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

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

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

decreasing absolute risk aversion and utility indices derived from cake eating problems abstract this paper establishes the following characterization of decreasing absolute risk aversion dara utility indices j exhibits dara if and only if it is the indirect function corresponding to an infinite horizon cake eating problem for some nondecreasing and concave utility function of consumption the characterization is applied to the analysis of resource extraction under uncertainty and to an inverse optimal problem

intergenerational risk sharing and risk taking of a pension fund abstract by using their financial reserves efficiently pension funds can smooth shocks on their asset returns and can thus facilitate intergenerational risk sharing in addition to the primary benefit of improved time diversification this form of risk allocation affords the additional benefit of allowing these funds to take better advantage of the equity premium which also favors the consumers in this paper our aim is twofold first we characterize the socially efficient policy rules of a collective pension plan in terms of portfolio management capital payments to retirees and dividend payments to shareholders we examine both the first best rules and the second best rules where in the latter case the fund is constrained by a solvency constraint and by a guaranteed minimum return to workers contributions second we measure the social surplus of the system compared to a situation in which each generation would save and invest in isolation for its own retirement we estimate that the certainty equivalent return of the pension saving scheme goes from 3 23 per year to 3 76 when intergenerational risk sharing is introduced one of the main results of the paper is that better intergenerational risk sharing does not reduce the risk born by each generation rather it increases the expected return to the workers contributions

asymmetric price benefits auctions abstract this paper studies the performance of two auction procedures for allocating the assets of a dissolving partnership when partners valuations for the assets are independent and asymmetrically distributed with one partner reputed to be more interested in the assets to be divided we provide results on existence and uniqueness of the equilibrium induced by these auctions comparative statics are developed especially the differences between relative efficiency and revenue from the two auctions journal of economic literature classification numbers c72 d39 d44 d52 d74 d82

dissolving a partnership dynamically abstract in financial disputes arising from divorce inheritance or the dissolution of a partnership frequently the need arises to assign ownership of an indivisible item to one member of a group this paper introduces and analyzes a dynamic auction for simply and efficiently allocating an item when participants are privately informed of their values in the auction the price rises continuously a bidder who drops out of the auction in return for surrendering his claim to the item obtains compensation equal to the difference between the price at which he drops and the preceding drop price when only one bidder remains that bidder wins the item and pays the compensations of his rivals we characterize the unique equilibrium with risk neutral and cara risk averse bidders we show that dropout prices are decreasing as bidders become more risk averse each bidder s equilibrium payoff is at least 1 n th of his value for the item

lost in translation the effect of cultural values on mergers around the world we find strong evidence that three key dimensions of national culture trust hierarchy and individualism affect merger volume and synergy gains the volume of cross border mergers is lower when countries are more culturally distant in addition greater cultural distance in trust and individualism leads to lower combined announcement returns these findings are robust to year and country level fixed effects time varying country pair and deal level variables as well as instrumental variables for cultural differences based on genetic and somatic differences the results are the first large scale evidence that cultural differences have substantial impacts on multiple aspects of cross border mergers

native language spoken language translation and trade we construct new series for common native language and common spoken language for 195 countries which we use together with series for common official language and linguistic proximity in order to draw inferences about 1 the aggregate impact of all linguistic factors on bilateral trade 2 the separate role of ease of communication as distinct from ethnicity and trust and 3 the contribution of translation and interpreters to ease of communication the results show that the impact of linguistic factors all together is at least twice as great as the usual dummy variable for common language resting on official language would say in addition ease of communication plays a distinct role apart from ethnicity and trust and so far as ease of communication enters translation and interpreters are significant finally emigrants have much to do with the role of ethnicity and trust in linguistic influence

the erosion of colonial trade linkages after independence high trade between countries with colonial ties may be explained by government policies that establish preferential access or as a consequence of networks formed through social interactions using bilateral trade data from 1948 to 2003 we examine the eect of independence on post colonial trade the severing of formal colonial relations can lead to an immediate reduction in trade as preferential access is eliminated as well as a gradual reduction corresponding to the deterioration of trading networks our results reveal that independence reduces colonial trade with its colonizer metropole the reduction cumulates over a 30 year period and the disruption is particularly severe for hostile separations we also find that overall colonial trade falls subsequent to independence but to a lesser extent than trade with the metropole

the trade creating effects of business and social networks evidence from france using theory grounded estimations of trade flow equations this paper investigates the role that business and social networks play in shaping trade between french regions the bilateral intensity of networks is quantified using the financial structure and location of french firms and bilateral stocks of migrants compared to a situation without networks migrants are shown to double bilateral trade flows while networks of firms multiply trade flows by as much as four in some specifications finally taking network effects into account divides the estimation of the impact of transport costs and of the effect of administrative borders by around three

