":null,"abstract":"Does state‐owned enterprise (SOE) prevalence affect the employment adjustments of firms after trade liberalisation? This paper estimates the role of the prevalence of SOEs in the labour market in import competition by using city‐industry level panel data in China from 2000 to 2006. Our results indicate that import competition decreases employment in the manufacturing industry and that SOE prevalence could partially offset the negative effect on employment. This offsetting effect is demonstrated at both extensive and intensive margins. Moreover, SOE prevalence has a positive externality for the employment of non‐SOEs under the import competition shock. Therefore, we verify the positive externality of SOEs in labour market adjustment in response to import competition.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"2012 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2024-02-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139807389","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}
We estimate the effect of the granting of European Union (EU) citizenship rights on the flow of remittances from Italy. We use the EU enlargements of 2007 and 2013 as natural experiments. The results show a negative impact on remittance flows. The effect of the 2007 EU enlargement shows how Romanian and Bulgarian citizens reduced the average annual amount of remittances by 1400 Euros per year per migrant. In the case of the 2013 EU enlargement, we find a smaller decrease of about 50 Euros per year per Croat. These results are consistent after a series of robustness checks. We analyse this decline in depth to the extent that remittances are an important source of monetary flows in transition economies. We find that both the change in the taxonomy of immigrants from the new Member States and the improvement of economic conditions in the country of origin after the EU accession provide suggestive evidence on plausible mechanisms behind our results.
{"title":"The effect of obtaining EU citizenship in former transition economies on remittance flows","authors":"Luca Pieroni, Melcior Rossello Roig","doi":"10.1111/twec.13548","DOIUrl":"https://doi.org/10.1111/twec.13548","url":null,"abstract":"We estimate the effect of the granting of European Union (EU) citizenship rights on the flow of remittances from Italy. We use the EU enlargements of 2007 and 2013 as natural experiments. The results show a negative impact on remittance flows. The effect of the 2007 EU enlargement shows how Romanian and Bulgarian citizens reduced the average annual amount of remittances by 1400 Euros per year per migrant. In the case of the 2013 EU enlargement, we find a smaller decrease of about 50 Euros per year per Croat. These results are consistent after a series of robustness checks. We analyse this decline in depth to the extent that remittances are an important source of monetary flows in transition economies. We find that both the change in the taxonomy of immigrants from the new Member States and the improvement of economic conditions in the country of origin after the EU accession provide suggestive evidence on plausible mechanisms behind our results.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"12 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139053981","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}
We examine the contribution of institutional reforms to economic growth. To this end, we distinguish between several classes of institutional reform in the approach to economic liberalisation. Based on a sample of 24 current and former transition economies for the period 1980–2016, we estimate the counterfactual scenarios related to each distinctive institutional approach to the economic liberalisation by making use of the synthetic control method. Our evidence uncovers notable contrasts in the long-term effectiveness of designated policy approaches in recovering from the transitional recession. A variety of synthetic control estimates suggests that a sustained big bang approach (rapid reforms) appears to be the most effective approach, while an abortive and gradualist approach tends to produce a permanent breakdown of the growth trajectories relative to the estimated counterfactuals. The point estimates survive an extensive battery of placebo tests. By employing the same methodological tool kit, future research could examine the impact of transition reforms on other socio-economic variables, such as the poverty rates, income inequalities, health and environmental outcomes.
