Search

This article introduces the appropriate within estimators for the most frequently used three-dimensional fixed effects panel data models. It analyzes the behavior of these estimators in the cases of no self-flow data, unbalanced data, and dynamic autoregressive models. The main results are then generalized for higher dimensional panel data sets as well.

By studying the factors underlying differences in trade performance across European economies, this paper derives six different "trade models" for 22 EU-countries and explores their developmental and distributional implications. We first introduce a typology of trade models by clustering countries based on four key dimensions of trade performance: endowments, technological specialization, labour market characteristics and regulatory requirements. The resulting clusters comprise countries that base their export success on similar trade models. Our results indicate the existence of six different trade models: the 'primary goods model' (Latvia, Estonia), the 'finance model' (Luxembourg), the 'flexible labour market model' (UK), the 'periphery model' (Greece, Portugal, Spain, Italy, France), the 'industrial workbench model' (Slovenia, Slovakia, Poland, Hungary, Czech Republic), and the 'high-tech model' (Sweden, Denmark, Netherlands, Belgium, Ireland, Finland, Germany and Austria). Subsequently, we comparatively analyse the economic development and trends in inequality across these trade models. We observe a shrinking wage share and increasing personal income inequality in most of the trade models. The 'high-tech model' is an exceptional case, being characterised by a relatively stable economic development and an institutional setting that managed to counteract rising inequality.

The paper develops a dynamic model of trade between two countries where the trading entities interact in a strategic context. Consumers in both countries are endowed with certain incomes and try to acquire as much as possible of the quantities available on the markets. Consumers have privileged access to some of the good supplied locally, a form of partial local protection. Over time, prices are adjusted to respond to the outcomes of trading. For this setup, we prove the existence of Nash equilibria and simulate the model numerically in Python to illustrate the possibility of obtaining different types of price dynamics depending on the price adjustment rule used. ACM Computing Classification System (1998): J4, G4, I.6.3.

This study estimates the effect of trade facilitation measures implementation on trade costs in Asia and the Pacific using data from the United Nations Global Survey on Trade Facilitation and Paperless Trade Implementation. Impact of different sets of measures are considered, from a basic set of measures to ensure compliance with the World Trade Organization Trade Facilitation Agreement (WTO TFA) commitments, to a full set of digital trade facilitation measures. The analysis shows that full implementation of both binding and non-binding measures in the WTO TFA is associated with an average 15% trade cost reduction in Asia-Pacific. On the other hand, full implementation of binding and non-binding WTO TFA measures together with other paperless and cross-border trade facilitation measures (digital trade facilitation) is projected to decrease trade costs by more than 26%, cutting international transaction costs in Asia and the Pacific by about $ 1.2 trillion annually. The analysis also confirms that there are significant reductions in trade costs associated with trade partners' implementation of trade facilitation measures. This shows that economies which already have high rates of trade facilitation implementation have strong incentive to encourage and support their trading partners in implementing trade facilitation. Further facilitation of trade in these economies will involve developing legal and technical frameworks to support cross-border paperless trade, i.e., enabling the electronic exchange and legal recognition of trade data and documents between public and private actors located in different countries along the international supply chain, as envisaged in the recently adopted regional UN treaty on cross-border paperless trade facilitation, the Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific (FA-PT).

Trade and investment can be effective means of implementation of the 2030 Sustainable Development Agenda. However, stand-alone trade and investment liberalization policies aimed at enhancing economic development may have negative side-effects on non-economic facets of sustainable development. As such, they are best to be accompanied by trade facilitation measures, as well as environmental, social and other complementary policies. In this paper, a computable general equilibrium (CGE) analysis is carried out using a modified Global Trade Analysis Project (GTAP) model and database to empirically evaluate the economic, social and environmental impacts of alternative policy changes in Asia and the Pacific. The CGE analysis confirms that trade and investment liberalization are essential drivers of economic development. The economic growth and trade benefits from trade facilitation generally dwarf those from tariff liberalization and, to a lesser extent, those achieved through investment liberalization. While results vary across subregions in the Asia-Pacific, both trade facilitation and investment liberalization also contribute positively to reducing inequality and undernourishment. However, the CGE analysis shows that liberalization policies increase CO2 emissions at the regional level. Importantly, economic growth in Asia and the Pacific is enhanced when regional liberalization policies are complemented by domestic social policy and global implementation of the environmental commitments under the Paris Accord.

