a column by Eric Golson for VOX: CEPR’s Policy Portal
Neutrality has long been viewed as impartiality in war.
This column, part of the Vox debate on World War II, asserts that neutral states in the war were realist in approaching their defence to ensure their survival. Neutrals such as Portugal, Spain, Sweden, and Switzerland maintained independence by offering economic concessions to the belligerents to make up for their relative military weakness.
Economic concessions took the form of merchandise trade, services, labour, and capital flows. Depending on their position and the changing fortunes of war, neutral countries could also extract concessions from the belligerents, if their situation permitted.
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Showing posts with label trade. Show all posts
Showing posts with label trade. Show all posts
Friday, 15 November 2019
Monday, 9 September 2019
Dollars and sense: The sterling depreciation and UK price competitiveness
an article by Giancarlo Corsetti, Meredith A. Crowley and Lu Han for VOX: CEPR’s Policy Portal
An immediate impact of the Brexit referendum in 2016 was the large, rapid depreciation of the sterling against all other currencies.The weak pound did not boost UK export volumes, but less clear is whether UK firms lowered their ex column by port prices in line with the weaker pound.
This column shows that the UK export price response to depreciation depends on the currency in which UK firms invoice their cross-border transactions. Firms invoicing in sterling gained competitiveness by passing the sterling’s weakness through to prices, unlike firms invoicing in vehicle or destination currencies,which adjusted their mark-ups.
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An immediate impact of the Brexit referendum in 2016 was the large, rapid depreciation of the sterling against all other currencies.The weak pound did not boost UK export volumes, but less clear is whether UK firms lowered their ex column by port prices in line with the weaker pound.
This column shows that the UK export price response to depreciation depends on the currency in which UK firms invoice their cross-border transactions. Firms invoicing in sterling gained competitiveness by passing the sterling’s weakness through to prices, unlike firms invoicing in vehicle or destination currencies,which adjusted their mark-ups.
Continue reading
Wednesday, 7 August 2019
The potential impact of machine translation on foreign trade – caution, please
a column by Jacques Melitz and Farid Toubal for VOX: CEPR’s Policy Portal
Artificial intelligence has made spectacular progress in recent years. One particular source of high expectations is automatic translation and whether it will finally bring about the long-predicted death of distance in trade.
This column examines the impact of a common language on bilateral trade and finds that the net result of reducing linguistic frictions with a set of trading partners is not apparent.The potential impact of machine translation on foreign trade remains up in the air.
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Artificial intelligence has made spectacular progress in recent years. One particular source of high expectations is automatic translation and whether it will finally bring about the long-predicted death of distance in trade.
This column examines the impact of a common language on bilateral trade and finds that the net result of reducing linguistic frictions with a set of trading partners is not apparent.The potential impact of machine translation on foreign trade remains up in the air.
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Friday, 19 July 2019
Caution: Trade uncertainty is rising and can harm the global economy
a column by Hites Ahir, Nicholas Bloom and Davide Furceri for VOX: CEPR’s Policy Portal
Recent developments have inspired efforts to measure trade uncertainty. This column presents a new index of world trade uncertainty for 143 countries, measured on a quarterly basis from 1996 onwards, using the Economist Intelligence Unit country reports. The index shows that uncertainty in trade is rising sharply. This has important implications for global economic prospects.
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Recent developments have inspired efforts to measure trade uncertainty. This column presents a new index of world trade uncertainty for 143 countries, measured on a quarterly basis from 1996 onwards, using the Economist Intelligence Unit country reports. The index shows that uncertainty in trade is rising sharply. This has important implications for global economic prospects.
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Monday, 13 May 2019
The global economy hit by higher uncertainty
a column by Hites Ahir, Nicholas Bloom and Davide Furceri for VOX: CEPR’s Policy Portal
According to the latest IMF projections, the global economy is now projected to grow at 3.3% in 2019, down from 3.6% in 2018. This is partly due to rising uncertainty in many parts of the world.
This column shows how these statements are in line with the latest reading of the World Uncertainty Index, which shows a sharp increase in the first quarter of 2019. The increase in uncertainty observed in the first quarter could be enough to knock up to 0.5% of global growth over the course of the year.
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According to the latest IMF projections, the global economy is now projected to grow at 3.3% in 2019, down from 3.6% in 2018. This is partly due to rising uncertainty in many parts of the world.
