Abstract The recent COVID‐19 pandemic has highlighted the importance of global access to human vaccines. There is, however, no empirical work on either the unequal distribution of international trade or on its determinants. Applying a gravity model to the UN Comtrade database between 2000 and 2019, we explain the patterns of bilateral trade across 116 countries. Using the Poisson Pseudo‐Maximum Likelihood methodology, our results show that inequalities in international vaccine trade have steadily increased. In general, supply and demand drivers play a role in explaining the flow of human vaccines. The impact of these drivers varies depending on the income level of the importing country. High‐income countries intensify their flows with demand factors such as GDP per capita, or supply factors such as the location of big pharmaceutical companies. Conversely, low‐income countries receive more vaccines according to their population. Our results show that a poor country that houses a big pharmaceutical company acts as an exporting platform to developing and poor countries. Middle‐income countries present features similar to rich countries both by producing more and also by exporting more. The imbalance endangers the global fight against the current COVID‐19 pandemic.
{"title":"The international trade in human vaccines before COVID‐19","authors":"Agustí Segarra‐Blasco, Mercedes Teruel, Sebastiano Cattaruzzo","doi":"10.1111/twec.13533","DOIUrl":"https://doi.org/10.1111/twec.13533","url":null,"abstract":"Abstract The recent COVID‐19 pandemic has highlighted the importance of global access to human vaccines. There is, however, no empirical work on either the unequal distribution of international trade or on its determinants. Applying a gravity model to the UN Comtrade database between 2000 and 2019, we explain the patterns of bilateral trade across 116 countries. Using the Poisson Pseudo‐Maximum Likelihood methodology, our results show that inequalities in international vaccine trade have steadily increased. In general, supply and demand drivers play a role in explaining the flow of human vaccines. The impact of these drivers varies depending on the income level of the importing country. High‐income countries intensify their flows with demand factors such as GDP per capita, or supply factors such as the location of big pharmaceutical companies. Conversely, low‐income countries receive more vaccines according to their population. Our results show that a poor country that houses a big pharmaceutical company acts as an exporting platform to developing and poor countries. Middle‐income countries present features similar to rich countries both by producing more and also by exporting more. The imbalance endangers the global fight against the current COVID‐19 pandemic.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"5 6","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"134909232","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}
Abstract We estimate, by means of the local projection method, the short to medium‐term economic impact of previous pandemics in a sample of 170 countries during the 2000–2018 period. We find that the output effect has been significant (reaching over −2 percent after 5 years) and persistent. The impact has varied across income groups, with pandemics affecting more developed countries through a big negative impact on investment. Moreover, we explored the relevance of fiscal space in affecting the negative economic impact of pandemics. To this end, we constructed new aggregate fiscal space variables based on a principal component analysis that combined several indicators. Results suggest that the initial fiscal landscape of countries was a key ingredient in softening the economic impact of past pandemics. We believe that this paper's findings are useful to inform policymakers about what can be expected in the new normal that is following the recent COVID‐19 pandemic, particularly in a context of increasingly constrained fiscal space.
{"title":"Pandemics and economic turmoil in the <scp>short‐run</scp>: The role of fiscal space","authors":"João Tovar Jalles","doi":"10.1111/twec.13527","DOIUrl":"https://doi.org/10.1111/twec.13527","url":null,"abstract":"Abstract We estimate, by means of the local projection method, the short to medium‐term economic impact of previous pandemics in a sample of 170 countries during the 2000–2018 period. We find that the output effect has been significant (reaching over −2 percent after 5 years) and persistent. The impact has varied across income groups, with pandemics affecting more developed countries through a big negative impact on investment. Moreover, we explored the relevance of fiscal space in affecting the negative economic impact of pandemics. To this end, we constructed new aggregate fiscal space variables based on a principal component analysis that combined several indicators. Results suggest that the initial fiscal landscape of countries was a key ingredient in softening the economic impact of past pandemics. We believe that this paper's findings are useful to inform policymakers about what can be expected in the new normal that is following the recent COVID‐19 pandemic, particularly in a context of increasingly constrained fiscal space.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"13 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135113488","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}
Nicolas Himounet, Francisco Serranito, Julien Vauday
How large and persistent are the effects of uncertainty shocks on the economy? Are the effects of macroeconomic uncertainty shocks different from those of financial uncertainty shocks? In the empirical literature, there was a consensus on an estimated negative impact of uncertainty on macroeconomic variables. Recently, some studies identifying shocks with a novel methodology, namely the events constraint approach, find that macroeconomic uncertainty shocks may trigger an increase in the industrial production. The goal of this paper is to question this striking result. We have identified two main shortcomings in this literature that could explain the positive correlation between macroeconomic uncertainty and economic activity. We show that this method of identification can be sensitive depending on how to identify and select the structural uncertainty shocks in a SVAR model. Our main conclusion is that the controversial result of a positive effect of macroeconomic uncertainty on economic activity does not yet seem to be proven. Whether financial or macroeconomic, there is no evidence allowing for rejection of the hypothesis that they have a negative impact on economic activity.
