Trade Diversion

You’ve no doubt noticed that recently I’ve only been posting once or twice per month. However, I am regularly sharing links and brief comments on Twitter, so you should follow @TradeDiversion. Recently on the Twitter feed (but not the blog):

• 13 May: Summer conferences: Schedules for Princeton IES and NBER ITI are up. http://www.princeton.edu/~ies/workshop.htm & http://users.nber.org/~confer/2013/SI2013/ITI/itiprg.html
• 12 May: World trade: Fresh blood http://econ.st/10uiFGB “The fate of the WTO’s Doha round is in the hands of two new trade officials” @TheEconomist
• 12 May: Kiminori Matsuyama’s symmetry-breaking model of endogenous comparative advantage is forthcoming in Econometrica: http://faculty.wcas.northwestern.edu/~kmatsu/
• 10 May: John Taylor relays rumors that “World Bank will water down or even abandon its ten-year old Doing Business” measures. http://johnbtaylorsblog.blogspot.com/2013/05/10-years-doing-business-measuring.html

I haven’t seen the inside of John McLaren’s new international trade textbook, but I really like the cover:

Here’s an analytic framework that’s almost surely wrong:

What do market economies have to do with cities?

Well, obviously cities are economic entities. To survive, a city or a region has to make money; it has to export more than it imports, in dollar terms. Cities that decline are on the losing side of this equation. So if you care about cities, which I do, it leads you to think about how they function as economic entities.

Alex Marshall’s new book doesn’t mention exports in the context of cities, so I don’t have a way to follow up on the logic underlying this claim. But trade surpluses are not at the heart of urban growth in any urban economics literature I’ve read.

[HT: Aaron Brown]

If you aren’t following Trade Diversion on Twitter, here’s what you missed recently:

• Senators propose bill to require U.S. Olympic uniforms be American-made [Fox News]
• Dan Ikenson on “Reid’s Bonfire of the Inanities“
• Conor Friedersdorf on “President Obama’s Disingenuous Attack on Outsourcing“
• Young readers — want to be a trade policy research assistant at @CatoInstitute? See http://worldtradelaw.typepad.com/ielpblog/2012/07/trade-policy-research-assistant-position.html (via @WorldTradeLaw)

William Cline and John Williamson describe their latest “estimates of fundamental equilibrium exchange rates” (pdf):

China is still judged undervalued by about 3 percent … Thus, whereas a year ago we estimated that the renminbi needed to rise 16 percent in real effective terms and 28.5 percent bilaterally against the dollar (in a general realignment to FEERs), the corresponding estimates now are 2.8 and 7.7 percent, respectively. It is entirely possible that future appreciation will bring the surplus [China's trade surplus] down to less than 3 percent of GDP. But China still has fast productivity growth in the tradable goods industries, which implies that a process of continuing appreciation is essential to maintain its current account balance at a reasonable level.

via Timothy Taylor.

Recently completed conferences include New Faces in International Economics at Penn State, the Midwest International Economics Group, CESifo in Munich, the European Research Workshop in International Trade at CREI, and the Rocky Mountain Empirical Trade Conference at UBC.

The agendas for the Princeton IES Summer Workshop (June 26 – 28) and the NBER Summer Institute trade session (July 9-12) are online.

European summer includes the European Trade Study Group conference in September.

Summer deadlines include July 15 for submissions to Empirical Investigations in International Trade (November) and presumably an August deadline for the October Midwest meeting.

Thanks to Bernardo Diaz de Astarloa for suggesting this post and some of its content.

Timothy Taylor, managing editor of the JEP, points to some recent literature on the effect of trade adjustment assistance. In Contemporary Economic Policy, Kara M. Reynolds and John S. Palatucci find that

using propensity score matching techniques we find that while the required training component of the program improves the employment outcomes of beneficiaries, on average the TAA program has no discernible impact on the employment outcomes of the participants…

We do find strong evidence, however, suggesting that those workers who participate in TAA-funded training opportunities are more likely to obtain reemployment, and at higher wages, when compared to TAA beneficiaries who do not participate in training.

That’s in line with prior research suggesting that the only realized benefits accrue to trainees. But note that due to some data limitations:

It is possible that these results are being  driven by differences between the training and  nontraining participant samples that we are  unable to control for. Recall that although TAA  beneficiaries must participate in training in order  to receive extended unemployment benefits,  nearly 20% of TAA participants receive a waiver  from the training requirement. Program administrators are allowed to grant waivers for a wide  variety of reasons, including the health, age,  and skill level of the worker. Waivers are also  granted to workers who can prove that training  is unavailable in their area. Although we control  for such characteristics as the age and education level of the participant, we do not have  information on other characteristics such as the  health status or the local labor market conditions  of the participant. It is likely that workers in poor  health would be both more likely to receive a  waiver and more likely to remain unemployed.  Moreover, workers in small rural areas may be  limited in both the number of training and the  number of new employment opportunities.