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This paper compares the effects of macroprudential policy, fiscal policy, and two liberalization policies on house prices and bank balance sheets and examines the welfare and distributional implications of each policy. Three prominent features of the Chinese economy, including monopolistically competitive banks, a managed float, and capital controls, are built into a New Keynesian dynamic stochastic general equilibrium model to produce a quantitative analysis of these policies. The model is estimated with Bayesian methods using Chinese data from 1998Q1 to 2016Q4. Results show that macroprudential policy greatly improves welfare and is the most effective tool for strengthening banks' balance sheets.

This paper develops a model of multi-product firms with endogenous quality across products within a firm. The model can reconcile the empirical fact that product quality and market size exhibit an inverted U relationship. In our model, on the one hand a larger market has a larger scope of quality differentiation and induces firms to increase quality; on the other hand, market competition is more intense in a larger market, exerting a negative influence on quality. We show that the model without taking quality differentiation into consideration could significantly underestimate the market competition and welfare. Moreover, our numerical analysis suggests that the model without taking quality differentiation into consideration could also significantly overestimate the gains of trade liberalization.

It has been 30 years since Central Asian '-stan' countries, namely, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan declared their independence in 1991. The Republics have chosen various transition paths from centrally planned to the market-based economic system. Today, it is time to assess their transition journey. The research found that the protectionist policy by Central Asian governors, on top of the land-locked geographical environment, made trade costly. Consequently, economic development slows down, unemployment increases, and poverty rate extremes. Eventually, the isolated region (relatively, excluding Kazakhstan) is imprisoned in a low-income trap and framed into a vicious circle. As a solution for tackling high-trade costs in the region, the research utilizes the GTAP CGE economic modeling to draw policy-targeted scenarios. The study summarizes that tariff reduction/elimination and trade facilitation policies flourish the region by bringing significant economic welfare, robust GDP growth, sizable job creation, and considerable poverty reduction. The trade facilitation scenarios impact the region's economy much more positively than do tariff liberalization scenarios.

The WTO Trade Policy Review Body met virtually on 11 and 13 March 2020 to review Australia's trade policies. The meeting took place as Australia was completing three decades of uninterrupted economic growth and as the run was being ended by COVID-19 and associated lockdowns. This paper provides a commentary on the Review. It begins by examining the evolution of Australia's trade policies, with emphasis on the period covered by the TPR, 2015-19. The second section evaluates the discussion at the TPR meeting, when WTO members raised questions about the policies described in the Review and the Australian delegation responded. The third section considers developments in the year after the meeting. The paper concludes that, despite its stellar economic performance in the three decades before COVID and strong record on trade liberalisation within and beyond the WTO, Australia faces a difficult post-COVID policy environment. The final section focuses on two challenges: rapidly deteriorating relations with China, Australia's largest trade partner, and the impact of climate change policies.

Using a shock to the Chinese capital market and unique and detailed audit-adjustment data, this paper investigates the effect of a capital-market liberalization program on auditors’ adjustments to their clients’ financial reports. Employing difference-in-differences tests with propensity-score matching and firm fixed effects, we find that the capital-market liberalization induced by the implementation of the Shanghai - Hong Kong Stock Connect affects auditors’ professional judgment and leads to audit-adjustment changes stimulated by greater reputational and litigation risks for auditors. Specifically, while the liberalization significantly decreases the frequency and magnitude of upward audit adjustments, the probability of downward adjustments remains the same in most cases. Further evidence shows that the effect is more pronounced for companies with high trading volume from Hong Kong investors, audited by the largest audit firms, and with low financial transparency.

Both England and the Netherlands have seen efforts to liberalise their audit markets for local government in recent decades. According to economic theory, these should benefit buyers as increased competition produces lower prices and improved quality. Increasing the number of competing audit firms in markets traditionally dominated by few large firms is widely seen as a key ingredient to this process. However, liberalisation has taken different paths in England, compared to the Netherlands. In England, a national-level collaborative purchasing arrangement has seen a small number of large firms competing, whilst in the Netherlands, a free market has led to the withdrawal by Big-4 firms and rapidly growing market share by mid-tier and small firms. In this paper, we analyse contrasting market developments in local public audit in England and the Netherlands and accordingly analyse the underlying factors through applying an established framework for market analysis from industrial economics, Porter's five forces framework, together with an institutional logics approach to further understand the factors involved. We find the Porter framework a useful tool to identify structural differences between markets but one that requires further analysis to explain underlying dynamics, which in the case of Dutch and English local public audit markets is effectively provided by the use of concepts from institutional logics including a historical contingency analysis.