This column shows how these statements are in line with the latest reading of the World Uncertainty Index, which shows a sharp increase in the first quarter of 2019. The increase in uncertainty observed in the first quarter could be enough to knock up to 0.5% of global growth over the course of the year.
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Monday, 29 April 2019
The Empire Marketing Board, 1926-33: Britain’s failed attempt at soft trade policy
a column by David M. Higgins and Brian Varian for VOX: CEPR’s Policy Portal
In the late 1920s and early 1930s, Britain tried to reorient its trade towards the Empire via an advertising campaign led by the Empire Marketing Board.
As this column shows, in economic terms, the initiative was a complete failure, producing no increase in the Empire’s share of Britain’s imports.
Imperial sentiment conflicted with economic reality: Britain was the biggest global importer of produce from the late 19th century to the interwar period, and the EMB’s activities were constrained by entrenched consumer preferences for non-Empire foodstuffs, such as Argentine beef and Danish butter.
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In the late 1920s and early 1930s, Britain tried to reorient its trade towards the Empire via an advertising campaign led by the Empire Marketing Board.
As this column shows, in economic terms, the initiative was a complete failure, producing no increase in the Empire’s share of Britain’s imports.
Imperial sentiment conflicted with economic reality: Britain was the biggest global importer of produce from the late 19th century to the interwar period, and the EMB’s activities were constrained by entrenched consumer preferences for non-Empire foodstuffs, such as Argentine beef and Danish butter.
Continue reading
Tuesday, 23 April 2019
How Britain unified Germany: Endogenous trade costs and the formation of a customs union
a column by Thilo Huning and Nikolaus Wolf for VOX: CEPR’s Policy Portal
State borders can change due to both political and economic disputes.
This column shows how the formation of the German state can be traced back to British political intervention at the end of the Napoleonic War. In preventing Russia from gaining territory westwards, Britain set in motion a series of events that gave Prussia strategic trade advantages. This led to the formation of Europe's first customs union (the Zollverein) and prepared the political unification of Germany.
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State borders can change due to both political and economic disputes.
This column shows how the formation of the German state can be traced back to British political intervention at the end of the Napoleonic War. In preventing Russia from gaining territory westwards, Britain set in motion a series of events that gave Prussia strategic trade advantages. This led to the formation of Europe's first customs union (the Zollverein) and prepared the political unification of Germany.
Continue reading
Friday, 15 March 2019
Trade and growth in the Iron Age
an article published in CentrePiece Volume 24 Issue 1 (Spring 2019) Paper No CEPCP547
Economists often point out the benefits of trade, yet empirical evidence for these benefits has been hard to come by and tends to be recent.
Jan David Bakker, Stephan Maurer, JörnSteffen Pischke and Ferdinand Rauch go back to the millennium before the common era to investigate the growth effects of one of the first major trade expansions in human history: the systematic crossing of the open sea in the Mediterranean by the Phoenicians.
Full text (PDF 4pp) lots of “further reading” and a couple of interesting (to me) maps of the Mediterranean.
Economists often point out the benefits of trade, yet empirical evidence for these benefits has been hard to come by and tends to be recent.
Jan David Bakker, Stephan Maurer, JörnSteffen Pischke and Ferdinand Rauch go back to the millennium before the common era to investigate the growth effects of one of the first major trade expansions in human history: the systematic crossing of the open sea in the Mediterranean by the Phoenicians.
Full text (PDF 4pp) lots of “further reading” and a couple of interesting (to me) maps of the Mediterranean.
Thursday, 1 November 2018
Patterns of trade and immigration in historical perspective
a column by David Jacks and John Tang for VOX: CEPR’s Policy Portal
Foreign goods and workers are regularly blamed when the national economy is performing poorly. Economic theory suggests that trade and migration are substitutes – one can import cheaper products from a trade partner, or one can import the foreign workers themselves to narrow the difference in international factor prices.
Yet, empirically this is not obvious.
Based on available long-run data for international trade and migration since the late 19th century for the US and Canada, this column finds that during the interwar period, trade and immigration did in fact appear to be substitutes.
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Foreign goods and workers are regularly blamed when the national economy is performing poorly. Economic theory suggests that trade and migration are substitutes – one can import cheaper products from a trade partner, or one can import the foreign workers themselves to narrow the difference in international factor prices.
Yet, empirically this is not obvious.
