Search

This article presents a theory of lobbying by firms for trade liberalization, not through political contributions, but instead through contributions to the litigation process at the World Trade Organization (WTO). In this "litigation for sale" model, firms signal information about the strength and value of potential cases and the government selects cases based on firms' signals. Firms play a key role in monitoring and seeking enforcement of international trade law by signaling information and providing a bureaucratic subsidy, which increases a state's ability to pursue the removal of trade barriers and helps explain the high success rate for WTO complainants. The theory's implications are consistent with in-depth interviews with 38 trade experts and are tested through an analysis of WTO dispute initiation. [ABSTRACT FROM AUTHOR]

It is well known that a consumer price-neutral reform of consumption taxes and import tariffs is welfare-improving. This paper shows that such price controls are inferior to quantity controls in terms of welfare improvement. The paper next turns to a comparison of different abatement strategies. Whether or not policy changes should fix private abatement or public abatement relates to the level of earmarking, and depends on the relationship between private production and public abatement. There are cases in which increased public abatement only improves welfare by more than both increased private and public abatement together. The paper recommends that environmental earmarking in the form of public abatement should be delivered to cushion price hikes and sustain private energy consumption. [ABSTRACT FROM AUTHOR]

The Mexican economy experienced two large crises: in 1995 and in 2008. The dynamics and origins of the episodes are very different; nevertheless, is there a common underlying mechanism? First, by applying the Business Cycle Accounting method, we find that the efficiency wedge is the main driver of output during both episodes. We present an equivalence between the neoclassical growth model with distortions and a small open economy with imported intermediate goods inputs, in which relative price changes manifest themselves as changes on the efficiency wedge. This result proposes a solution for the theoretical puzzle regarding the relationship between terms of trade shocks and productivity. Finally, the model is able to reproduce both the intensities and velocities of the crises in Mexico. [ABSTRACT FROM AUTHOR]

This paper empirically and theoretically investigates the relationship between budget balances and external balances, the so-called twin deficit hypothesis. Using the US post-World War II data, I estimate a time-varying structural vector autoregressive model to evaluate the effects of structural breaks on this relationship. The empirical results reveal that the relationship is significantly time varying: (1) an increase in government spending and the consequent budget deficits tend to cause trade deficits in the Bretton Woods era; (2) in contrast, an increase in government spending tends to induce trade surpluses in the post-Bretton Woods era; and (3) with the exceptions of the 1980s and 2010s, government spending shocks cause trade deficits under a floating exchange regime. Using the open economy New Keynesian model with rule-of-thumb consumers, I find that a shift in exchange rate regimes helps in understanding empirical results (1) and (2). Moreover, slowly adjusted taxes inform our comprehension of exceptions in the 1980s, whereas zero lower bound aids our explanation of exceptions in the 2010s. [ABSTRACT FROM AUTHOR]

Wheat market integration between the US and the UK before the "first era of globalization" (in the second half of the nineteenth century) was frequently interrupted by policy and "exogenous" events such as wars. This paper adds Canada to this story by looking at trade and price data, as well as contemporary debates. This allows us to triangulate the role of policy and wars, since Canada as a small open economy was part of the British Empire. We find that, despite its privileged access to British markets, Canada faced similar barriers to the US, suggesting that membership of the British Empire provided only a modest benefit to trade. We also describe the limitations she faced accessing the US market, in particular after American independence. [ABSTRACT FROM AUTHOR]

European Central Bank (ECB) staff have repeatedly justified the carbon bias of the Asset Purchase Programme (APP) in terms of "market neutrality". Yet this term is not included in the Treaties so its meaning and legal nature are unclear. To clarify the meaning of market neutrality in the euro area's monetary policy we develop a summative content analysis of the textual data contained in relevant legal and policy documents that are publicly available. We conclude that, in the context of monetary policy, the ECB and its staff have used the term market neutrality with two meanings: (i) the minimisation of any impact on the operation of markets and, in particular, on the operation of the price discovery mechanism; and (ii) the mirroring of the composition of a particular market to guide asset purchases. We then examine the legal nature of market neutrality in each of these two meanings. In its first meaning, we argue that market neutrality is the ECB's definition of the so-called 'principle of an open market economy' ('OME principle') and it is therefore primary law. In its second meaning, we argue that market neutrality operationalises the OME principle and is therefore secondary law. Our conclusions differ from those reached by the first academic enquiries into the legal nature of market neutrality and open an academic debate on the matter. A clear understanding of the legal nature of market neutrality is also essential to assess the validity of the ECB's climate change action plan. [ABSTRACT FROM AUTHOR]

This article studies the influence of the antineoliberal social movements in Peru and Ecuador in the face of the Multiparty Trade Agreement (MTA) between both countries and the European Union (EU). To identify and analyze this influence, a transdisciplinary theoretical framework was created, integrating debates and concepts from social movement theory and critical international political economy. In Peru, the movement used European allies to establish their demands on the EU's agenda, which resulted in increased pressure on the government to enforce labor rights and environmental standards. In Ecuador, the movement was able to establish food sovereignty and the rejection of free trade in the national constitution. As a result, the negotiations with the EU were delayed and Ecuador achieved certain exceptions in its adhesion protocol. Nevertheless, both movements were unable to maintain their influence, due to political and socioeconomic dynamics on the domestic and global levels. [ABSTRACT FROM AUTHOR]

