credit constraints equity market liberalizations and international trade abstract this paper provides evidence that credit constraints are an important determinant of international trade flows i exploit shocks to the availability of external finance and examine the impact of equity market liberalizations on the export behavior of 91 countries in the 1980 1997 period i show that liberalizations increase exports disproportionately more in financially vulnerable sectors that require more outside finance or employ fewer collateralizable assets this result is not driven by cross country differences in factor endowments and is independent of simultaneous trade policy reforms moreover it obtains with equal strength in the full panel of countries as well as in both panel and event study analyses of countries which removed capital controls during the sample period finally the effects of liberalizations are more pronounced in economies with initially less active stock markets indicating that foreign equity flows may substitute for an underdeveloped domestic financial system similarly opening equity markets has a greater impact in the presence of higher trade costs caused by restrictive trade policies

is protectionism on the rise assessing national trade policies during the crisis of 2008 to understand the role of trade policies in the crisis of 2008 this paper constructs the overall trade restrictiveness indices for a wide range of countries using their tariff schedules in 2008 and 2009 the index summarizes the trade policy stance of a country taking into account the share of each good in trade as well as its corresponding import demand elasticity results show that there is no widespread increase in protectionism via tariff policies since the global financial crisis has unfolded while many countries have adjusted tariffs upward on selected products only a handful of countries such as malawi russia argentina turkey and china focus on products that have significant impacts on trade flows the united states and the european union by contrast rely mainly on anti dumping duties to shield domestic industries overall while the rise in tariffs and anti dumping duties in these countries may have jointly caused global trade to drop by as much as us 43 billion during the crisis period it explains less than 2 percent of the collapse in world trade

understanding severance pay determination mandates bargaining and unions while most of the literature on employment protection has focused on governmentmandated severance pay it has recently been documented that a substantial share of severance payments derives from private contracts or collective agreements this paper studies the determination of these payments we analyze the problem of joint bargaining over wages and severance payments and examine the impact of unions on these choices to do so we use a search and matching model with risk averse workers in which we assume that workers may be unionized and that bargaining is over wages and severance pay bargaining results in levels of severance pay providing full insurance which depend on the generosity of unemployment benets and on the job nding rate unions opt for higher levels of severance pay given that their higher wage demands imply reduced job creation calibrated to 8 european economies the model predicts bargained levels of severance pay which are close to those found in reality

off the cliff and back credit conditions and international trade during the global financial crisis abstract we study the collapse of international trade flows during the global financial crisis using detailed data on monthly us imports we show that credit conditions were an important channel through which the crisis affected trade volumes by exploiting the variation in the cost of capital across countries and over time as well as the variation in financial vulnerability across sectors countries with higher interbank rates and thus tighter credit markets exported less to the us during the peak of the crisis this effect was especially pronounced in sectors that require extensive external financing have limited access to trade credit or have few collateralizable assets exports of financially vulnerable industries were thus more sensitive to the cost of external capital than exports of less vulnerable industries and this sensitivity rose during the financial crisis the quantitative implications of our estimates for trade volumes highlight the large real effects of financial crises and the potential gains from policy intervention

credit market imperfections and patterns of international trade and capital flows this paper offers two simple models to illustrate how corporate governance contractual enforcement and the balance sheet condition of the business sector etc can affect the patterns of international trade and capital flows in the presence of credit market imperfections jel d52 f15 f21 f40

financing for development editors introduction in this double issue of the oxford review of economic policy we publish a set of papers concerned with the mobilization of domestic and foreign capital in support of the united nations sustainable development goals that were launched in september 2015 the papers were originally presented at a conference on financing for development organized by the international monetary fund and the centre for finance and development at the graduate institute in geneva in april 2015

the rising skill premium and deunionization abstract during the past 50 years the us economy has seen a rapid decline in labor union membership and a substantial rise in wage inequality since labor unions compress wages between skilled and unskilled workers a rising skill premium encourages skilled workers to withdraw from the union if this withdrawal is accompanied by a fall in the productivity of unskilled workers firms become reluctant to hire the relatively expensive union workers reinforcing the decline in the unionization rate evaluating this hypothesis we find that the rise in the skill premium explains about 40 of the decline in the unionization rate

the effect of unions on the structure of wages a longitudinal analysis this paper studies the effects of unions on the structure of wages using an estimation technique that explicitly accounts for misclassification errors in reported union status and potential correlations between union status and unobserved productivity the econometric model is estimated separately for five skill groups using a large panel data set formed from the u s current population survey the results suggest that unions raise wages more for workers with lower levels of observed skills in addition the patterns of selection bias differ by skill group among workers with lower levels of observed skill unionized workers are positively selected whereas union workers are negatively selected from among those with higher levels of observed skill despite a large and sophisticated literature there is still substantial disagreement over the extent to which differences in the structure of wages between union and nonunion workers represent an effect of trade unions rather than a consequence of the nonrandom selection of unionized workers over the past decade several alternative approaches have been developed to control for unobserved heterogeneity between union and nonunion workers 2 one method that has been successfully applied in other areas of applied microeconometrics is the use of longitudinal data to measure the wage gains or losses of workers who change union status unfortunately longitudinal estimators are highly sensitive to measurement error even a small fraction of misclassified union status changes can lead to significant biases if the true rate of mobility between union and nonunion jobs is low this sensitivity led lewis 1986 to essentially dismiss the longitudinal evidence in his landmark survey of union wage effects in this paper i present some new evidence on the union wage effect based on a longitudinal estimator that explicitly accounts for misclassification errors in reported union status the estimator uses external information on union status misclassification rates along with the reduced form coefficients from a multi variate regression of wages on the observed sequence of union status indicators to isolate the causal effect of unions from any selection biases introduced by a correlation between union status and the permanent component of unobserved wage heterogeneity recognizing that unions may raise wages more or less for

