international coordination of trade and domestic policies the past half century has seen a dramatic multilateral reduction in tariff barriers under general agreement on tariffs and trade gatt negotiations however as tariff barriers have fallen attention has shifted to the use of domestic policies as secondary trade barriers a primary concern is that as countries sign trade agreements that constrain their ability to pursue trade goals through trade policy there will be unilateral incentives for governments to distort their domestic policies as a secondary means of protection 1 increasingly international trade disputes revolve around a country s use of internal regulations as a means of restricting trade the united states has successfully challenged the system of liquor taxes in both japan and korea as discriminating against imported liquor while venezuela and brazil have challenged american standards for reformulated and conventional gasoline as trade protection masquerading as environmentalism gatt contains several articles concerning the international regulation of domestic policies but the question of how to fully incorporate domestic policies within gatt negotiations and other international trade agreements remains contentious indeed at both the ministerial meeting in 1994 at the close of the uruguay round and the recent unsuccessful ministerial conference in seattle many gatt delegates renewed demands for the relationship between trade and various domestic policies e g environmental policy labor standards or competition policy to be examined despite the importance that has recently been placed on international cooperation over domestic policies no theoretical basis exists for considering how to cooperate over both trade and domestic policies within an international agreement previous papers on negotiation over two instruments of protection e g copeland 1989 1990 thomas l hungerford 1991 have assumed asymmetric limitations on cooperation i e they assume that one of the two instruments is either nonobservable or nonnegotiable this paper extends such work by investigating cooperation over two negotiable instruments of protection under symmetric limitations on cooperation and provides insight into the design of international trade agreements that incorporate cooperation over domestic policies i adopt the view that enforcement issues are central to the understanding of international cooperation one of the challenges of international cooperation is the absence of a central authority to enforce the terms of an agreement without access to an external enforcement mechanism international agreements are viable only as long as member countries view continued cooperation to be in their own self interest i e the benefits from cooperating outweigh the potential gains from cheating 2 while the gatt department of economics university of miami p o box 248126 coral gables fl 33124 e mail ederington miami edu i would like to thank bob staiger bob baldwin wolfgang keller phillip mccalman jenny minier seminar participants at the nber conference on trade the environment and natural resources and two anonymous referees for comments on earlier versions of this paper any remaining errors are of course my own for example brian r copeland 1990 examined negotiation over one trade barrier leaving a secondary trade barrier e g nontariff barriers domestic legislation etc to be set noncooperatively he shows that trade liberalization will induce substitution toward the less efficient nonnegotiable instrument of protection due to the unilateral incentives to maintain trade protection facing countries thus within a cooperative framework the two types of barriers serve as imperfect substitutes for each other 2 as stated by kenneth w dam in his review of the gatt institution the best guarantee that a commitment of any kind will be kept particularly in an international setting where courts are of limited importance and even more important marshals and jails are nonexistent is that the parties continue to view adherence to their agreement in their mutual interest thus the gatt system unlike most legal systems is not designed to exclude self help in the form of retaliation rather retaliation subjected to established procedures and kept within prescribed bounds is made the heart of the gatt system dam 1970 pp 80 81

perfect equilibria in a trade liberalization game the credibility of temporary protection is examined in a simple infinite horizon perfect information game of timing in which the domestic government uses the threat of future liberalization to induce the domestic firm to invest all pure strategy subgame perfect equilibria are cyclical and surprisingly one of them implements optimal temporary protection however this equilibrium fails to pass another credibility criterion called renegotiation proof the game has a unique stationary subgame perfect equilibrium in mixed strategies copyright 1990 by american economic association

a political economy theory of trade agreements we develop a model where trade agreements in addition to correcting terms of trade externalities help governments to commit vis a vis domestic industrial lobbies the model allows us to explore how the characteristics of the political environment aect the structure of the trade agreement and the extent of trade liberalization the model also highlights the role of intersectoral capital mobility in determining trade liberalization in a dynamic extension of the model we explore the extent to which trade liberalization occurs gradually and how its speed depends on the fundamentals of the problem