In 1538–39 Francisco de Vitoria delivered two relections: De Indis and De iure belli. This article distills from these writings the topic of free trade as a "human right" in accordance with ius gentium or the "law of peoples." The right to free trade is rooted in a more fundamental right to communication and association. The rights to travel, to dwell, and to migrate precede the right to trade, which is also closely connected to the rights to preach, to protect converts, and to constitute Christian princes. This has significant repercussions on the field of business ethics: the right to free trade is ultimately founded directly on natural law and indirectly on divine law; trade is not independent of ethics; and trade is presented as an opportunity to develop the virtues of justice and friendship, among other repercussions. Vitoria is portrayed as a defender of private initiative and free markets. [ABSTRACT FROM AUTHOR]

Manchester 'working men' approved an address in support of Abraham Lincoln's emancipation policy and the American Union at the Free Trade Hall on 31 December 1862. The US president described their gesture as 'sublime Christian heroism' when hopes of restoring the cotton supply and reopening the mills were better served by Confederate recognition. This transatlantic exchange became an integral part of the scholarly traditional interpretation that the British working class frustrated the pro-Confederate designs of the upper classes during the American Civil War. It formed the historiographical orthodoxy until revisionists countered that Lancashire workers advocated Confederate recognition. The Manchester meeting, revisionists claimed, was contrived to give the impression of working-class support for Lincoln which was, in fact, a myth. These two incompatible interpretations simplify and flatten the complexity of an event with local, national, and international ramifications. This article presents the first detailed examination of who organized the Free Trade Hall meeting and why. It moves scholarly understanding of the British public response to the American Civil War beyond its current stasis of 'traditional' versus 'revisionist' by placing the field in conversation with the recent history of radicalism and 'class' in the Victorian era. [ABSTRACT FROM AUTHOR]

Using monthly headline inflation data covering 184 countries for the period between January 1971 and December 2020, this paper investigates the role of standard gravity variables on inflation convergence across country pairs. The convergence analysis by unit root tests is based on ten-year rolling windows to control for potential structural changes over time, whereas the corresponding results are connected to the standard gravity variables in the preceding year to investigate the drivers of inflation convergence and its speed. Regarding the existence of inflation convergence, empirical results show that having a common currency, a free trade agreement, proximity, a common border, or a colonial relationship between countries increases the probability of inflation convergence. Regarding the speed of inflation convergence, the very same gravity variables are shown to reduce the half-life of convergence. In both cases, the effects of having a common currency are shown to dominate those of other gravity variables. [ABSTRACT FROM AUTHOR]

This article reviews Adam Smith's clearly articulated views about the desirability of free trade and his equally strong view on the necessity of sound institutions and 'the tolerable administration of justice' as key ingredients of successful economic management. It starts with Smith's views on free trade and shows how pertinent they are to today's high-level trade policy challenges. It then considers a more detailed day-to-day instrument of policy—the Trade Remedies Authority (TRA). Following Brexit, the TRA was created as an arms-length body for investigating cases for granting temporary import restrictions to specific products according to a reasonably well-defined objective process. The article demonstrates how, over the first 2 years of its life, the TRA has been reduced from a useful administrative instrument to a fig leaf for a political process for granting protection to petitioners. Unfortunately, this tendency to displace analytical approaches to policy by purely political ones can now be observed in many activities of UK governance. [ABSTRACT FROM AUTHOR]

A new liberal international order was born in 1918. Many rejected this regime embodied by the League of Nations and attempts to restore free trade. Among the critics were a host of European 'regionalists' who envisioned a world organized into federal super-states. They feared that geopolitical hegemony would soon belong to territorially contiguous super-states, such as the US and the Soviet Union. If the historiography has focused on the varieties of interwar internationalism, it has underplayed the extent of this regionalist challenge. This paper proposes to take seriously the dialectic between internationalist and regionalist visions of world order by charting the half-century political career of British imperialist and statesman Leopold Amery: from his lifelong campaign for British imperial economic union organized around preferential tariffs, through to his fervent critique of both the League and post-1945 American internationalism. Amery's exploits demonstrate that one of the most significant revolts against the liberal international order originated not only from the revisionist powers—the USSR, Nazi Germany, Fascist Italy, and Imperial Japan—but also from the supposed heartland of liberal internationalism itself: the British Empire. [ABSTRACT FROM AUTHOR]

This paper evaluates alternative reforms of the public pension system in an overlapping generations model for an open economy facing demographic change. We make progress compared to existing literature on pension reform by modelling individuals with heterogeneous innate ability and endogenous human capital, and by putting (the reduction of) welfare inequality effects of reform at the centre. Frequently adopted reforms such as an increase of the normal retirement age or a decrease of the pension benefit can guarantee financial sustainability, but they fail when the objective is also to avoid intergenerational or intragenerational welfare inequality. Our results prefer a reform which combines an increase of the retirement age with an intelligent linkage between the pension benefit and earlier labour earnings. First, this design conditions pension benefits on past individual labour income, with a high weight on labour income earned when older and a low weight on labour income earned when young. Second, this linkage is complemented by a strong rise in the benefit replacement rate for low ability individuals (and a reduction for high ability individuals). [ABSTRACT FROM AUTHOR]