{"title":"Using synthetic control method to estimate the growth effects of economic liberalisation: Evidence from transition economies","authors":"Jaroslaw Kantorowicz, Rok Spruk","doi":"10.1111/twec.13544","DOIUrl":"https://doi.org/10.1111/twec.13544","url":null,"abstract":"We examine the contribution of institutional reforms to economic growth. To this end, we distinguish between several classes of institutional reform in the approach to economic liberalisation. Based on a sample of 24 current and former transition economies for the period 1980–2016, we estimate the counterfactual scenarios related to each distinctive institutional approach to the economic liberalisation by making use of the synthetic control method. Our evidence uncovers notable contrasts in the long-term effectiveness of designated policy approaches in recovering from the transitional recession. A variety of synthetic control estimates suggests that a sustained big bang approach (rapid reforms) appears to be the most effective approach, while an abortive and gradualist approach tends to produce a permanent breakdown of the growth trajectories relative to the estimated counterfactuals. The point estimates survive an extensive battery of placebo tests. By employing the same methodological tool kit, future research could examine the impact of transition reforms on other socio-economic variables, such as the poverty rates, income inequalities, health and environmental outcomes.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"14 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139054076","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}
Lars P. Feld, Ekkehard A. Köhler, Leonardo Palhuca, Christoph A. Schaltegger
Previous empirical studies suggest that fiscal decentralisation, measured by the number of government layers, is associated with less foreign direct investment (FDI). With an improved dataset on the tax autonomy of sub-federal government tiers, we present evidence that fiscal decentralisation (de facto) does not reduce FDI. If local governments can set their tax rates and bases autonomously, they attract more FDI. Analysing 128,425 corporate cross-border acquisitions (CBA), between 194 source and 215 host jurisdictions from 1997 to 2021, we find that full taxation autonomy by subnational governments can double the number of CBAs in a given year. These results apply to high-income hosts and do not depend on specific periods.
{"title":"Fiscal federalism and foreign direct investment – An empirical analysis","authors":"Lars P. Feld, Ekkehard A. Köhler, Leonardo Palhuca, Christoph A. Schaltegger","doi":"10.1111/twec.13547","DOIUrl":"https://doi.org/10.1111/twec.13547","url":null,"abstract":"Previous empirical studies suggest that fiscal decentralisation, measured by the number of government layers, is associated with less foreign direct investment (FDI). With an improved dataset on the tax autonomy of sub-federal government tiers, we present evidence that fiscal decentralisation (de facto) does not reduce FDI. If local governments can set their tax rates and bases autonomously, they attract more FDI. Analysing 128,425 corporate cross-border acquisitions (CBA), between 194 source and 215 host jurisdictions from 1997 to 2021, we find that full taxation autonomy by subnational governments can double the number of CBAs in a given year. These results apply to high-income hosts and do not depend on specific periods.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"35 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139031524","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}
Wildmer Daniel Gregori, Maria Martinez-Cillero, Michela Nardo
This study empirically investigates the extent to which firms in the European Union, once acquired through a cross-border acquisition, show different productivity levels as compared to those firms that have not been acquired. Our identification strategy relies on the combination of Propensity Scores and the Staggered Difference-in-Difference estimator, using firms' balance sheet data for the years 2008–2018. We find that cross-border acquisitions decrease the productivity of the acquired firms, especially in the manufacturing sector, both high- and low-tech. We also find evidence of origin and sector heterogeneity. Firms targeted by acquirers with ultimate owners originating in emerging market economies and Offshore Financial Centres also decrease productivity of target firms operating in high-tech manufacturing sectors.
