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Double whammy? Trade and automation in engineering services Review of International Economics (IF 1.234) Pub Date : 2024-03-06 Franziska Klügl, Hildegunn Kyvik Nordås
This paper studies the role of trade for the joint uptake of AI‐enabled automation in manufacturing and engineering. It develops an agent‐based model (ABM) where the agents are heterogeneous manufacturers and engineering firms. The ABM features two technology‐related business models: engineering as a face‐to‐face consultancy service and engineering as automated software. The software adoption rate
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Barrier or opportunity? How trade regulations shape Colombian firms' export strategies Review of International Economics (IF 1.234) Pub Date : 2024-02-26 Samuel Rosenow
Firms increasingly have to contend with trade regulations to access foreign markets. We quantify their relative importance and the heterogeneous effects for Colombians firms exporting to Latin America between 2007 and 2017, focusing on specific types and channels. Using panel evidence from a firm‐level gravity model with a difference‐in‐differences identification strategy, technical barriers to trade
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Patterns of regulatory heterogeneity in international trade: Intensity, coverage, and structure Review of International Economics (IF 1.234) Pub Date : 2024-02-19 Irene Garcés, Achim Vogt
With falling tariffs the role of regulatory heterogeneity in international trade has become central in recent debates about regional integration and trade costs. In describing the NTM incidence few studies explicitly take into account the specific nature of underlying regulatory differences. We propose distinguishing regulatory heterogeneity with respect to the intensity, coverage, and structure of
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Spatial spillovers in trade agreement memberships: Does institutional proximity matter? Review of International Economics (IF 1.234) Pub Date : 2024-02-18 Renliang Liu, Thanasis Stengos, Yiguo Sun
This paper examines spatial spillovers in the formation of preferential trade agreements (PTAs) through a new channel of institutional proximity. Our dependent variable is the status of PTAs between country attributes within a country-pair. The explanatory variable of interest is the status of PTAs in neighbouring country-pairs that share proximity in institutional development. We consider democracy
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Gain without pain? Non-tariff measures, plant markup, and productivity Review of International Economics (IF 1.234) Pub Date : 2024-02-02 Massimiliano Calì, Marco Le Moglie, Giorgio Presidente
This paper extends the evidence on the impact of trade reforms on firms by focusing on non-tariff measures (NTMs), an increasingly important trade policy instrument in advanced and developing economies. We build a novel time-varying dataset on all NTMs applied to imported products by Indonesia and quantify the trade distortions they generate. We find that unlike tariffs, which reduce plants' productivity
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International trade and income distribution: The effect of corporate governance regimes Review of International Economics (IF 1.234) Pub Date : 2024-01-29 Hartmut Egger, Peter H. Egger, Douglas Nelson
This paper introduces a model of corporate governance into the general oligopolistic equilibrium theory of international trade. Corporate governance defines the influence of workers and capital owners on manager contract and, through this contract, the scope of these two groups for subsequent rent extraction in the wage/employment negotiation between firms and unions. If capital owners have dictatorship
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Central bank communication and expectations: Evidence for inflation-targeting economies Review of International Economics (IF 1.234) Pub Date : 2024-01-21 Magdalena Szyszko, Agata Kliber, Aleksandra Rutkowska, Mariusz Próchniak
We seek to investigate the effects of communication by central banks on professional and consumer inflation expectations. Accordingly, we investigate 12 small open economies implementing inflation targeting. The communication tone of the central banks is determined based on their post-decision releases. We use computational linguistics to quantify this factor. With regard to two subsamples that are
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Analyzing the effects of economic sanctions: Recent theory, data, and quantification Review of International Economics (IF 1.234) Pub Date : 2024-01-15 Peter Egger, Constantinos Syropoulos, Yoto V. Yotov
Inspired by the increased interest in economic sanctions and their consequences, this special issue contains a collection of studies by experts aiming to reflect the recent developments and trends in the literature on economic sanctions. The contributions contain theoretical research on the topic, data collection, and empirical work on the impact, effectiveness and success of sanctions. Moreover, the
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Tax policy competition under destination-based taxation Review of International Economics (IF 1.234) Pub Date : 2024-01-09 Thomas Beyer, Thomas A. Gresik
