The trade policy agenda has been relatively quiet since President Obama took office (notwithstanding a few murmurs about the Korea-US trade deal triggered by last week’s G20 meeting). The administration has been content to let the WTO system maintain the status quo and address disputes, as it has invested its political capital elsewhere. But trade does need to show up on the Congressional agenda occasionally, if only to maintain status-quo policy. “Congress needs to act during the lame duck session on renewal of the Generalized System of Preferences (GSP) program and the Andean Trade Preference Act (ATPA), both of which expire at the end of 2010.”
Author Archives: jdingel
Trade JMPs
There are many candidates this year with job-market papers on international trade. I’ve collected some here, focusing on trade and excluding international finance and open-economy macro. Please add more in the comments. (UPDATE: Thanks to those who have provided links and info!)
Anson Soderbery (UC Davis): “The Competitive Effects of Heterogeneous Firms Facing Capacity Constraints Under International Trade”
Arnab Nayak (Purdue): “Does Variety Fit the Quality Bill? Factor Endowments Driven Differences in Trade, Export Margins, Prices and Production Techniques”
Ben Li (Colorado): “Cross-Border Production, Technology Transfer, and the Choice of Partner”
Dan Lu (Chicago): “Exceptional Exporter Performance? Evidence from Chinese Manufacturing Firms”
Danielken Molina (UC San Diego): “Exporting and Access to Finance: The Colombian Case”
Eduardo Morales (Harvard): “Gravity and Extended Gravity: Estimating a Structural Model of Export Entry”
Ferdinando Monte (Chicago): “Skill Bias, Trade and Wage Dispersion”
Fernando Parro (Chicago): “Capital-Skill Complementarity and the Skill Premium in a Quantitative Model of Trade”
Greg Wright (UC Davis): “Revisiting the Employment Impact of Offshoring”
JaeBin Ahn (Columbia): “A Theory of Domestic and International Trade Finance”
Kamran Bilir (Stanford): “Patent Laws, Product Lifecycle Lengths, and the Global Sourcing Decisions of U.S. Multinationals”
Kyle Handley (Maryland): “Exporting Under Trade Policy Uncertainty: Theory and Evidence”
Logan Lewis (Michigan): “Exports versus Multinational Production under Nominal Uncertainty”
Matthias Lux (NYU): “Defying Gravity: The Substitutability of Transportation in International Trade”
Maya Cohen-Median (Stanford): “Exchange Rate Fluctuations, Consumer Demand, and Advertising: The Case of Internet Search”
Monika Mrázová (LSE): “Trade Agreements when Profits Matter”
Morten Graugaard Olsen (Harvard): “Banks in International Trade: Incomplete International Contract Enforcement and Reputational Concerns”
Oana Hirakawa (UC San Diego): “The Home Market Effect and the International Arms Trade”
Pablo Fajgelbaum (Princeton): “Labor Market Frictions, Firm Growth and International Trade”
Pierre-Louis Vézina (Graduate Institute, Geneva): “Race-to-the-bottom tariff cutting”
Pu Chen (Minnesota): “Trade Volatility and Intermediate Goods”
Rafael Dix-Carneiro (Princeton): “Trade Liberalization and Labor Market Dynamics”
Rodrigo Wagner (Harvard): “New Exports from Emerging Markets: Do Followers benefit from Pioneers?”
Seema Sangita (UC Davis): “The Effect of Diasporic Business Networks on International Trade and Investment Flows”
Shushanik Hakobyan (Virginia): “Accounting for Underutilization of Trade Preference Programs: U.S. Generalized System of Preferences”
Thomas Sampson (Harvard): “Assignment Reversals”
Zhanar Akhmetova (Princeton) “Firm Experimentation in New Markets”
The role of East Asian exchange rates in China’s trade surplus
At Econbrowser, Willem Thorbecke argues that renminbi appreciation alone wouldn’t make much sense: “if policymakers are concerned about China’s surplus, they need to consider exchange rates throughout East Asia rather than the Chinese exchange rate alone.” The reason is the “Factory Asia” phenomenon. Check out the composition of China’s surplus:
Irwin: Did France cause the Great Depression?
In a recent episode of EconTalk, Doug Irwin explains his paper describing France’s hoarding of gold in the late 1920s. (See also his Vox column.) It’s a very accessible introduction to the gold standard, sterilized interventions, and the dangers of deflation.