{"title":"The effects of cross-border acquisitions on firms' productivity in the EU","authors":"Wildmer Daniel Gregori, Maria Martinez-Cillero, Michela Nardo","doi":"10.1111/twec.13521","DOIUrl":"https://doi.org/10.1111/twec.13521","url":null,"abstract":"This study empirically investigates the extent to which firms in the European Union, once acquired through a cross-border acquisition, show different productivity levels as compared to those firms that have not been acquired. Our identification strategy relies on the combination of Propensity Scores and the Staggered Difference-in-Difference estimator, using firms' balance sheet data for the years 2008–2018. We find that cross-border acquisitions decrease the productivity of the acquired firms, especially in the manufacturing sector, both high- and low-tech. We also find evidence of origin and sector heterogeneity. Firms targeted by acquirers with ultimate owners originating in emerging market economies and Offshore Financial Centres also decrease productivity of target firms operating in high-tech manufacturing sectors.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"28 1","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138692361","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}
Despite the rich literature on income inequality, its impact on entrepreneurship is inconclusive, especially regarding the effect of different structures of inequality. In this research, we endeavour to explain such a phenomenon by formalising the inequality of opportunity. Utilising micro‐level data from China, we argue that it is inequality of opportunity that is negatively correlated with people's engagement in entrepreneurship, and this conclusion is consistent under a series of robustness checks. Our heterogeneity analysis indicates that the association between inequality of opportunity and entrepreneurship is stronger for self‐employment than for bigger‐scale private companies. It is also the strongest in regions with the lowest GDP per capita, the lowest fiscal expenditures and the smallest tertiary sector. These results suggest that economic development quality, economic structure and public service are important factors that influence the correlations between inequality of opportunity (IO) and entrepreneurial activities. Finally, we seek to understand the channels through which IO may be linked to entrepreneurship. Our results find that IO may discourage engagement in entrepreneurship by depressing human capital accumulation, access to credit, social capital and risk taking.
{"title":"The effect of inequality of opportunity on entrepreneurship: Evidence from China","authors":"Guangsu Zhou, Lizhong Liu","doi":"10.1111/twec.13543","DOIUrl":"https://doi.org/10.1111/twec.13543","url":null,"abstract":"Despite the rich literature on income inequality, its impact on entrepreneurship is inconclusive, especially regarding the effect of different structures of inequality. In this research, we endeavour to explain such a phenomenon by formalising the inequality of opportunity. Utilising micro‐level data from China, we argue that it is inequality of opportunity that is negatively correlated with people's engagement in entrepreneurship, and this conclusion is consistent under a series of robustness checks. Our heterogeneity analysis indicates that the association between inequality of opportunity and entrepreneurship is stronger for self‐employment than for bigger‐scale private companies. It is also the strongest in regions with the lowest GDP per capita, the lowest fiscal expenditures and the smallest tertiary sector. These results suggest that economic development quality, economic structure and public service are important factors that influence the correlations between inequality of opportunity (IO) and entrepreneurial activities. Finally, we seek to understand the channels through which IO may be linked to entrepreneurship. Our results find that IO may discourage engagement in entrepreneurship by depressing human capital accumulation, access to credit, social capital and risk taking.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"40 5","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"139010438","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}
Yihao Chen, Siying Ding, Yongzheng Liu, Guangliang Ye
China enacted the Anti‐Monopoly Law in 2008. This law is deemed a milestone of competition policy to improve market efficiency in the country. This paper builds a theoretical model and applies a difference‐in‐differences method using a firm‐level dataset of the 1998–2015 period to examine the impact of this law on firm productivity. We show that the enactment of this law significantly increased the total factor productivity (TFP) of the firms. The results are shown to be robust across alternative definitions of the treatment variable and alternative measures of productivity. Finally, we show that the productivity effect of this law tends to be stronger among state‐owned enterprises than private/foreign firms and large firms than small firms.
{"title":"Competition policy and firm productivity: Quasi‐experimental evidence from China","authors":"Yihao Chen, Siying Ding, Yongzheng Liu, Guangliang Ye","doi":"10.1111/twec.13545","DOIUrl":"https://doi.org/10.1111/twec.13545","url":null,"abstract":"China enacted the Anti‐Monopoly Law in 2008. This law is deemed a milestone of competition policy to improve market efficiency in the country. This paper builds a theoretical model and applies a difference‐in‐differences method using a firm‐level dataset of the 1998–2015 period to examine the impact of this law on firm productivity. We show that the enactment of this law significantly increased the total factor productivity (TFP) of the firms. The results are shown to be robust across alternative definitions of the treatment variable and alternative measures of productivity. Finally, we show that the productivity effect of this law tends to be stronger among state‐owned enterprises than private/foreign firms and large firms than small firms.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"63 4","pages":""},"PeriodicalIF":0.0,"publicationDate":"2023-12-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138587266","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}
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：