daily house price indexes construction modeling and longer run predictions we construct daily house price indexes for ten major u s metropolitan areas our calculations are based on a comprehensive database of several million residential property transactions and a standard repeat sales method that closely mimics the procedure used in the construction of the popular monthly case shiller house price indexes our new daily house price indexes exhibit similar characteristics to other daily asset prices with mild autocorrelation and strong conditional heteroskedasticity which are well described by a relatively simple multivariate garch type model the sample and model implied correlations across house price index returns are low at the daily frequency but rise monotonically with the return horizon and are all commensurate with existing empirical evidence for the existing monthly and quarterly house price series a simple model of daily house price index returns produces forecasts of monthly house price changes that are superior to various alternative forecast procedures based on lower frequency data underscoring the informational advantages of our new more finely sampled daily price series

the value of trade agreements in the presence of political pressures an argument often heard in favor of trade agreements is that by committing to free trade a government can credibly distance itself from domestic lobbies but several existing models of endogenous protection suggest that governments have no interest in foreclosing interest group pressures since governments derive rents from the political process we develop a small country model in which factors are sector specific in the short run but mobile in the long run we show that in this setting a government may be worse off in the political equilibrium than under commitment to free trade and hence it may value a trade agreement

is the wto passe the wto has delivered policy outcomes that are very different from those likely to emerge out of the recent wave of preferential trade agreements ptas should economists see this as an efficient institutional hand off where the wto has carried trade liberalization as far as it can manage and is now passing the baton to ptas to finish the job this paper surveys a growing economics literature on international trade agreements and argues on this basis that the wto is not passe rather and subject to some caveats this survey of research to date suggests that the wto warrants strong support while a more cautious view of ptas seems appropriate

bilateralism multilateralism and the quest for global free trade abstract we develop an equilibrium theory of trade agreements in which both the degree and the nature bilateral or multilateral of trade liberalization are endogenously determined to determine whether and how bilateralism matters we also analyze a scenario where countries pursue trade liberalization on only a multilateral basis we find that when countries have asymmetric endowments or when governments value producer interests more than tariff revenue and consumer surplus there exist circumstances where global free trade is a stable equilibrium only if countries are free to pursue bilateral trade agreements by contrast under symmetry both bilateralism and multilateralism yield global free trade

re evaluating the income elasticity of the property tax base an important research issue relating to the property tax is its income elasticity income elasticities provide a potentially cost effective means to forecast local government revenues and in policy analysis they are used to judge the tax s behavior over business cycles its stability and capacity to generate necessary growth in revenues its adequacy while previous income elasticity estimates have been derived from simple log linear models this paper focuses on the residential component of the property tax base and develops and estimates a nonlinear structural model of residential property valuation in further contrast to previous studies which have relied on national or state

the demand for site specific recreational activities a characteristics approach abstract a model of constrained utility maximizing behavior is developed to explain how a representative individual allocates his ski days among alternative sites the physical characteristics of the ski areas and the individual s skiing ability are explicit arguments in the utility function the budget allocation is given along with the parametric costs to ski including travel costs entrance fees equipment costs and the opportunity cost of his time shares a site s share being the proportion of ski days that the individual spends at that site are derived and assumed multinomially distributed a stochastic specification which maintains the inherent properties of the shares maximum likelihood estimation confirms the basic hypothesis that costs ability and characteristics all are important determinants of the sites shares the model explains a large proportion of the skier s allocation of ski days a multinomial logit model of skier behavior is also developed and maximum likelihood estimates of its parameters are obtained examination of the summary statistics from my model and the logit model indicates that my model predicts the skier s choice of sites better than the logit model

real time inflation forecasting in a changing world this article revisits the accuracy of inflation forecasting using activity and expectations variables we apply bayesian model averaging across different regression specifications selected from a set of potential predictors that includes lagged values of inflation a host of real activity data term structure data relative price data and surveys in this model average we can entertain different channels of structural instability by either incorporating stochastic breaks in the regression parameters of each individual specification within this average or allowing for breaks in the error variance of the overall model average or both thus our framework simultaneously addresses structural change and model uncertainty that would unavoidably affect any inflation forecast model the different versions of our framework are used to model u s personal consumption expenditures pce deflator and gross domestic product gdp deflator inflation rates for the 1960 2011 period a real time inflation forecast