This paper explores the link between trade liberalization and firms’ performance in Egypt combining macro and micro data. Using the Economic Census of Egypt 2013, we examine the association between tariffs and non-tariffs measures (NTM) imposed on intermediate input sand total factor productivity (TFP). In a first step TFP is estimated as the residual of a Cobb-Douglas/Translog production function and in thesecond, TFP is regressed on weighted tariffs and NTM imposed on intermediate inputs. Egyptian input-output tables are used to construct the weights. Our main findings show a positive and significant association between imported inputs and value-added and a significantly negative relationship between tariffs and TFP.

The paper calculates the top income shares in Greece from 1967 (the seizure of power by the military dictatorship) until 2017 (the aftermath of the debt crisis). This long-run perspective allows for the examination of the relationship between inequality and institutional transformations, namely democracy, finance and crisis. We find in particular that (a) transition to democracy did not affect the income share of the top decile, whereas social democracy had a significant negative impact (b) financial development and liberalization substantially increased all top decile shares (c) debt crisis, consolidation and recession were beneficial for the upper ranks of the top decile.

This paper studies the effect of export expansion on the US labour market over the last two decades. Exploiting foreign emerging markets’ unilateral liberalisation, this paper provides new empirical evidence for the importance of export expansion to the US labour market at the industry level. Using a novel instrumental variable strategy, the result confirms that US exports played a critical role in supporting manufacturing employment. Reduced‐form estimates imply that US exports to different markets created more than 1.6 million manufacturing jobs between 1991 and 2007, which is comparable to the estimated job losses attributed to the import competition from China. Meanwhile, there is substantial heterogeneity in this positive employment effect across export destinations and industries. Industries not only respond differently to various export shocks, but could also experience differential employment growth facing the same export shock. I find that the job creation effect is larger for industries with a higher initial share of workers who are older, less‐educated or non‐white, and performing routine‐based tasks. In addition, the effect is more pronounced for industries that had higher labour market concentration.

We study how trade liberalisation affects the extent of corporate decentralisation using the World Bank enterprise survey in China. In particular, we examine the autonomy of production, investment and employment decision and the incentive compensation of CEOs of subsidiary firms after China's entry in the World Trade Organization (WTO). We show that subsidiary firm CEOs receive more decision autonomy and higher powered incentives when facing increased foreign competition in output market. In contrast, subsidiary CEOs receive less decision autonomy and flat incentive compensation when foreign competition in subsidiaries’ input market intensifies. When examining subsidiary CEOs’ autonomy in different decisions, we find that CEOs’ investment autonomy is more responsive to foreign competition than employment and production autonomy. We explain this difference through the agency cost angle by showing that firms whose CEOs with greater investment autonomy tend to spend more on managerial perks. Taken together, this paper sheds new light on how trade liberalisation reshapes firms’ decentralisation decisions in a multi‐tasking principal‐agent setting.

This paper examines the empirical relationship between trade agreements and domestic labour mobility. The domestic‐commitment motive from Maggi and Rodriguez‐Clare (American Economic Review, 97, 2007, 1374) and standard trade models with labour frictions predict that trade liberalisation should occur when labour is more mobile. I find support for this prediction. Using regional trade agreements (RTAs) covering 56 countries in 2015, I show labour mobility is a strong predictor of trade liberalisation. The probability of an RTA increases when the country pair's average domestic labour market is less rigid. When the average labour mobility increases by 1 standard deviation from the mean, the probability of an RTA increases by 14–26%. These results are also consistent with the bound tariffs negotiated under the World Trade Organization, where less rigid labour markets are associated with lower bound tariffs.

Although regions are becoming increasingly important in the liberalization of international trade, the academic literature has only explored the issue extensively in the case of the European Union (EU). With respect to other regions, little is known of the internal factors that enhance their external performance. This paper uses EU interregional trade negotiations to examine the factors within the EU's counterpart region that contribute to regional cohesiveness and facilitate the conclusion of an agreement. By applying the crisp‐set qualitative comparative analysis method to the 13 available cases, this paper finds that the external performance of other regions is not achieved through a combination of homogeneity of state preferences and strong institutions, as the EU literature suggests. While one or other of these factors may be necessary, they only work in conjunction with a favourable power distribution, that is, regional systems formed by a large hegemon and/or small open economies.

