lines in the sand price dispersion across iraq s intranational borders before during and after the surge abstractthis paper tests the impact of a change in security commitment on market development in a country embroiled in low intensity conflict we analyze weekly price data for approximately 250 goods from 18 iraqi cities between 2005 and 2008 our paper suggests four empirical regularities associated with price dispersion and market development in postwar iraq first the degree of intracountry price dispersion in iraq is higher than that reported for a typical industrialized nation second the degree of price dispersion decreased significantly during 2007 coincident with the change in u s security strategy known as the surge third the economic impact of the surge is geographically uneven but loosely follows patterns of u s deployment with price dispersion decreasing by roughly one third in areas targeted during the surge but remaining relatively static in other areas finally we find that internal ethnoreligious divisions have relatively modest effects on price dispersion

trade facilitation and manufactured exports is africa different summary trade facilitation defined as reducing the transaction costs associated with the enforcement regulation and administration of trade policies has been at the forefront of discussions on policy measures for reducing the costs of exporting and importing in developing countries this study uses a new panel dataset for 124 developed and developing countries available for the period 2003 04 to assess the impact of trade facilitation and other trade related institutional constraints on manufacturing export performance with particular reference to africa we estimate a standard gravity model augmented with trade facilitation regulatory quality and infrastructure indicators our results show that trade facilitation reforms could contribute to improve export performance in africa but other reforms including the quality of the regulatory environment and the quality of the basic transport and communications infrastructure are also needed furthermore improvements in on the border and behind the border policies yield a higher return in terms of increasing manufacturing export performance in african countries than in the rest of the world

buying negative agenda control in the u s house we explore the foundations of the legislative party cartel as theorized by cox and mccubbins 1993 2005 to determine how majority party moderates who suffer net policy losses from the majority leadership s use of negative agenda control are kept from defecting from the cartel arrangement first we identify formally the group of majority party members who are net policy losers we find that those members occupying the initial 30 of the space within the majority party blockout zone that space closest to the floor median are hurt on a pure policy basis by the cartel arrangement second we find that members in this 30 zone are rewarded disproportionately by majority party leaders relative to members in other intervals on the same side of the floor median via side payments in the form of campaign contributions in addition majority party members within the 30 zone receive side payments commensurate with their particular policy loss

load management in europe marketing aspects different load management strategies and utility approaches are used to obtain efficient utilization of electric energy in europe this paper focuses on the use of pricing as a marketing tool the importance of pilot programs in marketing and especially on the broader approach to marketing used by utilities as the energy market becomes more complex several utilities extend their endeavours to comprehensive programs the utility either acts as co ordinator itself or as a part of a joint venture a broad utility approach to customers often as a total entrepeneur is becoming more common in europe

does institutional quality matter for trade institutional conditions in a sectoral trade framework summary this article examines the extent to which national institutional quality affects bilateral sectoral trade flows as well as whether the conditioning role of institutions for trade has been waxing or waning with time based on a new trade theory framework we derive a sectoral gravity equation including novel variables corresponding to the exporter s labor competitiveness levels along with importer s price indices and sectoral incomes and analyze industry specific bilateral trade flows of 186 countries for the period 1996 2012 we address potential endogeneity and econometric drawbacks by means of the poisson pseudo maximum likelihood estimation methods the results indicate that both the institutional conditions at destination and the institutional distance between exporting and importing countries are relevant factors for bilateral trade moreover the effect associated with institutional conditions at destination moderately increases over time this is a robust outcome across economic sectors with higher values for agriculture and raw materials than for manufacturing and services

trade costs and changes in canada s trade pattern this paper measures the size and composition of non tariff trade costs such as transport wholesale and network costs incurred in canada s merchandise trade using statistics canada s latest trade margins statistics it examines how changes in these trade costs have influenced canada s merchandise trade pattern and the course of economic integration our results show that as tariffs have been substantially reduced and largely abolished costs associated with transport and distribution services now appear much larger than remaining customs duties therefore liberalisation in services might be the next key step in promoting greater merchandise trade further reducing transport and other trade related costs has helped reverse the home market effect expanding canada s domestic demand and production for exports of differentiated products