supply chains global financial shocks and firm behaviour towards liquidity needs driven by the increasingly important role of supply chains in global production this paper studies empirical association between global credit market shocks and firm behaviour towards liquidity needs across countries and industries focusing on the adjustment of working capital financing we find two pieces of supporting evidence from international firm level panel data covering the period 2002 i 2012 iv first for industries where specific investment in the input supplier customer relationship is large firms are more exposed to credit market shocks we find that measures of global credit market shocks are negatively associated with trade receivables trade payables and inventories conditional on the level of contract intensity in the industries where firms operate second firms in emerging markets are more vulnerable to credit market shocks than are firms in developed countries we are also able to verify the economic significance of sales growth operating cash flows cash stock and firm size in the overall adjustment our findings highlight the importance of balance sheet contagion along supply chains during the 2007 09 global financial crisis

earnings instability and earnings inequality of males in the united states 1967 1991 although much research has focused on recent increases in annual earnings inequality in the united states the increases could have come from either of two sources the distribution of lifetime earnings could have become more unequal or the receipt of lifetime earnings could have become more unstable based on an analysis of the 1968 92 panel study of income dynamics we find that lifetime earnings inequality increased during the early 1980s and that earnings instability increased during the 1970s we also examine how these trends are related to changes in the distribution of wages and hours and the returns to education

exchange rate pass through and credit constraints abstract the macroeconomic evidence of the short term impact of exchange rates on exports and prices is notoriously weak this paper examines the microfoundations of this disconnect i study the response of firms export and price setting decisions to fluctuations in exchange rates and credit conditions using firm level survey data financially constrained firms pass through exchange rate changes to prices at almost twice the rate of unconstrained firms similarly their export volumes are about twice as sensitive to exchange rate fluctuations the effect of borrowing constraints is particularly strong during the recent financial crisis

trade credit and cross country predictable firm returns we investigate the role of trade credit links in generating cross border return predictability between international firms using data from 42 countries from 1993 to 2009 we find that firms with high trade credit located in producer countries have stock returns that are strongly predictable by the returns of their associated customer countries this behavior is especially prevalent for firms with high levels of foreign sales and is robust to a variety of controls to better understand this effect we develop an asset pricing model in which firms in different countries are connected by trade credit links the model has further predictions about this phenomenon including stronger predictability during periods of high credit constraints and high uninformed trading volume we find supportive empirical evidence for these results

intra firm bargaining under non binding contracts we present a new methodology for studying the problem of intra firm bargaining based on the notion that contracts cannot commit the firm and its agents to wages and employment we develop and analyse a general non cooperative multilateral bargaining framework between the firm and its employees and consider outcomes which are immune to renegotiations by any party equilibrium firm profits are characterizable as both a weighted average of a neo classical non bargaining firm s profits and a generalization of shapley value for a corresponding cooperative game furthermore the resulting payoffs induce economically significant distortions in the firm s input and organizational design decisions

taming the bullwhip effect whilst watching customer service in a single supply chain echelon we study a generalised order up to policy that has highly desirable properties in terms of order and inventory variance and customer service levels it generates we quantify exactly the variance amplification in replenishment orders i e the bullwhip effect and the variance of inventory levels over time for i i d and the weakly stationary auto regressive ar moving average ma and auto regressive moving average arma demand processes we demonstrate that high customer service as measured by fill rate and smooth replenishments need not increase inventory cost substantially we observe that in some instances of the arma demand pattern this comes at the expense of a relatively small increase in safety stock whilst in other instances inventory levels can actually be reduced

earnings inequality and mobility in the united states evidence from social security data since 1937 this paper uses social security administration longitudinal earnings micro data since 1937 to analyze the evolution of inequality and mobility in the united states annual earnings inequality is u shaped decreasing sharply up to 1953 and increasing steadily afterward short term earnings mobility measures are stable over the full period except for a temporary surge during world war ii virtually all of the increase in the variance in annual log earnings since 1970 is due to increase in the variance of permanent earnings as opposed to transitory earnings mobility at the top of the earnings distribution is stable and has not mitigated the dramatic increase in annual earnings concentration since the 1970s long term mobility among all workers has increased since the 1950s but has slightly declined among men the decrease in the gender earnings gap and the resulting substantial increase in upward mobility over a lifetime for women are the driving force behind the increase in long term mobility among all workers

cultural proximity a source of trade flow resilience while the significant influence of cultural proximity on bilateral trade flows has been extensively documented in the literature its possible role in times of crisis has not yet been raised relying on a panel estimation of a gravity model incorporating cultural proximity parameters we evidence the existence of a significant surge in the impact of the different components of cultural proximity during economic recession the trade resilience among countries sharing a cultural bond is not a pure composition effect as it also appears within product categories to understand this unexpected effect we discuss different mechanisms that emphasise the potential mitigating influence of cultural proximity on some determinants of the trade collapse namely the uncertainty shock the increased moral hazard and the emergence of ethnocentric preferences

the impact of banking deregulation on inbound foreign direct investment transaction level evidence from the united states abstract we evaluate the effects of state level banking deregulation that resulted in improved access to cheaper local finance on foreign firms investing in the u s we provide direct micro level evidence from u s inbound foreign direct investment transactions showing that interstate banking but not intrastate branching deregulation increased the number of transactions reduced the average transaction value and boosted overall investment by foreign multinationals we also show that lower cost of local credit and greater local bank competition in each state following the interstate banking deregulation are potential mechanisms that stimulated fdi activity finally we demonstrate that after the adoption of the interstate banking deregulation both the number and the average value of transactions increased in industries that are more dependent on external finance relative to industries that are less dependent

extra credit bank finance and firm export status in germany this paper estimates the exporter premium in bank lending we examine credit relationships in germany covering all loans of more than 1 5 million euro over the period from 2005 to 2010 having controlled for a wide range of other firm and bank characteristics our results indicate that exporting firms take out loans around 15 percent larger than those of nonexporters

job queues and the union status of workers this paper develops a model of the determination of the union status of workers that allows for the possibility of queuing for union jobs the empirical results derived using a sample from the university of michigan panel study of income dynamics are supportive of the queuing hypothesis the no queue model can be rejected using a likelihood ratio test this suggests that a simple probit or logit model for union status is misspecified because it is not based on any consistent behavioral theory an important implication of the model is that because most new entrants to the labor market prefer union jobs but cannot get them and because accrual of nonunion seniority makes workers progressively less likely to desire union jobs the union status of workers is largely determined by their success in being selected from the queue early in their working life

