Xavier Jaravel, Erick Sager, 16 October 2019

International trade creates both winners and losers. Using comprehensive price data, this column estimates the US price effects of the China shock from 2000 to 2007. It finds that US consumers benefited from large price declines in product categories in which imports from China increased, as increased trade with China eroded the market power of US producers. The positive impact of the China shock on the purchasing power of US consumers is large in comparison to its negative impact on US jobs.

Rui Costa, Swati Dhingra, Stephen Machin, 01 October 2019

Some commentators argue that globalisation is systematically connected to the real-wage and productivity stagnation seen across the developed world. This column analyses the relationship between international trade and worker outcomes in the immediate aftermath of the Brexit referendum, when the value of the sterling fell massively against other nations’ currencies. It finds that the rise in import costs from the sterling depreciation hurt wages and training. This relative decline in real earnings of workers has reinforced pre-existing real-wage stagnation; UK workers have not fared well since the referendum price rise.

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We are pleased to announce the celebration of the XVI Workshop on Economic Integration, organized by the INTECO joint research unit in Economic Integration to be held at the University Jaume I in Castellón the next 28th and 29th of November 2019. In this edition, our invited key speaker will be Mario Larch (University of Bayreuth) and a round-table on risk-sharing in the eurozone with the participation of Román Escolano (CUNEF), Jean-Baptiste Gossé (Bank of France) and Adrià Morrón (CaixaBank).

Analogously to previous years, the workshop will consist of the presentation of working papers in the field of economic integration, both real (international trade) and financial (international finance). Participants will have 20 minutes to present their works and then each paper will be briefly commented by a discussant and open for general discussion to the floor.

In case you are interested in participating in the workshop, either presenting or discussing papers, please let us know by email: [email protected] before the 25th October. In case you are interested in presenting a paper, please submit it with your expression of interest.

IMPORTANT DATES:
a) 25th of October 2019: expression of interest and submission of papers.
b) 8th of November 2019: publication of the program
b) 28th and 29th of November 2019: workshop

Regarding travel and financial issues, we can cover accommodation for one night and meals, as well as Thursday’s 28th dinner, only for those colleagues included in the final program. Other expenses will be covered by your own budget. All the information will be available on the INTECO web page (http://www.inteco.uji.es).

Fariha Kamal, 07 July 2019

‘Factoryless’ goods producing entities outsource physical transformation activities while retaining ownership of the intellectual property and control of sales to customers. Using 2012 data from the US Census Bureau, this column provides a new conceptual definition of factoryless activity. It also compares factoryless goods producer firms to service providers outside the manufacturing sector, and hybrid manufacturers to traditional manufacturers within the manufacturing sector. The analysis reveals several meaningful correlations between factoryless status at the firm level and conceptual variables such as employment mix, innovation, and importing activities.

Weicheng Lian, Natalija Novta, Evgenia Pugacheva, Yannick Timmer, Petia Topalova, 07 June 2019

The dramatic decline in the relative price of capital goods has been an important – but overlooked – driver of real investment. This column analyses cross-country price data to establish that deepening trade integration and productivity growth have both contributed to this decline. The erosion of support for international trade and sluggish productivity growth may limit further declines in relative prices of capital goods, which could negatively affect real investment rates. 

Christophe Gouel, David Laborde, 06 February 2019

Given our collective failure to mitigate greenhouse gas emissions, the world will have to adapt to a certain level of climate change. This may mean that as climate change affects crops’ yield potential, new patterns of comparative advantage, and hence new trade flows, will emerge. This column examines the importance of the market adaptations in mediating welfare losses in the agricultural sector. The findings suggest a large role for international trade: when adjustments in trade flows are constrained, global welfare losses from climate change increase by 76%.

Claudia Steinwender, 11 April 2018

Flows of information, though critical for the efficient functioning of markets, are often limited in reality, potentially distorting trade flows and price patterns. This column uses the transatlantic telegraph connection of 1866 to explore how changes in information frictions affected cotton markets in the US and UK. The results show that information frictions decrease average trade flows and the volatility of trade, leading to substantial welfare losses.

Eugenio Cerutti, Haonan Zhou, 09 February 2018

Chinese banks have continued to expand rapidly both domestically and abroad. Together, they constitute the largest banking sector in the world by far. This column places the Chinese banking system in a global context. Although very small relative to their domestic claims, Chinese banks’ foreign claims are substantial for many borrower countries in Asia, Africa, and the Caribbean in particular. Many of these banking connections are related to Chinese outward foreign direct investment, with fewer related to trade linkages.

Alan de Bromhead, Alan Fernihough, Markus Lampe, Kevin O'Rourke, 24 March 2017

With Brexit looming, and protectionist pressures mounting elsewhere in the developed world, the question of whether trade policy matters is taking on more significance. This column looks at the extent to which trade policy was responsible for the shift towards intra-imperial trade in the interwar period. Both tariffs and quotas increased the Empire’s share of British trade, suggesting that trade policy mattered more for interwar trade patterns than the cliometric literature has suggested.