euromind d a density estimate of monthly gross domestic product for the euro area euromind d is a density estimate of monthly gross domestic product gdp constructed according to a bottom up approach pooling the density estimates of eleven gdp components by output and expenditure type the components density estimates are obtained from a medium size dynamic factor model of a set of coincident time series handling mixed frequencies of observation and ragged edged data structures they reflect both parameter and filtering uncertainty and are obtained by implementing a bootstrap algorithm for simulating from the distribution of the maximum likelihood estimators of the model parameters and conditional simulation filters for simulating from the predictive distribution of gdp both algorithms process sequentially the data as they become available in real time the gdp density estimates for the output and expenditure approach are combined using alternative weighting schemes and evaluated with different tests based on the probability integral transform and by applying scoring rules

applied welfare economics with discrete choice models economists have been paying increasing attention to the study of situations in which consumers face a discrete rather than a continuous set of choices such models are potentially very important in evaluating the impact of government programs upon consumer welfare but very little has been said in general regarding the tools of applied welfare economics indiscrete choice situations this paper shows how the conventional methods of applied welfare economics can be modified to handle such cases it focuses on the computation of the excess burden of taxation and the evaluation of quality change the results are applied to stochastic utility models including the popular cases of probit and logit analysis throughout the emphasis is on providing rigorous guidelines for carrying out applied work this abstract was borrowed from another version of this item

a note on the functional form of travel cost models with zones of unequal populations as bowes and loomis 1980 noted in their contribution for recreation demand functions of a linear form the existence of unequal zonal populations in travel cost models leads to the problem of nonconstant error variances when observations are expressed on a per capita basis i e when the zone average method is used for a model with nonhomogeneous variances the ordinary least squares ols parameter estimates will be unbiased but inefficient these properties will hold true of the consumer surplus estimates as well a weighting of the observations is the well known solution to the heteroskedasticity problem where in this case the appropriate weighting factor for each observation is the square root of the associated zone of origin s population while preserving unbiasedness the weighted least squares wls approach generates parameter estimates that are equivalent to the generalized least squares gls minimum variance estimators in their application of the travel cost method to recreation trips during 1977 down the westwater canyon in utah bowes and loomis illustrated the efficacy of wls in predicting recreation trips more accurately than ols for a linear first stage demand curve as in previous studies the ols linear regression equation grossly mispredicted the total number of trips taken at the actual price per trip of zero and seemingly overestimated the value of consumer surplus further evidence of this latter finding was obtained in a study of warm water fishing in georgia by ziemer musser and

the necessity for substitute prices recreation demand analyses omitting substitute prices from a travel cost model is shown to cause a significant bias in consumer surplus estimates three sets of travel cost models are developed from a common data base representing 60 000 day users of u s army corps of engineer reservoirs in kansas and missouri the firzt set of models omitted substitute prices the latter two sets included them an analysis of variance test showed that consumer surplus estimates from the first set of models were significantly higher than the other two f 26 2 with 2 20 degrees of freedom the theoretical and practical implications of these findings are discussed economic theory postulates that the demand for a good is a function of its price the price of related goods and services and income still many empirical estimates of demand for recreation sites have ignored the price of substitute recreation sites the most common technique for estimating recreational demand is the travel cost model tcm a comprehensive literature review of the tcm conducted by dwyer kelly and bowes showed that only six of twenty clearly defined tcm demand functions included substitute prices as an argument in the demand function most of the models they reviewed were old but considerable debate remains about incorporating substitutes in the tcm consider the diversity of approaches that have recently been used to incorporate substitute prices into tcm demand functions when modeling recreation demand at corps of engineer reservoirs desvousges smith and mcgivney omitted any

a new coincident index of business cycles based on monthly and quarterly series maximum likelihood factor analysis of time series is possible even when some series are quarterly and others are monthly treating quarterly series as monthly series with missing observations and replacing them with artificial observations independent of the model parameters one can apply the kalman filter to a state space representation of a factor model and evaluate the likelihood function an application to quarterly real gdp and monthly coincident business cycle indicators gives a new coincident index of business cycles the new index is essentially the smoothed estimate of latent monthly real gdp and should improve upon the stock watson index

