Journal articles on the topic 'Trade shock'
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Lee, Sin Yee, Zulkefly Abdul Karim, Norlin Khalid, and Mohd Azlan Shah Zaidi. "The Spillover Effects of Chinese Shocks on the Belt and Road Initiative Economies: New Evidence Using Panel Vector Autoregression." Mathematics 10, no. 14 (July 11, 2022): 2414. http://dx.doi.org/10.3390/math10142414.
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This paper investigates the spillover effects of Chinese real and monetary sector shocks on the Belt Road Initiative (BRI) economies. The study adopted a panel vector autoregression (PVAR) estimation technique to analyse the dynamic propagation of Chinese shocks in the real sector (gross domestic product (GDP) and trade openness (OPEN)) and monetary sector (nominal interest rate (NIR)) for a sample of 50 BRI countries from 2000 to 2017. The main results revealed that Chinese income shocks positively spill over to all macroeconomic variables except BRI countries’ consumer price index (CPI). However, the Chinese trade openness shock only has a temporary positive spillover to BRI international trade and a temporary negative spillover on its monetary policy. In addition, the Chinese monetary policy shock has a negative spillover on GDP and a positive spillover on CPI in BRI economies. Chinese shocks, however, do not constitute a significant source of variation in any interest variable. As explained by the Chinese income shock, the BRI interest rate is the highest percentage of variable variation accumulated over time. Further, the highest variation of Chinese trade shock is BRI trade openness, and lastly, the highest variation of Chinese interest rate shock is CPI in BRI economies. The beggar-thy-neighbour effect may dominate the positive trade effect and is a negative impact of the Chinese shocks. Hence, BRI economies should alleviate the adverse shocks since the upcoming rapid growth from the Chinese has disturbed the BRI economies. Our results reveal the importance of Chinese development on BRI partners’ economies and the significance of Chinese shocks in real and monetary sectors in assisting policymakers in designing international and monetary policy for BRI economies.
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Baek, Jeongho, and Hong-Youl Kim. "Analyzing the Effects of Oil Price Shocks on the Trade Balance: New Evidence from Korea-China Trade." Korea International Trade Research Institute 18, no. 4 (August 31, 2022): 111–21. http://dx.doi.org/10.16980/jitc.18.4.202208.111.
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Purpose - The primary contribution of this paper is to investigate the impacts of oil supply shocks, aggregate demand shocks, and oil-specific demand shocks on three measures of South Korea’s trade balance oil, non-oil, and total trade balance with its top trading partner China.
Design/Methodology/Approach - In order to investigate how trade balance is influenced by three types of oil price shocks, we used a Structural Vector Autoregressive (SVAR). Also, Impulse Response Function (IRF) was used to calculate degree of the trade balance response to the oil price shock.
Findings - We discover that aggregate demand shocks have the greatest impact on Korea’s trade balances, while oil supply shocks have negligible impacts. Additionally, the overall impact of the three oil shocks on Korea’s trade balances with China appears to rely on the response of the non-oil trade balance.
Research Implications - This outcome explains why the roles of the different shock components of crude oil prices should be accounted for when modeling the nexus between oil price shocks and Korea’s balance of trade
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Novy, Dennis, and Alan M. Taylor. "Trade and Uncertainty." Review of Economics and Statistics 102, no. 4 (October 2020): 749–65. http://dx.doi.org/10.1162/rest_a_00885.
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We offer a new explanation as to why international trade is so volatile in response to economic shocks. Our approach combines the idea of uncertainty shocks with international trade. Firms order inputs from home and foreign suppliers. In response to an uncertainty shock firms disproportionately cut orders of foreign inputs due to higher fixed costs. In the aggregate, this leads to a bigger contraction in international trade flows than in domestic activity, a magnification effect. We confront the model with newly compiled US import and industrial production data. Our results help to explain the Great Trade Collapse of 2008–2009.
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O., Saibu M. "Sectoral Output Responses to Trade Openness, Oil Price and Policy Shocks in Nigeria: A CVAR Approach." Journal of Social and Development Sciences 1, no. 2 (March 15, 2011): 48–59. http://dx.doi.org/10.22610/jsds.v1i2.627.
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This study investigated the relative effectiveness of trade and policy shocks on sectoral output growth in a small open Nigerian economy. It is a country-specific, time series study verifies whether there is difference in the effect of sectoral output response to policy shocks in Nigeria. A CVAR model was specified to assess the effects of policy shocks on real aggregate and sectoral output measures. The model included oil price shock and an interactive term of trade openness as measures of supply and external shocks to the economy. The empirical results showed that there was remarkably difference in sectoral output responses to policy distortion. The effects of monetary policy shocks were positive and significant on manufacturing, service and industrial sector while fiscal policy shock was only significant and positive on agricultural output growth. The result further showed that international oil price shock and trade openness had pronounced negative effects on both sectoral and aggregate outputs. In addition, oil and trade openness’ negative effects overwhelmed the positive effects of fiscal and monetary policy shocks. The policy implication of the finding is that the effectiveness of domestic macroeconomic policy is constrained by the external shocks from both oil price and trade openness. Thus, confirming the open economic version of policy ineffectiveness proposition of the New classical macroeconomic in Nigeria
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Sun, Yiping, Chengjun Wu, Xiaoming Zhu, and Pingguan Bian. "China’s Accession to the WTO as a Shock to Residents’ Health—A Difference-in-Difference Approach." International Journal of Environmental Research and Public Health 19, no. 22 (November 9, 2022): 14728. http://dx.doi.org/10.3390/ijerph192214728.
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The impact of regional trade shocks on population health has been a topic of interest in health economics in recent years. Unfortunately, there are few studies directly discussing the impact of regional trade shocks caused by China’s WTO accession on the health of Chinese residents, which is essential to explore the connection between a country´s opening to international trade and the health of its residents. Taking China’s accession to the WTO as a quasi-natural experiment, based on the micro individual samples of the China Health and Nutrition Survey (CHNS) from 1993 to 2011, this paper, for the first time, studies the impact of regional tariff uncertainty caused by China’s accession to the WTO on the health of Chinese residents and its mechanisms by adopting the Difference-in-Difference (DID) model. The study finds that compared with the areas initially facing low tariff uncertainty, the areas with high initial tariff uncertainty have a greater negative impact on the health of residents after China acceded to WTO, which means that the trade shock caused damage to the health of residents. After a series of tests on the effectiveness and robustness of DID, this conclusion is still valid. The impact of the trade shock on residents’ health varies with the type of residence, gender, and geographical location, and there is a nonlinear relationship. Further mechanism tests show that the trade shock has worsened the health status of residents through rural migration channels, working hours channels, and pollution emission channels. This study provides micro evidence for objectively evaluating the health effects of trade shock and has important implication for considering the health loss of Chinese residents in the process of trade liberalization.
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Szomolányi, Karol, Martin Lukáčik, and Adriana Lukáčiková. "Impact of Terms-of-Trade on Slovakia, the Czech Republic, and Croatia in the Short Run." Naše gospodarstvo/Our economy 63, no. 1 (March 1, 2017): 3–13. http://dx.doi.org/10.1515/ngoe-2017-0001.