product complexity quality of institutions and the protrade effect of immigrants the paper assesses the trade creating impact of foreign born residents on the international imports and exports of the french regions where they are settled the protrade effect of immigrants is investigated along two intertwined dimensions the complexity of traded goods and the quality of institutions in partner countries the trade enhancing impact of immigrants is on average more salient when they come from a country with weak institutions however this positive impact is especially large on the imports of simple products when we turn to complex goods for which the information channel conveyed by immigrants is the most valuable immigration enhances imports regardless of the quality of institutions in the partner country regarding exports immigrants substitute for weak institutions on both simple and complex goods

careerism committee assignments and the electoral connection most scholars agree that members of congress are strongly motivated by their desire for reelection this assumption implies that members of congress adopt institutions rules and norms of behavior in part to serve their electoral interests direct tests of the electoral connection are rare however because significant exogenous changes in the electoral environment are difficult to identify we develop and test an electoral rationale for the norm of committee assignment property rights we examine committee tenure patterns before and after a major exogenous change in the electoral system the states rapid adoption of australian ballot laws in the early 1890s the ballot changes we argue induced new personal vote electoral incentives which contributed to the adoption of modern congressional institutions such as property rights to committee assignments we demonstrate a marked increase in assignment stability after 1892 by which time a majority of states had put the new ballot laws into force and earlier than previous studies have suggested

traders cops and robbers abstract we propose a simple model of trade outside the law preyed on by robbers and possibly protected by private cops we establish the conditions for trade collapse secure trade and insecure trade endogenous predation and enforcement can explain both puzzling failures of commonly observed state policies against illegal trade and puzzlingly large trade responses to liberalization in licit goods

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

institutions and financial development evidence from international migrants in the united states abstract we investigate the impact of institutions on financial development by analyzing the financial behavior of immigrants in the united states we find that immigrants from countries with institutions that more effectively protect private property are more likely to own stock in the united states the effect of home country institutions is persistent and absorbed early in life the impact of institutions is amplified for immigrants who live in metropolitan areas with many other immigrants from the same country these findings are robust to alternative measures of institutional effectiveness and to various methods of controlling for unobserved individual characteristics including specifications with country fixed effects

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

financial development and the product cycle abstract i develop a model to study how financial institution differences across countries affect the offshoring decision of northern firms and whether a product cycle arises when the only comparative advantage of northern suppliers is their access to better financial institutions a northern final good producer needs to buy an intermediate input from a supplier to complete production she can find this supplier either in the low wage but financially underdeveloped south or in the high wage and financially developed north i show that financial institution differences affect the optimal contract offered to the supplier and are enough to generate a product cycle the final good producer faces a trade off between low wages and contracting distortions when the good is new she finds it optimal to keep production in the north at the cost of a higher wage but with the benefit of a less distorted contract however as the good becomes more standardized the importance of the supplier increases and the cost of not shifting production to the south and take advantage of the lower wage offsets the contractual distortions that the underdeveloped southern financial institutions create the most salient empirical prediction is that the more r d intensive an industry is the larger is the effect of financial development on offshoring these results also hold when wages are endogenized in the empirical section the prediction is tested and confirmed using disaggregated trade data

insecurity and the pattern of trade an empirical investigation corruption and imperfect contract enforcement dramatically reduce international trade this paper estimates the reduction using a structural model of import demand in which insecurity acts as a hidden tax on trade we find that inadequate institutions constrain trade as much as tariffs do we also find that omission of indices of institutional quality biases the estimates of typical gravity models obscuring a negative relationship between per capita income and the share of total expenditure devoted to traded goods finally we argue that cross country variation in the effectiveness of institutions and the consequent variation in the prices of traded goods offer a simple explanation for the stylized fact that high income capital abundant countries trade disproportionately with each other

