Alternate adjustments to external shocks in Hungary

A multisector computable general equilibrium model is used to evaluate Hungary's response to the external price shocks in the 1970s. The model incorporates characteristics of Hungary's reformed socialist economy. The results show that although the deterioration in terms of trade was important, the policies of insulation of the economy and increases in investment had a much larger detrimental impact on the trade balance. The existence of planned CMEA trade reduced the effects of the price shocks on the trade deficit. Export promotion by means of higher export subsidies would not have been effective to reduce the trade deficit in Hungary.     

The experience of the EEC Eurolink Project in modeling bilateral trade linkage equations

Following the basic philosophical approach of the LINK Project, which links various national econometric models built in different countries, the Commission of the European Communities has succeeded in linking the full-size quarterly econometric models of the four major European countries. The Eurolink Project is being extended to cover the other EEC countries as well as the United States, Canada, and Japan. The results reported in this paper are part of this larger project which attempts to link the EEC member economies in a trade and capital flows econometric model and explain the transmission of interdependent economic fluctuations from country to country. In the present study, the interconnection between the various economies is represented by bilateral trade flows only. Flows of invisibles and of financial capital are not completely studied and are not yet ready to be included in this report.The theoretical structural model with its bilateral trade supply and demand functions and the technique employed for the construction of bilateral import and export price indices are presented. Estimation results are shown and discussed with emphasis on their use for the analysis of international trade and for policy decision making.     

Adjustment costs in labour markets and the distributional effects of trade liberalization: Analytics and calculations for Vietnam

This paper explores the implications of different labour market adjustment formulations for the analysis of trade liberalization across different sectors and households in the Vietnamese economy using computable general equilibrium (CGE) models. The model is calibrated to a model admissible Vietnamese data set for 1997.We use five different adjustment cost treatments in analyzing the effects of trade liberalization in Vietnam. We compare simulation results from each and show how different treatments can significantly affect the distributional impacts of policy reforms, such as the trade liberalization. First, labour is treated as fully mobile across all sectors in the economy. Second, the sectors of economy are broken down into the two blocks of agricultural and industrial-service sectors and labour markets are treated as segmented by sector block. No mobility of labour between blocks is allowed while labour within each sector block remains fully mobile. The third is the same as the second, but movement within each agricultural and industrial-service sector block involves transactions costs. In the fourth, mobility of workers from the agricultural to industrial-service sectors and vice versa is possible with transactions costs. Finally, we calibrate the model with unemployment but no adjustment costs for labour reallocation to explore how model results differ in terms of adjustments in the labour market and welfare effects.Our results indicate significant differences in the impacts from trade liberalization across these cases. The redistributional impact of trade liberalization is sharper against poor rural households with segmented labour markets and with transactions costs, while aggregate efficiency gains are similar to no adjustment cost analyses. The conclusion is the choice of model structure for labour markets is crucially important for the perceived distributional impacts of trade liberalization.     

The impact of fiscal shocks on real GDP and income inequality: What do Australian data say?

This paper examines the impact of three fiscal policy shocks on per capita real GDP and income inequality in Australia during the period 1965–2014. A small structural vector autoregressive (SVAR) model is constructed for an open economy for contemporaneous identification and estimation purposes. Based on the evidence of one cointegrating vector among the variables, a structural vector error correction (SVEC) model is specified for the long run. Direct taxation, indirect taxation receipts and government spending are identified as permanent fiscal policy shocks. The convergent use of two different models (SVAR & SVEC) strengthens the credibility of the results. The results have three key policy implications. First, a reduction in direct taxation receipts increases per capita real GDP without increasing income inequality. Second, a reduction in government expenditure significantly increases income inequality. Third, the adverse effect of indirect taxation receipts on income inequality is greater than the redistributive effect of government expenditure, which questions the widely held fiscal policy strategy of using indirect taxation to finance redistributive expenditure.     

Policy responses to external shocks in sub-Saharan African countries

The author analyzes the experience of sub-Saharan African countries with external shocks in the form of the deterioration of the terms of trade and the world recession between 1973 and 1978, with distinction made between low-income and middle-income countries. Adjustment to external shocks in low-income sub-Saharan African countries took largely the form of reductions in imports through lower rates of economic growth and lower income elasticity of import demand while these countries lost export market shares. Losses in export market shares were smaller in the middle-income countries and in the entire group, export performance was positively correlated with the rate of economic growth.     