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AbstractThe terms-of-trade shocks are not main source of business cycles in three post-communist countries (i.e., Slovakia, the Czech Republic, and Croatia). The zero or negative reactions of the trade balance in terms-of-trade positive shocks in the countries exhibit the Obstfeld-Svensson-Razin effect, according to which the Harberger-Laursen-Metzler positive effect on terms-of-trade indicates that the smaller the trade balance, the more persistent the terms-of-trade shock is. The conclusions come from the structural vector autoregressive analysis of the cyclical components of terms-of-trade, trade balance, output, consumption, and investment in three post-communist countries.
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Malhotra, Rohit. "“Asymmetric Export Volatility Shock Behaviour” of Lower Middle Income (LMI) Countries in South East Asia During COVID-19 Pandemic." Transnational Marketing Journal 9, no. 2 (September 13, 2021): 195–218. http://dx.doi.org/10.33182/tmj.v9i2.1559.
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COVID-19 Pandemic still affecting all countries. South Asian economies and that particularly India is no exception. Because of this “uncertainty shock”, India’s GDP has contracted by 3.1percent in the last quarter of 2020. The present empirical work covers broadly the “asymmetric spillover and related noisy shocks” surrounded with trade (export) volatility about LMI nations in “two phases” i.e. in terms of considering the During pandemic phase (DC) the period from April 2019 till June 2020 and Pre-pandemic phase (PC) from April 2013 till November 2020. A comparative trade volatility asymmetries analysis were applied using a nonlinear volatility function i.e. exponential weighted moving average (EWMA), and identification of noisy behaviour after the initial post-recovery for empirical evidence. The empirical findings discovered that there were “extended” non-smooth and noisy “shock propagation” post initial recovery across two phases by the use of VAR and VECM outcomes. Bangladesh and Pakistan were stronger “Noisy shock contributors” while Nepal and Sri Lanka were turned out to be the strongest “Noisy shock receivers”. This “noisy” behaviour implies “uncertainty” and chaos on the international trade front resulting in higherthan expected volatility in trade figures and in-built destabilized momentum in the impulses. The results also relate to the possible opportunities of intra-regional trade convergence as a policy imperative.
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Setiastuti, Sekar Utami. "TIME-VARYING MACROECONOMIC IMPACTS OF GLOBAL ECONOMIC POLICY UNCERTAINTY TO A SMALL OPEN ECONOMY: EVIDENCE FROM INDONESIA." Buletin Ekonomi Moneter dan Perbankan 20, no. 2 (October 31, 2017): 129–48. http://dx.doi.org/10.21098/bemp.v20i2.809.
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This paper studies macroeconomic impacts of global economic policy uncertainty shocks to a small open economy. To that end, I use monthly Indonesian data along with a measure of global economic policy uncertainty developed by Baker et al. (2016) and Davis (2016) and estimate a time-varying parameter Bayesian structural VAR with non-recursive identification using framework proposed by Canova and Pérez Forero (2015). I find that global economic policy uncertainty shocks lead to a reduction in prices, interest rate, and trade balance in all global events included in the estimation. The impact on output, however, largely varies across events. A surprise movement of global economic policy uncertainty triggers a contraction in output around the 2008 global financial crisis but, following the 2016 US presidential election, output reacts positively to the shock. Despite these notable variations in the responses of output, the proportion of the forecast error variance of output due to the shock is very small and decreases rapidly over time—which indicates that the shock presents an inconsequential effect to output. Nonetheless, the proportion of the forecast error variance of trade balance due to the shock is considerably higher than the forecast error variance of output and inflation. This further suggests that, via international trade, a global economic policy uncertainty shock could still pose harm for Indonesia.
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Di Tella, Rafael, and Dani Rodrik. "Labour Market Shocks and the Demand for Trade Protection: Evidence from Online Surveys." Economic Journal 130, no. 628 (January 22, 2020): 1008–30. http://dx.doi.org/10.1093/ej/ueaa006.
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Abstract We study preferences for government action in response to layoffs resulting from different types of labour-market shocks. We consider: technological change, a demand shift, bad management and three kinds of international outsourcing. Support for government intervention rises sharply in response to shocks and is heavily biased towards trade protection. Trade shocks generate more demand for protectionism and, among trade shocks, outsourcing to a developing country elicits greater demand for protectionism. The ‘bad management’ shock is the only scenario that induces a desired increase in compensatory transfers. Trump supporters are more protectionist than Clinton supporters, but preferences seem easy to manipulate: Clinton supporters primed with trade shocks are as protectionist as baseline Trump voters. Highlighting labour abuses in the exporting country increases the demand for trade protection by Clinton supporters but not Trump supporters.
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Yoon, Jai Hyung, and Francis In Yoon. "Terms of Trade, Intermediate Goods and International Real Business Cycles: Australia Case." International Studies Review 5, no. 2 (September 28, 2004): 95–111. http://dx.doi.org/10.1163/2667078x-00502006.
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This paper examines whether a two-sector business cycle model with intermediate and import goods successfully replicates stylized facts of the international real business cycle in a small open economy. Our model incorporates the neoclassical framework, with productivity shocks in both manufacturing and non-manufacturing sectors, terms of trade shock, import goods and intermediate goods. Our model is able to mimic the important features of business cycles in Australia. The productivity shock of the non-manufacturing sector has a dominant role in a small open economy's business cycle. The productivity shock of the non-manufacturing sector increases imports more than exports.
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Oladunni, Sunday. "External Shocks and Business Cycle Fluctuations in Oil-exporting Small Open Economies: The Case of Nigeria." Central Bank of Nigeria Journal of Applied Statistics, Vol. 10 No. 2 (February 21, 2020): 39–71. http://dx.doi.org/10.33429/cjas.10219.2/6.
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This study employs a sign-restricted Bayesian structural vector autoregressive (BSVAR) model to analyse how global demand, oil price and the US monetary policy shocks impact the Nigerian business cycle. The objective is to uncover the dominant external drivers of the business cycle in Nigeria. Results show that global demand and oil price shocks are the principal foreign drivers of the Nigerian business cycle. The global demand shock elicits the strongest responses from output growth and inflation; while oil price shock impacts the terms-of-trade and interest rate the most. The historical contributions of the global demand and oil price shocks to the evolution of output growth are significant and comparable, while that of oil price shock to inflation and interest rate is dominant. Further sensitivity analysis of pre-crisis period of 2008/09 suggests that macroeconomic risk arising from global demand shock is systematic, owing to the comparable impact on output growth and similar interest rate response in the two estimations. Evidence suggests that the GFC may have contributed to the more volatile inflation response to global demand shock in our full sample estimation. Given the strong and pervasive impact of the global demand shock on output growth, Nigeria can manage its vulnerability by shrinking the size of oil exports in its terms-of-trade, while growing non-oil exports progressively through sustained economic diversification and viable industrialization strategy.