We investigate how trade liberalisation affects the performance of Chinese manufacturing firms via sourcing from the South. Taking imports from Indonesia, the largest country in South‐east Asia—China's current trading partner as an example, we find that Chinese firms with higher import shares from Indonesia perform better in productivity, exports and sales, and they are more likely to engage in processing exports. Moreover, the impacts of foreign trade liberalisation on China's export scopes are more pronounced for firms with larger import shares from Indonesia. Such findings are robust to different empirical specifications.

Do structural reforms that aim to boost potential output also change the distribution of income? We shed light on this question by looking at the broad patterns in the cross‐country data covering advanced, emerging‐market, and low‐income countries. Our main finding is that there is indeed evidence of a growth‐equity trade‐off for some important reforms. Financial and capital account liberalization seem to increase both growth and inequality, as do some measures of liberalization of current account transactions. Reforms aimed at strengthening the impartiality of and adherence to the legal system seem to entail no growth‐equity trade‐off—such reforms are good for growth and do not worsen inequality. The results for our index of network reforms as well as our measure of the decentralization of collective labor bargaining are the weakest and least robust, potentially due to data limitations. We also ask: If some structural reforms worsen inequality, to what degree does this offset the growth gains from the reforms themselves? While higher inequality does dampen the growth benefits, the net effect on growth remains positive for most reform indicators.

© 2020 The Author. International Journal of Finance & Economics published by John Wiley & Sons Ltd. Trade liberalization is famously known for both creating winners and losers via processes of dislocation, sectoral reallocation, and specialization. This paper studies the conditions under which excess “losers” are generated during the process of liberalization with a focus on the role of institutions in economic transition. I contend that poor institutions, in particular property rights and democracy, can create unnecessary hardship in the transition to greater openness, generating a much higher burden on compensatory policies and making it more difficult to sustain open trade policies. Using a new dataset of trade openness, economic inequality, and institutions, and using 3SLS estimation to account for endogeneity, the analysis finds that this is indeed the case: high property rights and more democracy appear to help to mitigate trade-related inequality. Moreover, poor institutions create a downward spiral, with greater inequality leading to lower trade openness. These results imply that basic institutions can help to minimize losses sparked by globalization, while other well-meaning policies can actually increase disruptions.

Why have labour market reforms varied so much across European countries in the 30 years preceding the economic crisis? We argue that the degree of liberalization over time in each country depends on the interaction between governments' partisan leaning, the strength of trade unions and the economic problem‐load pushing governments to adopt distinct labour market reform strategies. Building on existing literature, we interpret ‘dualizing’ labour market reforms as weaker forms of liberalization and test our argument on the cross‐national variation in over 200 labour market reforms carried out in 14 western European countries between 1985 and 2007. Our empirical results show that governments are less likely to liberalize if they face a strong union movement and the economic problem‐load is low. However, even in countries with strong unions, opposition may not always manage to block change. First, as unemployment becomes more severe, unions' ability to reduce the likelihood of liberalization strongly decreases. Second, trade unions often do not manage to prevent liberalization advanced by social democratic governments. Third, governments can devise three (non‐rival) strategies to deflect opposition: (1) they can re‐regulate parts of the labour market to protect certain workers from liberalization; (2) generous unemployment benefits can cushion the costs of liberalization, thereby increasing its likelihood; and (3) they can carry out two‐tier reforms to insulate insider (unionized) workers employed in permanent contracts, which limits union opposition. By identifying the complex interactions between variables that explain variation in labour market liberalization across European countries, this article contributes to our understanding of the evolution of European political economy.

While prior literature on trade liberalisation and the environment has mostly focused on the macroeconomic ramifications, this study explores at the firm level whether and how changes of trade barriers brought about by China's accession to the WTO may impact on its manufacturing firms’ environmental performance. Adopting a difference‐in‐differences (DID) methodology, we document the effects of tariff reductions on improving firm‐level SO2 emission intensity, and the key corporate strategic decisions responsible for delivering the observed results, with robustness tests covering other major pollutants. In response to trade liberalisation, firms are found to increase labour resources for environmental protection and to improve their production processes to reduce emission intensity. This study contributes to the literature by investigating at the level of the operating firm how output and input tariff reductions may impact on environmental performance and uncovering for the first time the specific actions responsible for the results.