Asymmetric price rigidity and the optimal interest rate defense of the exchange rate: Some evidence for the US

This paper analyses the optimal monetary policy under incomplete exchange rate pass-through and asymmetric price rigidity. In a general equilibrium sticky price model of an open economy we find that the optimal interest rate rule is to respond to all types of shocks in an economy: real exchange rate shocks, supply shocks and demand shocks. We concentrate our analysis on the interest rate defense of the currency. We claim that the extent of the optimal response of the interest rate to exchange rate shocks depends positively on the degree of pass-through and negatively on price rigidity. Therefore, in the presence of asymmetric price rigidity, the optimal monetary policy should be non-linear, and the interest rate should be adjusted more in case of depreciation of the domestic currency than in case of its appreciation by the same magnitude due to higher downward price rigidity and lower downward pass-through, which are observed empirically. We test this prediction for the US economy and find that the US monetary policy is asymmetric indeed with higher reaction of the interest rate to depreciations of US dollar than to appreciations of the same size.     

The impact of de-globalization on China’s economic transformation: Evidence from manufacturing export

The economic transformation is an important policy practice of economic development in China. In the context of “deglobalization”, it is critically important to better understand the impacts of increasing trade costs on China’s economic transformation from the perspective of firms’ exports. In this study, we measure the trade costs of specific manufacturing sectors and provinces. We employ Heckman (1979) two-stage method and the data from China’s manufacturing firms to investigate the impacts of trade costs on heterogeneous firms’ exports. Based on these results, we further explore the impacts of trade costs on China’s economic transformation and discuss policy advisories. Our results indicate that the increase in trade costs have adverse impacts on China’s economic transformation. Specifically, increasing trade costs hinder firms’ export behaviors and export scales. However, these impacts are heterogeneous on different types of firms, which refers to the ownership reforms, manufacturing sector upgrades and coordinated regional development. In particular, increasing trade costs do not affect coordinated regional development in China, but they are not conducive to ownership reforms and manufacturing sector upgrades. Altogether, our findings provide the first evidence on the impacts of trade costs on China’s economic transformation from the perspective of firms’ exports, and also shed light on policy implications for promoting firms’ exports and economic transformation in the “deglobalization” period.     

Channels of monetary policy transmission in Vietnam

Since the economic reforms launched in 1986, the Vietnamese economy has registered impressive economic growth. While foreign investment is providing much needed capital, through the conduct of monetary policy, the State Bank of Vietnam (SBV), which is an integral part of the government of Vietnam, is also playing an important role in nurturing the economic growth. The aim of this paper is to evaluate the success of the SBV policies. Monetary policy actions affect all sectors of real economies with a significant lag. Without a good understanding of the transmission mechanism, monetary policy actions may not achieve the desired outcomes. Using quarterly data from 1995 to 2010, this paper focuses on monetary policy transmission mechanisms in Vietnam. Specifically, we consider the dynamic response of the Vietnamese economy to interest rate, exchange rate and foreign shocks. The estimated results based on structural vector autoregressive (SVAR) methodology suggest that monetary shocks tend to have a strong influence on Vietnam’s output. We find that Vietnam’s monetary policy is relatively more susceptible to foreign shocks.     

二十一世纪中国经济周期平稳化现象研究(英文)

本文的目的在于回答两个问题：第一，21世纪中国经济周期平稳化的原因何在？第二，21世纪中国经济波动的来源何在？利用统计分析和构造的多方程结构宏观经济模型，我们发现第一个问题的答案几乎完全在于国内因素，包括国内需求冲击的稳定和信贷市场中的自稳定机制；就第二个问题而言，21世纪中国经济波动的最大来源在于国外需求冲击和国内需求冲击——前者对GDP的波动影响较大，而后者则更多地影响CPI。本文的另一个发现是，传统的盯住货币供应量的货币政策对稳定GDP和CPI几乎没有效果。本文的政策建议之一是，在全球危机的背景下，稳定总需求的国内经济刺激政策依然很重要。本文的另一个建议是，为了摆脱全球化的负面影响，我们需要更加依靠城市化而非工业化，并在国内调整各个区域的经济角色。     