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Ibironke, Adesola. "Africa’s Trade with China and US: Has COVID-19 Changed the Trends of Trade?" Journal of Economic Impact 3, no. 2 (July 26, 2021): 55–66. http://dx.doi.org/10.52223/jei3022101.
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Africa’s trade with China and the US is one of the international issues affecting development in the continent. This paper, therefore, examines the effects of COVID-19 on Africa’s trade with the two countries by investigating whether the pandemic has changed the trends of the trade. The article explores the responses of the individual trade of China and the US with Africa to their own shocks, without and with the pandemic, using the vector autoregressive (VAR) model and monthly data covering 1970m01 (January 1970) to 2020m07 (July 2020). The results show that China’s trade performs better while responding to a shock to America’s trade than America’s trade does while responding to a shock to China’s trade, without and with COVID-19. This finding suggests that China has a stronger trade footing in Africa and that COVID-19 had not changed the trends of Africa’s trade with China and America, even with the impact of the pandemic on China. China’s dominant trade status in Africa is probably due to the country’s large investment and aid in the continent. The key policy focus of Africa on trading with China and the US should therefore be how to achieve optimum trilateral trade thresholds in the face of potential trade-offs.
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Al-Shayeb, Abdulrahman, and Abdulnasser Hatemi-J. "Trade openness and economic development in the UAE: an asymmetric approach." Journal of Economic Studies 43, no. 4 (September 12, 2016): 587–97. http://dx.doi.org/10.1108/jes-06-2015-0094.
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Purpose The purpose of this paper is to offer a review of the trade policy in the UAE. It also investigates the dynamic interaction between trade openness and GDP per capita in this emerging economy. Design/methodology/approach The asymmetric generalized impulse response functions and the asymmetric causality tests developed by Hatemi-J are used. Findings The results from asymmetric generalized impulse response functions indicate that a positive permanent shock in the trade openness results in a significant positive response in the cumulative sum of the positive component of the GDP per capita. Such a response is not found for the negative shocks in the trade openness. Furthermore, neither a positive nor a negative shock in the GPD per capita results in any significant response in the trade openness. These empirical findings are also supported by the implemented asymmetric causality tests. Originality/value This is the first attempt that investigates the impact of trade openness on economic performance in the UAE. Unlike previous literature on the topic, this paper allows for asymmetric impacts in the empirical model.
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Chinoy, Sajjid Z., and Toshi Jain. "What Does Oil in Triple Digits Mean for India?" Indian Public Policy Review 3, no. 2 (Mar-Apr) (March 18, 2022): 1–14. http://dx.doi.org/10.55763/ippr.2022.03.02.001.
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The Russia-Ukraine conflict is expected to impact India’s economy through several channels but we posit first order impacts will emanate from higher crude prices. If crude prices were to average $100/barrel in 2022, they will constitute a discernible adverse terms of trade shock for India’s economy that could shave a percentage point off India’s growth, pressure inflation further and widen the current account deficit towards 3% of GDP. How should policy respond? A negative terms of trade shock would argue for a more depreciated equilibrium real effective exchange rate. Policymakers should let this adjustment gradually take place to enable the corresponding “expenditure switching” needed to bring external imbalances back to sustainable levels. A sustained supply shock will make the trade-off for monetary policy more acute, with downside risks to growth accompanied by upside risks to inflation expectations. While the 2022-23 Budget created buffers to protect against shocks, fiscal policy will face its own set of trade-offs in simultaneously attempting to accommodate the shock, support growth and preserve macroeconomic stability. Beyond the near term, policymakers must consider systematically hedging crude price imports in global markets to protect the economy from periods of outsized volatility, apart from the medium-term objective of reducing dependence on imported crude.
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Liang, Jiaochen, and Stephan J. Goetz. "Self-employment and trade shock mitigation." Small Business Economics 46, no. 1 (September 19, 2015): 45–56. http://dx.doi.org/10.1007/s11187-015-9677-6.
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Abdullahi San, Mohammed, Prof Mustapha Mukhtar, and Prof A. Alexander. "Trade Shock, Inflation, Exchange Rate and Economic Growth: Empirical Evidence from OPEC Countries Using Panel Vector Autoregression." International Journal of Economics, Business and Management Research 06, no. 04 (2022): 178–98. http://dx.doi.org/10.51505/ijebmr.2022.6414.
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The study is empirically motivated to analyze the link between trade openness, inflation, exchange rate and economic growth among the OPEC countries by using key macroeconomic variables across member countries. The study utilizes quarterly time series data for variables including economic growth, trade openness, exchange rate, consumer price index and oil price as exogenous variable in the system for over 164 quarterly data points. Utilizing the recently introduced model of Ambrigo and Inessa (2015), the study uses panel vector autoregression model and analyze how various shocks affect macroeconomic stability of the member countries. Trading shock as well as oil price shock are analyzed and responses of other macroeconomic indicators are evaluated. Based on the estimated result for impulse response and forecasted error variance decomposition result, the study established statistically significant link between trading shock and economic growth of the member countries while oil price shock is found to have significant but weak relationship with economic growth. Babed on the finding established, the study recommends that trading shocks is the main driver of cyclical fluctuation of the OPEC's member countries economic growth. Policies are therefore prescribed to smoothen the impact of trading shocks on the economic growth of the member countries.
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Raghavan, Mala, and Evelyn S. Devadason. "How Resilient Is ASEAN-5 to Trade Shocks? A Comparison of Regional and Global Shocks." Global Journal of Emerging Market Economies 12, no. 1 (January 2020): 93–115. http://dx.doi.org/10.1177/0974910120906239.
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This article studies the resilience of the ASEAN region to external shocks amid the unfolding effects of the USA–China trade war. It investigates and compares the effects of regional (ASEAN) and global (USA, China) shocks on ASEAN-5 using a Structural VAR (SVAR) framework. To identify the propagation of economic shocks and spillovers on ASEAN-5, the changing trade links between the economies considered are used to account for time variations spanning the period 1978Q1–2018Q2. Three major results follow from the analyses on trade links and output multiplier effects. First, the response of ASEAN-5 to shocks from the USA and China were more pronounced than regional shocks for the period after the Asian financial crisis. Second, the increasing cumulative impact of China’s shock on ASEAN was congruous to the growing trade links and trade intensities between ASEAN and China. Third, the USA and China were dominant growth drivers for the weaker trade-linked ASEAN partners. Taken together, the results suggest that global shocks matter for the region, and the economic resilience of the region to global shocks depends on indirect effects apart from the direct trade links.
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Dix-Carneiro, Rafael, João Paulo Pessoa, Ricardo Reyes-Heroles, and Sharon Traiberman. "Globalization, Trade Imbalances and Labor Market Adjustment." International Finance Discussion Paper 2021, no. 1310 (February 10, 2021): 1–95. http://dx.doi.org/10.17016/ifdp.2021.1310.