This Article critically analyzes seven elements of the Biden administration trade policy: (1) buy American; (2) tariffs; (3) World Trade Organization; (4) free trade agreements; (5) China; (6) technology; and (7) Russia. Although President Biden has made a clean break from Trump policies in many areas, this is not the case when it comes to international trade. Regretfully, Biden has chosen to keep in place most of the failed trade policies of his predecessor—the Trump tariffs and the China trade war. It is not too late to shift ground, to negotiate mutual abolition of the Trump tariffs, to open free trade negotiations with the EU and UK, to join the Comprehensive and Progressive Trans-Pacific Partnership, to adopt a multilateral strategy with allies to check Chinese trade excesses, and to reengage with the World Trade Organization. Topping the list of needed reforms of the multilateral trading system are: (1) subsidies; (2) state-owned enterprises; and (3) forced technology transfer. These are best addressed through a WTO plurilateral agreement and/or preferential trade agreements. The Biden administration should prioritize these urgent reforms. Rather than promoting “free” trade and multilateral trade reforms, the Biden administration continues its predecessor’s nationalistic policies so that trade serves domestic political ends. Such state intervention in trade policy consists of the strategic use of tariffs, subsidies, “buy American” rules, and regional trade arrangements without regard to the rules of the multilateral trading system. These new policies represent a decisive retreat from globalization and openness to trade.

The Article explores the transformations triggered by digitalization in the domain of global trade law and seeks to evaluate the nature and the effects of the unfolding legal adaptation in this field of international law. For this purpose, the Article starts by mapping the sweeping effects of digitalization on trade and trade policies. It then turns to the current regulatory framework for digital trade—first, by sketching the state of affairs in the multilateral forum of the World Trade Organization (WTO) and second, by analyzing the more deliberate regulatory responses to the challenge of digitalization formulated in free trade agreements (FTAs), with a particular focus on some more recent advanced models of digital trade regulation. The Article finally seeks to contextualize and assess the impact of the existing legal framework and its adequacy for the contemporary data-driven economy, pointing also at some current deficiencies and potential setbacks going forward. [ABSTRACT FROM AUTHOR]

Drawing upon recent studies that empirically estimate both the benefits and costs of trade, this paper addresses a simple and important question: By how much do the benefits of increased global trade outweigh the costs? To the best of our knowledge, this is the first attempt to answer this question at global and World Bank income-grouping levels using empirically estimated relationships from the trade cost literature. Using a structural gravity model, we simulate changes in three primary trade constraints: a 10% reduction in tariff levels, a 10% reduction in effective distance, and a 10% increase in free trade agreement depth. The projection leads to a roughly 5% increase in global trade by value. Our model suggests that increased trade has an incredibly high benefit–cost ratio (BCR) for the developing world with an order-of-magnitude estimate for low- and lower–middle-income countries of 100 and for upper–middle-income countries of 50. However, the BCR for high-income countries is substantially lower, with a value closer to 5. Overall, the results suggest that free trade leads to substantial net benefits globally, generating US$ 700 billion in benefits (0.83% of global GDP) and US$ 100 billion in costs (0.12% of global GDP) in the first year, a differential that grows over time. Sensitivity analyses suggest that our BCRs are on the lower end of a plausible range. The results point to the incredible value of free trade, particularly for developing countries, and reiterate the importance of considering distributional impacts when implementing trade reforms. [ABSTRACT FROM AUTHOR]

Morocco's Competition Council has undergone major reform since 2011. New legislation has elevated the Council from its former role as a consultative authority to an independent, financially autonomous, decision-making authority. Despite these changes, however, many questions have been raised with regard to the Council's independence, and its duty to monitor and enforce free and fair competition, as well as the sufficiency of the guarantees concerning the statutory impartiality and powers that enable the Council to fulfil its mandate independently. The Council's independence merits discussion in the debate on the optimal implementation of a competition authority, as it is relevant to good governance and the rule of law. To regulate competition effectively, it is essential that the competition regulator remains independent. However, within a democratic framework, the Council's independence must be balanced by parliamentary accountability and budgetary control. [ABSTRACT FROM AUTHOR]

Postneoliberal regionalism in Latin America has failed to live up to the expectations of its proponents and analysts in the late 2000s and early 2010s. Several causes explain its disappointing result, but a relatively understudied cause may be found in the US policy of competitive liberalization. This policy not only aimed at securing US economic and trade interests but also served as a counterweight against emerging postneoliberalism and as a tool for reaffirming US hegemony. This article presents a case study of one example of competitive liberalization in action, the US-Peru FTA, in order to assess how the policy functioned and contributed to curbing the posthegemonic moment in Latin America. It observes a combination of coercion and the political influence of beneficiaries of free trade, and it considers how these dynamics worked to strengthen US influence, both in Peru and in the wider regional political economy. [ABSTRACT FROM AUTHOR]

State-Owned Enterprise (SOEs) are business entities owned by governments. Unlike private enterprises which operate on profit-motivation, SOEs often act on motives different from profit-making such as fulfilment of governmental or political purposes. Due to this peculiar feature, activities of SOEs sometime are disruptive of competitive market. In order to regulate activities of SOEs so that international market would not be unduly disturbed, GATT: Article XVII states that SOEs shall operate on a profit-motive in international trade. More recently, CPTPP (Comprehensive and Progressive Agreement on Trans-Pacific Partnership) and other FTAs include chapters devoted to the regulation of SOEs which provide that Contracting Parties ensure that their SOEs act on profit-motive so as not to cause disruption to the international market. On the other hand, competition laws of trading nations provide rules for prohibiting abusive conducts of dominant enterprises and this includes the prohibition of abuses by SOEs. However, applications of those two sets of regulations (GATT and CPTPP on one hand and competition laws on the other) are made independently from each other without being coordinated. This article surveys details of regulation of SOEs under CPTPP as a representative example of FTAs regulation and of competition laws of nations and suggests ways in which those two sets of rules can be coordinated in order to increase the effectiveness of legal disciplines imposed on SOEs' activities. [ABSTRACT FROM AUTHOR]

