wheat from chaff meta analysis as quantitative literature review abstract this paper presents and develops a quantitative method of literature reviewing and evaluating empirical research meta regression analysis or mra economics is theory driven yet we must learn empirically if economics is to advance mra offers a more objective statistical method to summarize our empirical knowledge and to explain the wide study to study variation in economic research mra is used to assess the evidence for ricardian equivalence and its findings are contrasted to those of conventional narrative review furthermore mra establishes a platform from which to distinguish genuine empirical effect from the exploitable specification error that infests applied econometrics

economic growth and structure of domestic absorption evidence from internationally comparable data abstract using the chenery syrquin models of structural change and internationally comparable data on gdp per capita and shares of consumption investment and government spending for the 1960s and the 1970s a study is conducted of changes in the structure of domestic absorption that accompany economic growth relative to the conventional data real data indicate the fall in the share of consumption to be somewhat lower and the rise in the share of investment to be larger as gdp per capita rises the share of government is observed to decline although most previous studies indicate an increase in government share with economic growth

patent validation at the country level the role of fees and translation costs one feature of the european patent system that is heavily criticized nowadays is related to its complex fragmentation and the induced cost burden for applicants once a patent is granted by the epo the assignee must validate and often translate it and pay the renewal fees to keep it in force in each country in which the applicant seeks protection the objective of this paper is to assess to what extent validation and renewal fees as well as translation costs affect the validation behavior of applicants we rely on a gravity model that aims at explaining patent flows between inventor and target countries within the european patent system the results show that the size of countries their wealth and the distance between their capital cities are significant determinants of patent flows validation fees and renewal fees further affect the validation behavior of applicants translation costs seem to have an impact as well the important role played by fees suggests that the implementation of cost reducing policy interventions like the london protocol would induce a significant increase in the number of patents validated in each european country

free trade agreements in the americas are the trade effects larger than anticipated this paper argues that the competitive liberalisation of national governments of the past several decades reflects national governments expectations of larger trade impacts from regional economic integration agreements eias than typical ex ante economic models have suggested moreover we show that previous typically cross section ex post empirical evaluations of the effects of eias on trade have seriously over or underestimated the effects partly due to ignoring the endogenous self selection bias of country pairs into eias accounting for this bias we find that economic integration agreements in the americas have had much larger impacts on trade over the period 1960 2000 than previously found and the ex post estimates are less fragile than those in earlier cross section analyses the results shed further light on understanding the causes and consequences of the growth of regionalism in the world

fiscal policies in the world economy this paper uses a two country general equilibrium model of the world economy in order to analyze the effects of budget deficits and government spending on world rates of interest consumption and international indebtedness it demonstrates the difference between the effects of fiscal expenditures and tax cuts as well as between the effects of current policies and expected future policies it is shown that the qualitative effects of fiscal policies depend on whether the country introducing the policies runs a surplus or a deficit in its current account following the positive analysis of the short run and the steady state effects the paper concludes with a normative analysis of the welfare implications of budget deficits

the indirect effects of foreign direct investment on trade a network perspective the relationship between international trade and foreign direct investment fdi is one of the main features of globalisation in this paper we investigate the effects of fdi on trade from a network perspective since fdi takes not only direct but also indirect channels from origin to destination countries because of firms incentive to reduce tax burden to minimise coordination costs and to break barriers to market entry we use a unique data set of international corporate control as a measure of stock fdi to construct a corporate control network ccn where the nodes are the countries and the edges are the corporate control relationships network measures as the shortest path length and the communicability are then computed on the ccn to capture the indirect channel of fdi empirically we find that corporate control has a positive effect on trade both directly and indirectly the result is robust with different specifications and estimation strategies hence our paper provides strong empirical evidence of the indirect effects of fdi on trade moreover we identify a number of interplaying factors such as regional trade agreements and the region of asia we also find that the indirect effects are more pronounced for the manufacturing sector than for primary sectors such as oil extraction and agriculture

new tests of the life cycle and tax discounting hypotheses abstract we first test a version of the permanent income consumption function recently suggested by barro the results support the theory except that consumption expenditures show sensitivity to transitory income next we use the consumption model to test the tax discounting hypothesis which is strongly supported this support for tax discounting disagrees with results from some earlier studies using more traditional specifications of the consumption function however we show that when certain obviously inadequate estimation procedures are corrected the traditional models also support tax discounting this uniform support for tax discounting suggests that the sensitivity of consumption to transitory income is not due to liquidity constraints

