economic determinants of free trade agreements abstract the purpose of this study is to provide the first systematic empirical analysis of the economic determinants of the formation of free trade agreements ftas and of the likelihood of ftas between pairs of countries using a qualitative choice model we develop this econometric model based upon a general equilibrium model of world trade with two factors of production two monopolistically competitive product markets and explicit intercontinental and intracontinental transportation costs among multiple countries on multiple continents the empirical model correctly predicts based solely upon economic characteristics 85 of the 286 ftas existing in 1996 among 1431 pairs of countries and 97 of the remaining 1145 pairs with no ftas

bilateral trade and shocks in political relations evidence from china and some of its major trading partners 1990 2013 abstract an extensive number of studies investigate the effects of political relations on trade by estimating a gravity model using annual or quarterly data we argue that the use of low frequency data introduces an aggregation bias because the cycle of moderate political shocks is much shorter measured in weeks using monthly data from 1990 through 2013 for china we estimate a model of political relations and conclude that political shocks are short lived narrative evidence from two case studies illustrates the transitory nature of these shocks a var model shows that although political shocks influence exports to china the effects largely vanish within two months a comparison of the monthly and annual frequency gravity equation regressions illustrates the effects of temporal aggregation

estimating the effects of free trade agreements on international trade flows using matching econometrics abstract this paper provides the first cross section estimates of long run treatment effects of free trade agreements on members bilateral international trade flows using nonparametric matching econometrics our nonparametric cross section estimates of ex post long run treatment effects are much more stable across years and have more economically plausible values than corresponding ols cross section estimates from typical gravity equations we provide plausible estimates of the long run effects of membership in the original european economic community eec and the central american common market cacm between 1960 and 2000 and the estimates confirm anecdotal reports of these agreements effectiveness

heterogeneous trade agreements wto membership and international trade an analysis using matching econometrics this article explores the heterogeneous effects of trade agreements tas and world trade organization wto membership on the volume of international trade we extend baier and bergstrand s 2009a application of matching econometrics by distinguishing between different types of tas and wto participation and account for the endogenous nature of trade policy for a panel data set covering 1960 2005 and 187 countries we find that the treatment effect on international trade systematically varies with the type of ta and wto membership

the voluntary provision of a pure public good the case of reduced cfc emissions and the montreal protocol abstract this paper applies the theory of the voluntary provision of a pure public good to the behavior of nations to curb chlorofluorocarbon cfc emissions during the late 1980s by devising an empirical test we determine that these cutbacks in emissions are consistent with nash behavior when taste parameters are controlled the relationship between emission cutbacks and national income is nearly linear as implied by the theory if the sample is purged of potential outliers then the linear relationship results a significant taste parameter is the extent of political and civil freedoms while a marginally significant parameter is geophysical position in terms of latitude

market structure and spells of employment and unemployment evidence from the construction sector in egypt summary this paper investigates the links between market structure and spells of employment and unemployment in the construction sector in egypt using an augmented job search framework two key features of the model are the reservation frontier which allows for a trade off between wages and expected duration of employment and the dependency of unemployment durations on expected employment durations and expected wages these as well as conjectures concerning the influence of demand side forces obtained from the expressions for the transition rates out of employment and unemployment are examined using weibull log logistic and generalized gamma parameterizations of the hazard rate the parametric assumptions are exploited to resolve problems associated with selectivity and use of generated regressors

assessing the impact of unilateral trade policies eba and agoa on african beneficiaries exports using matching econometrics the existing literature studying the impact of non reciprocal preferential trade agreements nrptas assumes implicitly nrptas are non randomly assigned without showing the evidence of that using a matching methodology this paper investigates whether the african growth and opportunity act agoa and the everything but arms eba unilateral trade concessions have had an impact and in what magnitude on the exports of african beneficiary countries in the light of the evidence of the non random nature endogeneity of nrptas methodologically previous studies using the matching procedure focused on bi or multilateral trade agreements our work focuses on nrptas that depend only on donors conditions accordingly we show that for nrptas gravity covariates cannot be used for the matching procedure we propose to use political variables as determinants for obtaining non reciprocal trade preferences in order to address the endogenous nature of nrpta assignment our main results confirm that a country becomes eligible for a nrpta only when it meets certain conditions defined by their donors such as political stability and economic regulation for agoa and freedom of expression and human development for eba results also show that both agoa and eba policies have had a positive impact on african beneficiary countries exports to nrpta s providers even if the magnitude impact of eba is significantly lower than that of agoa