This Article critically analyzes seven elements of the Biden administration trade policy: (1) buy American; (2) tariffs; (3) World Trade Organization; (4) free trade agreements; (5) China; (6) technology; and (7) Russia. Although President Biden has made a clean break from Trump policies in many areas, this is not the case when it comes to international trade. Regretfully, Biden has chosen to keep in place most of the failed trade policies of his predecessor—the Trump tariffs and the China trade war. It is not too late to shift ground, to negotiate mutual abolition of the Trump tariffs, to open free trade negotiations with the EU and UK, to join the Comprehensive and Progressive Trans-Pacific Partnership, to adopt a multilateral strategy with allies to check Chinese trade excesses, and to reengage with the World Trade Organization. Topping the list of needed reforms of the multilateral trading system are: (1) subsidies; (2) state-owned enterprises; and (3) forced technology transfer. These are best addressed through a WTO plurilateral agreement and/or preferential trade agreements. The Biden administration should prioritize these urgent reforms. Rather than promoting "free" trade and multilateral trade reforms, the Biden administration continues its predecessor's nationalistic policies so that trade serves domestic political ends. Such state intervention in trade policy consists of the strategic use of tariffs, subsidies, "buy American" rules, and regional trade arrangements without regard to the rules of the multilateral trading system. These new policies represent a decisive retreat from globalization and openness to trade. The Congress, directed by the Biden administration, has adopted a far-reaching industrial policy in the form of four laws that subsidize key sectors of the U.S. economy: American Rescue Plan Act ($40 billion); Infrastructure and Jobs Act ($1.2 trillion); Inflation Reduction Act ($369 billion); and Chips Act ($252.7 billion). This subsidization coupled with "buy American" protectionism constitute a departure from the free trade ideal that has characterized U.S. policy since the end of World War II. [ABSTRACT FROM AUTHOR]

The international economic order is undergoing significant change. Most recently, key countries have been seeking to increase their level of economic security, including through increased industrial subsidies. Regulating subsidies is controversial, but undisciplined subsidy payments could be harmful for the healthy functioning of markets and balanced development among nations. In this regard, the GATT-WTO has regulated subsidies, but it has not been fully functional in recent years, and reform efforts do not appear to be bearing fruit soon. Therefore, in parallel with WTO reform efforts, reliance on other approaches, such as discipline through free trade agreements (FTAs), should be considered. Disciplining subsidies through FTAs is inherently difficult, given the cross-border nature of subsidies on the one hand and the geographical limitations of the FTA's scope of application on the other. In recent years, however, such disciplines in FTAs have begun to appear, starting with EU FTAs. Thus, this article explores the possibilities and limitations of the discipline of subsidies through FTAs, using Japan's FTAs as a case study, to approach the path to international control of subsidies. Accordingly, this article first reviews the range of related issues and developments, including characteristics of subsidies, the rationale for subsidy discipline in trade agreements, recent challenges to multilateral subsidy discipline, the current status of subsidy discipline through FTAs, and the background of subsidy discipline in EU FTAs. The article then identifies the WTO-plus elements that are distinct to subsidy disciplines in EU FTAs and discusses their implications. Through these, it highlights the perspectives needed when considering subsidy discipline through FTAs, examines Japan's FTAs in light of these perspectives, and presents the findings and implications thereof. Considerations are given to Japan's FTA/trade policy as a background for its subsidy discipline through FTAs, the current status and characteristics of subsidy disciplines in Japan's FTAs, the Agreement Between the European Union and Japan for an Economic Partnership's (JPN-EU) subsidy-related provisions as drastic change, the effects on the Asia-Pacific region, and future prospects. [ABSTRACT FROM AUTHOR]

This paper quantitatively examines the macroeconomic and welfare effects of macroprudential policies in open economies. We develop a small open economy dynamic stochastic general equilibrium (DSGE) model, where banks choose their funding sources (domestic vs. foreign deposits) and are subject to financial constraints. Our model predicts that banks reduce leverage in response to a macroprudential policy tightening, but increasingly rely on foreign funding. This endogenous shifts of funding composition significantly undermine the stabilizing effect and welfare gains of macroprudential policies. Our results also suggest macroprudential policies are less effective in financially more open economies, and optimal policy should take capital flows into consideration. Finally, we find empirical support for the model predictions in a group of developing and emerging economies. [ABSTRACT FROM AUTHOR]

Existing theories of individual trade preferences do not satisfactorily explain how security concerns should affect American support for the US–China trade war that began in 2018. Although existing theories of public attitudes toward international trade—economic self-interest, sociotropism, partisanship, reciprocity, and xenophobia—all help to explain initial support for the trade war, these hypotheses do not adequately explain citizen attitudes in the context of an increasingly adversarial and securitized bilateral US–China relationship. In particular, they do not address how rising security tensions affect trade preferences. Using nationally representative original survey data (n = 1,016) and a nonrepresentative survey with an embedded experiment (n = 1,015), this article argues that securitization of the bilateral economic relationship has spurred threat perceptions and given rise to a Cold War narrative that has in turn caused a substantial share of Americans to become less concerned with the economic outcomes of trade and more concerned with trade's effect on security. These Americans demonstrate an instinctive "commercial peace" response, seeing trade liberalization as a potential deterrent to conflict. The results challenge conventional wisdom on political support for the trade war and add depth to existing theories of individual trade preferences regarding the interaction between economic, security, and psychological motivations. [ABSTRACT FROM AUTHOR]