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 industrial organization of congress or why legislatures like firms are not organized as markets this paper provides a theory of legislative institutions that parallels the theory of the firm and the theory of contractual institutions like market institutions legislative institutions reflect two key components the goals or preferences of individuals here representatives seeking reelection and the relevant transactions costs we present three conclusions first we show how the legislative institutions enforce bargains among legislators second we explain why given the peculiar form of bargaining problems found in legislatures specific forms of nonmarket exchange prove superior to market exchange third our approach shows how the committee system limits the types of coalitions that may form on a particular issue

political preferences for the pork barrel a generalization this paper provides a rational explanation for the observation of oversized coalitions often approaching unanimous size in the realm of distributive policies distributive policies are those which concentrate benefits in specific geographic areas states congressional districts while spreading costs through general taxation the explanation offered here that legislators may rationally prefer universalism to hard ball coalition politics generalizes earlier work of weingast and fiorina in particular it extends their results to pork barrel politics i e projects that are economically inefficient and demonstrates how packages of economically inefficient projects can nevertheless be politically popular the main theoretical feature that induces preferences for universalism is uncertainty over the composition of winning coalitions and consequently the desire for the political insurance that universalism provides

bridging trade theory and labour econometrics the effects of international migration this paper surveys current theoretical and empirical research on international migration with a particular emphasis on the links between trade theory and labour empirics

immigrant links to the home country empirical implications for u s bilateral trade flows immigrants ties to their home countries can play a key role in fostering bilateral trade linkages immigrant ties include knowledge of home country markets language preferences and business contacts that have the potential to decrease trading transaction costs empirical results for the united states suggest that immigrant links have historically been important in increasing bilateral trade flows with immigrants home countries copyright 1994 by mit press

anarchy and autarky endogenous predation as a barrier to trade this article presents a general equilibrium two country ricardian trade model with endogenous transactions costs that arise from individual utility maximizing allocation of labor to production and piracy in the absence of institutions for risk sharing and coordination of defense autarky obtains over most of the parameter space when both trade and predation are supported in equilibrium terms of trade effects can make security immiserizing in that case paradoxically predation creates trade

is piracy sustainable we develop a model of international trade between three countries one of which hosts pirates when the number of pirate ships increases the probability for one of the pirate ships for one commercial ship encountering a commercial pirate ship decreases increases then the commercial ships have an incentive to spend more on defense and pirate ships to invest less on attack if pirates operate under free entry they do not internalize the entry externality then their number rises until it reaches a level such that their attack power has become negligible and the defense of the commercial ships has reached a high level the economy settles in a full deterrence equilibrium however if the number of pirate ships is controlled by an authority which maximizes their total profit the economy settles in an equilibrium where piracy is active and commercial ships spend less on defense piracy is a substitute for trade piracy depends on the terms of trade of the pirate country and on the relative efficiency of the attack versus the defense

electricity tariffs in sweden abstract electricity tariffs in sweden are analysed on the basis of the theory of public utility pricing the coordinated pricing system used among power producers in the nordic countries is found to be an almost ideal application of this theory the power industry is criticized for its current objective of maintaining stable electricity tariffs a rough estimate related to low voltage electricity tariffs indicates a considerable savings potential for the country of a switch from the present uniform pricing system to interval pricing based on seasonal and daytime nighttime variations

corruption product complexity and african exporters abstractseveral studies have shown that african manufacturers perform poorly especially in comparison to their counterparts from other developing countries we build on these studies by a examining the decision to stop exporting among african manufacturers and b investigating whether these decisions can be linked to institutional dimensions such as corruption consistent with previous studies we observe that a significant fraction of african firms stop exporting every year using product complexity as a measure of an industry s sensitivity to corruption we find that firms in more corruption sensitive industries are more likely to stop exporting if there is an increase in overall corruption in the exporting country firm characteristics such as size and productivity also seem to influence the decision to stop exporting our finding about the relationship between corruption and the decision to stop exporting supports the conventional wisdom that corruption is detrimental to economic performance