We extend Bond and Gresik (On the incentive compatibility of universal adoption of destination-based cash flow taxation, International Tax and Public Finance, October 2022) by analyzing the equilibrium capital expense deduction policies that arise when countries compete for multinational investment under destination-based taxation. Bond and Gresik proved that destination-base cash flow taxation cannot
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Samuelson, Mortensen, and Melitz walk into a chocolate bar: A tale of jobs, inter-generational conflict, and international trade Review of International Economics (IF 1.234) Pub Date : 2024-01-08 Carl Davidson, Steven Matusz
We bring together three prominent literatures to show how jobs create an intergenerational externality. Employment acts as an asset, allowing current generations to borrow from future generations. The competitive equilibrium is not Pareto efficient, and the policies preferred by the current generation differ from the policies that maximize the welfare of future generations. We illustrate with an application
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Pass-through of shocks into different U.S. prices Review of International Economics (IF 1.234) Pub Date : 2024-01-02 Hakan Yilmazkuday
This article estimates the pass-through of different shocks into different U.S. prices that are important for policy makers. The investigation is based on a structural vector autoregression model, where quarterly data are used. The empirical results depict oil price pass-through, exchange rate pass-through, import-price pass-through, and producer price pass-through into import prices, producer prices
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Quantifying economic impacts of trade agreements with heterogeneous trade elasticities Review of International Economics (IF 1.234) Pub Date : 2023-12-26 Hiau Looi Kee, Alessandro Nicita
Bilateral trade relationships between countries vary across products. Such heterogeneity poses challenges when assessing the economic impacts of trade agreements. This paper estimates bilateral trade elasticities at the product level and explores these impacts using a hypothetical no-deal Brexit as an example. Our findings indicate that the European Union's demand for the United Kingdom products is
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Spillovers from government policy during a crisis: Evidence from international trade during COVID-19 lockdowns Review of International Economics (IF 1.234) Pub Date : 2023-12-13 Miguel Cardoso, Brandon Malloy
We examine how variation in the severity of government intervention in response to the COVID-19 pandemic impacted trade, using a novel dataset on monthly bilateral trade flows between Canadian provinces and U.S. states. Our results show that differences in the collections of policy responses employed by states and provinces throughout the course of the pandemic have had a significant and heterogeneous
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Estimating gravity coefficients with multiple layers of heterogeneity Review of International Economics (IF 1.234) Pub Date : 2023-12-13 Erick Kitenge, Sajal Lahiri
We estimate a gravity model for 205 countries, with data from 1954 to 2014, allowing for multiple layers of heterogeneity. The first layer arises from the interactions between a set of traditional gravity variables. The second one comes from country pairs that differ in values of the binary time-independent gravity variables. Further layers come from different income groups and regions. Our results
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Trade and credit: Revisiting the evidence Review of International Economics (IF 1.234) Pub Date : 2023-11-23 Eduardo Gutiérrez, Enrique Moral-Benito
This paper explores the effects of bank lending shocks on the export behavior of Spanish firms. For that purpose, we combine data on exports at the firm-product-destination level with a matched bank-firm dataset incorporating information on the universe of corporate loans from 2002 to 2013. Armed with this dataset, we identify bank-year specific credit supply shocks and estimate their impact on firms'
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Corporate income taxation and multinational production Review of International Economics (IF 1.234) Pub Date : 2023-10-30 Yang Shen
Through the lens of a quantitative general equilibrium model of international trade and multinational production, this paper studies corporate tax competition and cooperation among asymmetric countries. The model theoretically supports the empirical regularities that corporate income taxation influences multinational firms' location and production decisions. Calibrating the model to three asymmetric
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Importer market power and preferential trade agreements: Empirical evidence Review of International Economics (IF 1.234) Pub Date : 2023-10-27 Ross Jestrab
This paper provides direct empirical evidence that preferential trade agreements (PTAs) are consistent with the terms-of-trade theory. Using PTAs that occur between 2001 and 2015, we first show a PTA is associated with being more likely if countries have greater importer market power over one another. Second, using recently available tariff data for 39 bilateral PTAs, we show high levels of importer