the stabilizing effect of inventory in supply chains this paper presents a hierarchical model framework for the analysis of the stabilizing effect of inventories in multiechelon manufacturing distribution supply chains this framework is used to compare the variance of demand to the variance of replenishment orders at different echelons of the system e g retailer wholesaler empirical data and experience with management games suggest that in most industries inventory management policies can have a destabilizing effect by increasing the volatility of demand as it passes up through the chain the bullwhip effect our model helps to explain these observations and indicates mechanisms that can promote stabilization the analysis results also define sufficient conditions for the existence of stabilization and relate these conditions to the optimality of myopic control policies

financial markets the pattern of industrial specialization and comparative advantage evidence from oecd countries due to underlying technological and organizational differences industries differ in their need for external finance since services provided by the financial sector are largely immobile across countries the pattern of industrial specialization should be influenced by the level of financial development among oecd countries we find a strong causal effect of the financial sector on industrial specialization further the financial sector is a source of comparative advantage in a way consistent with the hecksher ohlin vanek model results are also presented on which aspects of financial systems are important for specialization and comparative advantage

bank linkages and international trade abstract we uncover a new channel through which international finance is related to trade the formation of international bank linkages increases exports bank linkages are measured for each pair of countries in each year as a number of bank pairs in these two countries that are connected through cross border syndicated lending using a gravity approach to model trade for 66 countries over 24 years with a full set of fixed effects source year target year source target we find that new connections between banks in a given country pair lead to an increase in trade flows between these countries in the following year and to trade diversions from countries competing for similar imports we conjecture that the mechanism for this effect is the role bank linkages play in reducing export risk and present evidence supporting this conjecture in particular using industry level trade data and controlling for country pair year and industry fixed effects we find that new bank linkages have larger impacts on trade in industries which tend to be subject to more export risk for u s banks we can show that bank linkages are positively associated with foreign letter of credit exposures

withstanding financial crises would trade partners help or hurt abstarctthis article provides new empirical evidence on the losses of real activity caused by various financial shocks spillover effects due to foreign trade linkages deserve special attention to this end we estimate a modify auto regressive process and a seemingly unrelated regression equations estimator is used to account for the dependency of one s country growth on its trade weighted partners growth we run estimations on a set of currency collapses banking crises and sovereign defaults in 49 advanced and developing countries from 1978 to 2011 the trade weighted foreign demand effect mitigated the economic downturn following a banking or a sovereign debt crisis in all countries while only the advanced ones benefited from it after a currency collapse trade based spillover effects make banking crises more costly in the developing countries in those that liberalize their financial account it contrasts with what is observed during currency or sovereign debt crises

the rise and fall of unions in the united states abstract union membership in the united states displayed a shaped pattern over the 20th century while income inequality sketched a a model of unions is developed to analyze these facts there is a distribution of productivity across firms in the economy firms hire capital plus skilled and unskilled labor unionization is a costly process a union chooses how many firms to organize and the union wage simulation of the model establishes that skill biased technological change which affects the productivity of skilled labor relative to unskilled labor can potentially explain the observed paths for union membership and income inequality

the impact of pricing policy on sales variability in a supermarket retail context abstract the bullwhip effect is recognized to be a significant cost driver in supply chains one of the measures proposed frequently to counter bullwhip effect is price stability through everyday low pricing edlp however this study suggests that with an auto regressive ar1 demand process the use of constant instead of dynamic pricing may result in lower profitability and higher demand volatility an optimal price and stocking level policy is developed with normally distributed demand in this study and the model is tested using parameters from a supermarket scanner data set to determine the impact of two pricing policies the hypothesis that low prior period demand leads to discounted pricing is also tested and partially supported

finance and trade a cross country empirical analysis on the impact of financial development and asset tangibility on international trade summary this paper investigates the interplay between financial development asset tangibility and international trade using industry level data on firms dependence on external finance and firms asset tangibility for 27 industries in 42 countries we find that economies with higher levels of financial development have higher export shares and trade balance in industries with more intangible assets using the same dataset we also show that the interplay between property rights protection and asset tangibility influences the pattern of trade higher levels of property rights protection lead to higher export shares and trade balance in industries with more intangible assets

the union threat this paper studies the impact of unions on wage inequality output and unemployment to do so it proposes a search and matching model of union formation in which unions arise endogenously through a voting process within firms in a union firm workers bargain their wages collectively in a nonunion firm each worker bargains individually with the firm because of this wage setting asymmetry a union lowers the profit of a firm and compresses the wage distribution of the workers furthermore to prevent unionization nonunion firms distort their hiring decisions in a way that also lowers the dispersion of wages after being calibrated on the united states the model shows that even though a partial equilibrium estimate would predict a small impact of unions on inequality removing the threat of unionization increases the variance of wages substantially completely outlawing unions increases wage inequality further moreover outlawing unions increases welfare and output and lowers unemployment these results suggest that even with a small membership unions might have a significant impact on the economy through general equilibrium mechanisms and the way they distort firms decisions i am greatly indebted to nobuhiro kiyotaki esteban rossi hansberg and oleg itskhoki for their invaluable advice and support throughout this project special thanks go to esteban for suggesting the title i also wish to thank manuel amador orley ashenfelter francisco buera jeff campbell pablo fajgelbaum henry farber baris kaymak david lee thomas lemieux benjamin moll justinas pelenis edouard schaal andrew shephard christopher sims liz tennant as well as seminar participants at princeton university and the chicago fed rookie seminar for helpful comments and suggestions i gratefully acknowledge financial support from the fonds quebecois de recherche sur la societe et la culture email mtascher princeton edu address 001 fisher hall department of economics princeton university princeton nj 08544 for the most recent version go to http sites google com site mathtd

a measure of bullwhip effect in supply chains with a mixed autoregressive moving average demand process abstract in this paper we quantify the impact of the bullwhip effect the phenomenon in which information on demand is distorted as moving up a supply chain for a simple two stage supply chain with one supplier and one retailer assuming that the retailer employs a base stock inventory policy and that the demand forecast is performed via a mixed autoregressive moving average model arma 1 1 we investigate the effects of the autoregressive coefficient the moving average parameter and the lead time on the bullwhip effect