the president and the distribution of federal spending scholarship on distributive politics focuses almost exclusively on the internal operations of congress paying particular attention to committees and majority parties this article highlights the president who has extensive opportunities both ex ante and ex post to influence the distribution of federal outlays we analyze two databases that track the geographic spending of nearly every domestic program over a 24 year period the largest and most comprehensive panels of federal spending patterns ever assembled using district and county fixed effects estimation strategies we find no evidence of committee influence and mixed evidence that majority party members receive larger shares of federal outlays we find that districts and counties receive systematically more federal outlays when legislators in the president s party represent them

trade wars and trade talks when governments meet in the international arena their actions reflect the political situations at home previous studies of trade relations have focused on governments that are immune from political pressures and that act as benevolent servants of the public interest here we introduce domestic politics into the analysis of international economic relations we study the interactions between national leaders who are concerned both with providing a high standard of living to the general electorate and collecting campaign contributions from special interest groups our analysis sheds light on the determinants of the structure of protection in non cooperative and cooperative policy equilibria

trade law and product complexity abstract how does the quality of national institutions that enforce the rule of law influence international trade anderson and marcouiller argue that bad institutions located in the importer s country deter international trade because they enable economic predators to steal and extort rents at the importer s border we complement this research and show how good institutions located in the exporter s country enhance international trade in particular trade in complex products whose characteristics are difficult to fully specify in a contract we argue that both exporter and importer institutions affect international as well as domestic transaction costs in complex and simple product markets international transaction costs are a part of the costs of trade domestic transaction costs affect complex and simple products differently thereby changing a country s comparative advantage in producing such goods we find ample empirical evidence for these predictions countries that have good institutions tend to

aid for trade effectiveness complementarities with economic integration developing countries are increasingly using regional integration as a main policy lever when pursuing a trade led growth strategy and today deep preferential trade agreements go beyond trade policy negotiations and cover trade facilitation issues since aid for trade aft has been recognised as a powerful instrument for increasing developing countries trade capacity by targeting internal trade costs this article tests whether complementarities exist between this type of aid and economic integration using a gravity model on panel data for the period 1995 2005 results indicate that aft when combined with economic integration has been effective in increasing trade flows both south south and north south trade flows have benefited and the combination of the two instruments has been particularly effective in expanding the south s exports to the north finally when breaking down aft into categories assistance to trade related institutions seems to generate the strongest complementarities with economic integration

institutional quality and international trade institutions quality of contract enforcement property rights shareholder protection and the like have received a great deal of attention in recent years yet trade theory has not considered the implications of institutional differences beyond treating them simply as different technologies or taxes the purpose of this paper is twofold first we propose a simple model of international trade in which institutional differences are modeled within the framework of incomplete contracts we show that doing so reverses many of the conclusions obtained by equating institutions with productivity institutional differences as a source of comparative advantage imply among other things that the less developed country may not gain from trade and factor prices may actually diverge as a result of trade second we test empirically whether institutions act as a source of trade using data on us imports disaggregated by country and industry the empirical results provide evidence of institutional content of trade institutional differences are an important determinant of trade flows

appropriation violent enforcement and transaction costs a critical survey this paper focuses on the extension of transaction costs to appropriative activity and coercive power in the property rights approach it has been argued that including the costs of appropriation and violent enforcement in transaction costs is based on the assumption that coaseian bargaining can be extended to any institutional scenario i e voluntary as well as coercive exchange however voluntary transactions cannot capture the logic of coercive power this means that the assumption of an efficient political market is not valid and that the political coase theorem lacks the logical consistency to provide a cornerstone for political theory