optimal consumption and the timing of the resolution of uncertainty abstract as is well known consumers want to accumulate precautionary savings in the face of income risks when their marginal utility is convex prudence in this paper we explore the effect of the timing of the resolution of income uncertainty on savings an agent faces uncertainty about his income at date t 2 what is the effect of being informed that the uncertainty will be resolved at date t 1 on the consumption at date t we show that the effect is positive if and only if marginal utility is convex prudence when either the risk free rate is equal to the rate of pure preference for the present or when the utility function is hara the intuition is that an early resolution of uncertainty allows for time diversifying the risk it therefore plays a role similar to a reduction of the income risk whose effect on savings is negative under prudence

life cycle saving insights from the perspective of bounded rationality this paper provides a new life cycle model that takes into account key elements of bounded rationality the paper shows that the model can account for patterns in the data that are hard to explain by the standard life cycle model among other patterns the model predicts that typically the young either hold no equity or their equity portfolio share is rather low and then increases over working life the analytical solution of the model demonstrates its high degree of tractability

time diversification liquidity constraints and decreasing aversion to risk on wealth abstract the aim of this paper is to provide a theoretical foundation to the notions of time diversification and decreasing absolute aversion to risk on wealth we examine the attitude towards risk on initial wealth when the agent allocate this wealth to consumption over his lifetime time diversification occurs in that case because the agent will optimally split the risk on wealth into small seemingly independent risks on consumption the introduction of liquidity constraints reduces the implicit time horizon of the consumer and thereby increases his risk aversion the negative relationship between initial wealth and the implicit time horizon where the consumer will be liquidity constrained provides an argument for decreasing aversion to risk on wealth

bonds versus stocks investors age and risk taking abstract it has become increasingly popular to advise investors to relocate their funds from a primarily stock portfolio to a primarily bond portfolio as they get older however the well known decision rules such as mean variance or stochastic dominance rules are unable to explain this common practice almost stochastic dominance asd and almost mean variance amv approaches are used to examine the dominance of stock and bond portfolios asd and amv rules unambiguously support the popular practice of advising higher stock to bond ratio for long investment horizons hence we provide an explanation to the practitioners recommendation within the expected utility paradigm

time diversification definitions and some closed form solutions abstract we establish general conditions under which younger investors should invest a larger proportion of their wealth in risky assets than older ones in the finite horizon dynamic setting we show that such phenomenon known as time diversification can occur in the presence of human wealth guaranteed consumption or mean reverting stock returns we formalize two alternative notions of time diversification commonly confounded in the literature analytic solutions are provided for both time series and cross sectional forms of time diversification to our best knowledge this paper is the first to solve in closed form the hedging demand for a cara investor with inter temporal consumption and a finite horizon facing mean reverting expected returns our results indicate that horizon can have a significant effect on the portfolio demand of a cara investor due to inter temporal hedging

product based cultural change is the village global we provide a model of product based cultural change where trade integration leads to cultural convergence a standard trade model of dixit stiglitz monopolistic competition is coupled with a micro founded model of cultural dynamics we show that access to varieties that are attached to a global cultural type changes the incentives of parents to socialize their children and transmit their type the resulting increase in agents of the global cultural type leads to a magnification of the initial shock a striking feature of the model is that even temporary shocks to openness may have permanent effects through the changing distribution of preferences in the economy

amicable divorce dissolving a partnership with simple mechanisms abstract this paper considers mechanisms for allocating the assets of a dissolving partnership that can be specified without information on the distribution of valuations of the asset or the level of risk aversion of the participants for the case of a single asset and risk averse agents three simple mechanisms are considered these mechanisms can be ranked in terms of ex post efficiency and partially ranked in terms of interim expected utility the efficiency of the alternating selection mechanism is considered for environments when there are many items to be allocated agents are risk neutral and transfers are prohibited conditions are given when a myopic strategy of picking the most preferred abailable item forms an equilibrium and these conditions are satisfied under independence under the further assumption of identical distributions of valuations it is shown that the total expected efficiency loss is at most 1 2 of the maximal value of a single item regardless of how many items are to be allocated

the language effect in international trade a meta analysis abstract gravity models of international trade have been frequently applied to estimate the impact of common official or spoken language on bilateral trade this study provides a meta analysis based on 701 language effects collected from 81 academic articles on average a common official or spoken language increases trade flows directly by 44

understanding consumer animosity in an international crisis nature antecedents and consequences the nature antecedents and consequences of consumer animosity during the 1997 asian economic crisis are investigated based on a large scale survey of 2000 adult consumers representative of five affected nations indonesia malaysia singapore south korea and thailand an animosity model was developed and tested with the us and japan as target countries as predicted stable and situational animosity reduced willingness to buy products from a perceived hostile national entity affective evaluations and cognitive judgments were negatively influenced by situational animosity but not by stable animosity as expected situational animosity was increased by external attribution perceived external control and stable animosity implications of these findings are discussed and directions for future research suggested

on the concavity of the consumption function at least since keynes 1935 many economists have had the intuition that the marginal propensity to consume out of wealth declines as wealth increases nonetheless standard perfect certainty and certainty equivalent versions of intertemporal optimizing models of consumption imply a marginal propensity to consume that is unrelated to the level of household wealth we show that adding income uncertainty to the standard optimization problem induces a concave consumption function in which as keynes suggested the marginal propensity to consume out of wealth or transitory income declines with the level of wealth