Since the Lisbon Treaty, the European Parliament (EP) has considerably increased its competencies in European Union (EU) trade policy. At the same time, a 'new generation' of free trade agreements (FTAs), including the Transatlantic Trade and Investment Partnership (TTIP) with the United States, Comprehensive Economic and Trade Agreement (CETA) with Canada, and the agreement with Japan, have been negotiated by the European Commission. Although existing literature has tackled the process of the EP's institutional self-empowerment in this policy area, there is no systematic research investigating the lines of conflict within the EP over FTAs. Through a newly collected dataset of all EP plenary debates between 2009 and 2019 on six relevant FTAs, we extract EP Members' (MEPs) preferences by means of a manual textual analysis. We then test the explanatory power of the two traditional lines of cleavages within the EP over MEPs stated preferences: position on the left-right axis and support for EU integration. We find that both these dimensions fundamentally shape the conflict in the EP over FTAs. The impact of these two ideological cleavages is magnified in the context of politicized FTAs, namely the TTIP and CETA. Through these findings, the paper significantly contributes to the research on competition in the EP and, more broadly, to the understanding of EU trade policy and its emerging politicization dynamics. [ABSTRACT FROM AUTHOR]

This article challenges exclusively rationalist accounts of and offers a complementary explanation for the emergence of liberal trade policy in the Kennedy administration. I draw on recent insights in constructivist institutionalism to emphasize the need to take agency seriously in institutionalist research. Using archival records, I analyze the decisive role Kennedy's advisers played as carriers of ideas in advocating for liberal trade policy by 'constructing the national interest', thus convincing a reticent president to support attempts aimed at achieving closer economic integration, culminating in the Trade Expansion Act of 1962. Insights from their role as advisers can help in specifying the role of agency in the ideas and institutional change literature, through strategic action which shaped a political leader's belief and put political issues on the agenda. By grasping agency in terms of making ideas actionable, an important step is taken in advancing endogenous approaches of institutional change. [ABSTRACT FROM AUTHOR]

The Agreement Establishing the African Continental Free Trade Area (AEAfCFTA) is a revolutionary treaty of the African Union (AU) which creates an African single market to guarantee the free movement of persons, capital, goods and services. The AEAfCFTA is geared towards enabling seamless trade among African countries. The single market relies heavily on the processing of the personal data of persons resident within and outside the AU, thereby necessitating an effective data protection regime. However, the data protection regime across Africa is fragmented, with each country either having a distinct data protection framework or none at all. This lack of a uniform continental framework threatens to clog the wheels of the African Continental Free Trade Area (AfCFTA), because by demanding compliance with the various data protection laws across Africa, free trade will be inhibited, the very problem the AEAfCFTA seeks to remediate. These concerns are considered and applicable solutions are proposed to ensure the successful implementation of the AfCFTA. [ABSTRACT FROM AUTHOR]

This paper investigates how a combination of monetary and macroprudential policies might affect the dynamics of a small open economy (SOE) with financial frictions under alternative discretionary shocks. Discretionary shocks in productivity and domestic and foreign monetary policies identify the roles of alternative interest rate and reserve requirement rules to stabilize the economy. The model is calibrated for the Brazilian economy. The exchange rate channel of transmission is relevant for foreign but not for domestic shocks. The interest rate rule should target domestic inflation and should not react to the exchange rate. The countercyclical reserve requirements rule, in its turn, should aggressively react to the credit-gap and not include a fixed component. Under both domestic and foreign shocks, the countercyclical effectiveness of the macroprudential policy improves when the degree of openness increases. There is a complementarity between monetary and macroprudential policy rules to stabilize the SOE. [ABSTRACT FROM AUTHOR]

We develop an open economy model of a currency union with frictional goods markets and endogenous search decisions to study optimal monetary and fiscal policy. Households finance consumption with a common currency and can search for locally produced goods across regions that differ in their market characteristics. Equilibrium is generically inefficient due to regional spillovers from endogenous search decisions. While monetary policy alone cannot correct this distortion, fiscal policy can help improve allocations by taxing or subsidizing production at the regional level. When households of only one region can search, optimal policy entails a deviation from the Friedman rule and a production subsidy (tax) if there is underinvestment (overinvestment) in search decisions. Optimal policy when households from both region search requires the Friedman rule and zero production taxes in both regions. [ABSTRACT FROM AUTHOR]

Abstract This article interrogates the introduction of special economic zones (SEZs) in Nigeria with an emphasis on the establishment of the Lekki free trade zone (FTZ) in May 2006 by [...]

