The impact of EMU on trade flowsGrauwe, Paul; Skudelny, Frauke
doi: 10.1007/BF02707286pmid: N/A
The Impact of EMU on Trade Flows. — In this paper we quantify the impact of exchange rate volatility on trade flows within the EU with the help of a gravity trade model. We consider bilateral instead of total exports, and we use panel data. Moreover, we introduce dynamics into the model, taking lagged exports as explanatory variable. The estimation of this model for the period 1962–1995 leads to significant negative coefficients for the proxy of exchange rate variability. We use these estimates to calculate the potential trade-creating effect of a monetary union, setting the exchange rate volatility equal to zero.
Fragmentation and trade: US inward processing trade in the EUGörg, Holger
doi: 10.1007/BF02707287pmid: N/A
Fragmentation and Trade: US Inward Processing Trade in the EU. — Fragmentation, which refers to the splitting up of a previously integrated production process into separate components, is seen as one of the reasons for the increasing globalization of the world economy. This paper undertakes an empirical study of the extent of US inward processing trade (IPT) in the EU, which we use as a proxy for fragmentation in trade. We also provide empirical evidence on the determinants of the distribution of US IPT across manufacturing sectors in the twelve EU member states. Our results give support to the importance of comparative advantage for the sectoral distribution of US IPT. Also, we find that the labour costs and the level of US FDI stocks affect US IPT in EU peripheral countries, while they do not seem to have any impact on EU core countries.
The nature and causes of intra-industry trade: Back to the comparative advantage explanation? The case of SpainBlanes, José; Martín, Carmela
doi: 10.1007/BF02707288pmid: N/A
The Nature and Causes of Intra-Industry Trade: Back to the Comparative Advantage Explanations? The Case of Spain. — The aim of this paper is to contribute empirically to the knowledge of the nature and causes of intra-industry trade (IIT), distinguishing between vertical and horizontal IIT. To this end, we estimate a more general empirical model than those used in previous studies, by introducing simultaneously both national and industry-specific variables which include measures for human and technological capital endowments. The results show that vertical IIT is positively related to industry technological intensity and differences in human and technological capital endowments between countries. On the other hand, horizontal IIT is explained by the traditional monopolistic competition model.
Explaining the geography and depth of international production: The case of US and Japanese multinational enterprisesKumar, Nagesh
doi: 10.1007/BF02707289pmid: N/A
Explaining the Geography and Depth of International Production: The Case of US and Japanese Multinational Enterprises. — This paper analyzes the determinants of intercountry variation in the extent and depth of the presence of foreign affiliates of US and Japanese MNEs, using an extended model of the location of foreign production in a four-dimensional setting. Country size, income levels, and urbanization favour the location of MNEs’ production. Geographical and cultural proximity between countries encourage investment links. However, distance favours the localization of production. Better infrastructure attracts MNEs to a country. Restrictive trade and investment regimes although costing some MNE production may improve its depth. Investment and tax incentives do affect the patterns of location of production while the strength of patent regime does not.
Real exchange rates and unit root testsParikh, Ashok; Wakerly, Elizabeth
doi: 10.1007/BF02707290pmid: N/A
Real Exchange Rates and Unit Root Tests. — This paper examines monthly OECD exchange rate data (1979–1997) using univariate and panel data unit root tests. Some of these tests support the hypothesis of a unit root. But tests of cointegration reveal the existence of weak purchasing power parity relationships between bilateral nominal exchange rates and relative prices. We suggest that researchers need not conduct unit root tests on real exchange rate data when a modified version of PPP is used; or if there is a long enough time series. Given the definition of real exchange rates, the indicator should be stationary and should have intrinsic mean reverting behaviour.
Estimating the size of the potential market for the Kyoto flexibility mechanismsZhang, ZhongXiang
doi: 10.1007/BF02707291pmid: N/A
Estimating the Size of the Potential Market for the Kyoto Flexibility Mechanisms. — The Kyoto Protocol incorporates three flexibility mechanisms to help Annex I countries to meet their Kyoto targets at a lower overall cost. This paper aims to estimate the size of the potential market for all three mechanisms over the first commitment period. Based on the national communications from 35 Annex I countries, it first estimates the potential demand in the greenhouse gas offset market. Then, it assesses the implications of the EU proposal for ceilings on the use of flexibility mechanisms. Finally, using the model based on the marginal abatement costs of 12 regions, the paper estimates the contributions of flexibility mechanisms to meet the total emissions reductions required of Annex I countries under the four trading scenarios.
The effects of the United States granting MFN status to VietnamFukase, Emiko; Martin, Will
doi: 10.1007/BF02707293pmid: N/A
In this paper, the direct impacts on Vietnam’s trading opportunities of the U.S. granting MFN treatment were first estimated by building up from the resulting level of tariffs applied to individual traded goods. Then, the economic impacts on Vietnam were inferred, using simulations with the Global Trade Analysis model. The results revealed that the increased market access to the United States brings significant welfare gains to Vietnam. The direct terms of trade improvement resulting from increased market access accounts for 60 percent of the total gain, with the remaining 40 percent derived from second-best induced gains in efficiency. Exports to the United States more than doubled, from $338 million to $768 million.13 The estimated increase in exports of clothing is especially significant, with these exports increasing almost fifteenfold, while exports of agricultural commodities decreased slightly. Total welfare as measured by Equivalent Variation increased by $ 118 million or 0.9 percent increase in real expenditure per capita. By granting MFN status to Vietnam, the United States also gains from improved resource allocation, although some of the gains are offset by deterioration in its terms of trade. The gains for the United States were estimated to be around $56 million per year.