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Going Dutch? Firm exports and FDI in the wake of the 2014 EU-Russia sanctions Review of International Economics (IF 1.234) Pub Date : 2023-10-27 Tristan Kohl, Marcel van den Berg, Loe Franssen
We examine the 2014 European Union economic sanctions on exports to Russia and the Russian retaliatory measures on imports from several Western countries. Using the universe of highly disaggregated international trade and taxation data for firms in the Netherlands, we systematically analyze the impact of these economic sanctions on Dutch firms' exports and foreign direct investment. Our analyses account
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TBTs, firm organization and labor structure Review of International Economics (IF 1.234) Pub Date : 2023-10-24 Giorgio Barba Navaretti, Lionel Fontagné, Gianluca Orefice, Giovanni Pica, Anna Cecilia Rosso
This article investigates the effect of shocks to the occupational structure of exporting firms induced by the introduction of technical barriers to trade (TBTs) in importing countries. We rely on specific trade concerns data to identify trade-restrictive TBT measures, combined with matched employer-employee data for French exporters over the period 1995–2010, and information on the product-destinations
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The impact of policy uncertainty on foreign direct investment: Micro-evidence from Japan's international investment agreements Review of International Economics (IF 1.234) Pub Date : 2023-10-06 Mitsuo Inada, Naoto Jinji
This study proposes an empirical strategy to identify the impact of policy uncertainty (PU) at the host economy-sector-reservation level on foreign direct investment (FDI) by exploiting sectoral differences in PU before and after the entry into force of international investment agreements (IIAs). These sectoral differences arise because IIAs mitigate PU in host economies, but sectors included in negative
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Quantifying the partial and general equilibrium effects of sanctions on Russia Review of International Economics (IF 1.234) Pub Date : 2023-09-22 Lisandra Flach, Inga Heiland, Mario Larch, Marina Steininger, Feodora A. Teti
This paper evaluates the effects of sanctions on Russia between 2014 and 2019 and the resulting countersanctions. We estimate their impact on trade in a gravity framework, allowing for treatment heterogeneity among pairs and sectors, and use the estimated elasticities in a general equilibrium analysis. We find that the sanctions decreased trade with Russia in key sectors, translating to a loss in real
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Smart or smash? The effect of financial sanctions on trade in goods and services Review of International Economics (IF 1.234) Pub Date : 2023-09-04 Tibor Besedeš, Stefan Goldbach, Volker Nitsch
We examine the extent to which financial sanctions imposed by Germany through its European Union and United Nations commitments cause collateral damage on Germany's trade in goods and services. Financial sanctions reduce Germany's inflows and outflows of financial assets, as well as imports and exports of goods and services. The relative effects on trade in goods and services are weaker than on financial
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The effects of heterogeneous sanctions on exporting firms: Evidence from Denmark Review of International Economics (IF 1.234) Pub Date : 2023-08-25 Ina C. Jäkel, Søren Østervig, Erdal Yalcin
Sanctions encompass a wide set of policy instruments restricting cross-border economic activities. In this paper, we study how different types of sanctions affect the export behavior of firms to the targeted countries. We combine Danish register data, including information on firm-destination-specific exports, with information on sanctions imposed by Denmark from the Global Sanctions Database. Our
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Divert when it does not hurt: The initiation of economic sanctions by US presidents from 1989 to 2015 Review of International Economics (IF 1.234) Pub Date : 2023-08-18 Hana Attia
A dominant argument in the literature is that leaders tend to initiate military disputes in periods plagued by economic distress. This article revisits the diversionary theory and adapts it to the use of economic sanctions in the United States, contending that their use follows a similar diversionary logic. Using a novel dataset on US sanctions from 1989 to 2015, I find that presidents are more likely
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How did GVC-trade respond to previous health shocks? Evidence from SARS and MERS Review of International Economics (IF 1.234) Pub Date : 2023-08-10 Anirudh Shingal, Prachi Agarwal
A health crisis can impact GVCs adversely by raising bilateral trade costs and via supply- and demand-side shocks in the exporting and importing countries. Focusing on trade in select GVC-intensive sectors, we disentangle the effects of these different channels in the context of SARS and MERS in a structural gravity framework. The estimated effects are found to be small in magnitude and show significant
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Sanctions and their impacts on medical trade and health outcomes Review of International Economics (IF 1.234) Pub Date : 2023-07-25 Anna Miromanova