We present a gravity model that accounts for multilateral resistance, firm heterogeneity and country-selection into trade, while accommodating asymmetries in trade flows. A new equation for the proportion of exporting firms takes a gravity form, such that the extensive margin is also affected by multilateral resistance. We develop Taylor approximated multilateral resistance terms with which to capture the comparative static effects of changes in trade costs. For isolated bilateral changes in trade frictions, multilateral resistance effects are small for most countries. However, if all countries reduce their trade frictions, the impact of multilateral resistance is so strong that bilateral trade falls in most cases, despite the larger trade elasticities implied by firm heterogeneity. As a consequence, the world-wide trade response, though positive, is much lower.

The objective of this study is to assess the impact of the East-West Highway improvement program on Georgia’s ability to access international markets. As highlighted extensively in the literature, improving transport infrastructure and the efficiency of the logistics sector can help countries gain competitiveness in international export markets, which can translate into faster economic growth and higher income. This study hypothesizes that investments in the EWH have reduced the cost of shipping Georgian goods to the rest of the world, and such reductions should be more significant for goods transported by road. To estimate the effect of cost reductions generated by improvements in the EWH, a gravity-type model in first-differences has been estimated. The results show that: (i) a 10 percent increase in the length of upgraded road network predicts a 1.1 percent increase in exports transported by road while no significant effect is estimated for exports on other transport modes (rail, sea, and air); (ii) the resulting increase in exports by road was reflected by a decrease in exports transported by sea; (iii) the effect is statistically and economically significant only for customs offices located along the EWH; (iv) only exports of time-sensitive products responded positively and significantly to improvements in the EWH during the 2006-2015 period; (v) upgrading the entire EWH is estimated to generate additional export revenues between USD 776 million and USD 1,466 million. It is important to note that the overall trade generating effect of the investment is expected to be somewhat lower as the results suggest some substitution between road and sea transport, but the overall impact is a significant boost to exports.

U.N. Commodity Trade (COMTRADE) statistics have major shortcomings for many analyses relating to tariffs and other trade barriers. The use of a cost-insurance-freight valuation base for these data results in an upward (sometimes severe) bias in the implied dutiable value of imports for countries that utilize free-on-board tariffs. This problem can be greatly exacerbated by the 'general' trade system procedure used to compile the U.N. statistics, as opposed to the 'special' trade practice used for the World Trade Organization Integrated Database. U.S. International Trade Commission statistics show that the combined effects of these biases can reach magnitudes that preclude the legitimate use of COMTRADE for many tariff-trade simulations or related trade negotiations. Copyright 2012, Oxford University Press.

Using highly disaggregated firm-level customs transaction data for imports and exports in Peru over the 2000–2012 period, this paper explores the relationship between imports of intermediate inputs and firm export performance. The paper shows that greater use, variety, and quality of imported intermediate inputs is significantly correlated with higher exports, faster export growth, greater diversification of export markets, and higher quality exports (as measured by relative unit prices) at the firm level. This relationship is robust and persistent to controls for unobserved firm heterogeneity and year fixed effects. The use of imported inputs is also associated with higher productivity at the firm level. Considering the relationship between specific trade policy measures and the import performance of those exporters that are direct importers, the analysis shows that those exposed to higher tariffs and nontariff measures import less in total and exhibit lower import variety. The use of the advanced clearance procedure as the modality to clear customs for imports is favorable to the import performance of exporter-importers, in that the users of the modality import more and import a more diversified bundle of inputs than those that do not use it, even after controlling for firm size.

International supply chains require the coordination of numerous activities across multiple countries and firms. This paper develops a theoretical model of supply chains in which the measure of tasks completed within a firm is determined by parameters that define transaction costs and the cost of coordinating more activities within the firm. The structural parameters that govern these costs explain variation in supply chain length as well as cross-country variation in gross-output-to-value-added ratios. The structural parameters are linked to comparative advantage along and across supply chains. The paper provides an analytical treatment of trade and welfare responses to trade cost change in a simple two-country model. To explore the models implications in a richer setting, the model is calibrated to match key observables in East Asia, and the calibrated model is used to evaluate implications of changes in model parameters for trade, welfare, the length of supply chains, and countries relative position within them.

