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Author: Daisoon Kim
Publisher:
ISBN:
Category :
Languages : en
Pages : 149
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Book Description
This research investigates how international trade and business cycles vary with characteristics of industries. The first chapter documents cost side industry heterogeneity across narrowly defined industries. The second and third chapters study the short run (international business cycle) and long run (home market effect) phenomenon, respectively. The research contributes to a better understanding of how the supply side industry heterogeneity plays a vital role in international trade and macroeconomics. The first chapter provides a method to estimate the cost structure. The approach relies on cost minimization and free entry condition with frictions, which allows decomposing sources of economies of scale into a sloping marginal cost curve and fixed cost. The US manufacturing industry data show that industry-level economies of scale are more strongly associated with marginal costs than fixed costs. The second chapter shows that the industry's international business cycle patterns vary systemically by the slopes. In industries with decreasing marginal costs, output, imports, and exports are all more correlated with aggregate GDP than in industries with increasing marginal costs. To rationalize the observed patterns, this chapter introduces sloping marginal cost curves and their variations across industries in an open economy macroeconomic model. It delivers endogenous export gains/losses and within-firm links between domestic and export markets which generate two attractive features of the model: (i) it raises model-implied cross-country aggregate GDP comovements which are close to the data, and (ii) it reproduces observed industrial international business cycle patterns. The results suggest that sloping marginal cost curves and their heterogeneity are informative to understand the international business cycle. The third chapter studies how industry characteristics determine the home market effect: the impact of country size on trade surplus and the location of industries. This chapter constructs a two-country multi-industry new trade model that allows for various supply- and demand-side industry characteristics. A novel feature of the model is that economies of scale arise not just from fixed costs, but also from sloping marginal cost curves. The model predicts that large countries have a higher concentration of industries in which (i) marginal costs are an important source of economies of scale, and (ii) products are more differentiated. This chapter tests these theoretical predictions using a gravity-based specification and introduces instrumental variables to fix measurement error and proxy problems. The empirical results are consistent with the main predictions of the model. The results show that the primary building blocks of new trade theory, economies of scale and product differentiation, are central to understanding international trade patterns in narrowly defined industries. The research supposes that a non-linear cost function and variations in cost structure across industries improve our understanding of international trade and business cycles.
Author: Daisoon Kim
Publisher:
ISBN:
Category :
Languages : en
Pages : 149
Get Book Here
Book Description
This research investigates how international trade and business cycles vary with characteristics of industries. The first chapter documents cost side industry heterogeneity across narrowly defined industries. The second and third chapters study the short run (international business cycle) and long run (home market effect) phenomenon, respectively. The research contributes to a better understanding of how the supply side industry heterogeneity plays a vital role in international trade and macroeconomics. The first chapter provides a method to estimate the cost structure. The approach relies on cost minimization and free entry condition with frictions, which allows decomposing sources of economies of scale into a sloping marginal cost curve and fixed cost. The US manufacturing industry data show that industry-level economies of scale are more strongly associated with marginal costs than fixed costs. The second chapter shows that the industry's international business cycle patterns vary systemically by the slopes. In industries with decreasing marginal costs, output, imports, and exports are all more correlated with aggregate GDP than in industries with increasing marginal costs. To rationalize the observed patterns, this chapter introduces sloping marginal cost curves and their variations across industries in an open economy macroeconomic model. It delivers endogenous export gains/losses and within-firm links between domestic and export markets which generate two attractive features of the model: (i) it raises model-implied cross-country aggregate GDP comovements which are close to the data, and (ii) it reproduces observed industrial international business cycle patterns. The results suggest that sloping marginal cost curves and their heterogeneity are informative to understand the international business cycle. The third chapter studies how industry characteristics determine the home market effect: the impact of country size on trade surplus and the location of industries. This chapter constructs a two-country multi-industry new trade model that allows for various supply- and demand-side industry characteristics. A novel feature of the model is that economies of scale arise not just from fixed costs, but also from sloping marginal cost curves. The model predicts that large countries have a higher concentration of industries in which (i) marginal costs are an important source of economies of scale, and (ii) products are more differentiated. This chapter tests these theoretical predictions using a gravity-based specification and introduces instrumental variables to fix measurement error and proxy problems. The empirical results are consistent with the main predictions of the model. The results show that the primary building blocks of new trade theory, economies of scale and product differentiation, are central to understanding international trade patterns in narrowly defined industries. The research supposes that a non-linear cost function and variations in cost structure across industries improve our understanding of international trade and business cycles.