Adrian Wood, 18 March 2017

In defending trade from misguided protectionism, economists argue that the main killer of manufacturing employment around the world has been technology, not trade. This column explores how globalisation has caused the sectoral structures of countries to conform more closely to their factor endowments. In the skill-abundant developed regions, manufacturing became more skill-intensive, while in skill-scarce and land-scarce Asia, labour-intensive manufacturing expanded. In land-abundant developing Africa, Latin America, and the Middle East, by contrast, manufacturing contracted.

Italo Colantone, Piero Stanig, 23 November 2016

The vote for Brexit was a watershed moment in European politics. This column investigates the causal drivers of differences in support for the Leave campaign across UK regions. Globalisation in the form of the ‘Chinese import shock’ is found to be a key driver of regional support for Brexit. The results suggest that policies are needed that help to redistribute the benefits of globalisation across society. 

Wolfgang Keller, Javier Andres Santiago, Carol Shiue, 23 August 2016

In international trade theory, countries are often treated as homogenous regions, with no account taken of their internal geography. This column uses evidence from China’s Treaty Port Era to show how domestic trade frictions shape welfare gains from trade. Gains from new technologies that lower trade costs are shared, but the gains are not evenly distributed. Lower trade costs can also mean lower welfare for productivity leaders, who may be replaced by low-cost suppliers from less productive regions as the costs of transport decline.

Stela Rubínová, Emmanuel Dhyne, 04 July 2016

Even in export-oriented industries, only a handful of firms ship their goods abroad. These firms are systematically different from their purely domestic counterparts. This column sheds light on the domestic supply chain of exporters to uncover firms whose production is exported indirectly. Accounting for indirect exporters brings the empirics of international trade closer to the modern structure of production, characterised by many stages in possibly many locations. These findings suggest that the distributional effects of globalisation go beyond the exporters versus non-exporters dichotomy.

Fabio Ghironi, 03 July 2016

Debate surrounding the Trans-Pacific Partnership (TPP) is raging. Economists on different sides of the debate have used different arguments and tools to support their positions. This column surveys several recent studies and the strategies they employ in modelling the potential effects of TPP. It argues that structural models need to start from micro foundations, and need to incorporate trade and macro dynamics. The general results of these studies lend support to those who think that TPP will be beneficial.

Francisco Buera, Ezra Oberfield, 12 June 2016

Free trade often comes hand in hand with economic growth. The opportunity for gain is relatively small, according to quantitative models that rely on standard static mechanisms. This column introduces a model to study the diffusion of ideas across countries as a means of increasing productivity, and a quantitative assessment of the role of trade in the transmission of knowledge. How much the transmission of knowledge will impact productivity depends on the openness of the trading countries, current stock of knowledge, and a diffusion parameter.

Friederike Niepmann, Tim Schmidt-Eisenlohr, 11 June 2016

To mitigate the risks of international trade for firms, banks offer trade finance products – specifically, letters of credit and documentary collections. This column exploits new data from the SWIFT Institute to establish key facts on the use of these instruments in world trade. Letters of credit (documentary collections) cover 12.5% (1.7%) of world trade, or $2.3 trillion ($310 billion). 

Emanuel Ornelas, 14 May 2016

For over half a century, one pillar of the world trading system has been the principle of ‘special and differential treatment’ (SDT) for developing countries. This column explores how SDT has impacted trade policy around the world. Although this strategy aims to help developing countries, in design and practice it seems to be biased against them. While there is no support for SDT as a growth-promoting strategy, there is a clear need for further research that explicitly tackles the empirical challenges that it presents. 

Wolfgang Dauth, Sebastian Findeisen, Jens Südekum, 21 February 2016

A common theme of recent trade theory models is that globalisation-related shocks induce worker sorting across industries, labour markets, and plants. However, there is little empirical evidence of shocks causing such endogenous mobility responses. This column explores how rising international trade exposure affected the job biographies and earnings profiles of German manufacturing workers since the fall of the Berlin Wall. Individuals are found to systematically adjust to globalisation, with a notable asymmetry in the individual labour market responses to positive and negative shocks. Critically, the push effects out of import-competing manufacturing industries are not mirrored by comparable pull effects into export-oriented branches.

Giovanni Federico, Antonio Tena-Junguito, 07 February 2016

Parallels are often drawn between the Great Recession of the past decade and the economic turmoil of the interwar period. In terms of global trade, these comparisons are based on obsolete and incomplete data. This column re-estimates world trade since the beginning of the 19th century using a new database. The effect of the Great Recession on trade growth is sizeable but fairly small compared with the joint effect of the two world wars and the Great Depression. However, the effects will become more and more comparable if the current trade stagnation continues.

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