This paper investigates how internal migration is affected by Brazil’s increased integration into the world economy. It analyzes the impact of regional differences in access to foreign demand on sector-specific bilateral migration rates between the Brazilian states for the years 1995 to 2003. Using international trade data, a foreign market access measure is computed at the sectoral level, which is exogenous to domestic migration. A higher foreign market access is associated with a higher local labor demand and attracts workers via two potential channels: higher wages and new job opportunities. Results show that both channels play a significant role in internal migration. Further, we find a heterogeneous impact across industries, according to their comparative advantage on the world market. However, the observed impact is driven by the strong reaction of low-educated workers to changes in market access. This finding is consistent with the fact that Brazil is exporting mainly goods that are intensive in unskilled labor.

In the last decade Morocco undertook substantial, if gradual, trade liberalization by reducing tariffs, reforming trade regulations and signing free and preferential trade agreements with several regions and countries, including the United States, Turkey, the European Union and Arab countries. This paper analyzes the impact of input tariff reduction on Moroccan exporting firms through the channel of intermediate goods. Gaining access to more varied and cheaper inputs can make exporting firms more competitive, and as a result they export more. To evaluate how this policy may impact firms export performance, the paper analyzes the impact of input tariff reduction on different margins of trade with emphasis on export markets and product diversification. The identification of the effect of input tariffs on exports relies on a difference-in-difference estimator using heterogeneous access to import tariff exemption as a measure of different levels of exposure to input tariff reduction at the firm level. Overall, the analysis finds that firms that are relatively more exposed to input tariff perform better in those sectors with the largest input tariff reduction, with better access to markets, higher probability to survive when exporting new products in those sectors and higher export value growth.

The paper introduces the appropriate within estimators for the most frequently used three-dimensional fixed effects panel data models. It analyzes the behavior of these estimators in the cases of no self-flow data, unbalanced data, and dynamic autoregressive models. The main results are then generalized for higher dimensional panel data sets as well.

Recent empirical evidence has highlighted how the export patterns of multi-product firms dominate world trade flows, and how these multi-product firms respond to different economic conditions across export markets by varying the number of products they export. In this paper, we further analyze the effects of those export market conditions on the relative export sales of those goods: we refer to this as the firm's product mix choice. We build a theoretical model of multi-product firms that highlights how market size and geography (the market sizes of and bilateral economic distances to trading partners) affects both a firm's exported product range and its exported product mix across market destinations. We show how tougher competition in an export market - associated with a downward shift in the distribution of markups across all products sold in the market - induces a firm to skew its export sales towards its best performing products. We find very strong confirmation of this competitive effect for French exporters across export market destinations. Our theoretical model shows how this effect of export market competition on a firm's product mix then translates into differences in measured firm productivity. Thus, a firm operating a given technology will produce relatively more output per worker when it exports to markets with tougher competition. This productivity gain is further compounded by the effect of competition on the mix of exported products.

Quantifications of gains from trade in heterogeneous firm models assume that productivity is Pareto distributed. Replacing this assumption with log-normal heterogeneity retains some useful Pareto features, while providing a substantially better fit to sales distributions-especially in the left tail. The cost of log-normal is that gains from trade depend on the method of calibrating the fixed cost and productivity distribution parameters. When set to match the size distribution of firm sales in a given market, the log-normal assumption delivers gains from trade in a symmetric two-country model that can be twice as large as under the Pareto assumption.

There is increasing evidence suggesting that climate change will negatively impact agricultural production in South Asia. Decreased domestic production may make South Asian countries more dependent on imports. The extent to which South Asia will need to increase its imports as a result of climate change will presumably depend on the degree to which the latter will affect domestic output. The effects of climate change on agriculture may well differ substantially for individual South Asian countries and indeed for regions within a given country which can be approximated by food production units. This calls for an analysis of climate change effects on trade flows under alternative trade policy regimes both for agriculture and non-agricultural sectors. The specific objectives of the paper include the following: analyze the extent to which agricultural production in South Asia and elsewhere in the world may be affected by different scenarios regarding climate change; analyze the extent to which changes in domestic production in South Asia resulting from climate change will lead to increased demand for imports by South Asian countries; analyze the effects of increased import demand in South Asia and changing exportable surpluses elsewhere on world market prices of major agricultural commodities consumed in South Asia; to the extent that South Asian governments allow transmission of changes in world market prices to domestic prices, analyze the potential welfare effects of changes in the latter; analyze if, and to what extent, worldwide trade liberalization and implementation of South Asian Free Trade Area (SAFTA) will dampen the effects of climate change on domestic agricultural prices in South Asia. In this context, the report is organized as follows: chapter one gives introduction. Chapter two describes the methodology used - with particular attention to how different models and modeling techniques are linked to produce an as accurate as possible assessment based on state-of-the-art knowledge. Chapter three provides an up-to-date analysis of trade flows and policies, and production patterns for key food products in South Asia to explain the context in which climate change is taking place. Chapter four describes the climate change scenarios and illustrates their consequences for crop yields at a global level and for South Asia - and in particular shows the vulnerability of the region to these changes. Baseline design, simulations, and results are discussed in chapter five. The final chapter six provides a short summary, discusses the limitations of the analysis, and derives suggestions and guidelines for future research.