Based on available long-run data for international trade and migration since the late 19th century for the US and Canada, this column finds that during the interwar period, trade and immigration did in fact appear to be substitutes.
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Tuesday, 25 September 2018
The effect of machine translation on international trade: Evidence from a large digital platform
a column by Erik Brynjolfsson, Xiang Hui and Meng Liu for VOX: CEPR’s Policy Portal
Recent years have seen dramatic progress in the predictive power of artificial intelligence in many areas, including speech recognition, but empirical evidence documenting its concrete economic effects is largely lacking.
This column analyses the effect of the introduction of eBay Machine Translation on eBay’s international trade. The results show that it increased US exports on eBay to Spanish-speaking Latin American countries by 17.5%. By overriding trade-hindering language barriers, AI is already affecting productivity and trade and has significant potential to increase them further.
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Recent years have seen dramatic progress in the predictive power of artificial intelligence in many areas, including speech recognition, but empirical evidence documenting its concrete economic effects is largely lacking.
This column analyses the effect of the introduction of eBay Machine Translation on eBay’s international trade. The results show that it increased US exports on eBay to Spanish-speaking Latin American countries by 17.5%. By overriding trade-hindering language barriers, AI is already affecting productivity and trade and has significant potential to increase them further.
Continue reading
Monday, 3 September 2018
Trade and growth in the Iron Age
a column by Jan Bakker, Stephan Maurer, Jörn-Steffen Pischke and Ferdinand Rauch for VOX: CEPR’s Policy Portal
Economists often point out the benefits of trade, yet empirical evidence for these benefits has been hard to come by and tends to be recent.
This column goes back to the first millennium BC to analyse the growth effects of one of the first major trade expansions in human history: the systematic crossing of the open sea in the Mediterranean by the Phoenicians.
A strong positive relationship between connectedness and archaeological sites suggests a large role for geography and trade in development even at such an early juncture in history.
Continue reading
Economists often point out the benefits of trade, yet empirical evidence for these benefits has been hard to come by and tends to be recent.
This column goes back to the first millennium BC to analyse the growth effects of one of the first major trade expansions in human history: the systematic crossing of the open sea in the Mediterranean by the Phoenicians.
A strong positive relationship between connectedness and archaeological sites suggests a large role for geography and trade in development even at such an early juncture in history.
Continue reading
Tuesday, 28 August 2018
Protectionism and the business cycle
a column by Alessandro Barattieri, Matteo Cacciatore and Fabio Ghironi for VOX: CEPR’s Policy Portal
Populist politicians argue that protectionism stimulates the domestic economy. This column uses data on temporary trade barriers from antidumping investigations to show that when small open economies have imposed protectionist measures, it has caused inflation to rise and real economic activity to fall. Empirical analysis and model-based exercises show that protectionism is costly even when used temporarily, even for economies stuck in liquidity traps, and regardless of the flexibility of the exchange rate.
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Populist politicians argue that protectionism stimulates the domestic economy. This column uses data on temporary trade barriers from antidumping investigations to show that when small open economies have imposed protectionist measures, it has caused inflation to rise and real economic activity to fall. Empirical analysis and model-based exercises show that protectionism is costly even when used temporarily, even for economies stuck in liquidity traps, and regardless of the flexibility of the exchange rate.
Continue reading
Saturday, 16 June 2018
Anatomy of a trade collapse: The UK, 1929-33
a column by Alan de Bromhead, Alan Fernihough, Markus Lampe and Kevin O'Rourke for VOX: CEPR’s Policy Portal
The literature has identified several stylised facts which characterise the nature and causes of the collapse in international trade during 2008 and 2009.
This column uses detailed, commodity-specific information on UK imports between 1929 and 1933 to document several similarities between the trade collapses of the Great Depression and the Great Recession.
The findings are in line with theories emphasising the composition of expenditure changes during major economic crises, or the relative sizes of firms operating closer to or further away from the margin between exporting or not.
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The literature has identified several stylised facts which characterise the nature and causes of the collapse in international trade during 2008 and 2009.
This column uses detailed, commodity-specific information on UK imports between 1929 and 1933 to document several similarities between the trade collapses of the Great Depression and the Great Recession.
The findings are in line with theories emphasising the composition of expenditure changes during major economic crises, or the relative sizes of firms operating closer to or further away from the margin between exporting or not.