omitted cross price variable biases in the linear travel cost model correcting common misperceptions the essence of the travel cost method is that the combination of the number of visits to a site and the round trip travel costs for each recreationist traces out a demand relationship since the geographic location of the recreationist s residence exerts a kind of experimental control which forces the more distant consumer to bear higher travel and related costs these travel costs are used as proxies for prices in estimating demand for the site s services clawson 1959 has presented the two step method for valuing a single site s services however it has been pointed out in the literature that single and isolated recreation sites very rarely exist and the failure to include prices for alternative sites in the demand equation leads to biased estimates for the value of the resource under consideration the literature contains some misconceptions about the direction of the bias consider quotations from two frequently cited studies

the wto trade effect this paper reexamines the gatt wto membership efiect on bilateral trade ows using nonparametric methods including pair matching permutation tests and a rosenbaum 2002 sensitivity analysis together these methods provide an estimation framework that is robust to misspeciflcation biases allows general forms of heterogeneous treatment efiects and addresses potential hidden selection biases this is in contrast to most conventional parametric studies on this issue our results suggest large gatt wto trade promoting efiects robust to various restricted matching criteria alternative indicators for gatt wto involvement different matching methodologies non random incidence of positive trade ows and inclusion of multilateral resistance terms

a note on the welfare effects of omitting substitute prices and qualities from travel cost models the bias to welfare estimates from omitting substitute prices or qualities in travel cost models is examined the presence of bias depends on whether single or multiple site changes are examined and the degree of correlation between the omitted and included prices for a multiple site price or quality change even when omitted price is uncorrelated with included price welfare estimates may be biased alternatively if omitted price is perfectly correlated the welfare measure may not be biased the presence of the bias depends equally on both the degree of correlation and whether a single or multiple change occurs this abstract was borrowed from another version of this item

rent destruction and the political viability of free trade agreements this paper studies the political viability of free trade agreements ftas the key element of the analysis is the rent destruction that these arrangements induce by eliminating intrabloc trade barriers an fta lowers the incentives of import competing industries to lobby for higher external tariffs thereby inducing a reduction of the rents created in the lobbying process using a conventional competitive model i show that the prospect of rent destruction can critically undermine and in some cases rule out entirely the political viability of welfarereducing ftas this result contrasts sharply with findings from the earlier regionalism literature

combining forecast densities from vars with uncertain instabilities recursive weight forecast combination is often found to an ineffective method of improving point forecast accuracy in the presence of uncertain instabilities we examine the effectiveness of this strategy for forecast densities using many vector autoregressive var and autoregressive ar models of output growth inflation and interest rates our proposed recursive weight density combination strategy based on the recursive logarithmic score of the forecast densities produces well calibrated predictive densities for us real time data by giving substantial weight to models that allow for structural breaks in contrast equal weight combinations produce poorly calibrated forecast densities for great moderation data copyright 2010 john wiley sons ltd

the effect of the canada us free trade agreement on canadian multilateral trade liberalization in this paper show that the canada us free trade agreement cusfta tariff preferences have triggered a decline in canadian external tariffs explaining a two percentage point reduction in the average tariff between 1989 and 1998 next we found that industries that generate the least export rent to the us firms experienced deeper tariff cuts in canada this result provides evidence of cooperation in trade policies between the us and canada finally we estimate the effect of the cusfta on the intensity of industrial lobbying for trade policy in canada and find no relationship between preferential trade liberalization and lobbying activity resume l effet de l accord de libre echange canada u s sur la liberalisation multilaterale du commerce canadien dans ce texte on montre que les preferences tarifaires de l accord de libre echange canada us alecus ont declenche un declin dans le niveau des droits de douane externes canadiens et expliquent une reduction de deux points de pourcentage dans le tarif moyen entre 1989 et 1998 ensuite on decouvre que les industries qui generent le moins de rentes des exportations vers les etats unis font l experience de reduction de tarifs plus importante au canada ce resultat revele une cooperation dans les politiques commerciales entre canada et etats unis enfin on evalue l effet de l alecus sur l intensite du lobbying industriel a propos de la politique commerciale au canada et on decouvre qu il n existe pas de relation entre la liberation preferentielle du commerce et l intensite de l activite de lobbying

trade agreements with domestic policies as disguised protection abstract wto rules prohibit disguised protection in the form of domestic policies how then do governments cooperate over trade and domestic policies when none can verify whether a nation s domestic tax reduction is a protective measure or a reaction to a production externality in this paper each government privately observes whether a production externality associated with its import competing good is high or low this paper finds that in an optimal agreement disguised protection with domestic policies is never used by governments with a high externality and is never commonly realized moreover in an optimal agreement tariffs may be conditional on domestic policies