The Cobden-Chevalier treaty of 1860 eliminated French import prohibitions and lowered tariffs between France and Great Britain. The policy change was largely unexpected and unusually free from direct lobbying. A series of commercial treaties with other nations followed. Post-1860, we find a significant rise in French intra-industry trade. Sectors that liberalized more experienced higher two-way trade. Our findings are consistent with the idea that trade liberalization led to "smooth adjustment" that avoided costly inter-sectoral re-allocations of factors. [ABSTRACT FROM AUTHOR]

The international trade in biotech products boosts national economies and advances scientific as well as technology innovation. However, while trading these products increases the spread of benefits on a global scale, it also increases risks to human health and the environment (ie biosafety). This is because the effects of this technology on biosafety are still highly uncertain. Against this background, the judicial bodies under the World Trade Organization (WTO) find themselves in the middle of an intricate and polarised debate in which a proper judicial balance between free trade and biosafety becomes fundamental in order to determine whether requests for ensuring human and environmental health justify trade restrictions. This paper aims to highlight that the WTO is institutionally unready for balancing economic and non-economic values. In suggesting how to rationalise the judicial balance between the competing interests in the context of biotechnology, this paper demonstrates that the judicial adoption of a well-structured proportionality analysis can turn the current balance by chance into a balance by structure. [ABSTRACT FROM AUTHOR]

This article examines the contribution of the FILEF (Federazione Italiana Lavoratori Migranti e Famiglie) to the European debate on the human, social and civil rights of migrant workers during the 1970s. Through the project of an 'International Statute of Migrant Workers' Rights', presented to the European Parliament in 1971, FILEF submitted a proposal for the reform of the 1968 Community Regulation on the Free Movement of Migrant Workers in Europe in order to extend to workers from non-European countries the same rights and protections accorded to those from the EEC area. The analysis is focused on the discussion around the proposal in the committees of the European Parliament as well as on the debate that developed within the transnational network of the FILEF during the international conferences organised by the Federation from the mid-1970s until the early 1980s. [ABSTRACT FROM AUTHOR]

After several hundred years of a closed-door policy, Korea finally opened its ports in 1876. Historians have traditionally claimed that the port-opening was coerced by foreign countries, deteriorated the Korean economy, and led to Korea becoming a colony. We examined this view by measuring biological living standards and find the opposite. The height of the male Hangryu Deceased, who died on the street but whose bodies were not claimed, increased by 1.1 cm from the 1880s to the 1910s. This also implies that free trade rather than new institutions might matter more for economic growth during the colonial era. [ABSTRACT FROM AUTHOR]

Political economists have paid increasing attention to distinctions between exporting and nonexporting firms, particularly with regard to their preferences on trade policy liberalization. A multitude of past studies focusing on economically advanced democracies characterized exporters as a small, elite group of large and highly productive firms, but this profile of a prototypical exporter is not necessarily representative of the body of firms operating under different domestic contexts. Using current and methodologically consistent cross-national surveys of firms conducted by the World Bank, this paper re-evaluates the link between certain firm-level characteristics and firms' propensity to export, taking into account how national-level political, economic, and geographic conditions affect these relationships. The pooled sample of firms from approximately 100 countries spanning different political regimes and levels of development confirms that, generally speaking, exporters are large, productive, and innovative. However, in less democratic and less developed settings, productivity and innovation do not appear to be a prerequisite to export orientation. When developing generalizable theories of firms' participation in the policymaking process, we must therefore be careful not to treat export behavior as an unqualified predictor of pro-free-trade attitudes. [ABSTRACT FROM AUTHOR]

Nowcasting, that is, forecasting the current economic conditions, is a key ingredient for decision making, but it is complex, even more so for a small open economy, due to the higher volatility of its GDP. In this paper, we review the required steps, taking Luxembourg as an example. We consider both standard and alternative indicators, used as inputs in several nowcasting methods, including various factor and machine learning models. Overall, mixed frequency dynamic factor models and neural networks perform well, both in absolute terms and in relative terms with respect to a benchmark autoregressive model. The gains are larger during problematic times, such as the financial crisis and the recent Covid period. [ABSTRACT FROM AUTHOR]

In 1821, as the Wars of Independence drew to a close, officials of the newly created republic of Gran Colombia passed a national gradual emancipation law. At the center of it was a Free Womb law that declared legally free the children of enslaved women born after the law's promulgation, while bonding these children to their mothers' masters until the age of 18. Yet, in addition to establishing a term limit on their legalized captivity, the law stipulated conditions for the commerce in Free Womb children, laying the groundwork for what I refer to as the Free Womb trade. This article presents the first detailed exploration of the origins, operations, and limitations of the Free Womb trade in Colombia, particularly at the level of one province: the northwestern Pacific coastal province of Chocó. I argue that the trade created distinctly bounded market geographies of Free Womb children, who were actively, if at times ambiguously, incorporated into Colombia's slave economy. As a general rule, the Free Womb trade placed captive families at the mercy of their masters; yet, as one extraordinary case reveals, the full extent of the local trade's legal power was not entirely secure. [ABSTRACT FROM AUTHOR]

We are entering the end game for this Parliament and so it is now time to focus on the policy horizon. In the run-up to the next election, the government's pieces will be moved by our fourth Prime Minister since the announcement of the advisory referendum on EU membership in February 2016. The rapidity in turnover of political leadership tells us starkly that there are deep problems with our economic and social performance, relative to expectations and to that of our main trading partners. The overriding narrative is of a kingdom of nations that have taken a huge step backwards in international standing and in the fulfilment of domestic objectives. At this historic moment with the accession of Charles III, we are not this time faced with post-war reconstruction, industrial decline, the need to deregulate or the need to hitch our colours to the rise of the City. It is more a problem of how to bring the country and devolved nations together and aim for economic and social progress for all. That implies both broadening our regional focus and narrowing our gambit to what institutions and policies the UK needs as a small open economy in order to deal with a global economic situation we must take as given and no longer made in our image. No new IMF or World Bank would, for example, offer the UK a seat at the top table, which was certainly the natural order in the first half of the twentieth century. [ABSTRACT FROM AUTHOR]