V diplomski nalogi opredelimo vlogo B2B portalov in pomen elektronskega poslovanja. B2B portale smo razvrstili glede na različne kriterije in predstavili različne modele trgovanja na njih. Velik del pozornosti smo posvetili tudi strateškemu načrtovanju B2B poslovanja in vključevanju podjetij na B2B portale, dotaknili pa smo se tudi vizije elektronskega poslovanja. Osrednji del naloge obsega predstavitev gradnje specifičnega portala Bbuines.com ter z njo povezane oblikovne in tehnološke rešitve, raziskovalni procesi in metodologije. Posebno pozornost smo posvetili določitvi uporabniške specifikacije zahtev na podlagi Diagrama primerov uporabe (Use Case). In the diploma work we defined the role of B2B portals and the purpose of electronic commerce. Further on we divided B2B portals based on different criteria types, and we introduced different models of trading on them. We paid special attention to strategic planning of B2B commerce and to integration of the companies into B2B portals. With that we also took into consideration visions of electronic commerce. The main part of the diploma work covers the presentation of development of a specific portal Bbuines.com and with that connected design and technical solutions, research processes and methodology. With specifically we focused on defining specifications of users' requirements based on Use-case diagram.

This paper analyzes the impact of political instability in Côte d’Ivoire on WAEMU trade over 1990-2007, applying panel econometric techniques to a gravity model of trade within WAEMU and between WAEMU and the rest of the world. The paper finds that intra-regional trade represents a small share of total WAEMU trade and that Côte d’Ivoire accounts for around half of that total, highlighting the importance of this country for the region. The political instability in Côte d’Ivoire has led to an increase in transaction costs, making it relatively more costly for member countries to trade with each other than with the rest of world. Instability has also resulted in a diversion of trade away from Côte d’Ivoire in favor of other countries equipped with ports and in a reduction of WAEMU overall potential trade. For Côte d’Ivoire alone, lost trade is estimated at around 40 percent of its potential trade with the WAEMU in the absence of instability. With a normalization in Côte d’Ivoire, enhanced security and further integration would be essential to achieve higher levels of trade and growth in the WAEMU region.

Chami's method for calculating how much of an exporter's market share change can be attributed to each competitor has regularly been applied in the literature, but it has not been related to any theory yet. Here, an attempt is made to examine the trade models that can provide the theoretical foundations for the method, clarifying the assumptions underlying its results. It is shown that the method is consistent with most of the main trade models found in the literature. O método desenvolvido por Chami para distribuir as participações de cada país exportador entre seus competidores em um determinado mercado tem sido aplicado na literatura, mas ainda não foi associado a qualquer teoria. Este artigo procura examinar os modelos de comércio que podem oferecer os fundamentos teóricos para o método, clarificando as suposições necessárias aos seus resultados. Mostra-se que o método é consistente com a maioria dos principais modelos de comércio encontrados na literatura.

International audience; Empirical spatial models of trade that are based on a mathematical programming specification often exhibit a large discrepancy between the equilibrium solution and the observed demand, supply and levels of trade flows among countries. This discrepancy may be due to several causes. Assuming, however, that a trade model is not misspecified - in the sense that all the countries involved in the specific commodity trade have been included in the study and that the relevant policy instruments have been taken into account - the cause of discrepancy may be traced either to imprecision of unit transaction costs or to imprecision in the measurement of the demand and supply functions' parameters, or both. Policy assessments based on this type of imprecise models may be unsatisfactory. This paper presents a methodology for calibrating trade models of increasing complexity which are capable of generating solutions that reproduce the commodity trade flows observed in a given base year among all countries. These models may serve as a springboard for assessing the impact of various policies on demand, supply, prices, trade flows, benefits and losses in the countries under study.; Les modèles spatiaux de commerce empiriques qui sont basés sur une spécification de programmation mathématique présentent souvent des différences importantes entre la solution d'équilibre et l'offre et la demande et les niveaux de flux commerciaux observés entre nations. Ces différences peuvent être imputables à divers facteurs. Si on suppose que le modèle de commerce est bien spécifié - au sens que tous les pays impliqués dans le commerce d'un produit particulier ont été inclus dans l'analyse et que les politiques ont été prises en compte - la source des divergences peut être attribuée aux imprécisions soit dans les coûts de transaction unitaire soit dans les paramètres des fonctions d'offre et de demande ou les deux à la fois. Les évaluations de politique basées sur ce type de modèle imprécis ne sont pas satisfaisantes. Cet article présente une méthodologie pour calibrer les modèles spatiaux de commerce d'une complexité croissante capable de générer des solutions qui reproduisent les flux de commerce observés pour une année donnée entre tous les pays. Ces modèles peuvent servir pour évaluer l'impact de diverses politiques sur la demande, l'offre, les prix, les flux de commerces et le bien-être des pays analysés.