overseas oil development policy of resource poor countries a case study from japan japan currently the world s third largest oil consumer depends on imports for almost all of its oil needs owing to this high level of dependence japanese citizens as well as the economy have historically been vulnerable in the past certain incidents caused by the interruption of oil imports have resulted in fatal damages to the country in order to reduce these risks the japanese government has supported overseas exploration and development activities of the domestic upstream oil industry which has not proven as successful as expected this paper presents the experiences policies and the structure of japan s attempts to increase the share of domestic oil needs met by development activities while conducting this study both internal and external constraints were encountered in addition to the lack of domestic oil reserves factors including the institutional design of cooperation between government and private industries the early history of the upstream industry the target area of overseas development and the changing environment have created impediments toward achieving the targets in 2006 japan again set a new target for doubling the ratio of self developed oil in its total imports by 2030 and will face challenges in clearing the above mentioned hurdles

estimating the effects of kyoto on bilateral trade flows using matching econometrics many kyoto countries fear a loss of competitiveness due to unilateral climate policy efforts policymakers therefore call for carbon related border tax adjustments with this paper we attempt to estimate the treatment effect of kyoto commitment on bilateral export flows using regression adjusted differences in differences matching techniques the gravity and international environmental agreement formation literatures provide guidelines for the choice of matching variables we find that kyoto countries exports are reduced by 13 to 14 per cent due to kyoto commitment trade effects are largest in energy intensive homogeneous industries such as iron and steel non ferrous metals organic and inorganic chemicals but also in machinery and equipment

is the green solow model valid for hbox co _ 2 co 2 emissions in the european union this paper addresses the hbox co 2 emission patterns of the european union from 1950 to 2010 and examines the validity of the green solow model which simulates hbox co 2 emissions growth by including only solow forces and assuming emission intensity growth to be exogenous and constant this study verifies that an environmental kuznets curve ekc trajectory exists for per capita hbox co 2 emissions in the european union that emission intensity growth is decreasing over time and that the decreasing intensity growth reflects variations of the dependent variable in the specifications of the green solow model the critique by stefanski on the mechanics of the green solow model oxcarre research paper 47 oxcarre laval university oxford 2013 of the green solow model assumption of exogenous and constant intensity growth is validated the ekc is defined as the emissions plotted against income and emission intensity is defined as the ratio of emissions to income the ekc and emission intensity share identical definitions and similar transition trajectories over time the transition of the ekc trajectory and decline in emission intensity growth began before worldwide attention was focused on global warming

footloose and pollution free in numerous studies economists have found little empirical evidence that environmental regulations affect trade flows in this paper we propose and test several common explanations for why the effect of environmental regulations on trade may be difficult to detect we demonstrate that whereas most trade occurs among industrialized economies environmental regulations have stronger effects on trade between industrialized and developing economies we find that for most industries pollution abatement costs are a small component of total costs and are unrelated to trade flows in addition we show that those industries with the largest pollution abatement costs also happen to be the least geographically mobile or footloose after accounting for these distinctions we measure a significant effect of pollution abatement costs on imports from developing countries and in pollution intensive footloose industries

is school the best route to skills returns to vocational school and vocational skills in egypt this paper tests the assumption that formal education is the best route to job skills the returns to formal vocational secondary schooling are compared to the returns to acquiring skills outside the education system such as undertaking an apprenticeship for male wage workers in egypt a unique longitudinal dataset with information on schooling and skills allows for causal inference about returns by comparing siblings for recent cohorts the estimated returns to formal vocational secondary education are the same as attaining no formal education however the returns to skills obtained outside of formal education are substantial

