Review of World Economics

Stehrer, Robert; Wörz, Julia

doi: 10.1007/BF02659743pmid: N/A

Textbook trade theory would suggest that emerging and developing countries specialize in lower-tech industries. In this paper the authors take a dynamic view on development and trade integration and distinguish three types of catching-up processes (the continuous-convergence approach, the climbing-up-the-ladder approach and the jumping-up approach). Using data for 25 countries and 32 industries the authors empirically analyze the different patterns of catching up over the period from 1981 to 1997. Further, they discuss linkages between technological convergence, dynamics of comparative advantage and trade patterns. JEL no. F14, L6, O10, O14, O30, O41.

Weder, Rolf

doi: 10.1007/BF02659744pmid: N/A

This paper derives and tests the hypothesis that a country exports relatively more of those goods for which it has a relatively larger home market, i.e., a comparative home-market advantage. This prediction is based on a two-country, many-good intraindustry trade model with economies of scale, international transaction costs and differences in expenditure shares and country size. The data from 1970 to 1987 of 26 industries of the manufacturing sector in the United States and the United Kingdom supports this hypothesis. It is also shown that the relationship between home-market size and export structure becomes significantly stronger for industries with high fixed costs. JEL no. F12, F14, F17

Cuyvers, Ludo; Dumont, Michel; Rayp, Glenn; Stevens, Katrien

doi: 10.1007/BF02659745pmid: N/A

The paper investigates whether significant HOS effects are present in the EU from trade liberalization with the emerging economies. Regarding wage inequality, there is only evidence of a trade-induced technological change, but biased towards thelower-skilled-labor-intensive sectors. Relative wages in the EU member states are not affected differently. Trade liberalization under ‘European assumptions’, however, could affect primarily relative factor demand. A flexible cost function approach shows that import competition from the emerging economies influenced relative labor demand in favor of the higher skilled, implying an intrasectoral rather than an intersectoral specialization in skill-intensive activities. JEL no. F11, F14

Dewachter, Hans; Maes, Konstantijn; Smedts, Kristien

doi: 10.1007/BF02659746pmid: N/A

In this paper, the standard International Arbitrage Pricing Theory is used to assess the effects of European monetary unification on the functioning of the European financial market. In particular, the focus is on the effects that unification may have had on the risk-sharing capacity of the financial markets. It is found that, already in the ERM decade, exchange rate changes do not (unconditionally) correlate strongly with financial market movements across countries. Consequently, elimination of exchange rate variability through monetary unification is not likely to have major implications for the pricing behavior in EMU. JEL no. G12, G15

Carstensen, Kai; Hawellek, Julia

doi: 10.1007/BF02659747pmid: N/A

In this paper the authors analyze the forecasting ability of the term structure with respect to future inflation in Germany. In contrast to previous studies, they find evidence in favor of a nonstationary term premium. Assuming that the nonstationary part of the term premium can be approximated by an observable factor, they derive testable restrictions which cannot be rejected for German data. In an out-of-sample forecasting experiment, the model out-performs rival models which assume a constant term premium. Nevertheless, the authors find that the forecasting ability of the term structure is limited while the real interest rate, is revealed as a good predictor for future inflation rates. JEL no. E31, E37, E43.

Hansen, Jørgen; Jensen, Camilla; Madsen, Erik

doi: 10.1007/BF02659748pmid: N/A

The paper examines the welfare effects of the Danish subsidies granted for the electricity production from wind power. This policy has induced a remarkable development of the Danish windmill industry resulting in a dominant position on the world market. The article demonstrates a strong learning-by-doing productivity growth in the Danish windmill industry and it analyzes the costs and benefits of this infant industry case. The costs consist of the efficiency loss from diverting electricity production from using fossil fuels to utilizing wind power. Benefits are the reductions in the environmental damage of using fossil fuels, however, the main benefits are related to the emergence of a new export sector. As the value of the windmill firms at the stock exchange by far exceeds that of the accumulated distorted losses in electricity production, this case demonstrates a successful infant industry strategy. JEL no. D2, L5, L6

Wößmann, Ludger

doi: 10.1007/BF02659749pmid: N/A

Hammermann, Felix; Egger, Hartmut; Kumkar, Lars

doi: 10.1007/BF02659750pmid: N/A