{"title":"A positive effect of uncertainty shocks on the economy: Is the chase over?","authors":"Nicolas Himounet, Francisco Serranito, Julien Vauday","doi":"10.1111/twec.13520","DOIUrl":"https://doi.org/10.1111/twec.13520","url":null,"abstract":"How large and persistent are the effects of uncertainty shocks on the economy? Are the effects of macroeconomic uncertainty shocks different from those of financial uncertainty shocks? In the empirical literature, there was a consensus on an estimated negative impact of uncertainty on macroeconomic variables. Recently, some studies identifying shocks with a novel methodology, namely the events constraint approach, find that macroeconomic uncertainty shocks may trigger an increase in the industrial production. The goal of this paper is to question this striking result. We have identified two main shortcomings in this literature that could explain the positive correlation between macroeconomic uncertainty and economic activity. We show that this method of identification can be sensitive depending on how to identify and select the structural uncertainty shocks in a SVAR model. Our main conclusion is that the controversial result of a positive effect of macroeconomic uncertainty on economic activity does not yet seem to be proven. Whether financial or macroeconomic, there is no evidence allowing for rejection of the hypothesis that they have a negative impact on economic activity.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"124 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135778620","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}
Abstract This paper analyses how regulatory convergence in different categories of technical barriers to trade (TBTs) imposed on imports of goods in information and communications technology (ICT) globally affected the values, volumes and unit values of imported goods during the period 1996–2019. Keywords cited in TBTs that are notified to the World Trade Organisation (WTO) give an indication of the regulatory objectives behind the imposition of TBTs. MAST also classifies TBTs based on their applicability, procedural and administrative uses, factors which will also be taken into consideration in the analysis. However, the objectives of TBTs may provide better insights to policymakers. TBTs are non‐discriminatory measures that are imposed unilaterally on all trading partners and on domestic producers. It is not feasible to analyse unilateral TBTs in a gravity setting, as they are excluded by the introduction of country‐product‐time fixed effects that control for multilateral resistances. However, regulatory convergence in TBT categories is a bilateral time‐varying variable that is analysed in a gravity model in this paper. The empirical results suggest that regulatory convergence between trading partners in some TBT categories stimulates import values and volumes. However, the impact is very heterogeneous across TBT objectives and classes and across ICT product categories.
{"title":"Regulatory convergence within technical barriers to trade","authors":"Mahdi Ghodsi","doi":"10.1111/twec.13515","DOIUrl":"https://doi.org/10.1111/twec.13515","url":null,"abstract":"Abstract This paper analyses how regulatory convergence in different categories of technical barriers to trade (TBTs) imposed on imports of goods in information and communications technology (ICT) globally affected the values, volumes and unit values of imported goods during the period 1996–2019. Keywords cited in TBTs that are notified to the World Trade Organisation (WTO) give an indication of the regulatory objectives behind the imposition of TBTs. MAST also classifies TBTs based on their applicability, procedural and administrative uses, factors which will also be taken into consideration in the analysis. However, the objectives of TBTs may provide better insights to policymakers. TBTs are non‐discriminatory measures that are imposed unilaterally on all trading partners and on domestic producers. It is not feasible to analyse unilateral TBTs in a gravity setting, as they are excluded by the introduction of country‐product‐time fixed effects that control for multilateral resistances. However, regulatory convergence in TBT categories is a bilateral time‐varying variable that is analysed in a gravity model in this paper. The empirical results suggest that regulatory convergence between trading partners in some TBT categories stimulates import values and volumes. However, the impact is very heterogeneous across TBT objectives and classes and across ICT product categories.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"69 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135884894","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}
Abstract This Special Issue (SI) gathers 13 papers presented at the 23rd INFER Annual Conference which took place in Lisbon, 8–10 September 2021, at ISEG – Lisbon School of Economics and Management. The conference was organised by INFER (International Network for Economic Research), UECE (Research Unit on Complexity and Economics), and REM (Research in Economics and Mathematics). The papers of the SI focus on key topics in international macroeconomics, revisit the fiscal policy conduct within a globalised world, investigate how uncertainty and risk affect macroeconomic policies, and analyse the links between labor market outcomes, automation, and economic integration.