on the role of distance for bilateral trade this study addresses the role of distance in a partial equilibrium model of bilateral trade and tests hypotheses in a large panel data set of trade flows the analysis obtains three implications regarding the empirical specification of trade frictions in gravity models two results illustrate the relevance of the approach

an econometric view on the estimation of gravity models and the calculation of trade potentials this paper presents an ar 1 model in the spirit of hausman and taylor zero differences between actual and in sample predicted trade flows large systematic differences between observed and in sample predicted trade flows only indicate model misspecification and econometric problems out of sample predictions make sense if countries of interest are in an early stage of the transformation process the gravity model remains an interesting tool for the calculation of counterfactuals e g the impact of catching up in gdp per capita in the ceec or of the reduction of trade costs via infrastructure investments or tariffs on bilateral trade etc for this line of research the difference between short term and long term influences could provide interesting insights

allocating tradable permits on the basis of market price to achieve cost effectiveness it is a well known result that distributional constraints can lead to an imperfectly competitive permit market where the emission target is no longer met at least cost in this paper we suggest an allocation rule for tradable permits which can handle this problem if the permit allocation is dependent on the market price for permits this allocation rule can achieve both cost effectiveness and meet specific requirements for cost distribution across agents

capital market imperfections and the consumption function a model is presented in which there is asymmetric information between borrowers and lenders two questions are asked i would liquidity constraints in such a model take the form of credit rationing or of a wedge between borrowing and lending rates and ii how do these constraints affect the aggregate consumption function some empirical

testing ricardian equivalence a reconsideration empirical evidence on the determinants of private consumption in 52 countries over the period 1979 88 indicates that in contrast to the ricardian equivalence proposition a significant relationship exists between consumption and the variable the ratio of tax revenue to changes in government debt which measures the extent of substituting debt for tax financing the results obtained from estimating euler equations for the representative individual s stochastic dynamic optimization problem are favourable to the proposition that the choice between current taxation and debt issuance to finance a given government expenditure stream is relevant to the determination of the level of aggregate demand

towards a new trade policy between the usa and middle east countries estimating trade resistance and export potential at the time of the conclusion of free trade areas ftas between the usa and middle east and north african mena countries there is a lack of literature concerning the measurement of the current us export position with regards to these countries and the us export potential in this area from recent developments of gravity models this paper derives an estimable equation which includes various trade resistance variables notably border effects multilateral resistance as well as specific bilateral effects the model is tested in order to scrutinise the impact of these variables on us exports to mena countries as well as the us export potential in this area to that end a selection of panel data specifications is proposed mainly hausman and taylor models as well as arellano and bond dynamic models results unambiguously indicate that as compared to the other oecd countries the usa suffers from a substantial trade integration deficit with mena countries this is reflected by the strongly negative values of the us mena bilateral fixed effects as well as the high bilateral border effects in addition the estimated actual potential us export ratio to these countries is only 0 76 therefore implementing an fta between the usa and mena countries may allow the former to progressively improve its export position in this area this would also help mena countries diversify their supplying sources

ricardian equivalence expansionary fiscal contraction and the stock market a vecm approach the effect of government taxation on future consumption has been explained in three ways the keynesian approach the ricardian equivalence proposition and the german view of expansionary fiscal contraction efc this paper reports empirical evidence on the validity of these explanations by examining the impact of a shock in government taxation upon private consumption once the effect of the stock market is removed a vector error correction model is estimated for the usa japan germany france the uk italy and canada for 1950 1997 and the impulse response functions of a shock in taxation and in expenditure are examined the responses to an increase in government taxation appear to lend support to the efc while the responses to an increase in government expenditure upon consumption suggest that the reaction of private consumption is more in line with the traditional keynesian approach