terror networks and trade does the neighbor hurt abstract this paper studies how network related terrorism redistributes trade flows across countries including those countries that are not a direct source of terror we first develop a game theoretical framework with imperfect information on the spatial location of transnational terrorism to show how the resulting security measures produce a non monotonic effect on the distribution of trade across countries neighbors adjacent to terror even when they do not source it have trade reduced through enhanced security measures while countries farther away benefit from those security measures second to empirically assess the distortional effects of terrorism on trade we first estimate the structural gravity equation derived from our theory then armed with the estimates of the partial effect of neighbor terror on bilateral trade we perform a counterfactual experiment and confirm the non monotonic general equilibrium effect of neighbor terror on trade

comparing the fit of the gravity model for different cross border flows abstract this paper investigates how well the gravity model explains various cross border flows that may lead to knowledge spillovers it turns out that the model works well for trade and telephone traffic but less satisfactorily for merger and acquisition flows

flexible strategies for load demand management using dynamic pricing the need for and potential role of flexible pricing options which offer an efficient means for achieving a utility s load demand management objectives are discussed the focus is on dynamic tariffs by incorporating real time features within one or more key parameters of the tariff such pricing options can be tailored to offer the degree of flexibility that is necessary and cost effective for achieving the given demand management objective s

coordination commitment and enforcement the case of the merchant guild we interpret historical evidence in light of a repeated game model to conclude that merchant guilds emerged during the late medieval period to allow rulers of trade centers to commit to the security of alien merchants the merchant guild developed the theoretically required attributes secured merchants property rights and evolved in response to crises to extend the range of its effectiveness contributing to the expansion of trade during the late medieval period we elaborate on the relations between our theory and the monopoly theory of merchant guilds and contrast it with repeated game theories that provide no role for formal organization

trade democracy and the gravity equation abstract does democracy affect trade there are several channels by which democracy may affect trade with differing implications first democratization in the exporting country can improve product quality and reduce trade costs increasing bilateral trade second democratization in the importing country may increase trade barriers and thus reduce imports in this paper i analyze the effect of democracy on trade by augmenting the gravity equation with democracy using a rich panel data set and controlling for the endogeneity of democracy i find empirical evidence consistent with the hypothesis that democracy fosters trade this finding is robust to various econometric methods and to the use of disaggregated specifications

a generalized design for bilateral trade flow models abstract this paper suggests a full interaction effects design to analyze bilateral trade flows this is illustrated with an unbalanced panel of bilateral trade between the triad eu15 usa and japan economies and their 57 most important trading partners over the period 1986 1997 our full interaction model finds empirical support for the new trade theory and linder s hypothesis we show that the omission of one or more interaction effects can result in biased estimates and misleading inference

economic integration and the civilising commerce hypothesis economic integration lowers one form of trade costs tariffs and stimulates changes in other trade costs this paper offers a model in which integration may raise or lower the important trade cost associated with insecurity the model can help to explain the varied experience with integration and it points to the usefulness of combining enforcement policy integration with trade policy integration

bilateral trade flows the linder hypothesis and exchange risk bilateral trade flows are used to examine the linder hypothesis and the effect of exchange rate variability in a gra vity type trade model derived from an underlying demand and supply mo del a behavioral model is used to justify examining these issues joi ntly the model performs well empirically using a sample of seventeen countries for the period 1974 82 the authors find overwhelming supp ort for the linder hypothesis and this version of the gravity model moreover they find strong support for the hypothesis that increased exchange rate variability affects bilateral trade flows copyright 1987 by mit press

public export credit guarantees and foreign trade structure evidence from austria foreign trade is usually not based on cash transactions but rather sales on credit are the rule the resulting monitoring costs for lenders and the risk of default on accounts receivable are part of the costs associated with cross border goods transactions relative to domestic trade credit cross border credit creates trade barriers due to differences in language business practice jurisdiction and payment enforceability between trading partners export credit insurance has long been a domain of public export credit agencies only since the early 1980s private insurance is gaining ground using disaggregated panel data for goods exports from austria over the period 1996 to 2002 we show that public export credit guarantees have a less than proportional positive effect on international trade volume they predominantly affect the country structure of foreign trade but leave the industry specialisation almost unchanged