import dynamics and demands for protection what kinds of changes in foreign competition lead domestic industries to seek import protection to address this question this paper uses detailed monthly u s import data to investigate changes in import composition during a 24 month window immediately preceding the filing of a petition for protection a decomposition methodology allows a comparison of imports from two groups of countries supplying the same product those that are named in the petition and those that are not the same decomposition can be applied to products quite similar to the imports in question but not subject to a petition the results suggest that industries typically seek protection when faced with a specific pattern of shocks first a persistent positive relative supply shock favors imports from named countries second a negative demand shock hits imports from all sources just prior to domestic industries petition for protection the relative supply shock is a broad one it applies both to named commodities and to the comparison product group the import demand shock by contrast is narrow hitting only named products the latter shock is also large import growth over the two year window is 15 percentage points lower in named products than in reference products with most of this gap arising in the final two quarters before the petition the negative import demand shock appears to be a key event in the run up to the filing of a petition it has been missed by previous studies using more aggregated data

improving the availability of trade finance in low income countries an assessment of remaining gaps conditions in trade finance markets have returned to normality along the main global routes after the global financial crisis of 2008 9 the structural difficulties of poor countries in accessing trade finance have however not disappeared and might have been worsened trade finance markets are characterized by a greater selectivity in risk taking flight to quality customers and a re focusing of global trade finance suppliers banks towards their largest customers in developed countries in that environment it seems that the lower end of the market has been struggling to obtain affordable finance with the smaller companies in the smaller poorer countries most affected this is an area where statis tics are difficult to find and causality hard to establish the paper takes a critical look at some of the recent available mostly survey based information suggesting that a significant trade finance market gap exists in sub saharan africa and poor countries in developing asia it looks at policy steps that are being taken to alleviate in part this situation

information distortion in a supply chain the bullwhip effect this article originally appeared in management science april 1997 volume 43 number 4 pp 546 558 published by the institute of management sciences consider a series of companies in a supply chain each of whom orders from its immediate upstream member in this setting inbound orders from a downstream member serve as a valuable informational input to upstream production and inventory decisions this paper claims that the information transferred in the form of orders tends to be distorted and can misguide upstream members in their inventory and production decisions in particular the variance of orders may be larger than that of sales and distortion tends to increase as one moves upstream a phenomenon termed bullwhip effect this paper analyzes four sources of the bullwhip effect demand signal processing rationing game order batching and price variations actions that can be taken to mitigate the detrimental impact of this distortion are also discussed

measuring endogenous supply chain volatility beyond the bullwhip effect most recent research on supply chain volatility has focused on one particular dimension of that volatility namely the amplification of upstream order variability while not ignoring this aspect of supply chain volatility we focus on a different but equally critical aspect of volatility the cyclical oscillation of on hand and on order inventories about their target values we prove that such cyclicality does not require oscillatory or random retailer demand as a prerequisite the resulting volatility is therefore endogenous rather than simply an amplification of exogenous demand inputs we also measure the amount of amplification resulting from a step increase in demand the order amplification is the product of two factors each of which is clearly linked to either on hand or on order inventory our results attest that supply chain volatility can arise in the absence of exogenous oscillatory or random demand and suggest strategies for avoiding or minimizing such volatility

economic impacts of new unionization on private sector employers 1984 2001 economic impacts of unionization on employers are difficult to estimate in the absence of large representative data on establishments with union status information estimates are also confounded by selection bias because unions could organize at highly profitable enterprises that are more likely to grow and pay higher wages using multiple establishment level data sets that represent establishments that faced organizing drives in the united states during 1984 1999 this paper uses a regression discontinuity design to estimate the impact of unionization on business survival employment output productivity and wages essentially outcomes for employers where unions barely won the election e g by one vote are compared with those where the unions barely lost the analysis finds small impacts on all outcomes that we examine estimates for wages are close to zero the evidence suggests that at least in recent decades the legal mandate that requires the employer to bargain with a certified union has had little economic impact on employers because unions have been somewhat unsuccessful at securing significant wage gains

global sourcing and credit constraints this paper incorporates credit constraints into a model of global sourcing and heterogeneous firms following antras and helpman 2004 heterogeneous firms decide whether to outsource or integrate input suppliers financing of fixed organizational costs requires borrowing with credit constraints and collateral based on tangible assets the party that controls intermediate inputs is responsible for these financing costs sectors differ in their reliance on external finance and countries vary in their financial development the model predicts that increased financial development decreases the share of integration relative to outsourcing in a country the effect is more pronounced in sectors with a high reliance on external finance however this effect is mitigated by higher productivity tfp and headquarter intensity empirical examination confirms the predictions of the model an improvement in financial development from the 25th to the 75th percentile in industries at the 75th percentile in finance dependence relative to those at the 25th percentile is associated with a 16 8 decrease in the median share of us intra firm imports an increase in tfp from the 25th to the 75th percentile in the tfp triple interactions increase the share of us intra firm imports at the median by 3 2 an increase in headquarter intensity from the 25th to the 75th percentile in the headquarter intensity triple interactions increase the share of us intra firm imports at the median by 21

export credit guarantees and export performance an empirical analysis for germany recent literature finds that exporters are particularly vulnerable to financial market frictions as a consequence exports may be lower than their efficient levels for this reason many countries support exporters by underwriting export credit guarantees the empirical evidence on the effects of those policies is however very limited in this paper we use sectoral data on export credit guarantees issued by the german government we investigate whether those guarantees indeed do increase exports and whether they remedy the export restricting effect of credit market imperfections both on the sectoral and on the export market levels exploiting the sectoral structure of a rich three way panel data set of german exports we control for unobserved heterogeneity on the country year sector year and country sector dimensions we document a robust export increasing effect of guarantees there is some evidence that the effect is larger for export markets with poor financial institutions and in sectors that rely more on external finance