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We study the role of global trade imbalances in shaping the adjustment dynamics in response to trade shocks. We build and estimate a general equilibrium, multi-country, multi-sector model of trade with two key ingredients: (a) Consumption-saving decisions in each country commanded by representative households, leading to endogenous trade imbalances; (b) labor market frictions across and within sectors, leading to unemployment dynamics and sluggish transitions to shocks. We use the estimated model to study the behavior of labor markets in response to globalization shocks, including shocks to technology, trade costs, and inter-temporal preferences (savings gluts). We find that modeling trade imbalances changes both qualitatively and quantitatively the short- and long-run implications of globalization shocks for labor reallocation and unemployment dynamics. In a series of empirical applications, we study the labor market effects of shocks accrued to the global economy, their implications for the gains from trade, and we revisit the "China Shock" through the lens of our model. We show that the US enjoys a 2.2 percent gain in response to globalization shocks. These gains would have been 73 percent larger in the absence of the global savings glut, but they would have been 40 percent smaller in a balanced-trade world.
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Alam, Aftab, Jingmei Ma, Ibrar Hussain, and Rizwan Fazal. "An analysis of the impact of China’s macroeconomic performance on its trade partners: Evidence based on the GVAR model." PLOS ONE 18, no. 1 (January 3, 2023): e0275859. http://dx.doi.org/10.1371/journal.pone.0275859.
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Economic strategies and planning are critical to a country’s growth and development. China, like many other countries, is seeking the most cost-effective trade deals. Using the Global Vector Auto Regression (GVAR) model, this study examined the impact of a shock to China’s macroeconomic factors on trading economies. The major findings reveal that there is no co-movement between the shock in Chinese gross domestic product (GDP) and German macroeconomic indicators; however, the shock has a positive and substantial influence on Japan’s GDP and Unites States (US)’ exchange rate. It is also worth noting that a shock to Chinese trade volume is more susceptible and more disturbing than a shock to US trade volume since it reduces trade volume and causes the Ren Min Bi (RMB) to devalue permanently. Furthermore, the analysis shows that Chinese stock prices have a major influence on German economy since China’s GDP, trade volume, and currency appreciate over time when its stock price rises. Finally, the exchange rate shock is beneficial to Germany as it boosts GDP and trade volume but has a negative influence on US stock prices. The current study is, therefore, expected to be a suitable beginning point for the governments and policymakers of trading partners to design an effective trade policy to minimize the impact on major economic variables.
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Autor, David H., David Dorn, Gordon H. Hanson, and Jae Song. "Trade Adjustment: Worker-Level Evidence *." Quarterly Journal of Economics 129, no. 4 (September 24, 2014): 1799–860. http://dx.doi.org/10.1093/qje/qju026.
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Abstract We analyze the effect of exposure to international trade on earnings and employment of U.S. workers from 1992 through 2007 by exploiting industry shocks to import competition stemming from China’s spectacular rise as a manufacturing exporter paired with longitudinal data on individual earnings by employer spanning close to two decades. Individuals who in 1991 worked in manufacturing industries that experienced high subsequent import growth garner lower cumulative earnings, face elevated risk of obtaining public disability benefits, and spend less time working for their initial employers, less time in their initial two-digit manufacturing industries, and more time working elsewhere in manufacturing and outside of manufacturing. Earnings losses are larger for individuals with low initial wages, low initial tenure, and low attachment to the labor force. Low-wage workers churn primarily among manufacturing sectors, where they are repeatedly exposed to subsequent trade shocks. High-wage workers are better able to move across employers with minimal earnings losses and are more likely to move out of manufacturing conditional on separation. These findings reveal that import shocks impose substantial labor adjustment costs that are highly unevenly distributed across workers according to their skill levels and conditions of employment in the pre-shock period.
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JIANG, XIAOJIAO, ANDREW J. CASSEY, and THOMAS L. MARSH. "ECONOMIC CONSEQUENCES FOR TREE FRUIT INTERMEDIARIES FROM SHOCKS." Journal of Agricultural and Applied Economics 49, no. 4 (August 22, 2017): 592–616. http://dx.doi.org/10.1017/aae.2017.15.
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AbstractMotivated by disease outbreaks and trade shocks, a dynamic equilibrium displacement model is calibrated for the U.S. pear industry to simulate welfare from various shocks compared to a baseline. Our contribution is assessing the impact to intermediary packers for fresh fruit and processors for processed fruit in addition to growers and consumers. The processed market is more sensitive than the fresh market generally, and supply shocks induce larger impacts on both markets than trade sanctions. Impacts to intermediaries are on par with growers, indicating that not considering them misstates the distribution of damages to the industry from a shock.
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Kyin, Tey Sheik, and Lee Chin. "CURRENCY CRISES AND CONTAGION CHANNELS IN ASIAN ECONOMIES." Buletin Ekonomi Moneter dan Perbankan 25, no. 4 (January 20, 2023): 575–96. http://dx.doi.org/10.21098/bemp.v25i4.1777.
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This study examines multiple transmission mechanisms that propagate and amplify shocks across Asian nations owing to financial turbulence with emphasis on global shock transmission between economies that prioritise ‘trade’ and ‘financial’ connections in four countries: Indonesia, Korea, Malaysia, and the Philippines. Based on the logit estimation outcomes, a higher degree of trade openness amplifies the implications of shocks on the economy. Relevant implications are drawn for optimal regional monitoring and the coordination of integration as the economic fundamentals associated with the currency crises complements the first-generation models of speculative attacks.
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Benguria, Felipe, and Alan M. Taylor. "After the Panic: Are Financial Crises Demand or Supply Shocks? Evidence from International Trade." American Economic Review: Insights 2, no. 4 (December 1, 2020): 509–26. http://dx.doi.org/10.1257/aeri.20190533.
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Are financial crises a negative shock to aggregate demand or supply? This is a fundamental question for research and policy making. Arguments for stimulus usually presume demand-side shortfalls; arguments for tax cuts or structural reform look to the supply side. Resolving the question requires models with both mechanisms, and empirical tests to tell them apart. We develop a small open economy model, where a country is subject to deleveraging shocks that impose binding credit constraints on households and/or firms. These financial crisis events leave distinct statistical signatures in the time series record that divide sharply between each type of shock. Empirical analysis reveals a clear picture: after financial crises the dominant pattern is that imports contract, exports hold steady or even rise, and the real exchange rate depreciates. History shows financial crises are predominantly a negative shock to demand. (JEL F14, F31, F41, G01, N10, N20, N70)
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Faryna, Oleksandr, and Heli Simola. "How Trade Composition Affects Sensitivity to Foreign Shocks: Applying a Global VAR Model to Ukraine." Visnyk of the National Bank of Ukraine, no. 247 (March 26, 2019): 4–18. http://dx.doi.org/10.26531/vnbu2019.247.01.
