us monetary policy and sectoral commodity prices abstract using a structural var svar model we examine the effects of the monetary policy of the united states on sectoral commodity prices including the non fuel commodity prices food prices beverage prices prices of agricultural raw materials prices of metals and prices of fuel energy commodities and macroeconomic activity the empirical evidence suggests that a u s monetary contraction leads to an immediate rise in the broad commodity price index which possibly reflects an aggregation bias greater expected inflation and speculation high production costs or some overshooting due to overreactions then the response erodes after six quarters as the positive interest rate shock vanishes and higher interest rates and liquidity drainage take traction despite this the aggregate price response masks the existence of significant heterogeneity in the price responses of the different types of commodity sectors more specifically a positive interest rate shock leads to i an initial pop in the price returns of the non fuel commodities which later reverses path and becomes negative as in the case of the prices of agricultural raw materials ii a positive and persistent rise in the volatile food prices iii a fall in the beverage prices and iv a persistent reduction in the prices of metals and the prices of energy prices our results also remain globally intact with respect to alternative specifications and identification schemes as well as to unconventional monetary policy effects similar results are also found when commodity futures prices are used we conclude that policymakers should recognize the source of sector inflation before embarking on contractionary monetary policy the design of core inflation targeting is also preferable to headline inflation targeting

why voluntary export restraints are voluntary the paper presents an analysis of the effect upon an oligopolistic equilibrium of introducing a voluntary export restraint ver upon an importing firm a ver set at the free trade level of imports is shown to raise the profits of all firms within the industry the result follows as the imposition of a ver upon a free trade nash price competition forces the domestic firm to become an industry price leader the ver raises industry prices by facilitating collusion and lowers consumer welfare pourquoi les restrictions volontaires d 1 exportation sont volontaires ce memoire presente une analyse des effets de l introduction de restrictions volontaires a l exportation rve sur une entreprise qui importe dans un monde en equilibre oligopolistique on montre que l introduction de rve approximant le niveau des importations en regime de libre echange devrait augmenter les profits de toutes les entreprises dans l industrie cela decoule du fait que l imposition de rve sur un univers de concurrence par les prix a la nash en regime de libre echange force l entreprise domestique a devenir le leader en prix l introduction de rve augmente le niveau des prix de l industrie en facilitant la collusion et de ce fait reduit le niveau de bien etre des consomrnateurs

on the equivalence of import quotas and voluntary export restraint abstract this note re examines the trade effects of a voluntary export restraint and an import quota whether or not they are equivalent in the presence of a dominant monopolist supplier depends fundamentally on the elasticity of a alternative non restricted producers excess supply functions and the market share of the dominant monopolist

voluntary export restraints antidumping procedure and domestic politics a voluntary export restraint ver is preferred to a tariff by a government concerned about electoral returns when the influence of industry profits is large relative to the losses to consumers from higher prices if the foreign firm is uncertain of these pressures the antidumping code facilitates the complete transfer of the relevant information and generates a ver rather than a tariff in equilibrium the choice across instruments is determined by the political attributes domestic and foreign profits rise with the antidumping generated ver and the ver lowers the volume of trade by more than the expected duty copyright 1996 by american economic association

the economics of voluntary export restraint agreements the three substantive sections of this survey deal with the economic consequences of voluntary export restraint agreements vers e g the multi fibre arrangement and vers on japanese auto exports section 2 focuses on the disposition of quota rents under the assumptions of perfectly competitive markets and the absence of substitute suppliers section 3 considers imperfect competition and the role of vers as cartelization instruments facilitating collusion section 4 analyzes the discriminatory effects of vers when there are third country suppliers a broad conclusion is that the economic consequences of vers are more complex than the standard trade policy analysis based on tariffs because of the issues discussed in sections 3 and 4 copyright 1989 by blackwell publishers ltd

imperfect competition and pareto improving strategic trade policy abstract this paper addresses the concern that strategic trade policy will inevitably invite retaliation by presenting examples in which tariffs and export taxes subsidies can improve the welfare of importing and exporting nations at the same time we argue that retaliation is less likely in such cases the conditions required for these results depend upon the relative sizes of the markets in the trading countries the number of firms in each and the shape of market demand and cost functions