The Doha round of multilateral trade negotiations stalled in 2008 owing in no small degree to a lack of agreement on the terms of substantially reducing trade-distorting support for agricultural products and to what extent this will be beneficial to developing countries. Nicaragua presents an interesting case in point, being one of the poorest economies in Latin America with still a relatively large agricultural sector and high degrees of rural poverty. In 2005, the country signed a free trade agreement with the United States. This chapter provides a quantitative analysis addressing that question. It does so using a computable general equilibrium (CGE) model for Nicaragua coupled with a micro-simulation methodology. The first section provides background information on trade reform policies and macroeconomic trends in Nicaragua, with special reference to the agricultural sector and rural poverty. The section that follows describes the main features of the CGE model and the micro-simulation methodology used to assess the impact on poverty and inequality. The author then lay out the model scenarios considered, which include liberalizations of agricultural and all merchandise goods trade by the rest of the world and by Nicaragua itself. That is followed by a summary analysis of results. This analysis includes tests for the sensitivity of the results with respect to assumptions regarding the responsiveness of trade to price liberalization, as identified through the relevant trade elasticities. The final section provides conclusions and possible policy implications.

In this paper, the authors examine the political economy drivers of the variation in agricultural protection, both across countries and within countries over time. The paper starts by listing the key insights provided by both the theoretical and empirical literature on the political economy of trade policy formulation. The authors then set out a basic framework that allows us to put forth various testable hypotheses on the variation and evolution of agricultural protection. The authors find that both the political ideology of the government and the degree of income inequality are important determinants of agricultural protection. Thus, both the political-support-function approach as well as the median-voter approach can be used in explaining the variation in agricultural protection across countries and within countries over time. The results are consistent with the predictions of a model that assumes that labor is specialized and sector-specific in nature. Some aspects of protection also seem to be consistent with predictions of a lobbying model in that agricultural protection is negatively related to agricultural employment and positively related to agricultural productivity. Public finance aspects of protection also seem to be empirically important.

This chapter discusses various aspects of financial crises and emerging market trade. The current global financial crisis and the sharp reduction in trade flows have raised questions about the extent to which access to capital affects the ability of companies to produce and sell exports and to buy imports. The results presented in this chapter imply that financial conditions play a significant, however, not dominant role in stimulating trade volumes among emerging market countries. Estimates presented in this paper suggest that the combination of zero net private capital flows to emerging markets and a domestic banking crisis could lower import volume growth by between 5 and 6 percent on impact, with a slightly lower effect on export volumes. It is also important to recognize that trade finance is not the only form of credit with implications for trade volumes. Conditions in credit markets more generally, including for working capital and long-term investment financing also have an impact on international trade, including through their impact on industrial production more generally. As such, it is probably sensible for policymakers to support credit flows in general rather than to focus specifically on increasing trade finance.

In this paper, the IMF's new Global Economy Model (GEM) is used to estimate the contribution of unbalanced growth to the decline in the share of goods production in Australia and New Zealand. The simulation results suggest that faster productivity growth in the tradable goods sector in Australia, New Zealand, and their major trading partners accounts for a significant portion of the relative decline in the importance of goods production. Over the 1995 to 2004 period, unbalanced growth explains more than 80 percent of the decline in goods production in both countries.