This study investigates the effects of investments by qualified foreign institutional investors (QFIIs) on the informational efficiency of stock prices in Chinese A‐share stock markets. Employing a large sample of listed firms from 2004 to 2012, we document a significant and positive relationship between stock price informativeness and stock ownership by foreign institutional investors. We also use the instrument‐variable approach, propensity‐score matching method, as well as an alternative measure of informational efficiency to ensure the robustness of our findings. We document that the effects of foreign ownership on informational efficiency is stronger for firms with lower levels of assets intangibility and in regions with less developed institutions. In addition, we document that the effects of foreign ownership on informational efficiency is more pronounced when QFIIs have better local information and more incentives to monitor.

This article evaluates the effects of external financial liberalization on Brazilian macroeconomic performance from 1995 to 2016. Its main contributions are to assess the influence of the global financial cycle on the level of external financial liberalization and to analyse the short‐ and long‐run macroeconomic effects of such liberalization on the performance of a peripheral economy in the global currency hierarchy. Methodologically, the article employs the Markov‐Switching Vector Autoregressive and Vector Error Correction models. The results show that the global financial cycle directly affects cross‐border financial flows and frames the impact of external financial liberalization on the macroeconomic performance. The article concludes that external financial liberalization has negative macroeconomic effects in the short run and generates a trade‐off between stability and growth in the long run.

This article presents an analysis of contemporary Uzbek agrarian change. Firstly, using mixed-methods and triangulating secondary and primary data from Samarqand, it untangles emerging relations of production and exchange during the slow processes of market transition. It shows that different types of public investment, price regulation, subsidies, procurement mechanisms and the pace of marketization to which crops are subject, shaped a slow growth of rural social differentiation and private accumulation. Traditionally, cotton farms have been in a privileged position because they have access to more land and subsidised inputs of production. However, due to recent fast-track liberalisation policies and state-led investment, farms producing High Value Crops—fruit and vegetables—are at the forefront of a new pattern of private accumulation. Secondly, the article reflects on how the gradual approach to market transition has so far squeezed private accumulation, enabling the centralisation of surplus extraction from cotton and wheat. This state-led accumulation strategy is slowly fading, leaving space for market-oriented reforms which will entail new but uncertain distributional and developmental outcomes within and outside agriculture.

In the last two decades, many European countries allowed the sale of over‐the‐counter (OTC) drugs outside pharmacies. This was expected to lower retail prices through increased competition. Evidence of such price reductions is scarce. We assess the impact of supermarket and outlet entry in the OTC drug market on OTC prices charged by incumbent pharmacies using a difference‐in‐differences strategy. We use price data on five popular OTC drugs for all retailers located in Lisbon for three distinct points in time (2006, 2010, and 2015). Our results suggest that competitive pressure in the market is mainly exerted by supermarkets, which charge, on average, 20% lower prices than pharmacies. The entry of a supermarket among the main competitors of an incumbent pharmacy is associated with an average 4% to 6% decrease in prices relative to the control group. These price reductions are long‐lasting but fairly localized. We find no evidence of price reductions following OTC outlet entry. Additional results from a reduced‐form entry model and a propensity score matching difference‐in‐differences approach support the view that these effects are causal.

We utilize an unprecedented liberalization episode in China, namely its World Trade Organization accession, to estimate the impact of trade liberalization on firm markup and markup distribution. Using a panel data quantile regression, we show that the impact of tariff reduction on markup can be heterogeneous to different firms, resulting in an unevenly distributed markup change across firms. In particular, reduction in output tariff reduces markup and markup dispersion, while reduction in input tariff increases markup and markup dispersion. (JEL F12, F13)

In spite of the substantial liberalization of China’s film industry, it is still highly regulated and protected from foreign competition through a series of policy measures. In the midst of pushing both liberalization and protectionism, Chinese firms tend to exploit favorable government policies and avoid restrictive regulations through alternative options to maximize profits. Most preceding studies emphasized the liberalization efforts by the Chinese government as a significant contribution to the film industry, while neglecting the response and strategies of Chinese filmmakers that have upgraded their overall competitiveness. Therefore, this paper aims to examine the government‐firm interplay and their influences on the enhanced competitive advantages of Chinese filmmakers and the film industry, by utilizing the theoretical framework of the ABCD model to demonstrate this interaction. Based on the comprehensive analysis of both Chinese achievements and remaining challenges, this study further provides useful policy implications for improving China’s film industry.

