At Vox, Kristian Behrens, Gregory Corcos, and Giordano Mion use Belgian firm-level export data to argue that the trade collapse was due to the fall off in demand and not trade-specific factors such as trade finance.

The Andean Community’s variable-rate tariffs seem novel: “The Andean Community’s Price Band System (APBS), introduced in 1995, had the announced goal of reducing domestic price instability by buffering fluctuations in international prices through use of a variable import tariff.”

Years ago, I posted a table documenting violations of the law of one price across Amazon.com and Amazon.co.uk, noting that there were opportunities for “DIY international arbitrage“. Now Jean Boivin, Robert Clark, and Nicolas Vincent are demonstrating the same point, after collecting a lot more data and noting that it’s best to compare Amazon.com to Amazon.ca:

What are the features that make the online book market and our data set appropriate for this type of study?

• First, each product is identical across retailers, which makes our analysis immune to issues of quality, packaging, and size differences which are present in the data used in earlier studies.
• Second, price comparisons can be readily done online and so shopping or search costs should be orders of magnitude lower than for non-online items.
• Third, according to the NAFTA agreement, books are not subject to trade restrictions or tariffs and there are no constraints on buying books from foreign websites between these two countries.
• Fourth, the nature of the industry is such that the physical concept of distance is irrelevant; the consumer does not have to travel to purchase the good and rather must incur shipping costs, which we observe.
• Fifth, Canada and the US are among the most economically integrated countries in the world, with similar tastes and economic environments.
• Finally, for some websites, we have proxies for (relative) sales, which make it possible to study the reaction of quantities to movements in international relative prices.

…

Based on the shipping costs for a four-book bundle, up to 40% of the 213 best-seller books in our sample are cheaper in Canada from a US perspective. The size of the deviations from the law of one price can also be significant, reaching up to 60% in some cases… If markets are not fully segmented, then the fact that books in Canada become cheaper following an appreciation of the US dollar should be reflected in higher sales for Canadian retailers. Using sales rankings as proxies for quantities, we find no evidence supporting such behaviour.

Germany is looking to bolster its export profile by focusing on logistics — Germany has devised a national strategy that integrates all transportation modes, such as rail, roads, and waterways to accelerate the movement of freight across all parts of the country, according to Julie Wagner of the Brookings Institution.

Hat tip: Larry W-S.

Paul Romer: “Economists devote too much attention to international flows of goods and services and not enough to international flows of ideas.”

Elhanan Helpman: A literature review of “labor market frictions as a source of comparative advantage, with implications for unemployment and inequality.”

William Kerr & William Lincoln: “Higher H-1B admissions increase immigrant science and engineering (SE) employment and patenting by inventors with Indian and Chinese names in cities and firms dependent upon the program relative to their peers… We are able to rule out displacement effects, and small crowding-in effects may exist.”

Jagdish Bhagwati is blogging, at the rate of one post per week, at World Affairs. Thus far, he’s tackled the troubling use of the fair trade label, the uselessness of Davos panels, and the fact that the world is not flat.

If you don’t have access to UNCTAD’s TRAINS via WITS, the WTO’s new tariff database appears to be similar, though not quite as comprehensive. For example, its most recent tariff line duties for Botswana are 2002, whereas TRAINS has them for 2007.

Forthcoming in the AER:

I develop a novel view of the trade frictions between rich and poor countries by arguing that to reconcile bilateral trade volumes and price data within a standard gravity model, the trade frictions between rich and poor countries must be systematically asymmetric, with poor countries facing higher costs to export relative to rich countries.

I provide a method to model these asymmetries and demonstrate the merits of my approach relative to alternatives in the trade literature. I then argue that these trade frictions are quantitatively important to understanding the large differences in standards of living and total factor productivity across countries.

Available ungated at the Minneapolis Fed.

Also on VoxEU today, Mary Amiti and David Weinstein on their recent NBER working paper on Japan’s 1990s trade finance shock –  “exports are much more sensitive to the health of negotiating banks than domestic sales.”

James Feyrer has a column at VoxEU based on his NBER paper on the effect of the closure of the Suez Canal on trade. The pictures tell the tale pretty well

The latter figure is for country-pairs whose bilateral distance was increased by more than 50% due to the closure.