Empirical spatial models of trade that are based on a mathematical programming specification often exhibit a large discrepancy between the equilibrium solution and the observed demand, supply and levels of trade flows among countries. This discrepancy may be due to several causes. Assuming, however, that a trade model is not misspecified - in the sense that all the countries involved in the specific commodity trade have been included in the study and that the relevant policy instruments have been taken into account - the cause of discrepancy may be traced either to imprecision of unit transaction costs or to imprecision in the measurement of the demand and supply functions' parameters, or both. Policy assessments based on this type of imprecise models may be unsatisfactory. This paper presents a methodology for calibrating trade models of increasing complexity which are capable of generating solutions that reproduce the commodity trade flows observed in a given base year among all countries. These models may serve as a springboard for assessing the impact of various policies on demand, supply, prices, trade flows, benefits and losses in the countries under study., Les modèles spatiaux de commerce empiriques qui sont basés sur une spécification de programmation mathématique présentent souvent des différences importantes entre la solution d'équilibre et l'offre et la demande et les niveaux de flux commerciaux observés entre nations. Ces différences peuvent être imputables à divers facteurs. Si on suppose que le modèle de commerce est bien spécifié - au sens que tous les pays impliqués dans le commerce d'un produit particulier ont été inclus dans l'analyse et que les politiques ont été prises en compte - la source des divergences peut être attribuée aux imprécisions soit dans les coûts de transaction unitaire soit dans les paramètres des fonctions d'offre et de demande ou les deux à la fois. Les évaluations de politique basées sur ce type de modèle imprécis ne sont pas satisfaisantes. Cet article présente une méthodologie pour calibrer les modèles spatiaux de commerce d'une complexité croissante capable de générer des solutions qui reproduisent les flux de commerce observés pour une année donnée entre tous les pays. Ces modèles peuvent servir pour évaluer l'impact de diverses politiques sur la demande, l'offre, les prix, les flux de commerces et le bien-être des pays analysés.

This paper examines the role of Japan against that of China in the exchange rate regime in East Asia in light of growing interest in forming a currency union in the region. The analysis suggests that currency unions with China tend to generate higher average welfare gains for East Asian countries than currency unions with Japan or the United States. Overall, Japan does not appear to be a dominant player in forming a currency union in East Asia, and this trend is likely to continue if China's relative presence continues to rise in the regional trade.

Recently, the export performance of France relative to its own past and relative to a major trading partner, Germany, deteriorated. That deterioration seems related to the geographical destination and product composition of trend exports. Faced with an increase in unit labor costs or in its terms of trade, France adjusts relatively less via price and wage changes, and more via employment changes. Given that SMIC convergence resulted in a significant increase in unit labor costs, foreign sector difficulties might be structural. Trade flows relevance and euro area policy constraints highlight the importance of structural reforms that increase markets flexibility.

The literature measuring the effects of WTO membership on trade flows has produced remarkably diverse results. Rose (2004) reports a wide range of empirical specifications that produce no WTO effects. Tomz et al. (2007) use Rose's data but include de facto WTO membership, to find positive WTO trade effects. Rose (2005) also produced positive WTO trade effects after accounting for the diverse trade effects produced by individual preferential trade agreements (PTAs). When Subramanian and Wei (2007) emphasize general equilibrium trade effects by controlling for multilateral resistance, they find strong WTO trade effects only for industrialized countries. Subramanian and Wei (2007), however, account neither for unobserved heterogeneity among trading partners, nor for differences in trade effects across PTAs (which could inflate WTO estimates). We unify the Rose, Tomz et al., and Subramanian and Wei specifications in one comprehensive approach that minimizes omitted variable bias to show that all specifications produce one consistent result: WTO effects on trade flows are not statistically significant, while PTAs produce strong but uneven trade effects. Extending the gravity model to address specific avenues in which WTO may have affected trade flows, we find that WTO membership boosts trade prior to PTA formation and increases trade among proximate developing countries (at the expense of distant trade). An augmented gravity model that accounts for WTO terms-of-trade theory shows that countries with greater incentives to bargain for tariff reductions before WTO accession experience positive and significant subsequent WTO trade effects.

This paper provides a general equilibrium analysis of the trade effects of the formation of a currency union, and of its subsequent enlargement to include an economically dissimilar country. Furthermore, it investigates how economic dissimilarities among countries affect the magnitude of the trade effects fostered by a common currency. We show that sharing a common currency enhances the volume of bilateral trade among countries. However, the more economically dissimilar is an accession country, compared to the original members of a currency union, the smaller are the gains in trade that would follow the enlargement of a currency union.

Using the theory of optimal local currency pricing, this paper constructs a structural equation to estimate the rate at which foreign producer prices pass through the local currency prices of imported goods in the U.S. This can be viewed as measuring exchange rate pass-through, in line with price stickiness in the New Keynesian Phillips curve literature. We estimate the structural equation using the generalized methods of moments for consistent estimates of exchange rate pass-through. We find that a model with a mix of local currency pricing and producer currency pricing fits the data best. The estimate of price stickiness in import prices is comparable to existing estimates of domestic price stickiness.