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This paper studies the transmission of foreign output shocks to real activity in Ukraine through international trade. We employ a global vector auto regressive (GVAR) model that captures about 80% of the world economy and incorporates time-varying trade and financial weights. According to our estimates, a mild recession in the US of a 1% drop in output generates a substantial recession in Ukraine of about 2.2%. A similar drop of output in the euro area and Russia translates to a drop in output of about 1.7% in Ukraine. Finally, the same drop of output in CEE, China, or the CIS leads to an output decline of about 0.4% in Ukraine. Meanwhile, Ukraine’s response to euro area output shock has been steadily increasing over the last couple of decades due to changes in global trade flows. Ukraine’s sensitivity to shocks in the US and euro area is notably strengthened by indirect trade effects, while the response to shocks from emerging economies, i.e., China, CEE, the CIS, and partially Russia, is mainly determined by bilateral trade linkages.
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Smith, Fiona. "Brexit as Trade Governance." Journal of World Investment & Trade 20, no. 5 (October 28, 2019): 654–79. http://dx.doi.org/10.1163/22119000-12340151.
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Abstract Following the 2016 referendum on its continued membership of the European Union (EU), the United Kingdom (UK) is now withdrawing from, and negotiating a new relationship with, the EU. Both the UK’s exit and future relationship with the EU must conform to World Trade Organization (WTO) rules. The WTO’s rules are only partial and were not designed to facilitate a state’s withdrawal from a regional trade agreement, the contraction of an area of liberalized trade, nor the (re)emergence of ‘protectionist’ trade barriers. The EU and UK must transcend this problem by creating legally binding rules in an otherwise vacant legal space. Yet Brexit is a shock to the WTO’s rules and ethos: diplomatic negotiation is augmenting and replacing regulation in ways that affect the WTO, and the bilateral and multilateral agreements to which the EU and UK are both parties. This shock is a fundamental change to the prevailing trade orthodoxy.
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Hendrati, Ignatia Martha, Unggul Heriqbaldi, Miguel Angel Esquivias, Bekti Setyorani, and Ari Dwi Jayanti. "Propagation of Economic Shocks from the United States, China, the European Union, and Japan to Selected Asian Economies: Does the Global Value Chain Matters?" International Journal of Energy Economics and Policy 13, no. 1 (January 22, 2023): 91–102. http://dx.doi.org/10.32479/ijeep.13789.
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A panel vector autoregression (VAR) model is employed to estimate whether growth shocks from the United States (US), China, Japan, and the European Union (EU) can be transferred to selected Asian countries. We examine 1) the effect of shocks through five channels: international trade, monetary policy, finance, global uncertainty, and oil prices; 2) whether a country’s deeper integration with the global value chain (GVC) enhances or decreases the effect of growth shocks from major economies more intensively than trade openness. We found evidence of the shock transfer from major economies to Asia through the five channels. The impact differs across countries depending on their participation in GVC; for example, the impact is high in Indonesia and low in South Korea. Moreover, Asian countries are more exposed to trade shocks through China’s trade channel than other major economies. Zooming in on the channels’ impacts, global uncertainty affects countries’ growth (e.g., Indonesia) more significantly than other channels (i.e., GVC); and Asian countries respond positively to oil prices in the short run but negatively in the long run.
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Susanti, Susi. "Analysis of Asean’s Shock in The Discourse on Establishing Asean Currency Unit (Acu)." Economics Development Analysis Journal 6, no. 4 (March 15, 2018): 395–402. http://dx.doi.org/10.15294/edaj.v6i4.22289.
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The discourse of the establishment of ASEAN single currency is the vision of ASEAN in 2020 with the aim to facilitate the stabilization of the regional exchange rate. The region that will form a single currency must have the same trade pattern criteria, symmetrical macroeconomic shocks and similar development economics characteristics. However, the economics indicators of ASEAN region are still inbalances. This study aims to analyze the shocks response of economic indicators in ASEAN-10. The variables in this research are Consumer Price Index (CPI), Real GDP and Trade Balance from ASEAN countries. This research model is Vector Error Correction Model. The are low correlation between Consumer Price Index (CPI), Real GDP and Trade Balance in ASEAN. The shock response from ASEAN countries to shocks that occurred in Singapore showed varying results and not symmetrical. This is shows that the requirement of formation of single currency has not been fulfilled. The result of the decomposition variant also shows that Singapore's economic turmoil is still dominantly influenced by internal conditions. However, the decomposition variant of GDP Rill shows that Laos has a higher role compared to Singapore due to the cooperative relationship between the two countries.
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Chaudhuri, Sarbajit, and Anindya Biswas. "External terms-of-trade and labour market imperfections in developing countries." Indian Growth and Development Review 11, no. 1 (April 9, 2018): 22–33. http://dx.doi.org/10.1108/igdr-07-2017-0045.
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Purpose Some recent empirical studies have found that developing countries are more prone to external terms-of-trade shocks compared to developed nations. With this background, the purpose of this paper is to the question of whether developing countries possess any built-in mechanism that can cope with external terms-of-trade (TOT) shocks both theoretically and empirically. Design/methodology/approach This paper uses a two-sector, full-employment general equilibrium model with endogenous labour market distortion to conduct its theoretical analysis and then uses an annual panel dataset of 13 small developing countries over the recent time period of 2000-2012 to substantiate its theoretical findings. Findings Theoretically, this study finds that developing countries possess an inherent shock-absorbing mechanism that stems from their peculiar institutional characteristics and can lessen the gravity of detrimental welfare consequence of exogenous TOT movements. This analytical result has been found to be empirically valid based on a panel dataset of 13 countries from 2000-2012. Originality/value The authors’ analyses suggest that that the developing countries should take utmost caution before adopting the policy of labour market reform because these might impair the effectiveness of their in-built shock-absorbing mechanism against adverse international price movements.
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Sulillari, Junada, and Kostandin Nasto. "AN ANALYSIS OF THE EVOLUTION OF ALBANIAN - GREEK TRADE FLOWS." International Journal of New Economics and Social Sciences 9, no. 1 (June 28, 2019): 169–82. http://dx.doi.org/10.5604/01.3001.0013.3041.
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The aim of this study is to realize an analysis of the trade relations between Albania and Greece. Through the study, researchers want to show how trade relations between these countries have changed during the years, and also want to reveal some of the things that dominate these relations. Part of the study will also be the analysis that will help understand the relationship between the trade flows and the Greek GDP. Also, it will be possible to see if these trade flows have experienced any shock during the period taken into consideration. The analysis will be realized by using an econo-metric linear model, and to discover if there has been any shock, the Error Correcting Model will be used. The study proved that Greece is one of the main trade partners of Albania. The volume of the trade flows with Greece represents an important part of the overall trade flows of Albania. Based on the dates analyzed the study revealed that imports composition has changed more in comparison with the exports. The study also revealed that there has been a shock in the trade flows during the period taken into consideration.
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Liu, Cong. "The Effects of World War I on the Chinese Textile Industry: Was the World’s Trouble China’s Opportunity?" Journal of Economic History 80, no. 1 (December 26, 2019): 246–85. http://dx.doi.org/10.1017/s0022050719000858.
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This paper uses an unexpected trade disruption due to World War I to study how a temporary reduction of imports affects the entry of industrial firms. I construct a new transportation network to capture counties’ exposure to this trade shock and compile panel data to examine the impact on China’s manufactured textile industry. I find that counties with greater prewar exposure to international trade experienced more firm entry after the war. The effect was delayed because the war simultaneously hindered machinery imports. Better access to finance also contributed to firm entry after the trade shock.