opening up international trade with eastern europe trade with eastern europe carl b hamilton and l alan winters previous economic policy in the soviet union and eastern europe sought to restrict international trade with market economies hence liberalization and reform should now lead to a huge increase in such trade this will have a major impact both on the reforming economies and on their new trade partners first we develop an empirical model of trade flows between existing market economies and use this to forecast long run trade flows as the former soviet union and eastern europe are reabsorbed into the world economy second we provide a more detailed analysis of one key sector agricultural trade we compare and contrast three regime changes reform in the east admission of the east to the ec cap and worldwide success on agricultural liberalization in the gatt third we adduce evidence of high quality human capital in eastern europe and argue that this will tend to confer a comparative advantage in quite sophisticated products we conclude by stressing that since trade cannot be permanently and profoundly unbalanced western market economies can enjoy potential gains from trade only if they allow market access to emergent producers from the former soviet union and eastern europe

is trade in electrical and electronic products sensitive to ipr protection evidence from china s exports abstractthis article attempts to provide the first empirical evidence on the effect of intellectual property rights iprs on china s export of electrical and electronic products it adopts a gravity model for unbalanced panel data of china s 146 important trading partners over the period of 2002 2012 to eliminate the effects of fdi in determining the linkage between ipr and exports the panel excludes the destination countries and territories that invest in china the results reveal that the level of ipr protection in destination countries has a positive impact on china s flow of exports further analysis on data disaggregated by ipr score demonstrates that a higher level of ipr protection in destination countries and territories is positively linked with china s exports of these items in each of the ipr protection clusters and indicates a strong market power effect by the interplay between r d expenditure and ipr in the destinations finally both market power and market expansion effects are found to

china s one belt one road initiative the impact of trade facilitation versus physical infrastructure on exports the one belt one road obor project is perhaps china s most significant international relations initiative in recent times it is based on openness harmony inclusivity mutual benefit and market operations and aims to connect the economically vibrant east asia and the developed europe by land and by sea and in the process it brings growth and development to tens of countries along the modern silk routes in this paper we compare the impact of the main initiatives of obor namely enhancements in physical infrastructure and improvements in border administration on the trade of countries that have signed on to this project especially countries along the six economic corridors we find overwhelming evidence that shows improvements in border administration has the greatest impact on exports of corridor countries although physical infrastructure is important for trade the chinese government should place equal attention to improvements in trade facilitation to ensure trade routes operate seamlessly across the various corridors

the border effect in spain this paper analyses the border effect in spain using a unique dataset on intranational trade flows over the period 1995 98 the results indicate that after controlling for market size and distance spanish regions trade around 22 times more with the rest of spain than they do with oecd countries moreover the size of the spanish bias is lower in the case of the spanish regions exports than in the case of imports although the difference is not statistically significant in most cases finally the border effect is not uniform across spanish regions

trade liberalization and trade performance of environmental goods evidence from asia pacific economic cooperation members in this article we study the impact of trade liberalization including reductions in both tariff and nontariff trade barriers on environmental goods egs exports using bilateral trade data from 20 asia pacific economic cooperation members we find that tariff reduction in an exporting country has a larger positive impact on its exports of egs than tariff reduction in an importing country our results also show that a lower nontariff barrier in an importing country increases its imports of egs a considerable amount of heterogeneity also exists in subsample results based on countries income levels

trading hot air the influence of permit allocation rules market power and the us withdrawal from the kyoto protocol after the conferences in bonn and marrakech it is likely that international emissions trading will be realized in the near future major influences on the permit market are the institutional detail the participation structure and the treatment of hot air different scenarios not only differ in their implications for the demand and supply of permits and thus the permit price but also in their allocative effects in this paper we discuss likely the institutional designs for permit allocation in the hot air economies and the use of market power and quantify the resulting effects by using the computable general equilibrium model dart it turns out that the amount of hot air supplied will be small if hot air economies cooperate in their decisions under welfare maximization more hot airis supplied than in the case where governments try to maximize revenues from permit sales

the emissions trading paradox abstract this article considers the price history of co2 allowances in the eu emission trading scheme since european emissions trading started in 2005 the prices of allowances have varied between less than one and thirty euro per ton of co2 this previously unpredicted volatility and more notably a significant price crash in may 2005 led to the hypothesis that electricity producers might use their market power to influence the prices of allowances besides market power the combination of information asymmetry and price interdependencies between prices of primary goods especially electricity and allowances plays an important role in explaining the emissions trading paradox the model presented will show that banking can lead to such a price crash if market participators act rationally furthermore in such a scenario banking can be profitable for sellers at the cost of buyers