Despite the intention that sanctions, by design, should not harm civilians' welfare, evidence shows that they can negatively affect health outcomes. In this study, I measure the impact of sanctions on international trade in medical supplies and cross-country mortality rates. I find that sanctions, particularly those imposed by the United States, decrease the volume of medical exports to targeted countries
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Sanctions in directed trade networks Review of International Economics (IF 1.234) Pub Date : 2023-07-13 Sumit Joshi, Ahmed Saber Mahmud, Abhinaba Nandy, Sudipta Sarangi
We model three factors that affect effectiveness of trade sanctions: a country's endowment, distance between countries, and network connectivity. Our model explains several empirical observations: (i) sanctions impose costs on both sender and target; (ii) sanctions are often unsuccessful; and (iii) import sanctions, and export plus import sanctions, are more effective than export sanctions alone. We
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Extraterritorial trade sanctions: Theory and application to the US–Iran–EU conflict Review of International Economics (IF 1.234) Pub Date : 2023-06-28 Eckhard Janeba
Under extraterritorial sanctions the sanctioning country extends its policies to trade of third countries with the sanctioned country. An example is President Trump's decision in 2018 to leave the Joint Comprehensive Plan of Action (JCPOA), a multilateral agreement with Iran. In this article, I develop a game-theoretic model to explain the emergence of extraterritorial sanctions. Such trade sanctions
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The geography of payment activity on PayPal Review of International Economics (IF 1.234) Pub Date : 2023-06-21 Russell Hillberry, Kornel Mahlstein, Simon Schropp
We use data from PayPal to study the geography of online payment activity. An empirical gravity model finds a distance elasticity of −0.58 for payment value, a result that is 40% lower than typically observed in conventional trade data. The firm-extensive margin is approximately half as sensitive to distance. The link between the scale of merchants' exports and transaction distance is considerably
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The global sanctions data base–Release 3: COVID-19, Russia, and multilateral sanctions Review of International Economics (IF 1.234) Pub Date : 2023-06-21 Constantinos Syropoulos, Gabriel Felbermayr, Aleksandra Kirilakha, Erdal Yalcin, Yoto V. Yotov
This paper introduces the third update/release of the Global Sanctions Data Base (GSDB-R3). The GSDB-R3 extends the period of coverage from 1950–2019 to 1950–2022, which includes two special periods—COVID-19 and the new sanctions against Russia. This update of the GSDB contains a total of 1325 cases. In response to multiple inquiries and requests, the GSDB-R3 has been amended with a new variable that
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Monetary union, asymmetric recession, and exit Review of International Economics (IF 1.234) Pub Date : 2023-06-21 Christian Keuschnigg, Linda Kirschner, Michael Kogler, Hannah Winterberg
We propose a model of the Eurozone and analyze an asymmetric recession in a vulnerable member state with high public debt, weak banks, and low growth. We compare macroeconomic adjustment under continued membership with two exit scenarios that introduce flexible exchange rates and autonomous monetary policy. An exit with stable investor expectations could significantly dampen the short-run impact. Stabilization
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Trade liberalization along the firm size distribution: The case of the EU-South Korea FTA Review of International Economics (IF 1.234) Pub Date : 2023-06-06 Sonali Chowdhry, Gabriel Felbermayr
Leading theories suggest that amongst continuing exporters, lower variable trade costs should boost exports of smaller firms by the same or greater percentage rate than larger firms. However, investigating the impact of the deep EU-South Korea FTA with French customs data, we find robust evidence to the contrary. Applying a triple-difference framework, we report that the FTA increased sales in the
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Missing: A correlation between exchange rate misalignment and GDP growth Review of International Economics (IF 1.234) Pub Date : 2023-05-24 Carlos Goncalves, Mauro Rodrigues
The impact of real exchange rate movements on growth is a hotly debated issue in policy and academic circles. We provide evidence that this association is very weak for a broad panel of countries. Controlling for initial GDP, country and time fixed effects, a more depreciated currency is associated with higher growth only if the savings rate is not included as a control. Further, even if the latter
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Shifts in the portfolio holdings of euro area investors in the midst of COVID-19: Looking-through investment funds Review of International Economics (IF 1.234) Pub Date : 2023-05-17 Daniel Carvalho, Martin Schmitz
We study the impact of the COVID-19 shock on the portfolio exposures of euro area investors. The analysis “looks-through” holdings of investment fund shares to first gauge euro area investors' full exposures to global debt securities and listed shares by sector at end-2019 and to subsequently analyse the portfolio shifts in the first and second quarters of 2020. We show heterogeneous patterns across