evidence on the relationship between housing and consumption in the united states a state level analysis we estimate the dynamic effects of u s housing market shocks on state level spending and home prices from a dynamic common factor model and identify housing demand and supply shocks using a sign restrictions approach while state level spending and house prices gradually respond positively and persistently to aggregate housing demand shocks there is significant variation across states in the magnitude of these responses cross state regressions of the estimated responses on an index of mortgage market development suggest that spending in states with greater opportunities for home equity borrowing is more sensitive to housing demand shocks than in states with fewer opportunities which is consistent with the prominence of a collateral channel over a wealth channel in explaining the link between housing and the overall economy

questions on international trade in textiles and clothing questions of importance for the negotiations on the extension of the arrangement regarding international trade in textiles focus on i relative importance of trade in textiles and clothing ii the participants in this trade iii products that succeed for developing countries iv market penetration in developed country markets v overall trends and vi effects of protectionist activities six conclusions are drawn 1 developed countries continue to generate the bulk of the world s exports of textiles 2 industries in developing countries are too small to threaten the developed countries industries 3 developed countries collectively enjoy a large and sustained surplus in textile trade offset by a larger and growing deficit in clothing 4 only hong kong south korea taiwan and india have large trade surpluses among developing countries 5 import penetration by developing countries is modest and 6 because of protection developing countries exports of textiles and clothing have no longer outstripped the growth of all trade in textiles and clothing since 1976

oil prices and global factor macroeconomic variables abstract this paper investigates the relationship between oil prices global industrial production prices central bank policy interest rate and monetary aggregate with a global factor augmented error correction model we confirm the following stylized relationships i at global level money industrial production and prices are cointegrated ii positive innovation in global oil price is connected with global interest rate tightening iii positive innovation in global money price level and industrial production is connected with an increase in oil prices iv positive innovations in global interest rate are associated with a decline in oil prices and v the u s euro area and china are the main drivers of global macroeconomic factors

alternative sources of the gains from international trade variety creative destruction and markups the modern theory of international trade identifies several additional sources of the gains from international trade beyond the gains from traditional comparative advantage these are the gains from importing new product varieties the gains from creative destruction as the relatively most productive firms expand their output by exporting while the less productive firms exit and the gains from competition between firms in different countries which can lead to reduced markups estimates of these various gains are provided for the united states and other countries

safeguards and retaliatory threats abstract this is the first empirical article to analyze the response of shareholders to the threat of retaliatory tariffs authorized by the world trade organization wto we use event study methodology to gauge the impact of european union eu retaliatory threats stemming from the 2002 imposition of u s steel safeguards results indicate that the u s stock returns of firms slated for wto authorized tariffs reacted negatively to the announcements signaling an increased likelihood of retaliation shareholders also generally responded positively to the early cancellation of the safeguards which removed the risk of retaliation industry level analysis indicates that producers of apparel tobacco and transportation equipment were particularly affected by the threat of retaliatory tariffs second stage estimates suggest that retaliatory threats have a more negative impact on firms with a higher export share to the eu greater profit growth and low research and development intensity

an assessment of voluntary restraints on hong kong exports to europe and the usa estimates of import tariff equivalents mtes 1981 84 of european and us voluntary export restraints on hong kong are presented with estimates of rent incomes transferred mte rates varied sharply over time and inversely with european tariffs as predicted by the model making national restrictions pointless as protection for small european countries the model points to and uses a new way of estimating non tariff barriers ntbs through derived estimates in principle once one has measured the restrictiveness of country l s ntbs one can derive an estimate of the restrictiveness of country 2 s ntbs

completing the european internal market some notes on trade policy this paper examines international trade policy within a completed european internal market the ethier horn argument for internal tariffs in a customs union is shown to be inapplicable to most of the ec s existing cost increasing barriers to trade the implications of abolishing both article 115 which prevents trade deflection and monetary compensatory amounts on agricultural trade are examined national production subsidies are examined in the context of the free intra ec mobility of capital and skilled labour subsidies are doubly harmful to a small open economy in the presence of factor mobility moreover even where rent snatching subsidies may be profitable for the ec as a whole subsidy wars could erupt between member states as they compete for rent generating industries

theoretical implications of imperfect competition on quota license prices and auctions this article looks at the implications for trade policy of recent work on quota auctions recent work has considered a variety of market structures in addition to the standard one of monopoly in the product market it has also emphasized details of the implementation process as well as the timing of decisions and dynamic factors such considerations are shown to be important because they can greatly affect the outcome of trade policies