Author: Roy Harrod
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 256
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Book Description
Author: Paul Ko
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This dissertation consists of four chapters. The first chapter introduces the global business cycle synchronization and empirically explores relationships between various shocks and the cross-country business cycle co-movement. The second chapter provides a multi-country, international real business cycle model that incorporates a comprehensive set of shocks that are mentioned in the first chapter. Then, the third chapter connects the model to the data and discusses how various shocks are backed out, by matching various data moments with the endogenous outcomes of the model. Then, the chapter answers the question of which set of shocks primarily affect the synchronization of cross-country business cycles. The fourth chapter explores the implications of the results in the previous chapters to the trade co-movement puzzle. In the first chapter, I empirically show that international business cycles have become highly synchronized across countries in the past three decades. Then, I document that there is a lack of consensus on whether this is due to an increase in the correlation of country-specific shocks or due to increased economic integration in the previous literature. In the second chapter, to understand this empirical phenomenon, I develop a multi-country real business cycle model with international trade that captures several potential explanations: shocks to productivity, demand, leisure, investment, sectoral expenditures, and trade-linkages. The third chapter describes the accounting procedure and the main results. In the first portion of the third chapter, I show a detailed accounting procedure: I match the data exactly with the endogenous outcomes of the model so that shocks fully account for the data. The data moments that I match are GDP, consumption expenditure, labor hours, PPI, CPI, and bilateral trade shares. Then, I calibrate the model to a panel of developed (G7) countries and the rest of the world (ROW). In the second portion of the third chapter, I discuss the main findings. During 1992--2014, I find that trade-linkage shocks, which capture increased economic integration and the volatility of bilateral trade flows, are essential in synchronizing international business cycles. In contrast, correlated country-specific shocks play relatively minor roles. This suggests that trade shocks due to economic integration have been the primary driver of the co-movement of international business cycles. Furthermore, I find that the sources of variation in trade-linkage shocks is predominantly driven by the rest of the world, followed by the United States and Germany -- which shows that the larger the presence of a country in global trade, the larger the impact of the country on international business cycle co-movement. In the fourth chapter, I use my model to address the \textit{trade co-movement puzzle}, which states that international real business cycle models should be predicting a much stronger positive link between trade and cross-country GDP correlations. When I do not account for the trade-linkage shocks in my counterfactuals, I find that the model does not exhibit positive relationship between trade and business cycle co-movement. On the other hand, the other sets of shocks are not sufficient enough to explain the positive relationship between trade and cross-country business cycles. This finding suggests that incorporating the dynamics of trade shocks is crucial when studying the trade co-movement puzzle.
Author: Marianne Baxter
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 80
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Book Description
Virtually all economies experience recurrent fluctuations in economic activity that persist for periods of several quarters to several years. Further, there is a definite tendency for the business cycles of developed countries to move together--there is a world component to business cycles. This paper argues that capital accumulation and international capital flows are central to understanding world trade and business cycles. In particular, fluctuations in net exports and the current account are shown to be dominated by trade in capital goods. The paper develops a two country model of international trade within which capital accumulation and international investment flows play a central role. We explore the channels by which technology shocks and fiscal shocks are transmitted to the domestic and foreign economies, and discuss the extent to which these results are sensitive to individuals' opportunities for international trade in financial assets. Overall, we find that the models capture many of the salient features of international business cycles. However, it has proven consistently difficult to generate sufficient comovement across countries in labor input and investment. The paper concludes with a discussion of fruitful directions for future research.
Author: Ana Filipa Vieira Nadais
Publisher:
ISBN:
Category : Default (Finance)
Languages : en
Pages : 166
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Book Description
"This dissertation consists of three essays studying different aspects of international economics. The first two chapters focus on international trade, namely on estimating the size of trade barriers by looking at how firms manage their inventories, while Chapter 3 focus on international macroeconomics; in specific, the likelihood of a country to default on its debt when there is an informal sector. The first chapter provides evidence supporting the common assumption that international fixed ordering costs are higher than domestic fixed ordering costs. The canonical inventory model (the EOQ model) is extended to include two inputs sourced from different countries. Given the demand for each of the inputs, the fixed ordering costs and the inventory holding cost, the firm decides the optimal quantity to order each period. The model is estimated using firmlevel data on inventories of raw materials and inputs used from domestic and international sources. Assuming constant returns on inventory holding costs, the model reveals that it is between 20 and 60 times more expensive to place an order internationally than domestically, but yields an elasticity of inventories to demand much smaller than in the data. Allowing for a more general holding cost structure, that depends on the level of inventories in stock captures the variation of inventories' cost with firm's size. With this more general setup, foreign ordering costs are estimated to be between 3.5 and 5.2 times higher than domestic, suggesting that there are strong economies of scale in holding inventories. Those estimates are corroborated when I allow total fixed ordering costs to depend on total demand as this specification results