Continue reading
Monday, 7 May 2018
Measuring The Permanent Costs of Brexit
an article by Hugo Erken, Raphie Hayat, Carlijn Prins, Marijn Heijmerikx and Inge de Vreede (Rabobank, Netherlands) published in National Institute Economic Review Volume 244 Issue 1 (May 2018)
Abstract
We analyse the costs of Brexit.
The results show that by 2030 a hard Brexit would reduce cumulative GDP growth by 18 percentage points compared to a situation where the UK continued its EU membership.
The economic damage in our FTA and soft Brexit scenarios is less severe than in our hard Brexit scenario, although it will still cost the UK economy roughly 12.5 percentage points and 10 percentage points of cumulative GDP growth by 2030, respectively.
We find much larger negative effects than most existing studies that use macroeconometric modelling to assess the effects of Brexit.
This is due to two reasons.
JEL Classification F15, F17, F43, D24
Full text (PDF 10pp)
Abstract
We analyse the costs of Brexit.
The results show that by 2030 a hard Brexit would reduce cumulative GDP growth by 18 percentage points compared to a situation where the UK continued its EU membership.
The economic damage in our FTA and soft Brexit scenarios is less severe than in our hard Brexit scenario, although it will still cost the UK economy roughly 12.5 percentage points and 10 percentage points of cumulative GDP growth by 2030, respectively.
We find much larger negative effects than most existing studies that use macroeconometric modelling to assess the effects of Brexit.
This is due to two reasons.
- First, we use an improved tariff version of the macroeconometric model NiGEM, which enables us better to assess the negative impact of cost-push inflation resulting from imposed trade barriers.
- Second, we estimate a new productivity model for the UK, which allows us to gauge adequately the negative UK-specific effects on productivity caused by Brexit.
JEL Classification F15, F17, F43, D24
Full text (PDF 10pp)
Monday, 12 February 2018
How merchant guilds became obsolete [feedly]
a column by Prateek Raj for VOX: CEPR’s Policy Portal
In medieval Europe, trade depended on personal relationships, which were usually mediated by merchant guilds. The column argues that increasing incentives to do business with merchants outside the guild system, and the availability of better information about those trading partners, led to the decline of merchant guilds in the 16th century. This occurred first in coastal cities that were early adopters of printing technology.
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In medieval Europe, trade depended on personal relationships, which were usually mediated by merchant guilds. The column argues that increasing incentives to do business with merchants outside the guild system, and the availability of better information about those trading partners, led to the decline of merchant guilds in the 16th century. This occurred first in coastal cities that were early adopters of printing technology.
Continue reading
Tuesday, 16 June 2015
The Global Trade of Textiles and Clothing in the Early Modern Period: Exchange, Meaning and Materialities
an article by Karolina Hutkova (University of Warwick) published in Exchanges: the Warwick Research Journal Volume 2 Number 2 (2015)
Abstract
The two-day workshop [International PhD and Postdoctoral Workshop, 27-28th November 2014, University of Warwick] at the University of Warwick brought together early career researchers studying various aspects of textile history – production, consumption, trade, fashion, and design – with the aim of drawing broader conclusions about the role of textiles and clothing in the development of societies, cultures and economies.
The methodological and geographical breadth of the presented research holds a promise that in the near future we will be presented with a much more global picture of textile production, consumption and trade in the early modern period.
Full text: HTML PDF
Hazel’s comment:
I know. I do not normally put images into references to journals but I could not resist this!
Early modern period, for those who like me are not sure, spans approximately 300 years from 1500 (Wikipedia).
Abstract
The two-day workshop [International PhD and Postdoctoral Workshop, 27-28th November 2014, University of Warwick] at the University of Warwick brought together early career researchers studying various aspects of textile history – production, consumption, trade, fashion, and design – with the aim of drawing broader conclusions about the role of textiles and clothing in the development of societies, cultures and economies.
The methodological and geographical breadth of the presented research holds a promise that in the near future we will be presented with a much more global picture of textile production, consumption and trade in the early modern period.
Full text: HTML PDF
Hazel’s comment:
I know. I do not normally put images into references to journals but I could not resist this!
Early modern period, for those who like me are not sure, spans approximately 300 years from 1500 (Wikipedia).
Monday, 11 March 2013
Trade and Labour Market Adjustment
OECD Trade Policy Paper No. 143 by Susan Stone, Patricia Sourdin and Clarisse Legendre (OECD, France)
Abstract
While it is widely accepted that there are adjustment costs associated with the reallocation of resources in response to freer trade, in most models these costs are assumed to be very small. However, more recent evidence is casting doubt on this assumption.
