The seminar is part of the activities of FIW, the Centre of Competence in International Economics. Regular lecture series on current issues in international economics.

Location: wiiw Wiener Institut für Internationale Wirtschaftsvergleiche, Rahlgasse 3, 1060 Wien

Thursday, January 29^th , 14pm

 wiiw Rahlgasse 3, 1060 Vienna, lectur hall (ground floor)

Adrea Leiter-Scheiring (with Stefan Borsky and Michael Pfaffermayr)

University of Innsbruck

Abstract

This article addresses the role of environmental standards harmonization and product quality on international trade. In particular, we examine the impact of the International Tropical Timber Agreement (ITTA) on tropical timber trade. We combine a cross-sectional dataset on bilateral trade flows of tropical timber with information on trading partners' economic and geographical characteristics and their ITTA membership. The empirical analysis is based on a gravity equation, which is estimated by using Heckman's selection model to address the potentially systematic selection of trading partners in trade activity. We find that countries participating in ITTA, and therefore agreed on a common standard, exhibit a significantly and substantially larger trade intensity. Furthermore, we observe that this effect depends on a baseline quality supplied by the exporter and its valuation by the importer. Finally, our counterfactual analysis shows a much stronger increase in trade volume in Northern import markets than in Southern markets.

Keywords: Standards harmonization, product quality, gravity equation, sample selection.

JEL Classification: O19, Q23, Q27, F18, L15

Presentation

Thursday, December 11^th, 5 pm
wiiw, Rahlgasse 3, 1060 Vienna, library (second floor)

Elhanan Helpman (with Oleg Itskhoki)

Harvard University

Abstract

Adjustment to trade liberalization is associated with substantial reallocation of labor across firms within sectors. This salient feature of the data is well captured by models of international trade with heterogenous firms. In this paper we reconsider the adjustment of firms and workers to changes in trade costs, explicitly accounting for labor market frictions and the entire adjustment path from an initial to a final steady-state. The transitional dynamics that emerge in this framework exhibit rich patterns, varying across firms that differ in productivity levels and across workers who are attached to these firms. Sunk costs of hiring slow down the adjustment process. High-productivity exporters expand employment on impact. Among lower productivity firms some close shop on impact, others fire on impact some workers and exit at a later date, and still other firms gradually reduce their labor force. In these circumstances jobs that pay similar wages ex ante are not equally desirable ex post, because after the trade shock high-productivity incumbents pay higher wages and provide more job security than low-productivity incumbents. After calibrating the model to match some key moments in the data, we provide a quantitative assessment of the various channels of adjustment. A main finding is that the gains from trade due to the decline in the price index of differentiated products overwhelm the losses that result from wage cuts, employment losses, and capital losses on incumbent firms.

Thursday, November 13^th , 4pm to 6pm

Chrisina Jude

University of Orleans, France; Directorate General of the Treasury at the French Ministry of Finance

Abstract

The aim of this paper is to empirically test the hypothesis of FDI led capital accumulation in Central and Eastern European countries. More precisely, we investigate the relationship between FDI and local investment, using a sample of 10 CEEC over the period 1990-2010. We find FDI to crowd out domestic investment, while the effect decreases with time. Our results also indicate that greenfield FDI may develop long run complementaries with domestic investment, while mergers and acquisitions do not prove any significant effect on domestic investment. Finally, financial development seems to foster a certain crowding-in effect. 

Keywords: FDI, domestic investment, crowding-out, transition, financial development

JEL Classification: E22, F21, F43, O52

Wednesday, October 2nd, 16:00 to 18:00

Gábor Békés (with Balázs Muraközy)

Hungarian Academy of Sciences and Central European University

Abstract

While most research in international trade deals with two modes of foreign sales, exports and direct investment, in reality there are several ways firms can sell abroad. Firms may hire intermediaries to help them selling abroad indirectly, export directly to counterparties abroad, set up arm's length contracts to manufacture abroad or invest directly in the foreign market. In this paper, we first extend a heterogeneous firms model and allow firms to choose among N options to serve clients abroad. Second, we allow for firms being different in several aspects of capability, and they will choose a mode based on their production efficiency and also, the quality of their goods. Using EFIGE, a rich cross section survey of firms in EU countries, we show sorting patterns across six different modes. We highlight the importance of mixed modes as well. Finally, we discuss the relevance of global value chains and the role of business groups.

 

Keywords: Firm heterogeneity, export, FDI, international trade mode, multinomial logit
JEL Classification: F14, F23

Wednesday, 17th September 2014, 16:00 to 18:00

Gabriel Felbermayr (together with Rahel Aichele and Inga Heiland)

ifo Institut and LMU München

Abstract

Since July 2013, the EU and the US are negotiating a comprehensive and ambitious agreement that has the objective of fostering transatlantic trade and investment. Simulations of the potential economic impact of such a Transatlantic Trade and Investment Partnership (TTIP) have led to diverging results due to differences in methods and in scenarios. In this paper, we propose to structurally estimate a new multi-industry quantitative trade model and to simulate the trade and welfare effects of a fully implemented TTIP. In doing so, we seek consistence with existing CGE-based approaches, but we apply a top-down approach to the treatment of non-tariff measures (NTMs). We find welfare effects that are comparable to those obtained in structurally estimated single-sector models and that are substantially higher than those obtained when using a bottom-up treatment of NTMs.

Keywords: Structural gravity, free trade agreements

JEL Classification: F13, F14, F17