This paper examines price convergence and changes in the efficiency of wheat markets, covering the period from the mid-fourteenth to the early twentieth century and most of Europe. The analysis is based on a new data set of prices from almost 600 markets. Unlike previous research, we find that convergence was a predominantly pre-modern phenomenon. It started in the late fifteenth century, advanced rapidly until the beginning of the seventeenth century when it temporarily stalled, resumed after the Thirty Years' War, and accelerated after the Napoleonic Wars in response to trade liberalization. From the late 1840s, convergence petered out and turned into divergence after 1875 as policy decisions dominated technological change. Our results point to the 'Little Divergence' between North-Western Europe and the rest of the continent as starting about 1600. Long-term improvements in market efficiency began in the early sixteenth century, with advances over time being as uneven as in price convergence. We trace this to differential institutional change and the non-synchronous spread of modern media and systems of information transmission that affected the ability of merchants to react to news. [ABSTRACT FROM AUTHOR]

In this Article, we argue that the uncertainty of UK national motor vehicle insurance law—when viewed with respect to its European Union (EU) parent, the Motor Vehicle Insurance Directive (MVID)—was never satisfactorily addressed, primarily when using the remedy available through the non-contractual liability of the State. The EU enforcement mechanisms were equally haphazard in their effectiveness and success in affording rights to third-party victims. Given the link between the MVID and the free movement of persons and goods, on which the harmonization of insurance protection was based, we present the first Article establishing an argument that those offending aspects of UK national law should have been disapplied. The UK has concluded its agreement to withdraw its membership of the EU—and thus no longer to be bound by EU law and the jurisprudence of the Court of Justice. Yet until the transitional period ends, the UK remained aligned to EU law and those defects present in national law should have been remedied. Therefore, the remedy issued from the Factortame line of case authorities may have proven to be the most effective way to grant access to rights which were denied to third-party victims in the UK. Here we present a justification for its application. [ABSTRACT FROM AUTHOR]

In this paper, we make the case that an argument for price-level targeting over inflation targeting need not to be based on some overly restrictive assumptions. We adopt a theoretical framework that deviates from the assumption of rational expectation, and that takes into account the cognitive limitations and a "trial and error" learning mechanism of the agents. The (im)perfect credibility of various monetary policies (e.g., a Taylor-type rule, strict domestic inflation targeting, strict consumer price index (CPI) inflation targeting, exchange rate peg, and domestic price-level and CPI-level targeting) may lead agents to react according to their expectation rules, and then create various degrees of booms and busts in output and inflation. Therefore, relaxing the rational expectation hypothesis has potential consequences for policy planning. We find that price-level targeting prevails over inflation targeting even under different expectation formation and even when the announced inflation target is not fully credible. The counterfactual analysis and sensitivity test confirm that CPI-level targeting is the most effective for improving social welfare and stability in an open economy. The business cycles induced by animal spirits are enhanced by strict inflation targeting. [ABSTRACT FROM AUTHOR]

After the financial crisis of 2008, the European Union ('EU') not only increased its substantial legislation regarding financial services, but also built up a strong and unified system of financial market supervision. In particular, central surveillance authorities were created. These were given far-reaching competences with regard to substituting dysfunctional national authorities or players in the financial services sector. The three European Economic Area ('EEA') and European Free Trade Association ('EFTA') States—Iceland, Liechtenstein, and Norway—participate in the EU's internal market through their membership of the EEA. In order to continue participating on an equal footing in the internal market for financial services and to honour their duty to maintain homogeneity, the EEA EFTA States also had to incorporate the new institutional setup regarding financial services supervision. This obligation, however, in particular relating to certain intrusive powers of the new surveillance authorities, collided with some constitutional reservations, above all of the two Nordic EEA EFTA States. This article will show how these conflicting aims could be merged into a system that on the one hand guarantees the unified overall approach needed for strengthened surveillance of the internal market for financial services, and on the other hand safeguards certain constitutional reservations of the EEA EFTA States. It also looks at how third countries that do not (fully) participate in the internal market, such as the United Kingdom and Switzerland, are likely to be treated in this context by the EU. [ABSTRACT FROM AUTHOR]

The paper analyzes how actual monetary policy changed following the official adoption of inflation targeting in the Czech Republic, Hungary, and Poland and how it affected the volatilities of important macroeconomic variables in the years thereafter. To disentangle the effects of the policy shift from exogenous changes in the volatilities of these variables, a Markov-switching dynamic stochastic general equilibrium model is estimated that allows for regime switches in the policy parameters and the volatilities of shocks hitting the economies. Whereas estimation results reveal periods of high and low volatility for all three economies, the presence of different policy regimes is supported by the underlying data for the Czech Republic and Poland, only. In both economies, monetary policy switched from weak and unsystematic to strong and systematic responses to inflation dynamics. Simulation results suggest that the policy shifts of both central banks successfully reduced inflation volatility in the following years. The observed reduction in output volatility, on the other hand, is attributed more to a reduction in the size of external shocks. [ABSTRACT FROM AUTHOR]