windfall profits and vertical relationships who gained in the japanese auto industry from vers this paper employs an event study to analyze the effect of the 1981 voluntary export restraint agreements on profits in the japanese automobile industry stock price movements of seven japanese automakers and sixty nine of their suppliers are examined the results indicate that the profits of japan s producers of passenger cars rose as a result of the voluntary export restraints while only some suppliers large ones and those producing specialized parts or services appear to have shared the benefits voluntary export restraints increased profits for some firms in the japanese auto industry but many suppliers did not share the windfall copyright 1993 by blackwell publishing ltd

oligopolistic competition and international trade quantity and quality restrictions abstract we examine trade restrictions such as quantity and quality limitations on imports in an oligopolistic industry consisting of foreign and domestic firms we find that the effects of trade policy hinge on the location of the quality produced by the firms in the quality spectrum a quota leads to positive protection while minimum quality standards leads to negative protection furthermore minimum standards lower national welfare and a quota has an ambiguous effect on welfare

the uruguay round agreements impact on developing countries abstract implementation of the results of uruguay round will bring about significant increases in trade investment income and welfare for developing countries this derives from increased market access to developed countries markets and from enhanced efficiency originating from their own liberalization commitments although the distribution of benefits will be uneven developing countries will also benefit from improved rules for trade and investment coupled with enhanced institutional enforcement of these rules and greater exposure to global competition within a more predictable secure and credible international trading environment to maximize the benefits however developing countries will need to continue with recent unilateral reforms to improve their supply response

keiretsu and relationship specific investment implications for market opening trade policy abstract this paper considers the implications of relationship specific investment within keiretsu for policies aimed at opening the japanese market for intermediate goods such as auto parts both vies applied to parts and vers restricting japanese exports of autos cause the keiretsu to import a wider range of parts but of a relatively unimportant type such as seat covers since keiretsu investment and output fall the total value of us parts exports may actually fall for a given value of these exports a vie is less costly for us consumers and japanese producers but a ver is preferred by us automakers

the heterogeneous impact of brexit early indications from the ftse abstract the uk s decision to leave the eu is surrounded by several studies simulating its potential effects we take an alternative approach by examining how news of brexit affected expectations as embodied in stock returns using a two stage estimation process while most firms had negative returns following news of the referendum s result with nearly 3 trillion wiped off global markets there was considerable heterogeneity in their changes relative to expectations we show that this heterogeneity can be explained by the firm s global value chain with firms heavily exposed to the eu and uk doing worse in addition we find that firms reliant on imported intermediates also perform worse this however is partially offset via intra firm trade in intermediates when sterling fell relative to host currencies these changes were primarily in the first two trading days and highly persistent understanding these movements gives a better understanding of brexit s potential effects

tariff jumping fdi and domestic firms profits studies of the welfare implications of trade policy often do not take account of the potential for tariff jumping fdi to mitigate positive gains to domestic producers we use event study methodology to examine the market effects for u s domestic firms that petitioned for antidumping ad relief as well as the effect of announcements of fdi by their foreign rivals in the u s market on these u s petitioning firms on average affirmative u s ad decisions are associated with 3 abnormal gains to a petitioning firm when there is no tariff jumping fdi but no abnormal gains if there is tariff jumping fdi the evidence for this mitigating effect is strongest when announcements of the intended tariff jumping fdi have already occurred before an ad decision takes place which happened in fair number of cases we also find evidence that the announcements of plant expansions and to some extent new plants have significantly larger negative effects on u s domestic firms profits than other types of fdi including acquisitions and joint ventures

global effects of developed country trade restrictions on textiles and apparel this paper uses an applied general equilibrium model to analyze the impacts of quota and tariff restrictions used by developed countries against textile and clothing imports from developing countries in the model countries are represented by their actual size in terms of gdp weakening rent transfer effects compared to partial equilibrium analysis results based on 1986 data suggest annual global gains from elimination of quotas and tariffs of around 23 billion in aggregate developing countries gain around 8 billion suggesting that gains to developing countries from improved access more than offset losses from foregone rent transfers as quotas and tariffs are abolished copyright 1990 by royal economic society