political oil import diversification by financial and commercial traders abstract international politics affects the oil trade but do financial and commercial traders who participate in spot oil trading also respond to changes in international politics we construct a firm level dataset for all u s oil importing companies over 1986 2008 to examine how these firms respond to increases in political distance between the u s and her trading partners measured by divergence in their un general assembly voting patterns consistent with previous macro evidence we first show that individual firms diversify their oil imports politically even after controlling for unobserved firm heterogeneity however the political pattern of oil imports is not entirely driven by the concerns of hold up risks which exist when oil transactions via term contracts are associated with backward vertical fdi that is subject to expropriation in particular our results indicate that even financial and commercial traders significantly reduce their oil imports from u s political enemies interestingly while these traders diversify their oil imports politically immediately after changes in international politics other oil companies reduce their oil imports with a significant time lag our findings suggest that in designing regulations to avoid harmful repercussions on commodity and financial assets policymakers need to understand the nature of political risk

a model of homogenous input demand under price uncertainty this paper examines the empirical validity of a model of homogeneous input demand under price uncertainty in which firms trade off expected input cost against its variability risk in selecting the optimal input supplier mix using recent work in time series econometrics this model is applied to the japanese steam coal import market where five suppliers compete china the soviet union south africa the united states and australia copyright 1991 by american economic association

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

how much does violence tax trade abstract we investigate the empirical effect of violence as compared to other trade impediments on trade flows our analysis is based on a panel data set with annual observations on 177 countries from 1968 to 1999 which brings together information from the rose data set the iterate data set for terrorist events and data sets of external and internal conflict we explore these data with traditional and theoretical gravity models we calculate that for a given country year the presence of terrorism together with internal and external conflict is equivalent to as much as a 30 tariff on trade this is larger than estimated tariff equivalent costs of border and language barriers and tariff equivalent reduction through generalized systems of preference and wto participation

alternative approaches to evaluation in empirical microeconomics four alternative but related approaches to empirical evaluation of policy interventions are studied social experiments natural experiments matching methods and instrumental variables in each case the necessary assumptions and the data requirements are considered for estimation of a number of key parameters of interest these key parameters include the average treatment effect the treatment on the treated and the local average treatment effect some issues of implementation and interpretation are discussed drawing on the labour market programme evaluation literature

formal and informal institutions in the labor market with applications to the construction sector in egypt abstract urban labor markets that are characterized by the absence or ineffectiveness of regulation by legal and bureaucratic institutions can nonetheless be subject to powerful institutional forces based on customary norms group cohesion kinship and social networks using insights derived from the new institutional economics this argument is illustrated with three examples from the construction labor market in egypt where formal and informal institutions performing similar functions are contrasted in each case the informal institution is found to be significantly more important in shaping labor market relations

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

kinship ties social networks and segmented labor markets evidence from the construction sector in egypt abstract this paper tests for rationing of entry into craft occupations in the construction labor market in egypt and investigates whether entry is rationed according to regional origin and access to kinship and other social networks i use a modified version of roy s model of occupational choice which allows for the existence of costs of entry into craft occupations data from a 1988 survey of construction workers are used to estimate the model and test for rationing the results confirm the existence of rationing according to a worker s regional background but are inconclusive with respect to kinship ties and social networks

kyoto and carbon leakage an empirical analysis of the carbon content of bilateral trade abstract has the kyoto protocol induced carbon leakage we conduct the first empirical ex post evaluation of the protocol we derive a theoretical gravity equation for the carbon dioxide content of trade which accounts for intermediate inputs both domestic and imported the structure of our new panel database of the carbon content of sectoral bilateral trade flows allows controlling for the endogenous selection of countries into the kyoto protocol binding commitments under kyoto have increased committed countries embodied carbon imports from noncommitted countries by around 8 and the emission intensity of their imports by about 3 hence kyoto has indeed led to leakage