This paper develops a unique dataset based on harmonised labour force surveys for six economies, facilitating the comparison of short term labour market impacts from trade across countries.
Data are reported at the individual worker level, allowing a comparison of impacts at both the industry and occupation levels. While the results of this empirical analysis at the industry level are very much in line with established research, the results at the occupation level are more varied.
Overall, and as expected, impacts are generally larger for occupations than at the industry level. These results are consistent with modern trade theory which posits that an expanding export sector rewards mostly high skilled workers and that some workers may find it more difficult to switch occupations than to switch industries.
Outcomes can also be explained in the context of labour market frictions and highlight the important role of labour market policy – as well as trade policy – in structural adjustment. Our results are consistent with sticky sector-specific human capital and information asymmetries, especially with respect to opportunities in different regions within the same country.
A wide range of policies can be employed to address these labour market frictions to improve worker mobility and reduce adjustment costs. Further efforts to specify appropriate policies to accompany trade openness is warranted; doing so would go a long way towards improving employment outcomes and generating more inclusive growth.
Full text (PDF 43pp)
JEL classifications: F16, F23, F66, J08
Abstract
While it is widely accepted that there are adjustment costs associated with the reallocation of resources in response to freer trade, in most models these costs are assumed to be very small. However, more recent evidence is casting doubt on this assumption.
This paper develops a unique dataset based on harmonised labour force surveys for six economies, facilitating the comparison of short term labour market impacts from trade across countries.
Data are reported at the individual worker level, allowing a comparison of impacts at both the industry and occupation levels. While the results of this empirical analysis at the industry level are very much in line with established research, the results at the occupation level are more varied.
Overall, and as expected, impacts are generally larger for occupations than at the industry level. These results are consistent with modern trade theory which posits that an expanding export sector rewards mostly high skilled workers and that some workers may find it more difficult to switch occupations than to switch industries.
Outcomes can also be explained in the context of labour market frictions and highlight the important role of labour market policy – as well as trade policy – in structural adjustment. Our results are consistent with sticky sector-specific human capital and information asymmetries, especially with respect to opportunities in different regions within the same country.
A wide range of policies can be employed to address these labour market frictions to improve worker mobility and reduce adjustment costs. Further efforts to specify appropriate policies to accompany trade openness is warranted; doing so would go a long way towards improving employment outcomes and generating more inclusive growth.
Full text (PDF 43pp)
JEL classifications: F16, F23, F66, J08
Tuesday, 10 January 2012
Wage inequality, technology and trade: 21st century evidence
an article by John Van Reenen (Centre for Economic Performance and London School of Economics) published in Labour Economics Volume 18 Issue 6 (December 2011)
Abstract
This paper describes and explains some of the principal trends in the wage and skill distribution in recent decades. Increases in wage inequality started in the US and UK at the end of the 1970s, but are now widespread. A good fraction of this inequality trend is due to technology-related increases in the demand for skilled workers outstripping the growth of their supply. Since the early 1990s, labour markets have become more polarised with jobs in the middle third of the wage distribution shrinking and those in the bottom and top third rising.
I argue that this is because computerisation complements the most skilled tasks, but substitutes for routine tasks performed by middle wage occupations such as clerks, leaving the demand for the lowest skilled service tasks largely unaffected.
Finally, I argue that technology is partly endogenous, for example it has been spurred by trade with China. Thus, trade does matter for changes in the labour market, but through a different mechanism than conventionally thought.
Abstract
This paper describes and explains some of the principal trends in the wage and skill distribution in recent decades. Increases in wage inequality started in the US and UK at the end of the 1970s, but are now widespread. A good fraction of this inequality trend is due to technology-related increases in the demand for skilled workers outstripping the growth of their supply. Since the early 1990s, labour markets have become more polarised with jobs in the middle third of the wage distribution shrinking and those in the bottom and top third rising.
I argue that this is because computerisation complements the most skilled tasks, but substitutes for routine tasks performed by middle wage occupations such as clerks, leaving the demand for the lowest skilled service tasks largely unaffected.
Finally, I argue that technology is partly endogenous, for example it has been spurred by trade with China. Thus, trade does matter for changes in the labour market, but through a different mechanism than conventionally thought.
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