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Hapsari, Anggraeni Tri, and Akhmad Syakir Kurnia. "FENOMENA KURVA J PADA NERACA PERDAGANGAN INDONESIA DENGAN ENAM NEGARA MITRA DAGANG UTAMA." JURNAL DINAMIKA EKONOMI PEMBANGUNAN 1, no. 2 (October 4, 2018): 10. http://dx.doi.org/10.14710/jdep.1.2.10-27.
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Whether a J curve phenomenon exists or not on the balance of trade has been an interest for empirical investigation in international economics. The phenomenon is typically associated with the response of the balance of trade to the exchange rate dynamics. Since a country has different trade features with different trading partners, the trade balances adjustment to the exchange rate dynamics should be seen as a head to head phenomenon. This paper investigates the effect of real effective exchange rate (REER) on the bilateral trade balance between Indonesia and its six major trading partners, namely Japan, China, Singapore, United States, South Korea and India on a quarterly basis over the period 1995.1 to 2013.4. The short run and the long run effect of the REER on the balance of trade is expected to be captured using error correction model (ECM) and vector error correction model (VECM). Subsequently, impulse response function is used to trace out the behavior of the bilateral trade balance in response to the REER shock whereas forecast error variance decomposition (FEVD) is used to decay the effect of innovation variables in the system. The result indicates that in the long run a J curve phenomenon appears on the bilateral trade balance between Indonesia and Japan, China, Singapore as well as South Korea. In the short run, a J curve phenomenon is seen on the bilateral trade balance between Indonesia and China as well as Singapore. This confirms that a J curve is a head to head phenomenon that has correlation with the trade features. Thus, the correction mechanism to the trade balance in response to the exchange rate shock (i.e. exchange rate market intervention) should count trade features as a consideration
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Mendoza, Adrian. "Disruptions in global value chains due to COVID-19: stylized facts and policy lessons." Philippine Review of Economics 58, no. 1&2 (December 2021): 214–40. http://dx.doi.org/10.37907/9erp1202jd.
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This paper provides an early assessment of global value chains (GVCs) amid the disruptive effects of COVID-19 on world trade. Using the Asian Development Bank’s updated Multiregional Input-Output Table, key indicators were estimated to identify important stylized facts about the contraction of GVC activities in 2020. Econometric models were also estimated to analyze the disruptive effect of COVID-19 outbreaks and stringent containment measures on GVC trade. The input-output analysis confirms that all major economic sectors suffered large losses, especially services. However, the bulk of the decline in overall GVC trade can still be traced to lower backward transactions in manufacturing. On the aggregate level, stronger backward GVC participation was associated with relatively milder contraction while the opposite was observed for forward participation. The regressions showed that positive growth of GVC trade was less likely in sectors with relatively larger exposure to foreign downstream shocks. Further, the combined effects of stringent containment measures and severe COVID-19 outbreaks also reduced the probability of growth in both backward and forward GVC transactions. These findings indicate that on top of foreign suppliers’ internal disruptions (foreign supply shock), weak global consumption (foreign demand shock) and local producers’ domestic sourcing problems (local supply shock) contributed to the steep contraction of GVCs in 2020. Against this background, the major challenges to robust recovery were also identified. These include the downside risks of a prolonged pandemic, the resurgence of protectionist tendencies, the strength of global demand, the reconfiguration of broken supply chains, and the ability of countries to coordinate their actions especially with respect to vaccination.
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Komail Tayebi, Seyed, and Mehdi Yazdani. "Financial crisis, oil shock and trade in Asia." Journal of Economic Studies 41, no. 4 (July 8, 2014): 601–14. http://dx.doi.org/10.1108/jes-04-2011-0053.
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Purpose – In this paper the authors address the questions whether global financial crises cause oil shocks worldwide, then whether such shocks affect trade flows of both oil importing and oil exporting countries of East-West Asia. The purpose of this paper is thus to explore such effects by specifying basically a dynamic export model using data of the Asian economies countries over the period 1980-2008. Design/methodology/approach – An ARDL specification is applied to show the dynamic effects of main determinants, including financial crisis and the world oil price, on the export flows of each country in the sample. The data for financial crisis have been compiled by Hatzius et al. (2010). Findings – The results, as a whole, imply that both financial crisis and oil price have a cross-effects on Asian trade flows in the short run, while this effects could not occur in the long run. Originality/value – The goal is to estimate an econometric model of exports to examine how recent crises affect export flows in the selected Asian countries. Different from previous studies in the literature, this paper first explores the interaction between financial crisis and oil shocks and second uses an extended and dynamic export model, based on ARDL approach. The core of the study relies on the question whether a cross-relationship between oil price and financial crisis affects the export flows of the Asian countries: China, Japan, Iran, Malaysia, Saudi Arabia, South Korea and Turkey which are both oil importing and exporting.
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Distefano, Tiziano, Francesco Laio, Luca Ridolfi, and Stefano Schiavo. "Shock transmission in the International Food Trade Network." PLOS ONE 13, no. 8 (August 8, 2018): e0200639. http://dx.doi.org/10.1371/journal.pone.0200639.
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Caliendo, Lorenzo, Maximiliano Dvorkin, and Fernando Parro. "Trade and Labor Market Dynamics: General Equilibrium Analysis of the China Trade Shock." Econometrica 87, no. 3 (2019): 741–835. http://dx.doi.org/10.3982/ecta13758.
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We develop a dynamic trade model with spatially distinct labor markets facing varying exposure to international trade. The model captures the role of labor mobility frictions, goods mobility frictions, geographic factors, and input‐output linkages in determining equilibrium allocations. We show how to solve the equilibrium of the model and take the model to the data without assuming that the economy is at a steady state and without estimating productivities, migration frictions, or trade costs, which can be difficult to identify. We calibrate the model to 22 sectors, 38 countries, and 50 U.S. states. We study how the rise in China's trade for the period 2000 to 2007 impacted U.S. households across more than a thousand U.S. labor markets distinguished by sector and state. We find that the China trade shock resulted in a reduction of about 0.55 million U.S. manufacturing jobs, about 16% of the observed decline in manufacturing employment from 2000 to 2007. The U.S. gains in the aggregate, but due to trade and migration frictions, the welfare and employment effects vary across U.S. labor markets. Estimated transition costs to the new long‐run equilibrium are also heterogeneous and reflect the importance of accounting for labor dynamics.
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Bertilson, H. S., and L. J. Bendinelli. "Awareness of Aggressive Response Contingencies When Using the Reaction-Time Research Task." Psychological Reports 56, no. 2 (April 1985): 631–37. http://dx.doi.org/10.2466/pr0.1985.56.2.631.