the interindustry structure of unionism earnings and earnings dispersion this study examines the relationship between unionism and earnings dispersion within u s manufacturing and nonmanufacturing industries the author hypothesizes not only that unionism narrows earnings dispersion as others have shown but also that the dispersion in earnings reflecting the degree of worker homogeneity influences the level of unionism estimation of a three equation model using 1970 three digit industry data provides evidence regarding the simultaneous determination of unionism earnings and earnings dispersion within u s industries the estimated equalizing effects of unionism on within industry earnings distributions are found to be significant both in the manufacturing and nonmanufacturing sectors the size of these estimates increasing after accounting for simultaneity in addition the dispersion in earnings does appear to affect the level of unionism although the evidence on this point is ambiguous

the bullwhip effect in supply chain networks this paper analyzes the propagation and amplification of order fluctuations i e the bullwhip effect in supply chain networks operated with linear and time invariant inventory management policies the supply chain network is allowed to include multiple customers e g markets any network structure with or without sharing information the paper characterizes the stream of orders placed by any supplier for any stationary customer demand processes and gives exact formulas for the variance of the orders placed and the amplification of order fluctuations the paper also derives robust analytical conditions based only on inventory management policies to predict the presence of the bullwhip effect for any network structure any inventory replenishment policies and arbitrary customer demand processes numerical examples show that the analytical results accurately quantify the bullwhip effect managerial insights are drawn from the analysis the methodology presented in this paper generalizes those in previous studies for serial supply chains

estimating the effects of unions on wage inequality in a panel data model with comparative advantage and nonrandom selection this article considers the estimation of the structure of wages in union and nonunion sectors it proposes an estimator that extends standard panel data techniques to the case in which the return to the permanent component of the error term is differently rewarded in the two sectors the econometric model is used to estimate the effect of unions on both the level and the variance of wages in canada the findings indicate that unions increase the average wage of workers and compress the returns to observable measures of skill and to a time invariant unobservable measure of skill

the effect of unions on wage inequality in the u s labor market this study uses current population survey micro data for 1973 74 and 1993 to evaluate the effect of changing union membership on trends in male and female wage inequality unionization rates of men fell between the two sample periods with bigger declines among lower skill groups these trends account for 15 20 of the rise in male wage inequality union membership rates of low wage women also declined while unionization increased among higher wage women on balance shifting unionization accounts for very little of the rise in female wage inequality economy wide trends in unionization mask a sharp divergence between the private sector where unionism was declining and the public sector where it was rising comparisons across sectors suggest that unionization substantially slowed the growth in wage inequality in the public sector

unions in a frictional labor market abstract a labor market with search and matching frictions where wage setting is controlled by a monopoly union that follows a norm of wage solidarity is found vulnerable to substantial distortions associated with holdup with full commitment to future wages the union achieves efficient hiring in the long run but hikes up wages in the short run to appropriate rents from firms without commitment in a markov perfect equilibrium hiring is too low both in the short and the long run the quantitative impact is demonstrated in an extended model with partial union coverage and multiperiod union contracting

a new database on the structure and development of the financial sector this article introduces a new database of indicators of financial structure and financial development across countries and over time the database is unique in that it combines a wide variety of indicators that measure the size activity and efficiency of financial intermediaries and markets it improves on previous efforts by presenting data on the public share of commercial banks introducing indicators of the size and activity of nonbank financial institutions and constructing measures of the size of bond and primary equity markets this article introduces a new database the first to provide comprehensive measures of the development structure and performance of the financial sector this database is the first to define and construct indicators of the size and activity of nonbank financial intermediaries such as insurance companies pension funds and non deposit money banks it is also the first to include indicators of the size of primary equity markets and primary and secondary bond markets in constructing the database authors carefully deflate measures and match stock and flow variables

export market exit and financial health in crises periods abstract this paper uses rich firm level data for the uk to investigate the link between firms financial health and export exit paying attention to the erm currency crisis and the global financial crisis our results show that deterioration in the financial position of firms has increased the hazard of export exit during the 2007 09 crisis but has no significant effect on the early 1990s crisis we also explore the extent to which firms in financially vulnerable industries face greater sensitivity of export exit to financial conditions we conclude that firms in sectors with great reliance on external finance experience higher hazards of exiting the export market during the 2007 09 crisis

did financial frictions stifle r d investment in europe during the great recession abstract we investigate the role of financial frictions in r d spending in a large sample of european firms our identification strategy exploits the contraction in credit supply that followed the 2008 09 global financial crisis and 2012 euro area sovereign debt crisis together with differences in financial frictions across firms and industries to identify a causal effect of financial constraints on investment in innovation we show that firms that are more likely financially constrained in industries more dependent on external finance invest disproportionally less in r d during periods of tight credit supply smaller private firms with weaker balance sheets also have a lower share of r d in total investment suggesting r d drops more than total investment during these crisis episodes these results are robust to different proxies of financial constraints and fixed effects identification strategies

conditions of reverse bullwhip effect in pricing under joint decision of replenishment and pricing abstract a reverse bullwhip effect in pricing rbp occurs when an amplification of price variability takes place moving from the upstream suppliers to the downstream customers in a supply chain in this study we investigate rbp conditions for supply chains where joint replenishment and pricing decisions are made commencing with a single stage supply chain in which a retailer faces a random and price sensitive demand we extend the results to a multi stage supply chain using a leader follower game theoretical framework we discuss rbp conditions for supply chains where newsvendor and continuous review inventory policies are employed and present numerical examples for commonly used demand functions

the impact of information enrichment on the bullwhip effect in supply chains a control engineering perspective this paper examines the beneficial impact of information sharing in multi echelon supply chains we compare a traditional supply chain in which only the first stage in the chain observes end consumer demand and upstream stages have to base their forecasts on incoming orders with an information enriched supply chain where customer demand data e g epos data is shared throughout the chain two types of replenishment rules are analysed order up to out policies and smoothing policies policies used to reduce or dampen variability in the demand for the class of out policies we will show that information sharing helps to reduce the bullwhipeffect variance amplification of ordering quantities in supply chains significantly especially at higher levels in the chain however the bullwhip problem is not completely eliminated and it still increases as one moves up the chain for the smoothing policies we show that information sharing is necessary to reduce order variance at higher levels of the chain the methodology is based on control systems engineering and allows us to gain valuable insights into the dynamic behaviour of supply chain replenishment rules we also introduce acontrolengineering based measure to quantify the variance amplification bullwhip or variance reduction

