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

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

unlootable resources and state security institutions in tajikistan and uzbekistan why when faced with similar conditions of weakening central control do some institutions of state security fragment into autonomous agents of organized violence whereas others cohere around coerc

does lootable wealth breed disorder a political economy of extraction framework this article proposes a political economy of extraction framework that explains political order and state collapse as alternative outcomes in the face of lootable wealth different types of institutions of extraction can be built on lootable resources with divergent effects on political stability if rulers are able to forge institutions of extraction that give them control of revenues generated by lootable resources then these resources can contribute to political order by providing the income with which to govern conversely the breakdown or absence of such institutions increases the risk of civil war by making it easier for rebels to organize the framework is used to explain two puzzling cases that experienced sharply contrasting political trajectories in the face of lootable resources sierra leone and burma a focus on institutions of extraction provides a stronger understanding of the wide range of political outcomes from chaos to dictatorship to democracy in resource rich countries

management earnings forecasts and value of analyst forecast revisions this study examines the stock price reactions to analyst forecast revisions around earnings announcements to test whether preannouncement forecasts reflect analysts private information or piggybacking on confounding events and news we find that management earnings forecasts influence the timing and precision of analyst forecasts more importantly evidence suggests that prior studies finding of weaker stronger stock price responses to forecast revisions in the period immediately after before the prior quarter earnings announcement disappears once management earnings forecasts are controlled for to the extent that management earnings forecasts are public disclosures our results suggest that the importance of analysts information discovery role documented in prior studies is likely to be overstated this paper was accepted by wei jiang finance

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

disentangling market access effects of preferential trading arrangements with an application for asean members under an asean eu fta the paper develops two synthetic measures at the hs 10 level to depict effective market access for a country receiving preferential access and applies these to the market access asean members would receive following the implementation of an fta with the eu first the measures show that current effective market access for asean eba members is cut in half by the preferences granted by the eu to countries that compete with these countries in the eu markets second the measures show that about one quarter of the preferential margin under the proposed fta for eba members would be lost as a result of preferential access granted to asean gsp members third disaggregated estimates of the restrictiveness of rules of origin confirm that rules are more restrictive for products with higher preferential margins and that asean countries usually face tougher rules of origin in the eu because of the composition of their exports

are regional trading arrangements trade creating an application of extreme bounds analysis in this study we use extreme bounds analysis to test the robustness of the hypothesis that regional trading arrangements rtas are trade creating extreme bounds analysis provides a more rigorous test of specification uncertainty than traditional econometric theory by incorporating prior information and using a systematic approach to testing the fragility of coefficient estimates the results show that the trade creation effect of most rtas is fragile using a least squares estimator where all weight is attached to the sampling distribution eight or more of the twelve rtas considered are found to be trade creating when the relative weight in the estimation is shifted from the sampling to the prior distribution the number of rtas that are trade creating falls to six at the 95 percent likelihood ellipsoid moreover when we specify that not all rtas are trade creating four rtas increase trade at the 95 percent likelihood ellipsoid at the extreme bounds when all weight is attached to the prior distribution none of the rtas are found to be trade creating as a result we conclude that the pervasive trade creation effect found in the literature reflects not the information content of the data but rather the unacknowledged beliefs of the researchers

revisiting the effects of regional trade agreements on trade flows with proper specification of the gravity model this paper uses a gravity model to assess ex post regional trade agreements the model includes 130 countries and is estimated with panel data over the period 1962 1996 the introduction of the correct number of dummy variables allows for identification of vinerian trade creation and trade diversion effects while the estimation method takes into account the unobservable characteristics of each pairs of trade partner countries the endogeneity of some of the explanatory variables as well as a potential selection bias in contrast to previous estimates results show that regional agreements have generated a significant increase in trade between members often at the expense of the rest of the world