略论保税港区的区域开发开放价值

保税港区作为重点发展国际中转、国际配送、国际采购、国际转口贸易和出口加工等业务的功能区,其在区域开发开放中的价值,在很大程度上取决于它的外部效应、示范性和制度创新作用。它不是“政策飞地”,而是区域经济发展的增长极,通过国际商务活动的拓展,服务和辐射周边区域,创立综合性功能区的“区域品牌”,并通过以对外开放为主的各项制度创新,成为开发开放的前沿。     

论东北地区外贸发展方式创新

外贸发展方式创新,是我国"十二五"时期经济发展方式转变的重大而关键的任务。长期以来,东北地区外贸发展主要依据传统的比较优势理论,以出口数量扩张、劳动密集型产品出口和低价格战略形成竞争优势。目前,面临后金融危机影响,全球经济增长乏力、大宗商品价格高企、资源环境压力加大、出口难度增加,更显露出其粗放性和难以持续性。东北地区外贸发展亟待打破原有传统贸易理论束缚,创新外贸发展方式,即从扩大出口创汇转向提高经济效益上来,从粗放式增长转向集约式增长上来,从出口创汇型转向依靠国际化经营能力上来。要遵循国际贸易规则,创新对外贸易制度安排;发挥东北地区优势,开拓多元化国际市场;优化出口产品结构,积极引导产业升级;加强与周边国家和地区的合作,促进外贸经济协调发展;集合各方力量,积极应对贸易摩擦。     

Trade sophistication in developing countries: Does export destination matter?

We investigate whether exports to developed economies stimulate export sophistication (represented by UNCTAD’s index of export similarity) in developing countries. Results from fixed-effects estimations suggest that exporting to developed economies enhances the sophistication of exports in the exporting country but there are diminishing returns to this effect. We also find non-linear effects from FDI and income on export sophistication with the effect of income exhibiting diminishing returns which suggests that the gains from exporting to developed economies are higher for lower-income countries; i.e., as income increases, the gains taper off. We discuss the policy implications of these results.     

外商直接投资对广西出口竞争力影响的实证分析

通过外商直接投资对出口竞争力影响的效应分析,对广西FDI对出口竞争力进行了竞争实力与竞争潜力两方面的实证分析,即分别对国际市场占有率、出口促进、出口产品技术水平、TC指数、RCA指数、贸易创造指数、技术外溢效应等进行实证分析,提出了引入价值增值率更高的生产环节的外商投资,利用FDI培育内生技术能力的政策选择,形成贸易、外资与产业政策合力等对策建议,最大限度地利用FDI促进广西出口竞争力的发展。     

What accounts for China''s trade balance dynamics?

This paper proposes a structural VAR model which extends the frameworks of Hoffmaister and Roldós [Hoffmaister, A. W., & Roldós, J. E. (2001). The sources of macroeconomic fluctuations in developing countries: Brazil and Korea. Journal of Macroeconomics, 23, 213–239] and Prasad [Prasad, E. S. (1999). International trade and the business cycle. Economic Journal, 109, 588–606]. The model is then used to analyse the sources of China's trade balance fluctuations in the period of 1985–2000. Efforts are made to distinguish the forces which underlie the long-run trend in trade balance from those with transitory impacts. The effects of four types of shock are examined—the foreign supply shock, the domestic supply shock, the relative demand shock and the nominal shock. Among other findings, two emerge as important. First, the movements in China's trade balance are largely the result of real shocks. Second, the Renminbi is undervalued, yet changes in the exchange rate bear little on the trade balance. Therefore, monetary measures would not suffice to redress China's trade ‘imbalance’.     