government deficits and aggregate demand abstract the evidence presented in this paper indicates that changes in government spending transfers and taxes can have substantial effects on aggregate demand the estimates also indicate that the promise of future social security benefits significantly reduces private saving each the basic implications of the so called ricardian equivalence theorem is contradicted by the data the results are consistent with the more general view of the effects of fiscal actions and fiscal expectations that is described in the paper

do we really know that the wto increases trade comment in a recent article in the american economic review andrew k rose 2004 finds that countries belonging to the general agreement on tariffs and trade gatt and its successor the world trade organization wto did not trade more than countries that abstained from membership a vast literature on the gatt and the wto presupposes that these organizations were important but until rose there were few systematic efforts to test the assumption that membership increased trade rose s contribution is striking because he assembles a large dataset performs a myriad of analyses and uncovers scant evidence that the gatt and the wto had any impact rose describes his negative findings as an interesting mystery 112 the solution to this mystery lies in understanding who actually participated in the gatt we show that rose has overlooked a large proportion of countries to which the agreement applied and mistakenly classified them as nonparticipants when in fact they had rights and obligations under the agreement this causes a downward bias in his estimates of the gatt s effect on trade because his gravity regressions

government debt government spending and private sector behavior a current period tax reduction financed by issuing government debt shifts the timing of tax collection from the current period to the future if the future taxes implied by government debt are not fully perceived and discounted by the private sector there will be a net wealth effect that increases private sector consumption thus reducing capital accumulation and growth if on the other hand the implied future taxes are perceived and discounted by the private sector the current period tax reduction will be used to increase private saving to pay for the future taxes and government debt will be absorbed without any real effects on the economy the effects of government spending financed by current period taxation also depend upon private sector perceptions 2 if the benefits of government spending are ignored private sector consumption will decrease in accordance with the reduction in permanent disposable income to the extent that government spending is on consumption type goods that are perceived as substitutes for privately provided consumption goods there will be a relatively greater reduction in private sector consumption to the extent that government spending is on investment type goods yielding future goods and services that are perceived as substitutes for future privately provided consumption goods there will be a relatively smaller reduction in private sector consumption the standard approach to modeling private sector consumption saving behavior involves a rather asymmetric set of assumptions as to how the private sector perceives the various elements of government fiscal policy 3 current period taxes are assumed to be fully perceived but current period government spending is implicitly assumed to be completely ignored by the private sector in considering permanent personal disposable income the private sector is assumed to be forward looking in its assessment of income and taxation the stock of government debt is nevertheless included as part of the stock of private wealth the implicit assumption associate professor of economics graduate school of business university of chicago 1101 east 58th street chicago il 60637 i thank eugene fama levis kochin michael mussa paul evans and an anonymous referee for helpful comments i am particularly grateful to daniel benjamin for contributing many hours of discussion and laura lahaye who was a research assistant and valuable adviser on earlier drafts the theoretical debate on the burden of the debt has been long standing gerald o driscoll 1977 documents ricardo s nineteenth century position robert barro 1974 reopened the debate by introducing the fundamental issue of intergenerational transfers also discussed in merton miller and charles upton 1974 the empirical side of the debate was initiated by levis kochin s 1974 attempt to test for the effects of deficits on consumption and by martin feldstein s 1974 attempt to test for the effects of social security wealth on consumption other empirical contributions include jess yawitz and laurence meyer 1976 myself 1978 and j earnest tanner 1978 1979 with respect to the effects of government deficits and debt and barro 1978 michael darby 1979 and dean leimer and selig lesnoy 1982 with respect to social security wealth see also interesting recent papers by john seater 1982 who generates detailed tests of the effects of deficits and debt on consumption charles plosser 1982 who explores the effects of government spending and debt shocks on interest rates and feldstein 1982 who attempts tests similar to some in this paper see fn 29 2martin bailey s 1962 1971 development of the effects of government spending on private consumption and aggregate economic activity is the seminal contribution paul david and john scadding 1974 extend bailey s ideas and provide some supporting empirical evidence more recently willem buiter 1977 and myself 1978 developed models based on bailey s earlier work barro 1981 has an interesting paper on related issues see also david aschauer 1982 3the standard approach incorporates fiscal policy through the concept of personal disposable income and by including the stock of government debt as part of personal wealth see for example the empirical specification of albert ando and franco modigliani 1963 which has been the basis of most empirical consumption studies since and feldstein 1974 for one of the more influential papers based on the ando modigliani specification