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College students interacted via the Taylor reaction-time method of studying aggression with an opponent who attacked the subject with maximum shocks for six trials and switched to a matching strategy for 1, 6, or 12 additional trials. At the end of the task, subjects responded to a questionnaire that measured awareness of their own shock settings, the opponent's shock settings, and the relationship between shock settings made by the subject and those made by the opponent. While a statistically significant proportion of subjects correctly recalled the shock settings and relationships between shock settings, a substantial proportion of subjects did not. Results were discussed in relation to a “trade-off” between the use of “masking” tasks, such as the reaction-time procedure, to control subjects' response bias, and the risk that stimulus contingencies may be obscured by such “masking” tasks. One solution to the dilemma may be to replicate the findings both with and without a “masking” task.
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Dajčman, Silvo, Alenka Kavkler, Sergey Merzlyakov, Sergey E. Pekarski, and Dejan Romih. "International Transmission of Conventional and Unconventional Monetary Policy and Financial Stress Shocks from the Euro Area to Russia." Journal of Central Banking Theory and Practice 11, no. 1 (January 1, 2022): 227–47. http://dx.doi.org/10.2478/jcbtp-2022-0010.
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Abstract This paper studies the international transmission of the euro area´s monetary policy and financial stress to Russia. The results show that financial stress in the euro area damages Russian economic activity and stock prices, but not its trade balance. The contractionary euro area monetary policy shock decreases Russian GDP, leads to real appreciation of the euro against the Russian rouble, damages Russian stock prices, but does not significantly affect the trade balance between countries. We also found that the Central Bank of the Russian Federation adjusts to monetary policy shocks in the euro area.
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Iloskics, Zita, Tamás Sebestyén, and Erik Braun. "Shock propagation channels behind the global economic contagion network. The role of economic sectors and the direction of trade." PLOS ONE 16, no. 10 (October 20, 2021): e0258309. http://dx.doi.org/10.1371/journal.pone.0258309.
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Examining the spread of macroeconomic phenomena between countries has become increasingly popular after the 2008 economic crisis, but the recent COVID-19 pandemic rendered this issue much more relevant as it shed more light on the risks arising from strongly interconnected economies. This paper intends to extend previous studies in this line by examining the relationship between trade openness and business cycle synchronization. It extends the scope of previous analyses in three areas. First, we use a Granger-causality approach to identify synchronization. Second, trade is broken down to the sector level and third, we distinguish between upstream and downstream connections. These developments allow for a directed approach in the analysis. We use conditional logit regressions to estimate the effect of trade openness on the probability of shock-transmission. The results presented in this study contribute to the literature in two ways. First, in addition to revealing a positive effect of aggregate two-way trade on shock-contagion, it also points out that this overall effect hides diverse behavior in specific trading sectors as well as upstream and downstream channels. Second, while some sectors are not significant channels of shock-transmission in either directions, upstream channels seem to be important in agriculture while downstream channels dominate machinery and other manufactures. Also, there are sectors (chemicals and related products) trade in which affects shock-transmission negatively.
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Gopinath, Gita, and Brent Neiman. "Trade Adjustment and Productivity in Large Crises." American Economic Review 104, no. 3 (March 1, 2014): 793–831. http://dx.doi.org/10.1257/aer.104.3.793.
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We empirically characterize the mechanics of trade adjustment during the Argentine crisis. Though imports collapsed by 70 percent from 2000 to 2002, the entry and exit of firms or products at the country level played a small role. The within-firm churning of imported inputs, however, played a sizeable role. We build a model of trade in intermediate inputs with heterogeneous firms, fixed import costs, and roundabout production. Import demand is non-homothetic and the implications of an import price shock depend on the full distribution of firm-level adjustments. An import price shock generates a significant decline in productivity. (JEL F14, F31, F43, L60, O14, O19)
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Suprayogi, Bambang, and Tarek M. Harchaoui. "China Shocks and Their Employment Effects in Emerging Economies." Signifikan: Jurnal Ilmu Ekonomi 9, no. 1 (February 8, 2020): 31–50. http://dx.doi.org/10.15408/sjie.v9i1.13550.
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The impact of “China shocks” on trading partners is a source of a massive supply shock that displaces foreign manufacturing producers, and an important source of demand shock that propelled forward a wide range of foreign sectors. The “common” existing literature mainly focused on the supply shock and its impact, leaving a large span of “China shocks” unexplained. Thus, this article undertake the important task to account for the dual track of “China shocks” and their impacts on a set of emerging economies, for which the evidence remains scanty. Using a global input-output methodology which highlights the job creation from exports and the job destruction aspect of imports, we provide evidence on the employment effect of bilateral trade with China. Our results suggest that considering the net effect of supply and demand related to China shocks mainly lead to negative job demand, and press the ringing bell for the government.JEL Classification: F1, F16, F66How to Cite:Suprayogi, B., & Harchaoui, T. M. (2020). China Shocks and Their Employment Effects in Emerging Economies. Signifikan: Jurnal Ilmu Ekonomi, Vol. 9(1), 31-50. doi: http://dx.doi.org/10.15408/sjie.v9i1.13550.
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Avila-Montealegre, Oscar, and Carter Mix. "Common Trade Exposure and Business Cycle Comovement." International Finance Discussion Paper 2020, no. 1306 (December 29, 2020): 1–32. http://dx.doi.org/10.17016/ifdp.2020.1306.
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A large empirical literature has shown that countries that trade more with each other have more correlated business cycles. We show that previous estimates of this relationship are biased upward because they ignore common trade exposure to other countries. When we account for common trade exposure to foreign business cycles, we find that (1) the effect of bilateral trade on business cycle comovement falls by roughly 25 percent and (2) common exposure is a significant driver of business cycle comovement. A standard international real business cycle model is qualitatively consistent with these facts but fails to reproduce their magnitudes. Past studies have used models that allow for productivity shock transmission through trade to strengthen the relationship between trade and comovement. We find that productivity shock transmission increases business cycle comovement largely because of a country-pair's common trade exposure to other countries rather than because of bilateral trade. When we allow for stronger transmission between small open economies than other country-pairs, comovement increases both from bilateral trade and common exposure, similar to the data.
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Richter, Thomas. "Central Counterparties and Liquidity Provision in Cash Markets." Journal of Risk and Financial Management 14, no. 12 (December 4, 2021): 584. http://dx.doi.org/10.3390/jrfm14120584.
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This paper investigates increased liquidity provision by market makers resulting from their ability to reduce balance sheet encumbrance through the use of central counterparties (CCPs). The introduction of the Basel III leverage rule constitutes a shock to market makers’ balance sheets and thus affects their capacity to intermediate trades. Using trade-by-trade data from sovereign bond markets, we show that liquidity provision by CCP members decreased to a lesser extent following the rule change. We attribute these findings to balance sheet reductions due to the netting enabled by CCPs, thereby highlighting their importance in cash markets.
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Bombardini, Matilde, Bingjing Li, and Francesco Trebbi. "Did US Politicians Expect the China Shock?" American Economic Review 113, no. 1 (January 1, 2023): 174–209. http://dx.doi.org/10.1257/aer.20210140.
