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Recent tweets

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

Davis & Dingel – A Spatial Knowledge Economy

What I’ve been up to:

Leading empiricists and theorists of cities have recently argued that the generation and exchange of ideas must play a more central role in the analysis of cities. This paper develops the first system of cities model with costly idea exchange as the agglomeration force. Our model replicates a broad set of established facts about the cross section of cities. It provides the first spatial equilibrium theory of why skill premia are higher in larger cities, how variation in these premia emerges from symmetric fundamentals, and why skilled workers have higher migration rates than unskilled workers when both are fully mobile.

NBER Working Paper 18188.

Is the renminbi significantly undervalued?

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.

International trade in summer 2012

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.

What good is trade adjustment assistance?

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.

2012 AEA meetings

A few thousand economists will descend upon downtown Chicago this weekend for three days of job-market interviews, research presentations, and other forms of fun at the American Economic Association’s annual meetings. The preliminary program listing is online.

I’ll be attending; please do say hello if you spot me. It was a pleasure to meet a couple of Trade Diversion readers last year in Denver.

The AEA meetings are a massive affair; if you search the program, you’ll find 17 sessions on international trade (JEL code F1) occupying a mere nine time slots. You might also catch me at sessions on F3, F4, P5, or R1. But listing all those would make this post far too long. See you in Chicago!

  • Jan 06, 2012 10:15 am, Hyatt Regency, Regency D
    New Directions in Trade Policy (F1)
  • Jan 06, 2012 10:15 am, Hyatt Regency, Columbian
    Offshoring Theories and Evidence (F1)
  • Jan 06, 2012 10:15 am, Hyatt Regency, Regency D
    New Directions in Trade Policy (F1)
  • Jan 06, 2012 12:30 pm, Hyatt Regency, Stetson Suite FG
    International Trade and Finance (F1)
  • Jan 06, 2012 2:30 pm, Hyatt Regency, Stetson Suite FG
    Round Table on Trade and Development (F1)
  • Jan 07, 2012 8:00 am, Hyatt Regency, Columbus CD
    Correct Measurement of International Financial and Trade Flows (F1)
  • Jan 07, 2012 8:00 am, Hyatt Regency, Crystal A
    Trade and Labor Markets: Evidence from Matched Employer-Employee Data (F1)
  • Jan 07, 2012 10:15 am, Hyatt Regency, Field
    Intermediation and Transport Costs in International Trade (F1)
  • Jan 07, 2012 2:30 pm, Hyatt Regency, Toronto
    Estimating Trade Elasticities (F1)
  • Jan 07, 2012 2:30 pm, Hyatt Regency, Columbus G
    International Trade (F1)
  • Jan 07, 2012 2:30 pm, Hyatt Regency, Water Tower
    International Trade and Trade Policy: In Memory of Robert E. Baldwin (F1)
  • Jan 07, 2012 2:30 pm, Hyatt Regency, Regency C
    New Directions in Trade and Geography (F1)
  • Jan 08, 2012 8:00 am, Hyatt Regency, Dusable
    Advances in International Trade (F1)
  • Jan 08, 2012 10:15 am, Hyatt Regency, Regency C
    International Trade Agreements (F1)
  • Jan 08, 2012 10:15 am, Hyatt Regency, Columbus H
    Multi-Product Firms and Product Quality in International Trade (F1)
  • Jan 08, 2012 1:00 pm, Hyatt Regency, Grand Suite 5
    Global Production Chains (F1)
  • Jan 08, 2012 1:00 pm, Hyatt Regency, Gold Coast
    Labor Market Impacts of Trade (F1)

The latest NBER trade research

Plenty of trade-related material in this morning’s NBER email:

Does “Buy American” boost US manufacturing employment?

A new Chicago Booth website polls expert economists on public policy issues. It recently asked people to strongly agree, agree, disagree, or strongly disagree with the following statement:

Federal mandates that government purchases should be “buy American” unless there are exceptional circumstances, such as in the American Recovery and Reinvestment Act of 2009, have a significant positive impact on U.S. manufacturing employment.

Here are two responses that caught my eye:

Participant Vote Confidence Comment
Daron Acemoglu Agree 6
4 years ago I would have disagreed. Recent evidence (Autor Dorn Hanson) suggests yes.Caveat: costs from higher prices & other inefficiencies
-see background information here
David Autor Disagree 4
Hard to believe this does much at all. But I’m speaking based on my prior. I’ve not seen any rigorous analysis.

The aggregate outcomes were:

IGM Buy American poll