the tax versus debt controversy in a multivariate cointegrating system the empirical literature is replete with evidence that budget deficits and government debt affect traditional view or do not appreciably affect ricardian equivalence private consumption however the validity of the relative empirical estimates can be questioned to the extent that they do not adequately distinguish among countries with varying levels of indebtedness the present paper attempts to address this problem by using johansen s cointegration technique and by sorting the sample countries into groups according to the ratio of debt to gdp the empirical evidence generated finds support for the debt illusion hypothesis as a means of expounding variations in consumers behaviour among countries with varying degrees of indebtedness

ghg emissions gdp growth and the kyoto protocol a revisit of environmental kuznets curve hypothesis abstract the kyoto protocol attempts through political negotiations to guide participating industrialized countries greenhouse gas ghg emissions from a positive growing trend to reach a peak point or turning point and then be reduced to a negative growth that means the relationship between decreasing ghg emissions and economic growth may be described by an inverted u curve or called a bell shaped curve which is consistent with the concept of the environmental kuznets curve ekc hypothesis this research observed that the economic development and ghg emissions in economies in transition eits exhibit a hockey stick curve trend or called quasi l shape curve that also generates a lot of hot air which is significant to the implementation of the kyoto protocol in addition through the analysis of single country time series data and gdp data this research demonstrated that statistical data for most of the annex ii countries do not possess evidence that supports the ekc hypothesis for ghg emissions the results from this study also indicated that the 38 industrialized countries are unable to meet their targets under the kyoto protocol within the specified time period which are probably caused by the econometric method s inability to predict accurately the extents and development of innovative technologies and clean development mechanism cdm projects if the international community truly wants to reduce the ghg emissions the effectiveness of the existing international framework for emissions reduction needs to be reconsidered seriously and the global cooperation mechanism also needs to be greatly enhanced

serial correlation and the fixed effects model this paper generalizes the durbin watson type statistics to test the ols residuals from the fixed effects model for serial independence also generalized are the tests proposed by sargan and bhargava for the hypothesis that the residuals form a random walk a method for efficient estimation of the parameters is also developed finally an earnings function is estimated using the michigan survey of income dynamics in order to illustrate the uses of the tests and the estimation procedures developed in this paper

the costs of compliance a cge assessment of canada s policy options under the kyoto protocol canada has committed itself under the kyoto protocol to reduce greenhouse gas emissions between 2008 and 2012 on average by six per cent from the base 1990 level as of 2009 however canada s greenhouse gas emissions are far above its 1990 level which calls for stringent short term policy measures if canada is to meet its legally binding commitment this paper uses a multi region multi commodity static general equilibrium model to quantify the economic impacts of alternative compliance strategies for canada in the context of climate policies undertaken by other kyoto parties the numerical results confirm fears by canadian policymakers of substantial economic adjustment costs should canada fulfill its kyoto commitments solely through domestic action however a rigorous use of the project based cdm on top of international emissions trading could allow canada to live up to its international climate policy commitment at politically much more tolerable costs

current and anticipated deficits interest rates and economic activity abstract there is a widespread feeling that current deficits in europe and the u s may hurt rather than help the recovery this paper examines some of the issues involved through a sequence of three models the first model focuses on sustainability and characterizes its determinants it suggests that the issue of sustainability may indeed be relevant in some countries the second model focuses on the effects of fiscal policy on real interest rates and in particular on the relative importance of the level of deficits and the level of debt in determining interest rates the third model focuses on the effects of fiscal policy on the speed of the recovery it shows how a sharply increasing fiscal expansion might be initially contractionary rather than expansionary

aggregate consumption and deficit financing an attempt to separate permanent from transitory effects many previous empirical studies of the ricardian equivalence hypothesis have found a relatively high degree of future tax liability discounting such that current deficits appear to have relatively little or no influence on current consumption demand however the validity of these empirical estimates can be questioned as they may not have adequately distinguished between permanent and transitory income flows this paper attempts to address this problem by using cycle averaging as a simple method of capturing the permanent path of income over time the empirical evidence generated in this paper rejects the strict debt neutrality proposition of the ricardian equivalence hypothesis