We examine the relationship between trade and financial globalization and the rise in inequality in most countries in recent decades. We find technological progress as having a greater impact than globalization on inequality. The limited overall impact of globalization reflects two offsetting tendencies: whereas trade globalization is associated with a reduction in inequality, financial globalization - and foreign direct investment in particular - is associated with an increase. A key finding is that both globalization and technological changes increase the returns on human capital, underscoring the importance of education and training in both developed and developing countries in addressing rising inequality.

SUMMARY The effect of preferential trade agreements (PTAs) on trade flows is subject to model uncertainty stemming from the diverse and even contradictory effects suggested by the theoretical PTA literature. The existing empirical literature has produced remarkably disparate results and the wide variety of empirical approaches reflects the uncertainty about the ‘correct’ set of explanatory variables that ought to be included in the analysis. To account for the model uncertainty that surrounds the validity of the competing PTA theories, we introduce Bayesian model averaging (BMA) to the PTA literature. Statistical theory shows that BMA successfully incorporates model uncertainty in linear regression analysis by minimizing the mean squared error, and by generating predictive distributions with optimal predictive performance. Once model uncertainty is addressed as part of the empirical strategy, we find strong evidence of trade creation, trade diversion, and open bloc effects. Our results are robust to a range of alternative empirical specifications proposed by the recent PTA literature. Copyright © 2010 John Wiley & Sons, Ltd.

South-South trade agreements are proliferating: Developing countries signed 70 new agreements between 1990 and 2003. Yet the impact of these agreements is largely unknown, as existing North- North and North-South micro-level studies are likely to yield misleading predictions for South-South trade agreements. This paper focuses on the static effects of South-South preferential trade agreements stemming from changes in trade patterns. Specifically, it estimates the impact of the Common Market for Eastern and Southern Africa (COMESA) on Uganda’s imports between 1994 and 2003. Detailed import and tariff data at the 6-digit harmonized system level are used for more than 1,000 commodities. Based on a difference-in-difference estimation strategy, the paper finds that—in contrast to evidence from aggregate statistics—COMESA’s preferential tariff liberalization has not considerably increased Uganda’s trade with member countries, on average across sectors. The effect, however, is heterogeneous across sectors. Finally, the paper finds no evidence of trade diversion effects.

This paper is a survey of the literature on theoretical models of the household, paying particular attention to some of the earlier contributions, and using them to place the current state of the theory in perspective. One of its aims is to suggest that the literature's neglect of Samuelson's proposal, that households can be modelled as if they maximised a form of social welfare function, was a mistake. However, the idea following directly from the Nash bargaining models, that the household's preference ordering over the utility profiles of its members depends on exogenous variables, in particular wage rates and non-wage incomes, is an important one. Combined with Samuelson's proposal, it can be made the basis for a general approach to modelling household decision taking, flexible enough to encompass non-cooperative behaviour and Pareto inefficiencies arising out of the inevitable incompleteness and unenforceability of domestic agreements. We also point out the importance of household production and some of the implications of its neglect in modelling households. Above all, the aim is to provide a deeper understanding of the current theoretical literature on household economics by means of a survey of its history.

Most researchers examining poverty and multilateral trade liberalization have had to examine average, or per capita effects, suggesting that if per capita real income rises, poverty will fall. This inference can be misleading. Combining results from a new international cross-section consumption analysis with earnings data from household surveys, this article analyzes the implications of multilateral trade liberalization for poverty in Indonesia. It finds that the aggregate reduction in Indonesia's national poverty headcount following global trade liberalization masks a more complex set of impacts across groups. In the short run the poverty headcount rises slightly for self-employed agricultural households, as agricultural profits fail to keep up with increases in consumer prices. In the long run the poverty headcount falls for all earnings strata, as increased demand for unskilled workers lifts incomes for the formerly self-employed, some of whom move into the wage labor market. A decomposition of the poverty changes in Indonesia associated with different countries' trade policies finds that reform in other countries leads to a reduction in poverty in Indonesia but that liberalization of Indonesia's trade policies leads to an increase. The method used here can be readily extended to any of the other 13 countries in the sample.