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

multilateral tariff cooperation during the formation of free trade areas we consider the impact of the formation of free trade agreements on multilateral tariff cooperation we assume that countries are limited to selfenforcing multilateral arrangements that balance the gains from deviating against the costs of an ensuing trade war we find that the emergence of free trade areas will be accompanied by a temporary retreat from liberal multilateral trade policies as the initial balance supporting multilateral cooperation is upset eventually however as the full impact of the emerging free trade agreement on multilateral trade patterns is felt this initial balance tends to reemerge and liberal multilateral trade policies can be restored

the role of dispute settlement procedures in international trade agreements although disputes are typically treated as synonymous with concerns about enforcement in economic models of trade agreements in reality most wto disputes seem to concern the interpretation of vague provisions or instances where the agreement is silent and some have suggested that the wto s dispute settlement body dsb could usefully grant exceptions to rigid contractual obligations these activist dsb roles could help complete an incomplete contract but how activist should the dsb be should dsb rulings set precedent we address these questions by characterizing the optimal choice of contract form and dsb mandate under various contracting conditions jel codes d02 d78 d86 f13 k12 k33

endogenously chosen travel costs and the travel cost model an application to mountain biking at moab utah the travel cost model is frequently used to estimate net willingness to pay for recreation at remote sites by using the visitor s travel costs as a proxy for the price of recreation however some concern has been raised over the validity of using the visitor s stated travel costs as a proxy for price this paper addresses some of these concerns by examining the possible over estimation of consumer surplus due to endogenously chosen travel costs this paper extends past theoretical work for the linear model by developing a correction for endogenously chosen travel costs in more commonly used nonlinear models such as the poisson or count data model also provided is the first empirical test of the presence of endogeneity and an estimate of the magnitude of the error from ignoring endogeneity in travel costs after applying this test and the correction to data that was gathered for mountain biking at moab utah the estimate of consumer surplus falls from us 153 to us 135 which is a 12 reduction

evaluating density forecasts with applications to financial risk management density forecasting is increasingly more important and commonplace for example in financial risk management yet little attention has been given to the evaluation of density forecasts the authors develop a simple and operational framework for density forecast evaluation they illustrate the framework with a detailed application to density forecasting of asset returns in environments with time varying volatility finally the authors discuss several extensions copyright 1998 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

multilateralism and the endogenous formation of preferential trade agreements abstract this paper examines the interaction between preferential trade agreements ptas and multilateral tariff reduction in a model of imperfect competition a growing literature finds that the formation of ptas alters the incentives for and the sustainability of multilateral tariff reduction we show that the causation is not one sided multilateral tariff reduction also affects the formation of ptas specifically tariff reduction enhances the incentives to form a pta and increases the likelihood that it is self enforcing thus each round of multilateral tariff reduction should lead to a new wave of ptas this may help to explain the current trend towards regionalism

strategic interaction among nations negotiable and non negotiable trade barriers trade policy is modelled as a two stage game between governments governments choose a negotiable trade barrier in the first stage of the game which is co operative the level of this barrier is treated as a binding commitment in the second stage of the game where the non negotiable trade barrier is chosen non co operatively hence governments choose trade barriers during negotiations with a view to influencing the equilibrium of the non co operative game to follow this proves to be a convenient framework in which to analyse the idea that trade agreements contain loopholes which can be exploited by protectionist governments trade negotiations induce substitution toward less efficient instruments of protection but are nevertheless welfare improving as long as the negotiations are relevant i e the negotiable barrier is actually in use and the two instruments are not perfect substitutes