trade finance matters evidence from the covid 19 crisis this study documents a substantial decline in the exports of major trading nations taking place in march 2020 accounting for product specific seasonality and annual trends the data suggest a drop by 38 per cent in france about a quarter in turkey and germany and 12 per cent in the us relative to their historical averages detailed export data from turkey disaggregated by financing terms show another striking pattern flows using bank intermediation which eliminates or reduces the risk of non payment or non arrival of prepaid goods such as letters of credit or documentary collection appear to have been much more resilient to the current downturn relative to flows using other financing terms these findings suggest that access to trade finance is vital during times of heightened uncertainty the author s 2020 published by oxford university press for permissions please e mail journals permissions oup com

reverse bullwhip effect in pricing price variability is one of the major causes of the bullwhip effect this paper analyzes the impact of procurement price variability in the upstream of a supply chain on the downstream retail prices procurement prices may fluctuate over time for example when the supply chain players deploy auction type procurement mechanisms or if the prices are dictated in market exchanges a game theory framework is used here to model a serial supply chain sequential price game scenarios are investigated to show that there is an increase in retail price variability and an amplified reverse bullwhip effect on prices rbp under certain demand conditions

the impact of the yuan dollar exchange rate on mexican manufacturing exports to the us a cointegration approach this paper makes use of three econometric methods and three time intervals to evaluate the long term effects of several key variables on mexican manufacturing exports to the us the evidence across econometric techniques and sample periods systematically indicates that i a real depreciation of the yuan dollar exchange rate reduces mexican manufacturing exports by lowering the price of chinese goods in the us market ii a depreciation of the peso dollar real exchange rate generates a strong supply side effect due to the high import content of mexican manufacturing exports which ultimately leads to lower rather than higher sales in the us and iii external demand and labour productivity are positively related to manufacturing exports whereas real wages are negatively related therefore a falling external demand for mexican manufacturing products or a real depreciation of the chinese currency could to some extent be offset by increasing labour productivity faster than wages these findings reflect two fundamental problems of the mexican economy i low investment in high quality formal instruction and proper training programs which gives rise to severe bottleneck points for faster labour productivity growth and ii excessive reliance of the export oriented manufacturing industry on foreign suppliers of intermediate inputs

fill rate in a periodic review order up to policy under auto correlated normally distributed possibly negative demand we investigate the inventory service metric known as the fill rate the proportion of demand that is immediately fulfilled from inventory the task of finding analytical solutions for general cases is complicated by a range of factors including correlation in demand double counting of backlogs and proper treatment of negative demand in the literature two approximate approaches are often proposed our contribution is to present a new fill rate measure for normally distributed auto correlated and possibly negative demand we treat negative demand as returns our approach also accounts for accumulated backlogs the problem reduces to identifying the minimum of correlated normally distributed bivariate random variables there exists an exact solution but it has no closed form however the solution is amenable to numerical techniques and we present a custom microsoft excel function for practical use numerical investigations reveal that the new fill rate is more robust than previous measures existing fill rate measures are likely to cause excessive inventory investment especially when fill rate targets are modest a strongly positive or negative autocorrelation in demand is present or negative demands exist our fill rate calculation ensures that the target fill rate is achieved without excessive inventory investments

the extension and exploitation of the inventory and order based production control system archetype from 1982 to 2015 in 1994 through classic control theory john naim and towill developed the automatic pipeline inventory and order based production control system apiobpcs which extended the original iobpcs archetype developed by towill in 1982 well recognised as a base framework for a production planning and control system due to the prevalence of the two original models in the last three decades in the academic and industrial communities this paper aims to systematically review how the iobpcs archetypes have been adopted exploited and adapted to study the dynamics of individual production planning and control systems and whole supply chains using various databases such as scopus web of science google scholar 111 papers we found that the iobpcs archetypes have been studied regarding the a modification of four inherent policies related to forecasting inventory lead time and pipeline to create a family of models b adoption of the iobpcs family to reduce supply chain dynamics and in particular bullwhip c extension of the iobpcs family to represent different supply chain scenarios such as order book based production control and closed loop processes simulation is the most popular method adopted by researchers and the number of works based on discrete time based methods is greater than those utilising continuous time approaches most studies are conceptual with limited practical applications described future research needs to focus on cost flexibility and sustainability in the context of supply chain dynamics and although there are a few existing studies more analytical approaches are required to gain robust insights into the influence of nonlinear elements on supply chain behaviour also empirical exploitation of the existing models is recommended

unions wages and skills studies uniformly conclude that union wage effects are largest for workers with low measured skills longitudinal analysis using 1989 90 1994 95 cps matched panels produces union premium estimates equivalent across skill groups following appropriate sample restrictions and control for worker specific skills nlsy evidence on aptitude scores confirms that union workers with high measured skills have relatively low unmeasured skills differential selection by skill class and skill homogeneity in union workplaces result from employer and employee sorting in response to wage standardization union organizing where skills are homogeneous and unionized employers reluctance to hire the most as well as least able workers

evidence for the effect of monitoring costs on foreign direct investment abstract a proposed reason for the significant inverse relationship between distance both physical and cultural and foreign direct investment is the increased costs for a parent firm to monitor an affiliate when there is greater distance between them we provide the first direct test of this hypothesis using o net data on occupational skills to construct industry level measures of the importance of monitoring related skills we exploit this cross industry variation to examine whether physical and cultural distances have a greater impact on cross border m a in industries where monitoring related skills are more important using data on worldwide cross border m a activity from 2005 through 2014 we find significant evidence for the effect of monitoring costs on cross border m a activity we also show that the relatively low importance of monitoring related costs in manufacturing industries compared to those in other sectors is an important factor in explaining why cross border m a in manufacturing is so large despite its relatively small share in most countries