Vor dem Hintergrund der Integration Polens in die Europäische Union (EU) werden in der vorliegenden Arbeit die Auswirkungen verschiedener agrarpolitischer Optionen untersucht. Als mögliche Varianten wurden dabei die Agenda 2000 sowie eine vollständige Liberalisierung der Gemeinsamen Agrarpolitk (GAP) ausgewählt. Neben den Politikoptionen werden weitere Parameter variiert, die die Entwicklung der Agrarproduktion und des Handels beeinflußen. Insbesondere werden unterschiedliche Varianten zur Entwicklung der Produktivität im polnischen Agrarsektor simuliert. Die Simulationen erfolgen mittels eines komparativ-statischen, partiellen Gleichgewichtsmodells. Des weiteren wird eine politökonomische Betrachtungsweise unter Nutzung einer Politischen Präferenzfunktion durchgeführt. Die wichtigsten Resultate der Analysen lassen sich wie folgt zusammenfassen: Eine vollständige Liberalisierung der GAP führt bei vorher stark protektionierten Pro-dukten wie Rindfleisch, Milch und Zucker zu Weltmarktpreiserhöhungen. Die Mehrzahl der Erzeuger- und Konsumentenpreise in der EU hingegen sinkt. Es folgt ein starker Rückgang der landwirtschaftlichen Produktion, welcher ein Defizit in der Agrarhandelsbilanz der EU bewirkt. In den Agenda 2000-Szenarien steigt in der EU bei der überwiegenden Zahl der Agrar-güter die Produktion an, auch der Saldo der Agrarhandelsbilanz bleibt positiv. Die Simulation eines EU-Beitritts Polens mit einer vollständigen Liberalisierung führt zu deutlichen Preissenkungen auf den nationalen Märkten. Die Auswirkungen auf die polnische Agrarhandelsbilanz sind stark von der Produktivitätsentwicklung abhängig. Auch ein EU-Beitritt Polens mit der Einführung der Agenda 2000 bedingt Preis-senkungen bei allen landwirtschaftlichen Produkten, mit Ausnahme von Zucker. Doch kann die polnische Agrarhandelsposition eindeutig verbessert werden. Die Ergebnisse zeigen weiterhin die Unterschiede in der Beurteilung einer Politikoption in Abhängigkeit von dem gewählten Bewertungsrahmen. Aus der Berechnung sozialer Wohl-fahrtseffekte lassen sich oftmals keine Aussagen zur tatsächlichen Umsetzbarkeit einer Reform formulieren. Erst die Ergänzung der Analyse um politökonomische Parameter ermöglicht auch Aussagen zur politischen Akzeptanz und Machbarkeit einer Politikoption., With regard to the approaching accession of Poland to the European Union (EU) this thesis analyzes the effects of different political options on agricultural production and trade. Here the Agenda 2000 and a complete liberalization of the Common Agricultural Policy (CAP) have been chosen. Furthermore, variations of other important parameters like population, income and different development paths for the productivity in the Polish agricultural sector are included. The simulations are run with a comparative static, partial equilibrium trade model accompanied by a Political Preference Function allowing for insights into the political economy of agricultural policy reform. The main results are as follows: A complete liberalization of the CAP leads to an increase in world market prices for once highly protected products like beef, milk and sugar. Concerning the national prices in the EU a decrease for most products is predicted. This will be followed by a drop in agricultural production and a negative agricultural trade balance for the European Union. The Agenda 2000 scenario shows an increase in the agricultural production and positive trade effects for the EU. The EU-accession of Poland under a fully liberalized policy leads to much lower prices on Polish agricultural markets. Here the production and trade effects are dominated by the development of the productivity in this sector. An EU-integration under the Agenda 2000 will also lower the prices for agricultural products, with the exeption of sugar. The trade situation will be improved. The derived Political Preference Function shows that the calculation of mere welfare effects is not sufficient for an assessment concerning the feasibility of a political reform. Here the additional analysis of the political influence of different interest groups might be a helpful tool.

A simple measure is proposed that estimates the volume of trade distortion caused by the agricultural policies of trading countries. The index, called a TDS (Trade Distorted by support), would be useful for trade analysts to compare the trade impact of agricultural support policies across countries and commodities. The TDS index can be calculated largely from existing information on agricultural support. A TDS index might also be used to assess damages in trade dispute settlement cases.

A simple measure is proposed that estimates the volume of trade distortion caused by the agricultural policies of trading countries. The index, called a TDS (trade distorted by support), would be useful for trade analysts to compare the trade impact of agricultural support policies across countries and commodities. The TDS index can be calculated largely from existing information on agricultural support.