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Information sets, expectations, and preferences of politicians are fundamental, but unobserved determinants of their policy choices. Employing repeated votes in the US House of Representatives on China’s normal trade relations (NTR) status during the two decades straddling China’s World Trade Organization (WTO) accession, we apply a moment inequality approach designed to deliver consistent estimates under weak informational assumptions on the information sets of members of Congress. This methodology offers a robust way to test hypotheses about what information politicians have at the time of their decision and to estimate the weight that constituents, ideology, and other factors have in policy making and voting. (JEL D72, D78, D83, D84, F14, P33)
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Ray, D. Michael, Ian MacLachlan, Rodolphe Lamarche, and KP Srinath. "Economic shock and regional resilience: Continuity and change in Canada's regional employment structure, 1987–2012." Environment and Planning A: Economy and Space 49, no. 4 (December 6, 2016): 952–73. http://dx.doi.org/10.1177/0308518x16681788.
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This article analyses regional resilience to economic shock in Canada from 1987 to 2012, a period that included severe recessions and major free-trade agreements. Employment is cross-tabulated by region, industry and gender and partitioned cumulatively using three-way multifactor partitioning for each period from 1987–1988 to 1987–2012. Employment loss in each recession is found to be more closely associated with industry-mix in the preceding growth period than with the region effect. At each recession, manufacturing had much bigger employment losses and a much weaker recovery than business services. Thus manufacturing amplifies economic shocks, while business services act as regional shock absorbers. Manufacturing employment decline in Ontario was influenced by trade liberalization and far exceeds what would be expected from the industry and region effects alone. Female employment growth outpaced male employment growth in every region and in every industry group apart from business and appeared to be more resilient to recession. But corrected for their industry composition and regional disparities, these gender differences are substantially reduced.
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Rodriguez, U.-Primo, Yolanda Garcia, Reynaldo Tan, and Arnulfo Garcia. "Can Trade Policies Soften the Economic Impacts of an Avian Influenza Outbreak? Simulations From a CGE Model of the Philippines." Asian Journal of Agriculture and Development 4, no. 2 (December 15, 2007): 41–50. http://dx.doi.org/10.37801/ajad2007.4.2.3.
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The paper examines the possibilities of using trade policy to address the adverse economic effects of an avian influenza outbreak in the Philippines. In particular, it employs a computable general equilibrium (CGE) model for analyzing the likely effects of two options; namely, a) a ban on imported poultry, and b) the removal of tariffs on non-poultry meat products. Using six model scenarios (i.e., production shocks, consumption shocks, ban on poultry imports, removal of tariff on non-poultry imports, and selected combinations of these shocks), the simulation results reveal that (a) the consumption and production shocks are expected to have a contractionary effect on real GDP; (b) the expected fall in the output of poultry products explains most of the decline in real GDP; (c) the production shock appears to have a larger impact since this explains most of the decline in real GDP as well as the increase in the general price level; (d) while the consumption shock tends to have a larger impact on the poultry products, the production shock dominates the aggregate responses because of its effects on other industries, and (e) avian influenza is likely to have far-reaching effects on the economy, way beyond the poultry sector. Based on these results, this paper supports the use of an import ban as a preventive measure against the occurrence of an avian influenza attack. This is based on the finding that the economic costs from such a measure appear to be lower than the costs associated with the disease. In contrast, the study finds that there is a weak case for removing tariffs on non-poultry meat products as a means to soften the harmful impacts of an avian influenza outbreak.
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Distefano, Tiziano, Francesco Laio, Luca Ridolfi, and Stefano Schiavo. "Correction: Shock transmission in the International Food Trade Network." PLOS ONE 16, no. 7 (July 6, 2021): e0254327. http://dx.doi.org/10.1371/journal.pone.0254327.
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Brülhart, Marius, Céline Carrère, and Frédéric Robert-Nicoud. "Trade and towns: Heterogeneous adjustment to a border shock." Journal of Urban Economics 105 (May 2018): 162–75. http://dx.doi.org/10.1016/j.jue.2017.09.005.
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Montoro, Carlos. "OIL SHOCKS AND OPTIMAL MONETARY POLICY." Macroeconomic Dynamics 16, no. 2 (January 5, 2012): 240–77. http://dx.doi.org/10.1017/s1365100510000106.
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This paper studies how monetary policy should react to oil shocks in a microfounded model with staggered price-setting and oil as an input in a CES production function. In particular, we extend Benigno and Woodford [Journal of the European Economic Association 3 (6) (2005), 1–52] to obtain a second-order approximation to the expected utility of the representative household when the steady state is distorted and the economy is hit by oil price shocks. The main result is that oil price shocks generate an endogenous trade-off between inflation and output stabilization when oil has low substitutability in production. We also find, in contrast to Benigno and Woodford, that this trade-off is reduced, but not eliminated, when we get rid of the effects of monopolistic distortions in the steady state. Moreover, the size of the endogenous “cost-push” shock generated by fluctuations in the oil price increases when it is more difficult to substitute other factors for oil.
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Qin, Jin, Ivan T. Kandilov, and Roger H. von Haefen. "Air Pollution and Trade: The Case of China." Frontiers of Economics in China 16, no. 2 (December 15, 2021): 307–46. http://dx.doi.org/10.54605/fec20210205.
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We estimate the effects of trade on air pollution in China. To address endogeneity concerns, we use an instrumental variable strategy that treats the Great Recession as an exogenous shock that differentially affected China’s coastal provinces, which export a greater volume of manufacturing as they are closer to navigable waters. In our empirical analysis, we employ annual data on emissions of sulfur dioxide as well as smoke and dust at the province level from 2003 to 2015 to measure air pollution intensity (the ratio of air pollution to GDP), and we also use fine particulate matter (PM2.5) concentrations data derived from satellite imagery as a robustness check. We find that a decrease in trade intensity (the ratio of trade to GDP) by 10 percentage points (a negative trade shock similar to what occurred during the Great Recession) increases sulfur dioxide emissions intensity by about 38 percentage points. Emissions of the other two air pollutants grow by similar proportions.
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LYBBERT, TRAVIS J., AARON SMITH, and DANIEL A. SUMNER. "WEATHER SHOCKS AND INTER-HEMISPHERIC SUPPLY RESPONSES: IMPLICATIONS FOR CLIMATE CHANGE EFFECTS ON GLOBAL FOOD MARKETS." Climate Change Economics 05, no. 04 (December 2014): 1450010. http://dx.doi.org/10.1142/s2010007814500109.
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Climate models predict more weather extremes in the coming decades. Weather shocks can directly reduce crop production, but their effect on food markets is partly buffered by storage and supply responses that can be complex and nuanced. We explore how inter-hemispheric trade and supply responses can moderate the effects of weather shocks on global food supply by enabling potential intra-annual arbitrage. Our estimates of this effect in the case of wheat and soybeans suggest that it may be considerable: 25–50% of crop production lost to a shock in the Southern Hemisphere is offset six months later by increased production in the North. These results have implications for the potential effects of climate change on global food markets, for how we model these interactions and, possibly, for the design of trade and production-related policies that aim to leverage this inter-hemispheric buffer more effectively.