non economic engagement and international exchange the case of environmental treaties we examine the role of non economic partnerships in promoting international economic exchange since far sighted countries are more willing to join costly international partnerships such as environmental treaties environmental engagement tends to encourage international lending countries with such non economic partnerships also find it easier to engage in economic exchanges since they face the possibility that debt default might also spill over to hinder their non economic relationships we present a theoretical model of these ideas and then verify their empirical importance using a bilateral cross section of data on international crossholdings of assets and environmental treaties our results support the notion that international environmental cooperation facilitates economic exchange

climate change policy market structure and carbon leakage abstract the 1997 kyoto protocol on climate change obliges the industrialized countries to initiate the international effort of abating anthropogenic greenhouse gas ghg emissions if such an initiative is to be taken the associated competitive effects may lead to significant relocation of developed countries energy intensive production this paper examines this issue i adopt an oligopolistic structure combined with increasing returns to scale production technologies to represent the strategic interaction among the firms producing energy intensive products this representation is then embedded within a multi regional computable general equilibrium model which in turn is used for quantifying these relocational effects the results suggest that significant relocation of energy intensive industries away from the oecd may occur depending on the type of market structure with leakage rates as high as 130 in which case ghg control policies in the industrialized countries actually lead to higher global emissions

trade and carbon taxes we study various scenarios for taxing emissions of carbon dioxide c02 the question is how carbon tax policies will perform given interna tional trade if countries adopt different tax rates we investigate this question quantitatively using cim earth a newly developed open source computable general equilibrium cge model since climate change is a function of global c02 emissions an efficient strategy for control ling emissions would be to impose the same price wherever they occur such an approach presents a free riding problem however because nations have an incentive not to comply while gaining the ben efits of reduced emissions elsewhere moreover because of distributive concerns and claims about

the impact of sanitary and phytosanitary measures on market entry and trade flows in an attempt to disentangle the impact of sanitary and phytosanitary sps measures on trade patterns we estimate a heckman selection model on the hs4 disaggregated level of trade we find that aggregated sps measures constitute barriers to agricultural and food trade consistently to all exporters but conditional on market entry trade flows are positively affected by sps measures additionally we find that sps measures related to conformity assessment hamper market entry and trade flows while sps measures related to product characteristics pose an entry barrier but increase bilateral trade flows conditional on meeting the standard

collateral damage trade disruption and the economic impact of war abstract conventional wisdom in economic history suggests that conflict between countries can be enormously disruptive of economic activity especially international trade we study the effects of war on bilateral trade with available data extending back to 1870 using the gravity model we estimate the contemporaneous and lagged effects of wars on the trade of belligerent nations and neutrals controlling for other determinants of trade as well as the possible effects of reverse causality we find large and persistent impacts of wars on trade national income and global economic welfare we also conduct a general equilibrium comparative statics exercise that indicates costs associated with lost trade might be at least as large as the conventionally measured direct costs of war such as lost human capital as illustrated by case studies of world wars i and ii

the relevance of standard estimates of rates of return to schooling for education policy a critical assessment abstract this paper examines the accuracy and usefulness of estimated rates of return to schooling based on the standard human capital model of becker and mincer regarding accuracy it investigates whether failure to account for differences in ability and school quality lead to significant biases estimates using ghanaian data confirm this possibility even when accurate estimated rates of return to additional years of schooling may have limited policy implications more useful for governments are rates of return to investments in school quality the paper uses data on cognitive skills to estimate rates of return to three types of school quality improvements

independent actor or agent an empirical analysis of the impact of u s interests on international monetary fund conditions abstract in this paper we analyze whether international monetary fund imf conditionality is exclusively designed to be in line with observable economic indicators or whether it is partly driven by the imf s major shareholder the united states a panel data analysis of 206 letters of intent from 38 countries submitted during the period april 1997 through february 2003 revealed that the number of conditions on an imf loan depended on a borrowing country s voting pattern in the un general assembly closer allies of the united states and other group of 7 g7 countries received imf loans with fewer conditions especially prior to elections these results are relevant to current public policy debates on the role and process of setting imf loan conditions and provide broader insight into the influence of the united states and other g7 countries on international institutions

