190 research outputs found
A Tale of (almost) 1001 Coefficients: The Deep and Heterogeneous Effects of the EU-Turkey Customs Union
No full textIn view of the deferred start of negotiations for the modernization of the customs union between the EU and Turkey (CU-EUT), we looked back and analysed the ex post trade consequences of the CU-EUT. Employing up-to-date econometric best practices for regional integration agreements, we quantified both the total and the heterogeneous trade effects of the CU-EUT. In contrast with most previous studies, our results indicate that the CU-EUT made a significantly positive, large and robust impact, implying there was an additional increase in EU-Turkey trade in manufacturing by 55–65 per cent compared with that during the previously active Ankara Agreement. We also provide evidence that the CU-EUT significantly increased Turkey's trade with non-member countries of the CU-EUT. Additionally, a substantial heterogeneity in the CU-EUT effect was found across different industries as well as for each of its member countries and the direction of trade. We linked the heterogeneity of up to 911 coefficient estimates to the differences in initial trade costs and show that it cannot be ascribed to reductions in bilateral tariff rates
Brothers in arms: the value of coalitions in sanctions regimes
No full textChowdhry S, Hinz J, Kamin K, Wanner J. Brothers in arms: the value of coalitions in sanctions regimes. Economic Policy . 2024: eiae019.This paper examines the impact of coalitions on the economic costs of the 2012 Iran and 2014 Russia sanctions. By estimating and simulating a quantitative general equilibrium trade model under different coalition setups, we (1) dissect welfare losses for sanctions senders and target; (2) compare prospective coalition partners; (3) investigate 'optimal' coalitions that maximize payoff from sanctions; (4) provide bounds for sanctions potential, that is, the maximum welfare change attainable when sanctions are scaled vertically up to an embargo, and horizontally up to a global regime. Relative to unilateral action, we find that coalitions magnify welfare losses imposed while their impact on domestic welfare loss incurred depends on the design and sectoral dimension of sanctions. Hypothetical cooperation of large developing economies such as China additionally raises the deterrent force of coalitions. Additionally, we quantify transfers that equalize welfare losses across coalition members to further demonstrate asymmetries in the relative economic burden of sanctions. In all scenarios, we implement a novel Bayesian bootstrap procedure that generates confidence bands for simulation outcomes
Worth the pain? Firms' exporting behaviour to countries under sanctions
No full textCrozet M, Hinz J, Stammann A, Wanner J. Worth the pain? Firms' exporting behaviour to countries under sanctions. European Economic Review. 2021;134: 103683.How do exporting firms react to sanctions? Specifically, which firms are willing - or capable - to serve the market of a sanctioned country? We investigate this question for four sanctions episodes using monthly data on the universe of French exporting firms. We draw on recent econometric advances in the estimation of dynamic fixed effects binary choice models. We find that the introduction of new sanctions in Iran and Russia significantly lowered firm-level probabilities of serving these sanctioned markets, while the (temporary) lifting of the U.S. sanctions on Cuba and the removal of sanctions against Myanmar had no or only small trade-inducing effects, respectively. Additionally, the impact of sanctions is very heterogeneous along firm dimensions and by case particularities. Firms that depend more on trade finance instruments are more strongly affected, while prior experience in the sanctioned country considerably softens the blow of sanctions, and firms can be partly immune to the sanctions effect if they are specialized in serving "crisis countries". Finally, we find suggestive evidence for sanctions avoidance by exporting indirectly via neighboring countries. (c) 2021 Elsevier B.V. All rights reserved
Consequences of a Higher Carbon Price in the EU — Who Will Win, Who Will Lose?