This paper explores the impact of reducing non‐tariff measures (NTMs) in major ASEAN countries. New econometric estimates of the impact of different types of NTMs are used in a global supply chain model to separately model the effects on intermediate products and those sold to final consumers. We also distinguish between whether the NTM cost burden is directed at exporters or importers. This paper makes important advances in modelling the heterogeneity of NTMs, offering much richer policy analysis of the impact of NTMs on supply chains in the Asia‐Pacific region than has previously been possible. We illustrate the benefits, both to the major ASEAN countries and to their trading partners, from the partial liberalisation by ASEAN countries of their most trade distorting types of NTMs. Such liberalisation increases the GDP and welfare of all countries, with the effect particularly pronounced for the major ASEAN countries themselves, especially Vietnam and the Philippines. As trade in plant products and animal products is particularly affected by NTMs, these sectors show the largest expansion of trade.

Institutionalist explanations of the high non‐standard employment rate in the Spanish labour market have pointed to the relevance of flexibilization at the margin, that is, the deregulation of non‐standard jobs. Using Spanish social security micro data, we find evidence that the liberalization reforms of 2010 and 2012 had flexibilization at their core, that is, greater instability due to open‐ended and full‐time contracts (erosion of employment protection) and a rise in turnover among periphery workers, increasing the segregation gap. We conclude that there is a high level of deregulation and simultaneous dualization due to the combination of flexibilization at the margin (until 2008) and the core (2010–2012).

The main aim of this paper is to examine the threshold impact of financial development and trade liberalization on income inequality as a measure of sustainable development in a sample of developed and developing countries using panel threshold analysis. Two major dimensions of financial development are considered: liquid liabilities and stock market capitalization. The empirical results revealed that financial development reduces income inequality only in countries where their GDP per capita is above ~US$11,000. It has no significant impact in reducing inequality in developing countries. This implies that institutional reforms in less developed and developing countries are necessary in order to reap the gains from financial development. Trade liberalization is found to have a positive impact on income inequality for both country groups—that is, trade benefits have worsened the income distribution.

In 2016, the U.S. launched a trade dispute against China at the World Trade Organization, arguing that China has been restricting its grain imports via tariff quota administration. Despite sharp criticisms by the U.S., the extent to which the grain imports were restricted in China remains largely unknown, primarily due to that China's grain import behaviors are still under‐researched. The U.S. grain export sector might actually gain little from China's grain trade liberalization in the short run, since China has become less import dependent on the U.S. through the pursuit of import diversification. In this context, this article aims to quantify impacts of the tariff quota administration on China's grain imports from its trading partners. We calculate ad valorem tariff equivalents of the tariff quota administration and then estimate import demand elasticities using a source differentiated import demand model. We find that the tariff quota administration might have reduced China's quota fill rates for the grain commodities by 10–35% during 2013–2017. In particular, the U.S. wheat exports to China were largely negatively affected. We also find that the tariff quota administration in China acts like a variable import levy—its import restrictiveness varies negatively with world prices, leading to lower import demand elasticities.

This paper documents the evolution of markups in a small open economy, Slovenia, using a comprehensive dataset covering the full population of firms. It makes three novel contributions to the literature. First, in contrast to other work for Europe, we find that markups have increased from 1.05 to 1.19 between 1994 and 2015. Second, while other research so far found exporters typically to have higher markups, we find the opposite in Slovenia. Though the rise in markups occurs both with exporters and non-exporters, there is a consistent diverging trend in markups in favor of non-exporters since 1999. This can be attributed to increased competitive pressure faced by exporters following the increased participation in global value chains. Third, we decompose aggregate markups and show that the increase in markups, for both exporters and non-exporters, is mainly driven by the within component rather than the reallocation effect. This suggests that all firms were increasing their markups, rather than high markup firms increasing their market share over time. ispartof: The World Economy vol:43 issue:5 pages:1327-1347 status: published

In this paper, we examine how trade liberalisation affects firms' branding behaviours. We investigate this question with China's accession to the WTO in late 2001. We find that firms in sectors with large import tariff reductions discontinue more trademarks. Meanwhile, these firms file more trademark applications and their total number of effective trademarks increases after trade liberalisation. This growth in trademarks is mainly driven by large firms, as measured by the number of employees. In fact, small firms' applications and effective trademarks decline during trade liberalisation. It is also found that trademark applications are mainly filed for the traditionally non‐dominant products of industries. We provide a conceptual model that incorporates the channels through which both passive and active responses occur.