coordinating lead times and safety stocks under autocorrelated demand we consider a supply chain in which orders and lead times are linked endogenously as opposed to assuming lead times are exogenous this assumption is relevant when a retailer s orders are produced by a supplier with finite capacity and replenished when the order is completed the retailer faces demands that are correlated over time either positively or negatively which may for example be induced by a pricing or promotion policy the auto correlation in demand affects the order stream placed by the retailer onto the supplier and this in turn influences the resulting lead times seen by the retailer since these lead times also determine the retailer s orders and its safety stocks which the retailer must set to cover lead time demand there is a mutual dependency between orders and lead times the inclusion of endogenous lead times and autocorrelated demand represents a better fit with real life situations however it poses some additional methodological issues compared to assuming exogenous lead times or stationary demand processes that are independent over time by means of a markov chain analysis and matrix analytic methods we develop a procedure to determine the distribution of lead times and inventories that takes into account the correlation between orders and lead times our analysis shows that negative autocorrelation in demand although more erratic improves both lead time and inventory performance relative to iid demand positive correlation makes matters worse than iid demand due to the endogeneity of lead times these effects are much more pronounced and substantial error may be incurred if this endogeneity is ignored

credit contraction and international trade evidence from chilean exporters summary using data of chilean exporting firms this paper studies the effect of the financial crisis on the extensive and intensive margin of export in the aftermath of the crisis the negative effect of the crisis on exports is highly heterogeneous the evidence shows that larger exporters belonging to industries more dependent on overall credit have suffered disproportionately more during the crisis in terms of export growth but less in terms of entry and exit this has important policy implications as public policy aiming at stimulating trade credit may not be as effective if overarching credit conditions remain subdued

impact of market demand mis specification on a two level supply chain this paper investigates the impact of mis specifying the market demand process on a serially linked two level supply chain box jenkins models are used to represent both the true and a mis specified market demand processes it is shown that the impact of mis specification on cost is minor if the supply chain tries to minimise the market demand forecast errors furthermore our analysis suggests that mis specification does not always result in additional costs a managerial insight is revealed poor forecast accuracy is not always bad for the total supply chain costs in other words employing more accurate forecasting methods may actually result in higher total supply chain costs

wage setting institutions and pay inequality in advanced industrial societies the distribution of pay differs significantly across countries and over time among advanced industrial societies in this paper institutional and political determinants of pay inequality are studied in sixteen countries from 1980 to 1992 the most important factor in explaining pay dispersion is the level of wage setting i e whether wages are set at the level of the individual the plant the industry or the entire private sector the impact of centralization is the same whether centralization occurs via collective bargaining or via government involvement in private sector wage setting the concentration of unions and the share of the labor force covered by collective bargaining agreements also matter after controlling for wage setting institutions other variables such as the governing coalition the size of government international openness and the supply of highly educated workers have little impact economic political and norm based explanations for the association of centralization with egalitarian outcomes are discussed

performance pay and wage inequality an increasing fraction of jobs in the u s labor market explicitly pay workers for their performance using bonus pay commissions or piece rate contracts using data from the panel study of income dynamics we show that compensation in performance pay jobs is more closely tied to both observed and unobserved productive characteristics of workers than compensation in non performance pay jobs we also find that the return to these productive characteristics increased faster over time in performance pay than in non performance pay jobs we show that this finding is consistent with the view that underlying changes in returns to skill due for instance to technological change induce more firms to offer performance pay contracts and result in more wage inequality among workers who are paid for performance thus performance pay provides a channel through which underlying changes in returns to skill get translated into higher wage inequality we conclude that this channel accounts for 21 of the growth in the variance of male wages between the late 1970s and the early 1990s and for most of the increase in wage inequality above the eightieth percentile over the same period

the bullwhip effect in capacitated supply chains with consideration for product life cycle aspects abstract this paper presents an analysis of the bullwhip effect and net stock amplification in a three echelon supply chain considering step changes in the production rates during a product s life cycle demand the analysis is focused around highly complex and engineered products e g automobiles that have relatively long production life cycles and require significant capital investment in manufacturing using a simulation approach we analyze three stages of the product life cycle including low volumes during product introduction peak demand and eventual decline toward the end of the life cycle parts of the simulation model have been adopted by a major north american automotive oem as part of a scenario analysis tool for strategic supply network design and analysis the simulation results show that performance of a system as a whole deteriorates when there is a step change in the life cycle demand while restriction in production capacity does not significantly impact the bullwhip effect it increases the net stock amplification significantly for the supply chain setting under consideration furthermore a number of important managerial insights are presented based on sensitivity analysis of interaction effect of capacity constraints with other supply chain parameters

stopped myopic policies in some inventory models with generalized demand processes this paper considers single item inventory systems with immediate delivery and no economies of scale bounds are provided on the value loss relative to optimal cost for restricting attention to the class of inventory stocking policies that behave myopically up to a specified stopping time the stopping time may be random and may depend on demand histories as well as information exogenous to the firm the bounds are robust to the nature of the demand process faced after the stopping time so are applicable when the statistics of demand after the stopping time are unknown stopping times that are large with high probability imply that near term decisions are completely specified with high probability the general bounding results allow one to consider demand processes that may otherwise be analytically intractable it is shown that the class of demand models for which the assumption of additive i i d shocks is appropriate is the same class admitting effective myopic stocking policies the bounds also make rigorous the intuitive notion that myopic policies are least effective in systems with precipitous drops in demand coupled with an inability to recover cash invested in inventory the option of selling inventory at discount is a reality in many real systems and enhances the attractiveness of the myopic stocking policy in numerical examples the myopic policy is shown to be an effective competitor in a range of systems for which optimal policies are not known the results suggest that for systems with immediate delivery no economies of scale and no currently known optimal policy the myopic stocking rule is a reasonable default policy to adopt

the international credit channel of u s monetary policy transmission to developing countries evidence from trade data abstract in a large sector level bilateral trade dataset we find robust evidence supporting a broad international credit channel of u s monetary policy transmission to developing countries we show that u s monetary policy has a significant effect on the sectoral composition of developing countries exports financially more vulnerable sectors have a significantly more negative exposure of their trade to a tight u s monetary policy especially in financially less developed exporting countries or during significant u s tightening periods moreover we identify both a monetary policy dependence mechanism and a financial dollarization mechanism through which u s monetary policy can influence the sectoral composition of developing countries exports