the regulation of electricity results from an event study in this paper event study methods are used to compare the stock market returns for the recs with general stock market returns to test the hypothesis that the regulatory package shows symptoms of capture by special interest groups over the 1991 95 period the results show that some capture by the recs may have occurred as they have earned abnormal market returns however regulatory events are heterogeneous in nature and actions taken over prices by the director general of electricity supply dges in 1995 appear to have reduced abnormal returns as part of the study we examine the impact on shareholders returns of the dges s controversial announcement in march 1995 of plans to tighten price controls on the recs the regulatory package appears to work reasonably well on balance

european community external protection and 1992 voluntary export restraints applied to pacific asia european community external protection and 1992 voluntary export restraints applied to pacific asia

using information diffusion models to estimate the impacts of regulatory events on publicly traded firms abstract analysis and evaluation of regulatory actions require inexpensive and timely information about resultant costs and benefits this paper extends the traditional event study methodology for assessing the impact of regulatory actions on the value of publicly traded firms we use diffusion theory to construct several models of how markets adjust to regulatory events ex ante preference for a particular model is based on prior knowledge about the characteristics of the regulatory event and information diffusion patterns we demonstrate the use of the methodology by applying it to an analysis of the impacts of a regulatory action taken to protect the northern spotted owl

increasing the profits of a subset of firms in oligopoly models with strategic substitutes consider an industry composed of n firms in a symmetric equilibrium designate a subset of s n firms and marginally reduce the strategic variables of the firms in the subset if the remaining firms simultaneously make the best reply to this exogenous displacement under what circumstances will profits of the firms in the designated subset increase we show that in the case of cournot competition among producers of perfect substitutes a marginal contraction is strictly beneficial strictly harmful if and only if the number of firms in the designated subset exceeds the adjusted number of firms outside it by strictly more strictly less than one the adjustment factor is unity when cost and demand functions are linear but more generally depends on the convexity of the cost and demand curves thus a marginal contraction of two firms in a triopoly has no effect on the profits of firms in the subset if cost and demand functions are linear if instead cost is linear but the inverse demand function is strictly concave strictly convex a marginal contraction will strictly decrease strictly increase profits the analysis is extended to the effects of nonmarginal exogenous changes in the outputs of the constrained firms this extension has implications for the relationship of stackelberg sequential move and nash simultaneous move equilibria our analysis has broad application to illustrate we show that it unifies results in the literature on export subsidies horizontal mergers and strikes the paper is organized as follows in section i our comparative static result is derived in section ii we present a wide range of applications in the conclusion and the appendix we generalize our analysis to other situations involving strategic substitutes

large datasets factor augmented and factor only vector autoregressive models and the economic consequences of mrs thatcher we investigate methods of capturing the salient characteristics of very large datasets in an investigation of uk and us macroeconomic policy using factor augmented var favar models we also estimate structural factor only var fovar models and examine the impact of aggregate demand and aggregate supply in a further empirical application we find that while there is some evidence of increased macroeconomic flexibility in the usa as well as the uk since the late 1980s the speed of macroeconomic adjustment is more marked in the uk economy post 1987 possibly reflecting the uk labour market reforms of the thatcher government in the 1980s

trade liberalization comparative advantage and scale economies stock market evidence from canada abstract the canada united states free trade agreement fta provides an excellent opportunity to analyze the impact of a comprehensive trade liberalization in this paper a stock market event study is employed to capture investors expectations about the consequences of this agreement for manufacturing firms in canada the primary question addressed is whether abnormal stock market returns corresponding to news about the fta are consistent with hypotheses based on comparative advantage and economies of scale the results indicate that both comparative advantage and scale economies played a role in determining investors perceptions of the impact of the fta

import now an analysis of market share voluntary import expansions vies abstract proponents claim that voluntary import expansions vies increase foreign access to a domestic market while increasing competition and reducing prices using a bertrand model i show that a vie produces exactly the opposite results a vie that increases the market share of imports above the prevailing level results in higher prices in the domestic market this result holds even when the domestic market is assumed to be protected by a tariff type barrier prior to the imposition of a vie a vie and an equivalent import subsidy are shown to have opposite effects on prices

voluntary export restraints profits and quality adjustment this paper develops a model of vertical differentiation to assess the impact of output constraints on the profits and quality choices of firms subject to them a competitive environment is developed with the automobile industry in mind multiproduct oligopolists producing differentiated goods who behave as coumot competitors the results show that an output constraint will not induce constrained firms to upgrade their product line when their unconstrained competitors produce higher quality models it is also shown that an output constraint can raise the profits of constrained firms despite output increases by unconstrained firms