do trade agreements stimulate international trade differently evidence from 296 trade agreements in a seminal article rose 2004 found that the assumed positive impact of the wto on international trade was questionable this finding has been scrutinised and modified in subsequent research using different data sets econometric methods and separating the wto from other forms of trade agreements a key characteristic of the subsequent literature is the rather simplistic way in which trade agreements are treated whereby all trade agreements are lumped together trade agreements come however in many different forms and shapes this study addresses these differences in trade agreements using a unique database of 296 trade agreements we distinguish 17 trade related policy domains and indicate whether the agreements contain legally enforceable commitments this extensive and novel taxonomy of trade agreements enables us to allow for the possible heterogeneity of the impact of trade agreements on international trade using a gravity model we find that trade agreement heterogeneity indeed matters for international trade and that countries experience significant trade increases due to comprehensive trade agreements even if not all participants are in the wto

the real impact of gatt wto a generalised approach rose s result in 2004 that gatt wto has no significant impact on bilateral trade triggered off a series of empirical studies each of those studies augments rose s paper in one specific methodological aspect with the general finding that gatt wto significantly fosters members trade although the estimated impact varies between 2 per cent and 195 per cent of trade creation we combine the methodological contributions of previous studies to overcome these isolated approaches to account for possible interactions and to develop a more general view on the impact of gatt wto in particular we find that gatt wto promotes members trade by around 86 per cent

the gatt wto has promoted trade but only in capital intensive commodities this article uses gravity models to explore the impact of the general agreement on tariffs and trade gatt world trade organization who on bilateral trade in a sample of 46 countries over the period 1965 to 1997 our data enable us to disaggregate trade by broad commodity aggregates the results for total trade are similar to those reported by rose 2004 however the disaggregated estimates reveal that the gatt wto has had a positive and statistically significant impact on trade in capital intensive commodities but no statistically significant impact on trade in other commodities the article demonstrates that simple modifications of rose s approach lead to results that are much more common sense than his jel f10 f15

ricardian equivalence and the public and private saving nexus in india abstractthis study tests the ricardian equivalence theorem ret and examines the responsiveness of private saving to public saving in india most estimators do not provide support for the empirical validity of ret and long run cointegration between public and private saving the increases in household saving hhs seem to have been engendered by the provision of saving incentives institution of saving schemes self driven motivation to save and the precautionary accumulations induced by uncovered uncertainties in incomes rather than by ricardian behaviour of households the self imposed aversion to debt and debt bequest borrowing and liquidity constraints and the intertemporal smoothing of consumption have been the added catalysts that contributed to the increases in hhs the households with binding borrowing constraints inadequate or no insurance and uncovered uncertainties in incomes seem to have been saving more to pay for higher inflation tax the fiscal consolidation and generation of public s

convergence of the static estimation toward the long run effects of dynamic panel data models abstract this article focuses on the estimation of long run effects on panel data we show that the probability limit of the between estimator of a static relation whereas the true specification is a dynamic error components model converges to the long run effects

do regional trade agreements increase members agricultural trade the gravity model is used extensively to investigate the trade flow effects of regional trade agreements rtas a notable feature common to previous research is the use of aggregate trade data these studies typically report conflicting and even negative results of the effect of rtas on members trade using recent developments in the gravity equation suggested by baier and bergstrand 2007 and anderson and van wincoop 2003 this article demonstrates that rta effects on members trade depend fundamentally on whether the analysis focuses on agricultural or nonagricultural sectors on the particular agreement analyzed and on the length of the phase in period that characterizes almost all rtas copyright 2008 oxford university press

is foreign aid a vanguard of foreign direct investment a gravity equation approach summary this paper investigates whether and how foreign aid facilitates foreign direct investment fdi flows into less developed countries we employ a large data set of source recipient country pairs and conduct gravity equation type estimation our empirical methodology enables us to examine an effect through which aid from a donor country promotes fdi from the same donor in particular which we call a vanguard effect we find that foreign aid in general does not have any significant effect on fdi however when we allow for differences in the size of aid effects across donor countries we find robust evidence that foreign aid from japan in particular has a vanguard effect i e japanese aid promotes fdi from japan but does not attract fdi from other countries