This article aims to analyse the impact of industry‐level trade liberalisation (measured through industry‐specific tariff rates) on poverty in Pakistan. Combining data for tariff rates with the Labour Force Survey of Pakistan, we use quantile regression analysis to estimate the impact of changes in tariff rates on workers’ wages (associated with the manufacturing sector of Pakistan) that are at different points of the income distribution. Our findings meaningfully signal that trade liberalisation helps to reduce poverty in the economy. Based on these results, this study provides policy recommendations to reap maximum benefits from trade liberalisation.

In this paper we attempt to characterize the stability of shadow deposits in China with interest rate liberalization and fintech developments. We emphasize that shadow banks provide higher but riskier returns and such characteristics affect the stability of shadow deposits. In our setting, the stability of shadow deposits is influenced by two offsetting effects, namely: the patience effect, which makes investors more willing to wait because of the potentially higher returns; and the uncertainty effect, which makes investors more likely to withdraw as a result of higher risk. Under liberalized interest rates, the patience effect will erode and the uncertainty effect will be heightened because the post‐liberalization higher return of traditional banks undermines the importance of the extra return of shadow deposits to depositors, while preserving the importance of the risk aspect. Fintech development is modeled as a reduction in the withdrawal cost that facilitates runs. This affects the stability of shadow deposits because of their wider fintech reliance. Regulators should be cautious in pushing interest rate liberalization and fintech application alongside building a safety net for shadow banking.

In this paper, we examine the impact of foreign direct investment (FDI) on local urban inequality in China. Specifically, we consider the FDI policy change as an exogenous shock on the local labour markets. We find that cities that have experienced a bigger policy change in promoting FDI between 1997 and 2002 are significantly more unequal in 2005. This pattern is mainly driven by the positive association between FDI liberalisation and skill premia. The result holds after we control for other policy changes, such as privatisation of state‐owned enterprises, infrastructure and trade liberalisation. We then turn to investigate the mechanisms using firm and individual‐level information. Our firm‐level evidence shows that FDI firms not only hire relatively more high‐skilled workers but also provide relatively higher wages to high‐skilled workers compared to domestic firms. Moreover, the individual‐level analysis shows that FDI has a significantly positive spillover effect on wages received by skilled workers employed by state‐owned enterprises, but not wages of unskilled workers.

The study estimates, in the short run, the tax revenue implications of Malawi joining the African Continental Free Trade Area (AfCFTA) using liberalization approaches and the SMART Model. The results show that Malawi is likely to benefit from joining the AfCFTA through trade creation. However, revenue losses are imminent and more pronounced for capital goods. The study recommends that Malawi should join the AfCFTA and liberalize while keeping a substantial portion of tariff lines for sensitive products and excluded products over a longer period of liberalization. The exclusion list should contain a significant amount of capital goods to minimize short‐run negative revenue impacts.

Pensions provision in the UK has been undergoing upheaval for several decades, as an already liberal regime has gradually been further liberalised, resulting in the rollout of defined contribution provision via the pseudo-compulsory automatic enrolment system. Yet, the system is dysfunctional, insofar as it replaces the institutional guarantors essential to pensions provision with hazy notions of individual responsibility. The ability of capitalism to reproduce itself is jeopardised as a result. Increasingly, the state, despite scaling back the state pension system, is intervening to subsidise and substitute for a marketised system. Despite the significant risk of poor outcomes for millions of savers in the automatic enrolment system, and the integral role of the state in private provision, pensions policy receives little attention in political debates, or by political scientists. This is driven in part by a lack of salience among the public, which is itself a result of the peculiar temporality of pensions. Yet it is a product also of the disciplinary norms of political science, and the positionality of political scientists.

