196,170 research outputs found
Sector and Importer Determinants of Prices for Traded Intermediates
No full textWhile the literature on traded goods prices emphasizes final goods prices and related consumer theory to explain variation in goods prices with importer characteristics, trade in intermediates actually constitutes about two-thirds of total trade. We propose a mechanism for explaining variations in the prices of intermediates as a function of importer characteristics, wherein production is vulnerable to failure and the probability of failure declines in the quality of intermediates. Higher wages mean a greater opportunity cost of failure, leading to a stronger demand for high-quality intermediates where firms face higher wages. We find empirical support for this mechanism in the case of intermediate goods using IV regressions. In addition, our findings indicate that while the cost of labor explains about one-fifth of variation in imported intermediate prices, it is a non-significant determinant of imported final good prices
Cross-border mergers and acquisitions and the role of trade costs
No full textCross-border mergers and acquisitions (M&As) have increased dramatically over the last two decades. This paper analyses the role of trade costs in explaining the increase in both the number and the value of cross-border mergers and acquisitions. In particular, we distinguish horizontal and non-horizontal M&As and investigate whether distance and trade policy barriers affect these two types of mergers differently. We analyse this question using industry data for 23 OECD countries for the period 1990-2001. Our findings suggest that while in the aggregate trade costs affect cross-border merger activity negatively its impact differs importantly across horizontal and non-horizontal mergers. The impact of trade costs is less negative for horizontal mergers, which is consistent with the tariff-jumping argument.mergers and acquisitions, international trade, trade costs, gravity, FDI, Hijzen, G�rg, Manchin
Market power in distribution and pass-through for consumers and producers
No full textWe examine the differential pass-through of import prices into consumer and producer prices. We develop a framework with distribution costs and distribution market power. We then examine pass-through from import prices to consumer and producer prices in the euro area using the U.S. import price as instrument. We find that pass-through rates to producer prices are more sensitive to changes in distribution margins than pass-through to consumer prices. Furthermore, only a portion of import price changes translate into domestic price changes limiting potential consumer benefits from tariff liberalization, with market power in distribution services being one important factor reducing pass-through
Rules of origin and the web of East Asian free trade agreements
No full textThe authors provide an overview of the preferential rules of origin in East Asia, highlighting the aspects that might possibly generate some trade-chilling effects. They review characteristics of existing preferential trade agreements with special emphasis on lessons from the European experience, and analyze some important features of the existing rules of origin in East and South-East Asian regional integration agreements. The empirical analysis of the effectiveness of preferentialism on intra-regional trade flows focuses on the ASEAN Free Trade Area (AFTA), with the aim of providing a rough estimate of the costs of requesting preferences. The results suggest that preferential tariffs favorably affect intra-regional imports only at very high margins (around 25 percentage points). This points to the likelihood of high administrative costs attached to the exploitation of preferences, particularly with regard to the compliance with AFTA's rules of origin.Free Trade,Trade Law,Rules of Origin,Trade Policy,Economic Theory&Research
Border effects in the enlarged EU area
No full textBy looking at imports of Eastern European countries, we provide novel
insights on the importance and magnitude of border effects and on how
they are linked with technical barriers to trade. All Central Eastern
European Countries (CEECs) traded with themselves more than with other
countries. We grouped products into three categories; depending on the
importance of applicaple technical barriers. Our results show border effects
are the largest for products, where we expect to have the most important
technical barriers. We assess if border effects changed over the transition
period and we find that for products where technical barriers are less
important the magnitude of border effects was declining at the end
of the 90s
International migration and illegal costs: Evidence from Africa-to-Europe smuggling routes
No full textThe 2011 Arab Spring marked the opening of the Central Mediterranean Route for irregular border crossings between Libya and Italy, which produced heterogeneous reductions of bilateral smuggling distances between country pairs in the Mediterranean region. We exploit this source of spatial and temporal variation in bilateral distance along land and sea routes to estimate the elasticity of irregular migration intentions for African and Near East countries. We estimate an elasticity of migration intentions to smuggling distances exceeding -3, mainly driven by countries with weak rule of law and high internet penetration. Our findings are consistent across irregular migration measures both at the aggregate and individual levels. We show that irregular migration elasticity is higher for youth, relatively skilled individuals and those with an informative advantage (having a social network abroad or a mobile phone)
Determinants of European cross-border mergers and acquisitions
No full textThis paper investigates the determinants of European cross-border M&As using a large database. Specifically, we identify some of the different factors which contribute to the efficiency of the firms and divide these into two groups: those which can be changed through a merger or acquisition and those which cannot be altered and are more related to the environment where the acquired firm is established. Using a gravity model we find evidence for both of what have become to be known as the governance and outcome hypotheses. Additionally, we do not find any supporting evidence for more intense M&A activity between euro-zone countries.mergers and acquisitions, mergers, acquisitions, cross-border, M&A, Manchin
Trade Costs, Quality, and The Skill Premium
No full textWe develop a monopolistic competition model with nonhomothetic factor input bundles where increasing quality requires increasing use of skilled workers. As a result more skill abundant countries export higher quality, higher priced goods. Using a multicountry dataset we test and confirm the findings in Schott (2004) of a positive effect of skill abundance on unit values identified with US data. We extend the core model with per unit trade costs leading to the Washington-apples effect that goods shipped over larger distance are of higher quality. The combination of high-quality goods being relatively skill intensive with the Washington-apples effect implies that countries at a larger distance from their trading partners display a higher skill premium. Simulating our model we find that a doubling of distance of a country relative to all its trading partners raises the skill premium in a country by about 2.3 percent
Pursuing environmental and social objectives through trade agreements
No full textUsing a large dataset covering more than 180 countries and spanning several decades, we employ a SDID estimator to identify the extent to which trade agreements incorporating non-trade provisions (labor standards, environmental protection and civil and political rights) are associated with improvements in corresponding non-trade performance indicators. We distinguish between binding (enforceable) and non-binding provisions in trade agreements, and also control for the allocation of official development assistance targeting these three non-trade policy areas. Overall, the results suggest that efforts made to date to include non-trade provisions in trade agreements have not resulted in consistent desired (better) non-trade outcomes
Preference erosion and multilateral trade liberalization
No full textBecause of concern that OECD tariff reductions will translate into worsening export performance for the least developed countries, trade preferences have proven a stumbling block to developing country support for multilateral liberalization. We examine the actual scope for preference erosion, including an econometric assessment of the actual utilization, and also the scope for erosion estimated by modeling full elimination of OECD tariffs and hence full MFN liberalization-based preference erosion. Preferences are underutilized due to administrative burden—estimated to be at least 4 percent on average—reducing the magnitude of erosion costs significantly. For those products where preferences are used (are of value), the primary negative impact follows from erosion of EU preferences. This suggests the erosion problem is primarily bilateral rather than a WTO-based concern
- …