Tariffs,the terms of trade,and national product differentiation

The assumption of national product differentiation is a common feature in many computable general equilibrium models currently used to evaluate trade policy. The results of these models tend to be dominated by changes in the terms of trade, rather than the efficiency effects of the policy concerned. In this paper we use a theoretical n-country general equilibrium trade model to evaluate how national product differentiation relates to the terms-of-trade effects of a tariff. We conclude that monopoly power implicit in national product differentiation is the source of the strong terms-of-trade effects in Armington-type models, and can be exercised with the imposition of a tariff. These results are independent of country size, thus yielding a nonzero optimal tariff even for a small country. Theoretical results are then illustrated using the importdisaggregated version of the Michigan model of world production and trade. We find that strong, tariff-induced terms-of-trade changes emerge over a wide range of import demand elasticities. These results suggest that the assumption of national product differentiation may prejudice the case in favor of maintaining existing levels of protection, and, therefore, may not be appropriate for commercial policy analysis.     

Economy-wide effects of cross-border labor mobility: The case of Palestinian employment in Israel

This paper investigates the economy-wide effects of cross-border movements of Palestinian labor for employment in Israel. The integration of Palestinian and Israeli labor markets is unique, as it differs from international labor migration and associated remittances described in the literature. Especially, it departs from the cultural and social dimensions associated with international migration because there is no shift in residence. We find based on an economy-wide model calibrated to a newly developed database of the West Bank economy that increasing Palestinian labor demand in Israel negatively affects the West Bank economy by bidding up domestic wages, reallocating labor away from tradable activities and reducing competitiveness of the Palestinian export sector. However, increasing labor income from Israel has positive welfare effects for Palestinian households. Considering these results, the paper identifies policy options for the Palestinian National Authority.     

亚洲区域经济合作新领域：区域月良务贸易自由化

在对16个亚洲经济体参与的32件区域服务贸易协定进行经验研究的基础上,本文基于与多边服务贸易体系相对照的视角,对亚洲经济体参与区域服务贸易自由化的机制进行分析,并对亚洲经济体在区域贸易协定框架下的服务贸易自由化水平进行量化评估,以期在一定程度上识别区域服务贸易安排在多边服务贸易安排的基础上取得的进展。     

GLOBALISATION AND REGIONAL RENEWAL REVISTED

The articles in this forum address how the epochal process of globalisation pertains to rural and regional Australia. Collectively, they demonstrate the complexity of globalisation in rural areas in three ways. First, globalisation is a multi‐faceted phenomenon involving more issues than the fluxion of economy and polity around “free” trade. It simultaneously effects and incites ethical and practical reactions concerning national boundaries, environment, community, health, wealth, language and essentially all other matters with social valence. Second, globalisation has diverse and differential impacts both between the developed and developing nations and within them. Third, globalisation has generated collective angst and organised protest. Taken as a whole, these papers simultaneously illustrate theoretically abstract and privately mundane aspects of globalisation.     

Free riders and the redistributive effects of international commodity agreements: The Case of Coffeee

Most studies on the redistributive effects of international commodity agreements neglect the existence of free riders. This article shows, however, that incentives for a free rider behavior may exist under various systems of commodity control. The International Coffee Agreement includes an export quota scheme that is faced with free riders on the import side. The factors that determine the impacts of such a scheme on prices, trade, earnings, and expenditures on the world market and on welfare of importing nonmember countries are elaborated theoretically. An econometric model of the world coffee market is then used to measure the effects of coffee export quotas on different variables of the world market. By use of estimated national import demand functions for coffee, the national welfare gains of importing nonmember countries due to the quota policy of the International Coffee Agreement are also computed.     

The economic costs of US stock mispricing

The USAGE model for the United States is used to quantify economic costs due to stock mispricing, made operational by shocking Tobin's q. The simulations quantify a potentially large impact even in the most favorable environment, where export demand holds up, and, the dollar is pro-cyclical. A two-year investment boom in two sectors increases consumption by a Net Present Value (NPV) amount of nearly one per cent, due to a positive investment externality onto the US terms of trade. If the investment is wasted, however, the consumption loss is nearly one-half of a per cent. A 5-year ‘capital strike’ across the whole economy subsequent to the boom - mimicking financial distress from a burst bubble - shaves around 10 per cent off consumption. Given these significant costs associated with “boom” and “bust” equity markets, we consider some, policy options that might result in greater stability in these markets.