{"title":"Introduction to INFER special issue on “new aspects of economic and financial integration”","authors":"António Afonso, Cristina Badarau, Camélia Turcu","doi":"10.1111/twec.13517","DOIUrl":"https://doi.org/10.1111/twec.13517","url":null,"abstract":"Abstract This Special Issue (SI) gathers 13 papers presented at the 23rd INFER Annual Conference which took place in Lisbon, 8–10 September 2021, at ISEG – Lisbon School of Economics and Management. The conference was organised by INFER (International Network for Economic Research), UECE (Research Unit on Complexity and Economics), and REM (Research in Economics and Mathematics). The papers of the SI focus on key topics in international macroeconomics, revisit the fiscal policy conduct within a globalised world, investigate how uncertainty and risk affect macroeconomic policies, and analyse the links between labor market outcomes, automation, and economic integration.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"22 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135885042","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}
Abstract This study examines the socioeconomic impact of Special Economic Zones (SEZs) in Cambodia—a prominent place‐based policy established in 2005. The paper employs a database on existing and future SEZs in Cambodia with matched household surveys at the district level and documents stylized facts on SEZs in a low‐income country setting. To identify the causal effects of the SEZ program, the paper (i) constructs an alternative control group including future SEZ program participants and districts adjacent to SEZ hosts; and (ii) employs a propensity score weighting technique. The study finds that entry of SEZs increases employment and leads to a decline in income inequality at a district level. Gains in female employment is the key channel explaining rising employment rates. The paper also finds that school drop‐out rates are higher in districts with clusters of multiple SEZs.
{"title":"The socioeconomic impact of Special Economic Zones: Evidence from Cambodia","authors":"Mariya Brussevich","doi":"10.1111/twec.13526","DOIUrl":"https://doi.org/10.1111/twec.13526","url":null,"abstract":"Abstract This study examines the socioeconomic impact of Special Economic Zones (SEZs) in Cambodia—a prominent place‐based policy established in 2005. The paper employs a database on existing and future SEZs in Cambodia with matched household surveys at the district level and documents stylized facts on SEZs in a low‐income country setting. To identify the causal effects of the SEZ program, the paper (i) constructs an alternative control group including future SEZ program participants and districts adjacent to SEZ hosts; and (ii) employs a propensity score weighting technique. The study finds that entry of SEZs increases employment and leads to a decline in income inequality at a district level. Gains in female employment is the key channel explaining rising employment rates. The paper also finds that school drop‐out rates are higher in districts with clusters of multiple SEZs.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"173 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136032465","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}
Abstract This paper explores the impact of the US dollar dominance on monetary and exchange rate policies in 51 advanced and developing countries from 1999 to 2021. We introduce a global exposure index to measure countries' dependence on the US dollar. Our study reveals that the dominant currency framework creates a global monetary cycle driven by the US dollar, exposing non‐U.S. economies to the U.S. monetary policy. However, we show that countries can reduce their exposure to the U.S. monetary policy by accumulating reserves and intervening in foreign exchange.
{"title":"Trilemma revisited with dollar dominance in trade and finance","authors":"Vanessa Olakemi Dovonou","doi":"10.1111/twec.13525","DOIUrl":"https://doi.org/10.1111/twec.13525","url":null,"abstract":"Abstract This paper explores the impact of the US dollar dominance on monetary and exchange rate policies in 51 advanced and developing countries from 1999 to 2021. We introduce a global exposure index to measure countries' dependence on the US dollar. Our study reveals that the dominant currency framework creates a global monetary cycle driven by the US dollar, exposing non‐U.S. economies to the U.S. monetary policy. However, we show that countries can reduce their exposure to the U.S. monetary policy by accumulating reserves and intervening in foreign exchange.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"26 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135993472","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}
Abstract We investigate the impacts of geopolitical risks (GPRs) on financial stress (FS) in major emerging economies from 1985 to 2019. Applying a recently developed panel quantile estimation method, we show that GPRs pose serious risks to the stability of the financial condition in emerging economies. Namely, when FS is already equal to or above average, GPRs intensify this instability to a remarkable degree. Nevertheless, GPRs do not ignite the stress when the financial situation is benign. In emerging economies, foreign exchange markets and, to a lesser extent, the banking industry and the debt market suffer more severe consequences of geopolitical tensions than the stock market. In contrast, advanced economies, represented by the Group of Seven (G7), have witnessed detrimental consequences of GPRs on their stock markets, but negligible effects on other parts of their financial systems.