sovereign debt restructuring messy or messier ever since the mexican asian and russian crises of the mid 1990 s efforts have been underway to find means for more effective prevention and resolution of currency financial crises much has been done with respect to crisis prevention exchange rate flexibility is much greater than it was there is increased transparency and improved oversight of the financial system and greater attention is paid to unsustainable policy stances work continues to strengthen economies immunity to crises however no matter how much is done there will inevitably be a crisis or crises much has already been learned with respect to crisis resolution and the international financial community is better equipped to cope with crises than was the case earlier but as with prevention more can be done one item on the agenda which should contribute both to prevention and to resolution is dealing with unsustainable debt burdens of sovereign nations two of the hallmarks of most of the 1990 s crises were first the importance of private capital flows and their reversals in triggering the crises and in intensifying their severity and second the involvement of the financial systems in them the countries afflicted by these crises were ones that had succeeded in raising per capita incomes and rates of economic growth that success hinged in significant part on their having put in place economic policies that are conducive to economic growth including a predictable legal framework respect for property rights openness to the international economy and much more the fact that the policy framework was generally appropriate implied among other things that there were relatively high real returns to investment in these economies that is of course the main reason why private investors were interested in them at the same time capital inflows permitted more rapid development than would otherwise be possible these associations of high real returns growth and appropriate policy stances continue for these reasons there is typically a strong stake for emerging markets to maintain international creditworthiness and policymakers go to great lengths to maintain their international reputations and market standings an efficient private international capital market benefits both developing countries which are thereby able to invest more than domestic savings at high real rates of return and investors in high income countries who can realize higher real returns and greater portfolio diversification than they could achieve without these investment opportunities because countries are sovereign their high stakes in maintaining creditworthiness are crucial for attracting international capital flows this is because foreign creditors do not have the rights they do in domestic courts and hence must have other protections against default on the part of borrowers this is especially true for sovereign borrowers international lenders to private entities in emerging markets normally have the same protection as is afforded to domestic lenders for sovereign borrowing however the chief protection foreign creditors have is the losses that would accrue to the sovereign debtor both directly through the future reduction in access to international credit markets and through the effects on private economic activity of a sovereign default in the event of discussants guillermo calvo interamerican development bank and university of maryland morris goldstein institute for international economics michael mussa institute for international economics ann harrison university of california berkeley

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

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

kin groups and reciprocity a model of credit transactions in ghana this paper studies kinship band networks as capital market institutions membership in a community where individuals are dynastically linked has two effects on informal credit first the nonanonymity of the dynastic link allows to sanction the defaulters offspring and induce compliance even in short term interactions social enforcement second preferential agreements can arise in which kin members condition their behavior on the characteristics of a player s predecessor expecting others to do the same with their offspring reciprocity these effects are incorporated in an olg game with endogenous matching between lenders and borrowers and tested using household level data from ghana

competition and bias we attempt to measure the effect of competition on bias in the context of analyst earnings forecasts which are known to be excessively optimistic because of conflicts of interest our natural experiment for competition is mergers of brokerage houses which result in the firing of analysts because of redundancy e g one of the two oil stock analysts is let go and other reasons such as culture clash we use this decrease in analyst coverage for stocks covered by both merging houses before the merger the treatment sample to measure the causal effect of competition on bias we find that the treatment sample simultaneously experiences a decrease in analyst coverage and an increase in optimism bias the year after the merger relative to a control group of stocks consistent with competition reducing bias the implied economic effect from our natural experiment is significantly larger than estimates from ols regressions that do not correct for the endogeneity of coverage this effect is much more significant for stocks with little initial analyst coverage or competition

economic integration and political disintegration in a world of trade restrictions large countries enjoy economic benefits because political boundaries determine the size of the market under free trade and global markets even relatively small cultural linguistic or ethnic groups can benefit from forming small homogeneous political jurisdictions this paper provides a formal model of the relationship between openness and the equilibrium number and size of countries and successfully tests two implications of the model firstly the economic benefits of country size are mediated by the degree of openness to trade secondly the history of nation state creations and secessions is influenced by the trade regime

third country effects of regional trade agreements does regionalism negatively impact non members to answer this question we examine the effect of regional trade agreements rtas on imports from non members and the tariffs that they face using data from six rtas in latin america and europe we do not find evidence that implementation of the regional agreements is associated with trade diversion from third countries to regional members using detailed industry data on preference margins and most favoured nation mfn tariffs for three trade agreements in latin america over 12 years we find that greater preference margins do not significantly reduce imports from third countries we also look at the effect of preferences on external tariffs we find evidence that preferential tariff reduction tends to precede the reduction of external mfn tariffs in a given sector offering evidence of tariff complementarity overall the results suggest that regionalism does not significantly harm non members