Playing with shipping costs data
Ethan Zuckerman has some fun with Maersk’s online shipping rates calculator:
The main thing I’ve found playing with Maersk’s calendar: distance doesn’t matter as much as demand. Americans buy a lot of atoms from China. The Chinese don’t buy nearly as many from the US. A 40′ container filled with household goods, shipped from Shanghai to Houston, TX costs $6169.93. Reverse the trip and ship the same container from Houston to Shanghai and the cost is $3631.07. That’s because 60% of containers on ships coming from the US to China are empty, which means Maersk and other shippers are desperate to sell container space.
(The 2006 New York Times article that offers that 60% empty container statistic suggests that lots of full containers are coming to China from raw-materials rich countries like Australia, Brazil and the Middle East. That suggests we should see the opposite pattern – expensive containers from Sao Paolo to Shanghai and cheap ones in the other direction. Nope. $5101.70 from Shanghai to Sao Paolo, $1930.59 in the other direction. Perhaps containers from China to Brazil are riding the same ships as those to the US and paying the same premiums?)
Maersk also offers a set of maps that help you get a sense for how these trade routes actually work. It’s a four day trip from Suva to Auckland on the Pacific Islands Express, and then the bottles of Fiji water are transfered to OC1, the Oceania Americas Service. The Pacific crossing is a long one – 18 days to the Panama Canal, a quick stop in Cartagena, and we’re in Philadephia 25 days out of Auckland. It’s a truck ride from Philly to Cambridge, and that short hop is responsible for $950 of the total transit cost.
As I poke through these maps, schedules and tariffs, I feel like I’m glimpsing a secret world. Part of it may come from the sheer poetry of the names. Shipping routes include “The Boomerang” and the “The South China/Australia Yo-yo” and connect ports like Tin Can Island (Apapa, Nigeria, the main port for Lagos). And part comes from the sense that these routes and rates, the infrastructure that supports an economy where transPacific bottled water is possible, are the ley lines of globalization, radiating a mysterious and sinister power.
Non-discriminatory treatment in domestic commerce
A recent court ruling that led to the repeal of an import prohibition on agricultural products may not be covered at the IELP Blog, because it’s a purely domestic matter:
The city of Lake Elmo [in Minnesota] imposed the protectionist law in 2008, requiring that all agricultural produce sold on Lake Elmo’s farms must actually be grown in Lake Elmo. This would have significantly damaged the Bergmanns, and others like them, who grow produce elsewhere and sell it from their Lake Elmo farm. Judge Noel’s opinion recommended that a preliminary injunction be issued preventing the law from being enforced while the Institute for Justice lawsuit is litigated. The City Council’s change in the law now makes a preliminary injunction unnecessary.
Transfer pricing in the headlines
Bloomberg: “Google 2.4% Rate Shows How $60 Billion Lost to Tax Loopholes”
Mishra & Mishra: “Border Bias”
This paper is psychology, not economics per se, but it’s about the border bias nonetheless:
In this research, we documented a bias in which people underestimate the potential risk of a disaster to a target location when the disaster spreads from a different state, but not when it spreads from an equally distant location within the same state. We term this the border bias. Following research on categorization, we propose that people consider locations within a state to be part of the same superordinate category, but consider locations in two different states to be parts of different superordinate categories. The border bias occurs because people apply state-based categorization to events that are not governed by human-made boundaries. Such categorization results in state borders being considered physical barriers that can keep disasters at bay. We demonstrated the border bias for different types of disasters (earthquake, environmental risk) and tested the underlying process in three studies.
[HT: MR]
Reasons to manufacture in the US
FT:
General Electric plans to invest $432m in four US centres that design and make refrigerators by 2014. The move will add about 500 jobs and reverse a long-term trend of outsourcing its appliance manufacturing to places such as China.
GE argues that a combination of US production quality, the ability to market goods as US-made, and rising transport, currency and labour costs in formerly cheap manufacturing countries have made the moves practicable.
A series of local, state and federal tax breaks have also played a role. For setting up the design and manufacturing centres in the Midwest and South, GE negotiated about $78m in tax breaks.
Over the past year a number of US companies ranging from Caterpillar, the world’s biggest maker of earthmoving equipment, to Wham-O, the maker of the Frisbee and Hula-Hoop, have announced similar plans to expand US production facilities…
In the US market the investments also make for useful headlines for GE. “You still have to be competitive but when all things are equal, being made in the US tips consumers in our direction,” Mr Campbell said. But behind the moves are a series of hard-headed calculations. Local manufacturing means faster product development and lower costs. GE has also used tough new labour contracts to reduce its domestic production costs.
“Compared to five years ago we have made tremendous progress with our unions, which means the new people we hire on to these programmes will come in at reduced wage rates, and that has gone a long way to help us get competitive,” Mr Campbell said.
[HT: Tepper]
Trade Diversion 