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Understanding the globalization-crisis linkage: A “differenced” approach Review of International Economics (IF 1.234) Pub Date : 2023-05-09 Uchechukwu Jarrett, Hamid Mohtadi
The recent string of adverse global shocks (financial crisis, trade war, COVID-19, Ukraine war) poses a potential challenge to the well-known welfare enhancing effects of globalization, necessitating a better understanding of the longer run globalization-crisis linkage as opposed to its shorter run effects. Focusing on the Great Recession, we discover an evolving role of trade and financial openness
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Preferential trade agreements, externalities, and domestic policy Review of International Economics (IF 1.234) Pub Date : 2023-05-09 Natalia Bezmaternykh, Paul Missios
As multilateral trade barriers fall, there are increasing concerns that domestic policies will be used to undermine tariff cooperation. We examine how the ability to use domestic instruments affects the formation of trade agreements, and the resulting implications for the pursuit of free trade. We examine how optimal tariffs relate to domestic policy choices, and how negotiated restrictions on trade
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Why trade when you can transfer the technology: Revisiting Smith and Ricardo Review of International Economics (IF 1.234) Pub Date : 2023-04-20 Rajat Acharyya, Sugata Marjit
This paper explores the possibility of international technology transfer in lieu of trade in a model with absolute and comparative advantage. Countries having absolute advantage in producing a good may offer that technology to a potential trading partner against a fee and both the countries might gain depending on the extent of comparative and absolute advantages. Thus, gains from trade might be dominated
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Debt and real interest rates: Evidence from G20 countries Review of International Economics (IF 1.234) Pub Date : 2023-04-11 Lixin Sun
In this article, we examine the relationship between the debt and the ex-post real interest rate on the basis of a sample from the G20 with the panel analysis, the panel threshold model, and a panel VAR model, particularly during times of high debt levels. In contrast to the results from the previous literature, our estimates suggest the negative connections between debt levels and real rates of interest:
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Exporting and sourcing strategies Review of International Economics (IF 1.234) Pub Date : 2023-04-05 Youngho Kang, Unjung Whang
This study uses firm-level panel data for South Korea for the period 2006–2015, to investigate changes in firms' sourcing behaviors after these firms start exporting. The data studied includes detailed information on firms' export status, whether their purchases of intermediate inputs were domestic or from foreign markets, and whether the supplier firms were affiliated or non-affiliated. To estimate
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Scale, scope, and the international expansion strategies of multiproduct firms Review of International Economics (IF 1.234) Pub Date : 2023-03-30 Stephen Ross Yeaple
A growing literature seeks to understand how the characteristics of firms shape the manner in which they serve foreign markets. We consider an environment in which multiproduct firms can sell their products in multiple countries from multiple locations. We show that there are strong empirical regularities in the expansion strategies of U.S. multinational firms and that simple extensions of standard
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Revisiting the real exchange rate misalignment-economic growth nexus via the across-sector misallocation channel Review of International Economics (IF 1.234) Pub Date : 2023-03-20 Claire Giordano
This study assesses whether the component of across-sector labor and capital misallocation induced by real effective exchange rate (REER) misalignments in turn significantly affects economic development. REER imbalances are derived from a Behavioral Equilibrium Exchange Rate model; labor and capital misallocation is measured according to indicators in Ando and Nassar (IMF Working Papers, 2017, 17,
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Capital controls as a bargaining device: The case of Iceland Review of International Economics (IF 1.234) Pub Date : 2023-03-15 Fridrik Mar Baldursson, Richard Portes, Eirikur Elis Thorlaksson
Iceland imposed strict capital controls when its banks failed in October 2008. Legacy problems and a large stock of carry-trade funds locked in by the controls hindered lifting them, but they also helped in resolving the banks. We formulate and calibrate a bargaining model describing the strategic interaction between Iceland and international investors. Outcomes indicate a judicious bargaining approach
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Effects of international trade on income revisited Review of International Economics (IF 1.234) Pub Date : 2023-03-14 Jiantao Ma
This paper revisits the causal impact of international trade on income using a time-variant instrument in a panel of counties between 1950 and 1995. In particular, in constructing the time-varying instrument, it estimates the gravity model using the Poisson pseudo maximum likelihood (PPML) estimator. Trade has a significantly positive impact on income over the 1950–1970 period -the income elasticity