{"title":"Geopolitical risks and financial stress in emerging economies","authors":"Tam NguyenHuu, Deniz Karaman Örsal","doi":"10.1111/twec.13529","DOIUrl":"https://doi.org/10.1111/twec.13529","url":null,"abstract":"Abstract We investigate the impacts of geopolitical risks (GPRs) on financial stress (FS) in major emerging economies from 1985 to 2019. Applying a recently developed panel quantile estimation method, we show that GPRs pose serious risks to the stability of the financial condition in emerging economies. Namely, when FS is already equal to or above average, GPRs intensify this instability to a remarkable degree. Nevertheless, GPRs do not ignite the stress when the financial situation is benign. In emerging economies, foreign exchange markets and, to a lesser extent, the banking industry and the debt market suffer more severe consequences of geopolitical tensions than the stock market. In contrast, advanced economies, represented by the Group of Seven (G7), have witnessed detrimental consequences of GPRs on their stock markets, but negligible effects on other parts of their financial systems.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"81 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136032926","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}
Abstract This paper examines the international spillover effects of China's government spending using the Bayesian technique based on a monthly dataset covering China, the world economy and the G7. The split‐sample analysis shows that China's government spending had a significant positive spillover effect on the world economy after 2008, while the effect was moderately negative before 2008. The trade channel plays a dominant role in the international propagation of China's government spending shock and could explain the changes in spillover effects. For the domestic economy, the stimulative effect of China's government spending has weakened slightly after 2008.
{"title":"The evolving international effects of China's government spending","authors":"Wen Zhang","doi":"10.1111/twec.13494","DOIUrl":"https://doi.org/10.1111/twec.13494","url":null,"abstract":"Abstract This paper examines the international spillover effects of China's government spending using the Bayesian technique based on a monthly dataset covering China, the world economy and the G7. The split‐sample analysis shows that China's government spending had a significant positive spillover effect on the world economy after 2008, while the effect was moderately negative before 2008. The trade channel plays a dominant role in the international propagation of China's government spending shock and could explain the changes in spillover effects. For the domestic economy, the stimulative effect of China's government spending has weakened slightly after 2008.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"27 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-13","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"135858808","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}
Abstract Owing to globalisation‐induced fragmentation of production across regions and reorganisation of global value chains (GVCs), more attention is being paid to the impact of deep preferential trade agreements (PTAs) on GVC participation. We examine how the promotional effect of deep trade agreements on GVC participation changes with GVC production position distance between member countries. We argue that production position distance has an inverted U‐shaped effect on the relationship between deep trade agreements and bilateral GVC participation. Specifically, starting with a short production position distance, an increase in production position distance can strengthen the promotional effect of deep trade agreements on bilateral GVC participation. However, when the production position distance reaches a certain threshold, an increase in production position distance weakens the promotional effect of deep trade agreements on bilateral GVC participation. Analysis of panel data, which covers 43 countries over the 2000–2014 period, supports our predictions. Further analysis shows that the inverted U‐shaped effect of production position distance on the relationship between deep trade agreements and bilateral GVC participation is more likely to take place in the manufacturing sector rather than in the services sector.
{"title":"Deep trade agreements, production position distance and bilateral global value chain participation","authors":"Zhaobin Fan, Sajid Anwar, Ying Zhou","doi":"10.1111/twec.13514","DOIUrl":"https://doi.org/10.1111/twec.13514","url":null,"abstract":"Abstract Owing to globalisation‐induced fragmentation of production across regions and reorganisation of global value chains (GVCs), more attention is being paid to the impact of deep preferential trade agreements (PTAs) on GVC participation. We examine how the promotional effect of deep trade agreements on GVC participation changes with GVC production position distance between member countries. We argue that production position distance has an inverted U‐shaped effect on the relationship between deep trade agreements and bilateral GVC participation. Specifically, starting with a short production position distance, an increase in production position distance can strengthen the promotional effect of deep trade agreements on bilateral GVC participation. However, when the production position distance reaches a certain threshold, an increase in production position distance weakens the promotional effect of deep trade agreements on bilateral GVC participation. Analysis of panel data, which covers 43 countries over the 2000–2014 period, supports our predictions. Further analysis shows that the inverted U‐shaped effect of production position distance on the relationship between deep trade agreements and bilateral GVC participation is more likely to take place in the manufacturing sector rather than in the services sector.","PeriodicalId":75211,"journal":{"name":"The World economy","volume":"77 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2023-10-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"136212956","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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