No full textAbstract If the EU is to achieve its ambitious climate protection targets, prices for greenhouse gas emissions will rise noticeably in the next few years. This has economic implications not only for the EU member countries, but also for the rest of the world. This article presents the results of simulations covering 141 countries/regions and 65 economic sectors. The economic impact of the EU increasing its carbon price by $50 is calculated. In addition to the effects on real GDP and sectoral production, the consequences for the volume of emissions are also calculated. The carbon price increase is found to effectively bring down emissions, though with non-negligible leakage effects and at very heterogenous costs, both across countries and across sectors
The Carbon Footprint of Global Trade Imbalances
No full textA large share of global carbon emissions arises in the production of goods that are consumed in a different country and from burning fossil fuels that have been extracted yet elsewhere. The flows of carbon embodied in trade are highly asymmetrical, decoupling territorial emissions (or what we will call production footprints) from consumption footprints and from what we call extraction or supply footprints. At the same time, trade is highly and persistently unbalanced in value terms, too, allowing this decoupling to be even more pronounced — with a priori ambiguous environmental consequences. Prominently, the two countries with the largest net ex- and imports of carbon (China and the US) have at the same time consistently been among the countries with the largest trade surplus and deficit, respectively, and many large fossil fuel exporters have been running persistent trade surpluses. We investigate the effects of global value trade imbalances on carbon emissions around the world. To this end, we build a Ricardian quantitative trade model including sectoral input-output linkages, trade imbalances, fossil fuel extraction, and carbon emissions from fossil fuel combustion. For every individual country, the emission effect of re- moving its trade imbalance depends on the carbon intensities of its production and consumption patterns, as well as on its fossil resource abundance. The simultaneous removal of all global trade imbalances is found to lower world carbon emissions by 0.62 percent or 184 million tons of carbon dioxide. Out of all individual countries’ imbalances, eliminating the Qatari trade surplus and the US trade deficit would lead to the largest environmental benefits in terms of lower global emissions
The Carbon Footprint of Global Trade Imbalances
No full textInternational trade is highly imbalanced both in terms of values and in terms of embodied carbon emissions. We show that the persistent current value trade imbalance patterns contribute to a higher level of global emissions compared to a world of balanced international trade. Specifically, we build a Ricardian quantitative trade model including sectoral input-output linkages, trade imbalances, fossil fuel extraction, and carbon emissions from fossil fuel combustion and use this framework to simulate counterfactual changes to countries' trade balances. For individual countries, the emission effects of removing their trade imbalances depend on the carbon intensities of their production and consumption patterns, as well as on their fossil resource abundance. Eliminating the Russian trade surplus and the US trade deficit would lead to the largest environmental benefits in terms of lower global emissions. Globally, the simultaneous removal of all trade imbalances would lower world carbon emissions by 0.9 percent or 295 million tons of carbon dioxide
The Consequences of Unilateral Withdrawals from the Paris Agreement
No full textWe develop a multi-sector structural trade model with emissions from production and a con- stant elasticity of fossil fuel supply function to simulate the consequences of unilateral withdrawals from the Paris Agreement. Taking into account both direct and leakage effects, we find that a US withdrawal would eliminate a third of the world emissions reduction (25.7% direct effect and 7% leakage effect), while a potential Chinese withdrawal lowers the world emission reduction by 19.4% (8.2% direct effect and 11.2% leakage effect). The substantial leakage is primarily driven by technique effects induced by falling international fossil fuel prices
Carbon Tariffs: An Analysis of the Trade, Welfare and Emission Effects
No full textCarbon tariffs are one prominently discussed environmental policy. The proponents stress the carbon tariffs' ability to mitigate the potential negative effect of environmental-friendly production on competitiveness, to avoid carbon leakage and to reduce world carbon emissions. We analyze the effects of carbon tariffs on trade, welfare and carbon emissions in a multi-sector, two-factor gravity model. The introduction of carbon tariffs reduces welfare in most countries, but the effect tends to be more pronounced in poorer countries. Further, carbon emissions are massively shifted from these countries to richer countries. Most remarkably, world carbon emissions increase by 0.49 percent in the investigated counter-factual scenario, with a bootstrapped 95% confidence interval of [0.44, 0.55]
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