currency unions and trade how large is the treatment effect currency unions and trade what can the data say the impact of a common currency on trade can be grossly mismeasured if countries that belong to currency unions are systematically different from those that do not and if the relationship between trade and its observable determinants is complex i argue that such complications are plausible and likely to distort the empirical results of a recent economic policy paper by andrew rose issue 30 2000 pp 7 45 using techniques designed to be robust in this situation i find that the effects of common currency on international trade are considerably less dramatic and much less precisely estimated torsten persson i have always maintained that the measured effect of a single currency on trade appears implausibly large but i am not convinced by torsten persson s diagnosis and proposed solution i apply a variety of estimation techniques to a new larger data set where many more instances of currency union creation and abandonment make it possible to rely on time series as well as cross sectional evidence the results are similar to my earlier ones the effect of a single currency on trade is large andrew rose

why cooperate public goods economic power and the montreal protocol this paper develops a correlated probit model to describe dichotomous choices that may contain a public goods component or some other forms of interdependency the key contribution of the paper is to formulate tests for interdependent behavior among agents in particular we examine the decisions by nations whether or not to ratify the montreal protocol on substances that deplete the ozone layer specifically we reject free riding as a motive for not ratifying the protocol and we find little evidence that individual nations were influenced by the behavior of their largest trading partners hence the data suggest that with respect to the montreal protocol most nations acted without regard for the actions of other nations

the contractual nature of the firm for their helpful comments i am grateful to armen a alchian yoram barzel keith leffler john s mcgee and dean worcester 1 ronald h coase the nature of the firm 4 economica 386 1937 the paper however was written several years earlier see note 3 infra 2 the social sciences citation index provides the following information breaking down the period of 1966 80 into three five year periods the total citations of coase s firm paper for each subperiod are 1966 70 17 citations 1971 75 47 citations and 1976 80 105 citations

a political economic model of u s bilateral trade a bstract interrelationships between economics and politics have long been recognized by scholars in the field of international relations this paper attempts to identify and quantify the factors aflecting bilateral trade flows between the united states and other countries by developing a gravity type model the model includes economic and political variables and is tested using data for sixty six u s trading partners results indicate that pure economic variables which reflect market forces are not the only factors affecting u s bilateral trade semi cconomic and international political factors are also important

free to trade democracies autocracies and international trade trade relations we address this issue by analyzing the relationship between regime type and trade policy in a formal model of commercial policy we establish that the ratification responsibility of the legislature in democratic states leads pairs of democracies to set trade barriers at a lower level than mixed country pairs composed of an autocracy and a democracy we test this hypothesis by analyzing the effects of regime type on trade during the period from 1960 to 1990 the results of this analysis accord with our argument democratic pairs have had much more open trade relations than mixed pairs t he effects of domestic political institutions on trade policy have long been a source of controversy among social scientists despite the widespread interest that this debate has prompted however remarkably few studies have addressed the links between political regime type and commercial policy 1 most work on the political economy of trade policy that examines institutional factors focuses only on variations in policy among democracies and avoids comparing democracies with other types of regimes moreover many analyses of trade barriers especially those by economists ignore the effects of domestic political

international politics and import diversification abstractthis paper examines how international politics affects trade in the absence of empires or wars we first show that deterioration of relations between the united states and another country measured by divergence in their united nations general assembly voting patterns reduced u s imports from that country during 1962 2000 though statistically significant the magnitude of the effect of political distance on trade is small indeed we show that except for petroleum and some chemical products u s imports are not affected by international politics american firms however diversify their oil imports significantly away from political opponents of the united states oil trade is often associated with backward vertical foreign direct investment that is subject to the expropriation risk in contrast to the usual claim that oil is a strategic commodity we provide suggestive evidence that trade in products when rents are appropriable is more likely to be affected by international politics