in international fixed ordering costs between 4.1 and 7.2 times higher than domestic. The second chapter uses firm-level data on inventory holdings and source of inputs to estimate domestic and international trade barriers looking not only at fixed costs, but also at time lags and computing their tariff equivalents. It starts by documenting three features related to inventories, import decisions, and firm's size. First, inventories increase strongly in size, with an elasticity right below one. Second, importers hold more inventories than non-importers and third, inventories increase in import intensity. Given inventory carrying costs, the inventory holdings are used to infer relative domestic and international trade barriers. I develop a model of heterogeneous firms that produce using imperfectly substitutable domestic and imported intermediates and face demand and supply uncertainty. Given ordering costs and delivery lags that differ by source country, interest charges and inventory holding costs, producers use inventories to economize on trade costs. I find it is 5 times more costly to place an international than a domestic order but, when scaled by average shipment size, the international fixed ordering cost is just twice as large; the international time lag is 3 times larger than the domestic and there is complementarity in inputs, reflected in higher domestic inventories to domestic purchases ratio for importers than for non-importers. Overall, domestic and international trade frictions have a 17.3% tariff equivalent. I decompose these tariffs into their three components and observe that due to the substitutability between fixed ordering costs and inventory holding costs, these barriers have the same relevance while that of time lag is slightly smaller. This framework can then be used to evaluate the benefits of infrastructure investments and policy changes to reduce time delays, uncertainty or fixed ordering costs. The last chapter starts from the observation that, although emerging markets are often characterized by a large informal sector, frequent default and procyclical fiscal policies, sovereign default models proposing explanations for the high sovereign bonds interest rate spreads faced by developing economies have abstracted from the existence of the informal sector and its role. To address this concern, I propose a mechanism through which the size of the informal sector impacts a country's default decision. I extend a small open economy sovereign default model by including an informal and a formal sector and pro-cyclical fiscal policies, where a benevolent government makes default and tax decisions in order to maximize agent's utility and satisfy its level of public spending. I conclude that the taxable base decreases in the size of the informal sector leading to more distortions, which translate into higher tax rates, and more frequent defaults and that these results are magnified over the business cycle"--Pages vi-viii.
Author: A.P. Thirlwall
Publisher: Springer
ISBN: 134926931X
Category : Business & Economics
Languages : en
Pages : 325
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Book Description
Sir Roy Harrod was one of the foremost economists of the twentieth century who made pioneering contributions in several branches of economics including: trade cycle theory; growth theory; trade theory; monetary economics; imperfect competition theory, and methodology. This volume arises out of a conference to celebrate the sixtieth anniversary of the publication of his book The Trade Cycle in 1936. After an introductory essay by Walter Eltis, a student of Harrod, this volume contains important essays on the interpretation of Harrod's work in the field of economic dynamics by Danial Besomi and Maurizio Pugno, and in the field of trade and growth by Tony Thirlwall, John McCombie and Luca Bendictis. Finally, Warren Young, in the process of writing Harrod's biography, uses correspondence between Harrod and Haberler to elucidate Harrod's views on trade theory, international monetary reform and inflation.
Author: Sir Roy Forbes 1900- Harrod
Publisher: Hassell Street Press
ISBN: 9781014022264
Category :
Languages : en
Pages : 256
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Book Description
This work has been selected by scholars as being culturally important and is part of the knowledge base of civilization as we know it. This work is in the public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work. Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. To ensure a quality reading experience, this work has been proofread and republished using a format that seamlessly blends the original graphical elements with text in an easy-to-read typeface. We appreciate your support of the preservation process, and thank you for being an important part of keeping this knowledge alive and relevant.
Author: Robert Miguel Walter Kurt Kollmann
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 222
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Book Description
Author: Roy F. Harrod
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 234
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Book Description
Author: Gottfried Haberler
Publisher: Cambridge, Mass. : MIT Press
ISBN:
Category : Economics
Languages : en
Pages : 680
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Book Description
Gottfried Haberler's contributions to the field of international trade and finance began in the 1920s with a seminal paper on comparative costs. His continuing contributions to open economy analysis, development, business cycles and inflation, the theory of money, and rational expections are highlighted in this selection of 27 essays spanning the years 1925 to 1980. The essays are divided into five major sections, representing the subdisciplines of Haberler's most significant work. The first section on international trade contains his work on comparative costs, comparative advantage, and the location of production and international trade. A section on international finance deals with the state of the international monetary system under conditions of world recession, control over international reserve, U.S. balance-of-payments policy, currency depreciation and the terms of trade, and transfer and price movements. The topic of inflation and business cycles is covered in the third section, with essays on income policies, stagflation, and the Great Depression, and the international transmission of inflation. Section four deals with economic development, and the concluding section contains essays on the theory of money and general macroeconomic theory. Several articles are translated here for the first time and there is a complete bibliography of Haberler's work up to 1980. Gottfried Haberler is Professor Emeritus of Economics, Harvard University, and Resident Scholar at the American Enterprise Institute. Anthony Koo is Professor of Economics at Michigan State University.