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Low tariff on dirty goods—Environmental negligence or environmental concern? Review of International Economics (IF 1.234) Pub Date : 2023-03-08 Sugata Marjit, Arijit Mukherjee
Shapiro (Quarterly Journal of Economics, 2021) conducts an in-depth empirical analysis to show that dirtier upstream goods face lower import tariffs than cleaner downstream goods. Inspired by that paper, we examine how the welfare maximizing tariffs on the final goods will differ depending on the dirtiness and the extent of cross border pollution. We show that countries concerned about controlling
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Integrated versus segmented markets: Implications for export pricing and welfare Review of International Economics (IF 1.234) Pub Date : 2023-01-27 Raphael Becker, Sergey Nigai, Tobias Seidel
This paper challenges the common assumption of perfect market segmentation in models based on monopolistic competition. We develop a tractable approach to analyze export entry and pricing decisions of firms and show that the trade costs triangle condition (absence of potential re-exporting arbitrage) imposes constraints on firm-level export prices, which have first-order implications for trade and
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Productivity premium of multinationals in global ownership linkages: A comparison of second-tier subsidiaries Review of International Economics (IF 1.234) Pub Date : 2023-01-27 Eiichi Tomiura, Hiroshi Kumanomido
High productivity of foreign direct investment (FDI) firms is a stylized fact. However, in the real world, there are subsidiaries owned by foreign parents but establishing their own foreign subsidiaries. Based on global ownership linkage data, we compare productivity levels of subsidiaries owned by parents in G-7 countries but located worldwide. The FDI productivity premium is on average significantly
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Bill of lading data in international trade research with an application to the COVID-19 pandemic Review of International Economics (IF 1.234) Pub Date : 2023-01-19 Aaron Flaaen, Flora Haberkorn, Logan Lewis, Anderson Monken, Justin Pierce, Rosemary Rhodes, Madeleine Yi
We evaluate high-frequency bill of lading data for international trade research. These data offer some advantages over both other publicly accessible trade data and confidential datasets, but they also have drawbacks. We analyze three aspects of trade during the COVID-19 pandemic. First, we show how the high-frequency data capture the within-month collapse of trade between the United States and India
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Monetary policy transparency and real exchange rate adjustment Review of International Economics (IF 1.234) Pub Date : 2023-01-16 Zheng-Hao Lai, Jyh-Lin Wu
We study the effect of different attributes of monetary policy transparency on real exchange rate adjustment by estimating the half-life of the real exchange rate. After controlling for sample-selection bias, results from the panel error-correction model suggest that the economic aspect of transparency facilitates real exchange rate adjustment in non-industrial countries. The driving force behind this
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Heterogeneous effects of Aid-for-Trade on donor exports: Why is Japan different? Review of International Economics (IF 1.234) Pub Date : 2023-01-11 Shuhei Nishitateno, Hayato Umetani
This study estimates the Aid-for-Trade (AfT)-export elasticity from the donor perspective, focusing on the top-five donor countries: Japan, Germany, France, US, and UK. We find the elasticity for Japan is large, suggesting that the Japanese AfT generates a net export expansion, in contrast with the other top donors. We examine the potential mechanism behind the export creation effect of Japanese AfT
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Search and learning in export markets: Evidence from interviews with Colombian exporters Review of International Economics (IF 1.234) Pub Date : 2023-01-09 Juan Camilo Domínguez, Jonathan Eaton, Marcela Eslava, James Tybout
Why do most new exporters quickly abandon foreign markets after shipping very small amounts? And what are the investments that exporters need to make to succeed in exporting? A large literature uses models and customs records to address these questions. We complement these studies by conducting case study interviews with a small set of Colombian manufacturers of plastic products with limited differentiation
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Two-sided heterogeneity: New implications for input trade Review of International Economics (IF 1.234) Pub Date : 2022-12-28 Tomohiro Ara
This article develops a heterogeneous firm model to analyze selection effects at different production stages on trade-induced intra-industry resource reallocations. Using a two-country symmetric setting in which both inputs and final goods are costly to trade subject to selection, we show that the trade elasticity of intermediate goods is endogenously greater than that of final goods due to an extra