the impact of iso 9000 diffusion on trade and fdi a new institutional analysis the effects of iso 9000 diffusion on trade and foreign direct investment fdi have gone understudied we employ panel data reported by oecd nations over the 1995 2002 period to estimate the impact of iso adoptions on country pair economic relations we find iso diffusion to have no effect in developed nations but to positively pull fdi i e enhancing inward fdi and positively push trade i e enhancing exports in developing nations

the geography of trade in goods and asset holdings gravity models have been widely used to describe bilateral trade in goods portes and rey portes r rey h 2005 the determinants of cross border equity flows journal of international economics 65 2 269 296 applied this framework to cross border equity flows and found that distance which proxies information asymmetries is a surprisingly very large barrier to cross border asset trade we adopt a different point of view and explore the complementarity between bilateral trade in goods and bilateral asset holdings in a simultaneous gravity equations framework providing different instruments for both endogenous variables we show that a 10 increase in bilateral trade raises bilateral asset holdings by 6 to 7 the reverse causality is also significant albeit smaller controlling for trade the impact of distance on asset holdings is drastically reduced keywords gravity models international finance international trade simultaneous equations

on the origins of comparative advantage this paper proposes a simple theory of international trade with en dogenous technological dierences across countries the core of our analysis lies in the determinants of the division of labor we consider a world economy comprising two large countries with a continuum of goods and one factor of production labor each good is characterized by its complexity de ned as the number of tasks that must be per formed to produce one unit there are increasing returns to scale in the performance of each task which creates gains from specialization and uncertainty in the enforcement of each contract which create transac tion costs the trade obetween these two forces pins down the size of productive teams across sectors in each country under free trade the country where teams are larger specializes in the more complex goods in our model it is the country where the product of institutional qual ity and human per worker capital is larger hence better institutions and more educated workers are complementary sources of comparative advantage in the more complex industries

the trade off between foreign direct investments and exports the role of multiple dimensions of distance to serve foreign markets firms can either export or set up a local subsidiary through horizontal foreign direct investment fdi the conventional proximity concentration theory suggests that fdi substitutes for trade if distance between countries is large while exports become more important if scale economies in production are large this paper investigates empirically the effect of different dimensions of distance on the choice between exports and fdi we find that different dimensions of distance affect exports and fdi differently there is clear evidence of a proximity concentration trade off in geographical terms the share of fdi sales in total foreign sales increases with geographical distance the positive relation between import tariffs and fdi intensity provides further evidence for a trade off resulting from trade costs on the other hand the share of fdi decreases with language differences and cultural and institutional barriers the latter dimensions of distance thus affect fdi more strongly than exports 2011 blackwell publishing ltd

contracting institutions and ownership structure in international joint ventures abstract this paper examines the role of contracting institutions on a multinational firm s optimal ownership strategy we develop a model in which both a multinational firm and its local joint venture partner can ex post engage in costly rent seeking actions to increase their ex ante agreed upon revenue share we show that the host country s level of contract enforcement and level of judicial favoritism affect the parties incentives to contribute to the international joint venture the model allows us to identify testable hypotheses relating these institutional features with the performance and optimal ownership structure of international joint ventures

export to elude abstract how does domestic value added tax vat reform affect firms export we address this question via a model in which firms choose their sales for the domestic and foreign markets optimally the model predicts that strengthening domestic tax enforcement has a negative effect on domestic sales but a positive effect on exports when firms face a convex production cost function we test the model predictions using detailed firm and product level data from chinese industrial surveys and customs records our empirical analyses rely on china s golden tax project which is an information technology introduced in 2001 2002 that dramatically reduces the cost of vat enforcement we find that after the adoption of the technology by the government firms located far from local tax offices face a larger increase in their effective vat rates than those located nearby the enforcement effect and the former increase their export more than the latter the elusion effect we also find that the elusion effect is stronger for firms subject to higher export rebates or more severe financial constraints