the economics of special interest politics the case of the tariff this paper investigates the interaction of politicians and special interest lobbies the goal is to model the equilibrium levels of redistributive policies such as taxes subsidies tariffs and regulatory decisions the model is applied throughout to the setting of tariffs by contributing to political campaigns special interest lobbies generate economic returns higher tariffs generate revenue for import competing industries through higher product prices higher milk support prices raise dairy farm income and so forth the lobby invests to maximize these net economic returns in evaluating their chances of election politicians weigh the favorable effects of special interest money against the unfavorable association with the lobby and the social cost of the redistributive policy section i explores the lobby s problem it describes a formalization of mancur olson s discussion of the voluntary provision of public goods and optimal contributions by lobbies to political campaigns section ii describes determination of the equilibrium tariff positions of each politician in a political campaign

managed trade with imperfect information central to the general agreement on tariffs and trade gatt agreement signed in 1947 by 23 nations was the reduction of tariffs this had the direct result of bringing down the average ad valorem tariff on industrial goods from over 40 in 1947 to under 4 by the time of the uruguay round in 1995 furthermore following the kennedy round of 1969 the objectives of the gatt and of its successor the world trade organization wto were expanded so as to help bring down nontariff barriers as well remarkably these reductions were achieved in the absence of any external enforcement mechanism intended to punish gatt wto violators commitments were kept only as long as nations continued to view adherence to the agreements as being in their mutual interest 2 it is precisely because the contracting parties of the gatt wto have made it their top priority to reduce trade distortions that the subject of safeguards as an exception to the general rule of liberalizing trade comes into play when governments know they can increase tariffs temporarily in the event of a surge in import volume they agree to negotiate a more substantial tariff reduction during the negotiation stage 3 the move toward special protection is motivated in part by the fact that volatility in trade flows has become a more important source of domestic disruption these special protection policy tools are typically used to limit the rate of import or export expansion from that which would occur in the absence of intervention they are aimed at mitigating the underlining changes in trade flows where the basic insight developed in the literature is consistent with different government objectives to this end corden 1974 has argued that countries rarely initiate protection for the purpose of capturing the terms of trade gains presumably because of the fear of future retaliation by their trading partners countries

an extension of omitted cross price variable biases in the linear travel cost model correcting common misperceptions caulkins bishop and bouwes cbb 1985 raise an important issue concerning the conventional presumption of positive bias in consumer surplus when alternative sites are ignored in the travel cost method treatment of site value dwyer kelly and bowes 1977 they analyze a significant geographic dispersion phenomenon which can cause either negative or positive bias in travel cost model tcm estimates of site value when travel costs to alternative sites are omitted however the derivation of specification bias in the tcm which they provide is incomplete and could lead to generalizations which are erroneous cbb use the well known specification bias analysis to discuss the possible effects of ignoring alternative recreation sites in the tcm demand analysis given the estimated linear regression equation

is there a case for non discrimination in the international protection of intellectual property abstract we evaluate the case for non discrimination in international patent protection when trade is not subject to any frictions barriers requiring national treatment nt does not affect the rate of innovation and welfare since unfavorable discrimination suffered abroad by innovators in the absence of nt is fully offset by favorable discrimination enjoyed by them at home when trade barriers exist however such international offsetting in patent protection is incomplete and innovation incentives are actually lower under nt by lumping domestic and foreign patent protection together nt blunts the overall effectiveness of patent protection in incentivizing innovation in the presence of trade barriers

valuing the multidimensional impacts of environmental policy theory and methods a theoretically consistent framework is developed for valuing the multidimensional impacts of environmental policy conventional benefit estimates are shown to be biased because of the presence of substitution and complementarity effects in valuing policy impacts procedures are developed for implementing a valid framework consistent with theory empirical results indicate significant substitution effects in valuing environmental conditions across different geographic regions

specification bias in contingent valuation from omission of relative price variables the specification bias from omission of relative price variables in contingent valuation functions is investigated omitted variable bias will cause the determinants of willingness to pay wtp to assume zero the omission of relative price variables constitute policy implications forecast values of wtp values will be biased when empirical wtp functions are used the effects of relative prices in empirical valuation functions should be included in future studies of contingent valuation

endogenous lobby formation and endogenous protection a long run model of trade policy determination this paper provides a theory of lobby formation within a framework in which trade policy is determined through political contributions under certain conditions free trade turns out to be an equilibrium outcome either when the government has a high affinity for political contributions or when it cares a great deal about social welfare moreover greater inequality in asset distribution results in a greater number of lobbies and in most cases more protection for each of these lobbies furthermore industries with higher levels of capital stock fewer capitalists more inelastic demand and smaller geographical dispersion are the ones that get organized