This paper investigates the effects of input trade liberalisation on firm markups and assesses how institutional environment affects such impacts by using Chinese firm‐level data. To identify the causal effects, we exploit the quasi‐natural experiment of China's WTO accession in 2001 and perform difference‐in‐differences estimation. The results show that input tariff liberalisation leads to a substantial increase in firm markups, and institutional environment significantly strengthens such an impact. We further uncover the underlying mechanisms through which input tariff liberalisation boosts firm markups, and show that both price and cost channels work for the input tariff cut effect on firm markups, of which the latter is much more important. In addition, we also demonstrate that input tariff cut significantly fosters aggregate markup growth, and the reallocation effect is found to be an important channel through which input tariff liberalisation boosts aggregate markup growth.

This paper analyses the effects of inward foreign direct investment (FDI) on female earnings and women's economic status in households using Chinese Urban Household Survey data from 1997 to 2008. The identification exploits the substantial relaxation of foreign investment regulations immediately after China's accession to the WTO in 2002. The difference‐in‐differences estimation results show that FDI liberalisation has improved women's economic status significantly by increasing female earnings in sectors more exposed to FDI. Further analyses indicate that foreign investment liberalisation facilitates the promotion of female employees in their career ladders and increases their skill premium, which are two important channels through which women enhance their economic independence.

We take a fresh look at the aggregate and distributional effects of policies to liberalize international capital flows—financial globalization. Both country- and industry-level results suggest that such policies have led on average to limited output gains while contributing to significant increases in inequality—that is, they pose an equity–efficiency trade-off. Behind this average lies considerable heterogeneity in effects depending on country characteristics. Liberalization increases output in countries with high financial depth and those that avoid financial crises, while distributional effects are more pronounced in countries with low financial depth and inclusion and where liberalization is followed by a crisis. Difference-indifference estimates using sectoral data suggest that liberalization episodes reduce the share of labor income, particularly for industries with higher external financial dependence, those with a higher natural propensity to use layoffs to adjust to idiosyncratic shocks, and those with a higher elasticity of substitution between capital and labor. The sectoral results underpin a causal interpretation of the findings using macro data.

We extend the seminal home market effect model of Helpman and Krugman (Market structure and foreign trade, MIT Press, Cambridge, MA, 1985) by incorporating asymmetric cultural discounting. In addition to the home market effect, our model predicts that a country subject to a relatively lower cultural discount factor becomes a net exporter as trade liberalisation accelerates. Using international box office revenues in the motion picture industry and developing a measure of asymmetric cultural discount based on tourist‐arrival statistics, we find empirical support for this hypothesis. Our model provides an explanation for the continued cultural dominance of smaller English‐speaking countries in larger non‐English‐speaking countries, which cannot be explained by the home market effect alone.

Using a large panel dataset over a 20‐year period, this article explores the effect of multilateral trade liberalisation on export product diversification. Empirical results show that multilateral trade liberalisation is positively associated with export product diversification. However, less‐developed economies experience a greater positive effect than relatively advanced economies. This analysis suggests that if trade tensions reduce cooperation on trade matters among World Trade Organization members, it may hinder export product diversification in developing countries, and the poorest countries might be the most adversely affected.

This paper links the sharp drop in China's manufacturing servitisation (MS) in early 21st century to China's accession to WTO featured by conspicuous input trade liberalisation (ITL). The results show that manufacturing industries exposed to higher degree of ITL suffer more MS declines after China's accession to the WTO. Heterogeneous analysis shows that industries with high import intensity, capital intensity or technology intensity suffer more MS declines following input trade liberalisation. Further analysis shows that input trade liberalisation increases the import of intermediate inputs while significantly reduces the proportion of service imports for manufacturing industries. The results are robust to a series of robustness checks.

We estimate the extent to which firms responded to tariff reductions associated with China's WTO entry by altering labour's share of value. Firm‐level regressions indicate that firms in industries subject to tariff cuts raised labour's share relative to economy‐wide trends, both through input choices and rent sharing. Our estimates suggest that, on average, an industry that experienced no reductions in output or input tariffs would have a 15.7% lower labour share of value in 2007 than it actually did, assuming the same economy‐wide trends. There is significant variation across firms: the impact attenuates with geographic remoteness and union presence and strengthens with foreign ownership.