law trade and development abstract this paper uses a ricardian model to generate predictions about the influence of institutions on trade in differentiated complex and commoditized simple products and then uses a rich international trade data set for empirical tests the model draws the distinction between the role of international transaction costs and domestic production costs in the trade of complex and simple products the effects of institutions predicted by the model are identified with a three step estimation procedure we find that when countries have low quality institutions institutional reform primarily influences production costs and has little influence on the volume of trade institutional reform however increases the diversity of exports in complex goods markets conversely in countries with more developed institutions institutional reform primarily influences transaction costs and is associated with gains in the volume and the diversity of complex exports

tying trade flows a theory of countertrade with evidence a countertrade contract ties an export to an import usually countertrade is criticized as a form of bilateralism and reciprocity and thus as an inefficient form of international exchange in this paper the authors argue that there are circumstances in which the tying of two technologically unrelated trade flows may be efficiency enhancing they show that countertrade can be an efficient institution in international trade that solves moral hazard problems and restores creditworthiness of highly indebted countries the authors test the implications of their model using a sample of 230 countertrade contracts copyright 1995 by american economic association

the collateral channel under imperfect debt enforcement does a country s ability to enforce debt contracts affect the sensitivity of economic activity to collateral values to answer this question we introduce a novel industry specific measure of real asset redeployability the ease with which real assets are transfered to alternative uses as a proxy for collateral liquidation values our measure exploits the heterogeneity of expenditures in new and used capital and the heterogeneity in the composition of real asset holdings across u s industries using a cross industry cross country approach we find that industry size and growth are more sensitive to collateral values in countries with weaker debt enforcement our estimates indicate that the differential effect is sizeable the sensitivity of economic activity to collateral values is not affected by a country s financial development once the quality of debt enforcement is accounted for we then rationalize our empirical findings based on a model of credit under imperfect enforcement and discuss an important implication of our empirical result macroeconomic volatility generated by fluctuations in collateral values is higher in countries with weaker debt enforcement institutions

swords or plowshares a theory of the security of claims to property this paper develops a general equilibrium model of the allocation of resources among appropriative and productive activities the model emphasizes the distinction between offensive weapons which are the instruments of predation and fortifications which provide defense against predation the analysis of this model shows how the equilibrium security of claims to property is determined the analysis focuses on the possibility of a nonaggressive equilibrium in which no resources are allocated to offensive weapons and claims to property are fully secure we also analyze the complex relation between economic welfare and the security of claims to property we find for example that a relatively poor agent could be better off in an equilibrium with less secure claims to property

informal barriers and agricultural trade does monetary integration matter eu enlargement and the recent sovereign debt crisis of euro zone countries have revived the debate around the european monetary union emu in this article we ask how informal barriers to agricultural and food trade have changed since the introduction of the common european currency and whether this evolution can be attributed to monetary integration we focus on the foreign trade of the 11 emu founder countries over a nine year period covering the creation of the emu and find a diminishing marginal trade impact of both information and institutional barriers we find a lower level of trade barriers but cannot attribute this outcome to the introduction to the euro

preferences and the home bias in trade abstract why is there less observed trade than is predicted by neoclassical trade models a home bias in consumption due to preferences can partially explain this using data from a randomly assigned auction mechanism and survey conducted in madagascar respondents willingness to pay for rice of varying quality and origin is investigated by imposing a novel structure on traditional valuation collection methods one finds that consumers will pay approximately 8 more for home grown rice the key result is that consumers place greater value on an item produced in their own country without any tangible reason to do so other than the product s origin this preference based explanation is one piece of the mosaic of factors that cause disproportionate consumption of domestically produced goods this paper provides concrete evidence in favor of structuring trade models to allow for an explicit home bias in preferences

on the impact of transportation costs on trade in a multilateral world this article proposes to account for the differences in the importance of transport costs depending on characteristics of trading partners in a multiregion model of trade in differentiated goods we expect a smaller impact of transport costs on a country s exports as a share of importer gross domestic product gdp the more less relatively capital abundant the exporter importer is and the lower higher production costs are as captured by gdp at given factor endowments and diversity all else equal empirically this requires four interaction terms in addition to the direct impact of transport costs when estimating log linear gravity models one with the exporter gdp per capita or capital labor ratio a second one with the importer gdp per capita or capital labor ratio and a third and fourth with exporter and importer gdp respectively the hypotheses are strongly supported by the evidence from a large panel of bilateral trade between 1970 and 2000