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What drives economic growth forecast revisions? Review of International Economics (IF 1.234) Pub Date : 2022-12-28 Metodij Hadzi-Vaskov, Luca Antonio Ricci, Alejandro Mariano Werner, Rene Zamarripa
This article investigates how the IMF WEO growth forecast revisions behave across different horizons and country groups. Our main findings suggest that (i) growth revisions in horizons closer to the actual are generally larger, more volatile, and more negative; (ii) on average, growth revisions are in the right direction, becoming progressively more responsive to forecast errors as horizons get closer
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Long-term determinants of valuation effects Review of International Economics (IF 1.234) Pub Date : 2022-12-20 Soyoung Kim, Kyunghee Min
The progression of financial globalization increases the importance of valuation changes of foreign assets and liabilities, similar to that of current account in explaining the recent net foreign asset position of countries around the world. This study analyzes the long-term determinants of valuation effects by using panel regression with 10-year data span of 188 countries. The main findings are as
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Currency internationalization and openness: A paradigm from renminbi Review of International Economics (IF 1.234) Pub Date : 2022-12-12 Huiqing Li, Daofan Jia, Jia Li
This article intended to empirically test the interactive effects among renminbi (RMB) internationalization, trade and financial openness. Based on the monthly data from the first month of 2011 to the sixth month of 2018, we first build a vector error correction model includes RMB internationalization index, financial openness, trade openness, inflation rate, exchange rate and economic growth rate
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Competition in taxes and intellectual property right Review of International Economics (IF 1.234) Pub Date : 2022-12-07 Ronald B. Davies, Yutao Han, Kate Hynes, Yong Wang
We examine competition for foreign direct investment when governments compete in tax incentives along with intellectual property rights (IPRs) protection. Higher IPRs result in a lower probability of imitation and thus higher expected profits and tax revenues, all else equal. We derive the Nash equilibrium strategies of two competing jurisdictions and show that since individual hosts do not internalize
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Competition for multiproduct firms Review of International Economics (IF 1.234) Pub Date : 2022-11-30 Hong Feng, Jie Ma, Yang Yue
We use a first-price menu auction approach to studying a fiscal competition between two countries of different sizes to attract a foreign monopolist intending to supply two vertically differentiated products in a regional economy composed of the same two countries. Market size and cannibalization exclusively determine the firm's location choice. Though import substitution provides each country with
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The effect of intra-firm linkages on firm productivity Review of International Economics (IF 1.234) Pub Date : 2022-11-29 Jaehan Cho, Bo-Young Choi
In this study, we investigate the relationship between intra-firm linkages and firm productivity using a unique dataset from Korean multinational foreign affiliates. In an empirical analysis, we find that while intra-firm imports are not statistically associated with productivity on an economy-wide scale, a positive relationship exists among affiliates in industries with high levels of research and
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Multinational production and intra-firm trade Review of International Economics (IF 1.234) Pub Date : 2022-11-23 Vanessa Alviarez, Ayhab F. Saad
Intra-firm trade, from parents to affiliates, has been combined with standard models of multinational production (MP) to deliver gravity-style predictions for foreign affiliates sales. Nonetheless, the evidence shows that intra-firm trade is concentrated among a small set of large multinational firms. Using firm level data from 35 countries, we document that only firms belonging to multinational corporations
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On the revealed comparative advantages of Dutch cities Review of International Economics (IF 1.234) Pub Date : 2022-11-17 Steven Brakman, Tijl Hendrich, Charles van Marrewijk, Jennifer Olsen
Davis and Dingel explain the distributions of skills, occupations, and sectors across cities. Their model predicts that larger cities will be relatively skill-abundant and specialize in skill-intensive activities. This relates the model to factor-driven comparative advantages. They also develop an elasticity test and pairwise comparison test for the spatial distributional implications of the model
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Financial globalization and monetary transmission Review of International Economics (IF 1.234) Pub Date : 2022-11-10 Simone Auer
This article studies the way in which international financial integration affects the domestic transmission of monetary policy in a standard New Keynesian open economy model. It extends Woodford's (2010) model to a framework, in which not only a global integration of goods and factor markets, but also financial markets might matter for the monetary transmission mechanism. The article considers two