the mercantilist index of trade policy we introduce an index of trade policy restrictiveness defined as the uniform tariff that maintains the same trade volume as a given tariff quota structure our index overcomes the problems of the trade weighted average tariff it avoids substitution bias correctly accounts for general equilibrium transfers and takes import volume instead of welfare as benchmark empirical applications to international cross section and time series comparisons of trade policy confirm our theoretical results trade weighted average tariffs generally underestimate the true height of tariffs as measured by the trade volume equivalent index this in turn always underestimates the welfare equivalent index

globalization pressures and the state the worldwide spread of central bank independence the authors examine the impact of globalization on state structures in the specific instance of the central bank following the world system world society and neoinstitutional perspectives in sociology they assume that states are in cultural political and economic competition with each other thereby seeking to maintain their position and status frequently by adopting organizational forms or practices that make them isomorphic with their environment the authors predict that countries boost the independence of their central bank from the political power as their exposure to foreign trade investment and multilateral lending increases they also model the cross national dynamic process of diffusion of central bank independence by examining the impact of cohesive and role equivalent trade relationships between countries they find support for their hypotheses with information on 71 countries between 1990 and 2000

cultural diversity on wall street evidence from consensus earnings forecasts abstract we examine how cultural differences among agents influence the aggregate outcome of a common forecasting task using both exogenous shocks to sell side analyst diversity and panel regression methods we find that increases in analyst cultural diversity positively affect the quality of the consensus earnings forecast we further provide evidence on the potential mechanisms underlying this result by showing that cultural diversity is associated with improvements in individual analyst forecasts greater analyst conference call participation and interaction and greater diversity in analyst education backgrounds and professional interests overall our results indicate that greater cultural differences among agents producing an aggregate forecast are associated with a higher quality consensus forecast

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

trade policy trade costs and developing country trade this paper briefly reviews new indices of trade restrictiveness and trade facilitation that have been developed at the world bank the paper also compares the trade impact of different types of trade restrictions applied at the border with the effects of domestic policies that affect trade costs based on a gravity regression framework the analysis suggests that tariffs and non tariff measures continue to be a significant source of trade restrictiveness for low income countries despite preferential access programs this is because the value of trade preferences is quite limited a new measure of the relative preference margin developed in the paper reveals that this is very low for most country pairs most countries with very good duty free access to a market generally have competitors that have the same degree of access the empirical analysis suggests that measures to improve logistics performance and facilitate trade are likely to have the greatest positive effects in expanding developing country trade increasing the trade impacts of lowering remaining border barriers by a factor of two or more

firm characteristics and analyst following abstract this paper examines the major determinants of the number of analysts following a firm a simple model of analyst following is proposed and several firm characteristics are suggested that are likely to influence the extent of a firm s analyst following by either affecting the aggregate demand for or supply of analyst services or both for the firm almost all of these characteristics are found to be strongly significant in affecting the extent of analyst following of firms and the empirical results generally accord well with economic intuition

the direct and relative effects of preferential market access abstract the proliferation of preferential trade agreements has resulted in a complex system of preferences in which market access conditions are often discriminatory in this paper we investigate how market access conditions have evolved between 2000 and 2009 and how this has affected international trade our results show that the proliferation of preferential access has increased bilateral trade not only due to lower tariffs but also because preferential access often resulted in higher preferential margins vis a vis foreign competitors the results also indicate that the evolution of the system of preferences has been disadvantageous for countries that did not actively engage in forming new trade agreements

natural resource wealth and the survival of autocracy does natural resource wealth impede transitions to democracy this article revisits this question with an event history design that differs from the approach used in other recent statistical tests of rentier state theory the research confirms that autocracy is typically more durable in countries with substantial resource wealth and the author finds this effect is robust to other measures proposed to explain the dearth of democracy in the middle east or the muslim world along the way the author raises concerns about the use of all countries and all years samples to test theories of democratization arguing that this design can obscure important differences in the forces driving stability and change among different types of political regimes

measuring the restrictiveness of trade policy this article provides an introduction to the trade restrictiveness index tri which equals the uniform tariff that is welfare equivalent to a given pattern of trade protection unlike standard measures of trade restrictiveness the tri has a solid theoretical basis can incorporate both tariffs and quantitative restrictions and can be adapted to construct the trade policy equivalent of domestic distortions the article compares a number of applications and describes procedures for operationalizing the tri on a personal computer the authors conclude that the tri has considerable potential in empirical work