Most emerging economies have been affected to some degree by the Fed's quantitative easing (QE) policies. This paper assesses the impact of these measures in terms of key macroeconomic variables for four inflation-targeting small open economies in Latin America. We identify a QE policy shock in a structural vector autoregressive with block exogeneity and a mixture of zero and sign restrictions. Overall, we find that these QE policies have significant effects on financial variables such as the exchange rate, and these effects are larger with respect to those in output and prices. Furthermore, the effects vary across countries, and these are more significant in Chile and Mexico than in Peru and Colombia. [ABSTRACT FROM AUTHOR]

The globalization of production is changing the political economy of trade policymaking: Traditional supporters of free trade (exporters seeking market access in foreign countries) are joined by new actors (companies needing intermediates from abroad for their production processes) in their lobbying efforts for trade liberalization. Multinational corporations (MNCs) play a crucial role in this new alliance due to their strong involvement in international trade and endowment with resources that can be used to lobby policymakers. We derive an argument from these premises that leads to the expectation of variation in trade policy outcomes across industries depending on their degree of integration in a global network of multinational corporations. Disaggregated data on the level of tariffs and speed of tariff cuts in preferential trade agreements, international mergers and acquisitions at the firm level, and MNC imports of intermediates by sector allow us to test the argument. The findings support our theoretical expectations. The paper sheds light on the processes and outcomes of trade policymaking in a globalized economy by further developing an existing argument about GVCs and trade policy outcomes as well as expanding on it by adding data on international corporate connections. [ABSTRACT FROM AUTHOR]

This study reflects on Arthur Cecil Pigou's role in public debate during the initial phase of the First World War over whether Britain should negotiate a peace treaty with Germany. Its main goal is to provide evidence that the "Cambridge Professor" framed his approach to this highly controversial issue from theoretical propositions on trade, industrial peace, and welfare that he had developed in previous works. After reviewing his contributions on these subjects, Pigou's letter to The Nation in early 1915, suggesting an open move by the Allies towards an honorable peace with Germany, is presented along with his more elaborate thoughts on this same theme put down in a private manuscript. The negative reactions to Pigou's letter are then scrutinized, particularly the fierce editorial published by The Morning Post. A subsequent version of Pigou's plea for peace, delivered in his London speech late in 1915, is detailed, listing the essential conditions for a successful conclusion of the conflict. To come full circle, the paper recapitulates Pigou's postwar considerations on diplomacy, free trade, and colonialism. The concluding remarks bring together the theoretical and applied branches of Pigou's thoughts on war and peace. [ABSTRACT FROM AUTHOR]

This paper studies the impact of trade openness and the proportion of exporters on environmental quality through the scale, composition and technique effects from 1998 to 2007 using firm- and city-level data for 287 Chinese cities. Our results reveal that, on average, trade openness has a detrimental impact on the environment in Chinese cities, but this impact remains heterogeneous across regions. A higher proportion of exporters improves the environment in central and eastern cities while generating nevertheless more pollution in western cities. As regards the sector-specific impact, we find that the higher proportion of exporters in the mining and less-polluting manufacturing sectors in eastern cities diminishes the emissions of particulate matter 2.5 (PM2.5). Our finding also suggests that a pollution haven effect emerges in China at the city level. Finally, our results confirm the presence of an environmental Kuznets curve effect for the PM2.5 pollutant across Chinese cities. [ABSTRACT FROM AUTHOR]

Over recent years, a new transnational conflict has been deemed to be structuring political conflict in Europe. Several scholars have posited the emergence of a new 'demarcation' vs. 'integration' cleavage, pitting the 'losers' and 'winners' of globalization against each other. This new conflict is allegedly structured along economic (free trade and globalization), cultural (immigration and multiculturalism), and institutional [European Union (EU) integration] dimensions. From an empirical viewpoint, it is still a matter of discussion whether this conflict can be interpreted as a new cleavage, which could replace or complement the traditional ones. In this context, the European Parliament (EP) elections of 2019 represent an ideal case for investigating how far this new cleavage has evolved towards structuring political competition in European party systems. In this paper, by relying on an original dataset and an innovative theoretical and empirical framework based on the study of a cleavage's lifecycle, we test whether a demarcation cleavage is structuring the European political systems. Moreover, we assess the evolution of this cleavage across the 28 EU countries since 1979 and the role it plays within each party system. The paper finds that the demarcation cleavage has emerged in most European countries, mobilizing over time a growing number of voters. In particular, this long-term trend has reached its highest peak in the 2019 EP election. However, although the cleavage has become an important (if not the main) dimension of electoral competition in many countries, it has not reached maturity yet. [ABSTRACT FROM AUTHOR]

Between 1885 and 1891, the Liberal statesman William Ewart Gladstone debated the scientific status of the Book of Genesis with the natural historian Thomas Henry Huxley in a series of articles published in the Nineteenth Century. Viewed in isolation, this episode has been seen as a case of a professional scientist dismissing an amateur interloper. This article repositions this familiar dispute as one chapter in Gladstone's lifelong engagement with the concept of historical 'development', the unfolding or evolution of Providence to human reason over time, a concept which came to prominence in the 1840s, in both Tractarian theology and in natural history. Gladstone consistently advocated an accommodation between transmutation and natural theology based on a probabilist ontology derived from the eighteenth-century Anglican churchman Joseph Butler (1692–1752). That understanding of historical truth to which Gladstone credited his ability to discern when political issues became ripe for agitation demanded a humble, Christian moral temper that embraced doubt and salutary suffering, rather than certainty and whiggish celebration of progress. [ABSTRACT FROM AUTHOR]