foreign direct investment and external financing conditions evidence from normal and crisis times this paper investigates the effects that external financing conditions in source and destination countries have on foreign direct investment fdi in normal and crisis times using a difference in differences approach we find that source and destination countries financial development have a strong positive impact on the relative volume of fdi in financially vulnerable sectors in normal times on the other hand during the 2008 2010 global financial crisis the relative volume of fdi in financially vulnerable sectors fell relatively more in financially developed source and destination countries most notably if these countries experienced a credit crisis

labor market institutions and wage inequality the authors investigate how labor market institutions such as unemployment insurance unions firing regulations and minimum wages have affected the evolution of wage inequality among male workers results of estimations using data on institutions in eleven oecd countries indicate that changes in labor market institutions can account for much of the change in wage inequality between 1973 and 1998 factors found to have been negatively associated with male wage inequality are union density the strictness of employment protection law unemployment benefit duration unemployment benefit generosity and the size of the minimum wage over the 26 year period institutional changes were associated with a 23 reduction in male wage inequality in france where minimum wages increased and employment protection became stricter but with an increase of up to 11 in the united states and united kingdom where unions became less powerful and in the united states minimum wages fell

when is quality of financial system a source of comparative advantage abstract dominant theories of trade tend to ignore the role of finance as a source of comparative advantage on the other hand the finance literature places financial institutions as a driver of economic growth this paper unites these two competing schools of thought in a general equilibrium framework for economies with high quality institutions defined by the competitiveness of the financial sector the quality of corporate governance and the level of property rights protection finance is passive on the other hand for economies with low quality institutions the quality of the financial system is an independent source of comparative advantage interestingly the conventional measure of financial development the size of the financial market relative to gdp does not adequately capture the underlying quality of financial institutions in addition free trade may reduce the aggregate income in south financial capital tends to flow from south to north

trade finance and the great trade collapse pieces of evidence that support the trade finance channel first we show that export prices rose relative to domestic manufacturing prices across a large number of countries second we find that import and export prices of goods shipped by sea which are likely to be affected most by trade finance contractions rose disproportion ately more than those shipped by air or land

union wages temporary lay offs and seniority it is widely believed that the seniority system in conjunction with the collective bargaining process contributes significantly to the determination of the unemployment level in unionized sectors causa i empiricism suggests that real wage demands often remain buoyant in these sectors in the face of seemingly high rates of unemployment among union members james medoff 1979 p 380 convincingly documents the evidence that adjustment through lay offs is substantially greater in unionized firms than in comparable non unionized firms the usual but somewhat informal explanation is that the outcome of union voting is greatly influenced by senior workers who are fairly certain that they will not be laid off when normal shifts in the industry s demand for labour occur 2 these inframarginal workers are believed to vote for higher wage settlements than they would if their own jobs were not so secure

the rise and fall of unions the public sector and the private as of the late 1980s american unionism as a whole has been in decline for about thirty years this decline has been concentrated in the unions serving workers in the private sector and contrasts sharply with the growth of public sector unions during much of the same period this paper attempts to explain these divergent trends but takes their existence as given by decline or rise of unionism i refer to changes in the percentage relative number of union adherents among a specified group of workers though i believe that movements in the relative number of union adherents have run parallel to broader but more vague movements of union influence the reader must draw such inferences for himself as best he can a union adherent is assumed to be both a dues payer and covered by a collective bargaining contract possible differences between these two concepts of union affiliation are unimportant for this paper individuals are assumed always to act as if they had compared the costs and benefits of union adherence and chosen adherence if the benefits were greater and otherwise if the opposite applied as used here costs and benefits are limited to hourly compensation wages and fringes employment opportunities and working conditions while ideological preferences undoubtedly influence a small minority of workers it is assumed that such individuals are too few to affect the trends analysed 1 the above assumptions obscure important interdependencies among the decisions of individual workers and those of an employee and his employer for example if an 1i do not deny either that changes in attitudes toward the relative desirability of working under union conditions may have occurred from time to time or that such changes might be of interest however i assume that the dominant factors affecting movements in the quantity of union adherents are changes in the benefits and costs of unionization particularly hourly compensation and employment opportunities

managing the order pipeline to reduce supply chain volatility the bullwhip effect in particular and supply chain volatility in general has been the subject of much analytical and empirical investigation by researchers one goal of this work has been to determine supply chain designs and policies that minimize volatility using a system dynamics approach we use three distinct supply chain volatility metrics to compare the ability of two alternative pipeline inventory management policies to respond to a demand shock the results indicate that no one policy dominates on all three metrics of supply chain volatility a simplistic static pipeline policy minimizes the bullwhip effect and lessens the likelihood of on hand inventory oscillations while a more sophisticated dynamic pipeline policy may converge more rapidly to the new equilibrium in addition simulation results suggest that the dynamic policy provides better customer service through fewer stockouts and backorders

adaptive inventory control for nonstationary demand and partial information this paper examines several different policies for an inventory control problem in which the demand process is nonstationary and partially observed the probability distribution for the demand in each period is determined by the state of a markov chain the core process however the state of this core process is not directly observed only the actual demand is observed by the decision maker given this demand process the inventory control problem is a composite state partially observed markov decision process pomdp which is an appropriate model for a number of dynamic demand problems in practice managers often use certainty equivalent control cec policies to solve such a problem however this paper presents results that demonstrate that there are other practical control policies that almost always provide much better solutions for this problem than the cec policies commonly used in practice the computational results also indicate how specific problem characteristics influence the performance of each of the alternative policies

measuring and avoiding the bullwhip effect a control theoretic approach an important contributory factor to the bullwhip effect i e the variance amplification of order quantities observed in supply chains is the replenishment rule used by supply chain members first the bullwhip effect induced by the use of different forecasting methods in order up to replenishment policies is analysed variance amplification is quantified and we prove that the bullwhip effect is guaranteed in the order up to model irrespective of the forecasting method used thus when production is inflexible and significant costs are incurred by frequently switching production quantities up and down order up to policies may no longer be desirable or even achievable in the second part of the paper a general decision rule is introduced that avoids variance amplification and succeeds in generating smooth ordering patterns even when demand has to be forecasted the methodology is based on control systems engineering and allows important insights to be gained about the dynamic behaviour of replenishment rules