the birth of pork local appropriations in america s first century after describing a newly assembled dataset consisting of almost 9 000 local appropriations made by the u s congress between 1789 and 1882 we test competing accounts of the politics surrounding them before offering a more nuanced historically contingent view of the emergence of the pork barrel we demonstrate that for most of this historical period despite contemporary accusations of crass electoral motives the pattern of appropriations is largely inconsistent with accounts of distributive politics grounded in a logic of legislative credit claiming instead support for appropriations in the house mapped cleanly onto the partisan ideological structure of congress for most of this period and only in the 1870s produced the universalistic coalitions commonly associated with pork barrel spending we trace this shift to two historical factors the emergence of a solid democratic south and growth in the fraction of appropriations funding recurrent expenditures on extant projects rather than new starts

has distance died evidence from a panel gravity model the estimated coefficient of distance on the volume of trade is generally found to increase rather than decrease through time using the traditional gravity model of trade this distance puzzle proved robust to several ad hoc versions of the model using data for 1962 96 for a large sample of 130 countries the introduction of an augmented barrier to trade function removes the paradox yielding a decline in the estimate of the elasticity of trade to distance of about 11 percent over the 35 year period for the whole sample however the death of distance is shown to be largely confined to bilateral trade between rich countries with poor countries becoming marginalized

intellectual property rights product complexity and the organization of multinational firms this paper studies how the intellectual property right ipr regime in destination countries influences the way multinationals structure the international organization of their production in particular we explore how multinationals divide tasks of dierent complexities across countries with dierent levels of ipr protection the analysis studies the decision of firms between procurement from related parties and outsourcing to independents suppliers at the product level it also breaks down outsourcing into two types by distinguishing whether or not they involve technology sharing between the two parties we combine data from a french firm level survey on the mode choice for each transaction with a newly developed complexity measure at the product level our results confirm that firms are generally reluctant to source highly complex goods from outside firm boundaries by studying the interaction between product complexity and the ipr protection we obtain that i for technology sharing outsourcing iprs promote outsourcing of more complex goods to a destination country by guaranteeing the protection of their technology ii for non technology related outsourcing iprs attract the outsourcing of less complex products that are more prone to reverse engineering and simpler to decodify and imitate

international standards and international trade empirical evidence from iso 9000 diffusion abstract empirical scholarship on the standards trade relationship has been held up due to methodological challenges measurement varied effects and endogeneity considering the trade effects of one particular standard iso 9000 we surmount methodological challenges by measuring standardization via national penetration of iso 9000 allowing standardization to manifest via multiple quality signaling information compliance cost and common language channels and using instrumental variable multilateral resistance and panel data techniques to overcome endogeneity we find evidence of common language and quality signaling augmenting country pair trade yet iso rich nations benefit the most from standardization while iso poor nations find iso 9000 to represent a trade barrier due to compliance cost effects

gravity models a reformulation and an application to discriminatory trade arrangements gravity models are used to estimate trade flows from 162 countries into 11 major importing countries for 1976 counting the ec as one the main theories underlying gravity models are reviewed and a new gravity model is derived from a linear expenditure system a major innovation of this model is that both tariffs and dummy variables for discriminatory arrangements are incorporated price variables are also explicitly included in the model the tariff and the dummy variables are found to be statistically significant and this indicates that previous gravity model studies which used dummies to estimate the trade benefits of preferential tariffs may not have accurately estimated the effects of the preferences the price variables generally are also found to be statistically significant which casts doubt on the homogeneous goods assumption underlying the purchasing power parity hypothesis some significant differences in the estimates were found when separate equations were regressed for the eec and the us