welfare enhancing export subsidies this paper shows that export subsidies on marginal goods and those on nonmarginal goods have opposite welfare effects for the country imposing these subsidies where marginal goods are the ones that would be exported by only a small amount or not at all under free trade but whose export can be promoted considerably by export subsidies the former enhances the imposing country s welfare while the latter worsens it the paper also throws light on related issues such as industrial targeting policy

a difficulty with the travel cost method instead of observable prices of recreational visits travel cost method tcm re searchers are obliged to substitute researcher assigned visitation cost estimates i argue that visitation costs are inherently subjective but are ordinally measurable so long as the cost in creases with distance travelled it follows that traditional tcm yields only ordinally measur able welfare estimates the household produc tion function formulation of tcm resolves this problem only by imposing severe and un testable analytical restrictions tcm cannot serve as a stand alone technique for estimating recreation benefits rather it must be calibrated using information generated with fundamentally different methods jel q26

trade creation and trade diversion in the canada united states free trade agreement in this paper the changes in trade patterns introduced by the canada united states free trade agreement are examined variation in the extent of tariff liberalization under the agreement is used to identify the impact of tariff liberalization on the growth of trade both with member countries and non member countries data at the commodity level are used and the results indicate that the canada united states free trade agreement had substantial trade creation effects with little evidence of trade diversion jel classification f13 f14

tariffs and the most favored nation clause abstract in an n country oligopoly model of intraindustry trade n 3 this paper explores the economics of the most favored nation mfn principle under the non cooperative tariff equilibrium each country imposes higher tariffs on low cost producers relative to high cost ones thereby causing socially harmful trade diversion mfn adoption by each country improves world welfare by eliminating this trade diversion under linear demand mfn adoption by the country with the average production cost is most desirable high cost countries refuse reciprocal mfn adoption with other countries and also lose even if others engage in reciprocal mfn adoption amongst themselves

welfare effects omitted variables and the extent of the market this paper offers an economic interpretation of kling s 1989 finding that single price change measures of consumer surplus will provide an unbiased measure for a multiple price change provided the prices are perfectly correlated the explanation lies in recognizing that correlation in this case serves to define the commodity extent of the market using this link the paper demonstrates how the insights involved in defining general equilibrium demand functions or equivalently residual demand models can be adapted to fit the issues raised with travel cost models in accounting for the effects of substitutes

the negotiation of sustainable tariffs abstract the governments of two countries explicitly negotiate over a new pair of tariffs as soon as they reach agreement the countries put into effect the agreed upon pair of tariffs which must be self enforcing we investigate how the difference in the two governments patience affects the negotiation results provided that the common optimum tariff is the status quo tariff rate for each country we find that the country with the more patient government gains most from the negotiation if the time lag between a defection and punishment in the implementation phase is short the opposite is true if the response lag in the implementation phase is long

combining var and dsge forecast densities a popular macroeconomic forecasting strategy utilizes many models to hedge against instabilities of unknown timing see among others stock and watson 2004 clark and mccracken 2010 and jore et al 2010 existing studies of this forecasting strategy exclude dynamic stochastic general equilibrium dsge models despite the widespread use of these models by monetary policymakers in this paper we use the linear opinion pool to combine inflation forecast densities from many vector autoregressions vars and a policymaking dsge model the dsge receives a substantial weight in the pool at short horizons provided the var components exclude structural breaks in this case the inflation forecast densities exhibit calibration failure allowing for structural breaks in the vars reduces the weight on the dsge considerably but produces well calibrated forecast densities for inflation

introducing the euro sting short term indicator of euro area growth we set out a model to compute short term forecasts of the euro area gdp growth in real time to allow for forecast evaluation we construct a real time dataset that changes for each vintage date and includes the exact information that was available at the time of each forecast with this dataset we show that our simple factor model algorithm which uses an easy to replicate methodology is able to forecast the euro area gdp growth as well as professional forecasters who can combine the best forecasting tools with the possibility of incorporating their own judgement in this context we provide examples showing how data revisions and data availability affect point forecasts and forecast uncertainty copyright 2010 john wiley sons ltd