Identity is an important determinant of economic behavior. A limitation of the existing literature is the focus on one identity dimension at a time. We show that the multiplicity of identity dimensions matters for economic behavior and that neglecting it may lead policy makers to overlook important, unintended effects of economic policies. We exploit the randomized nature of political reservations for women in India to show that a policy designed along one identity dimension (gender) alters the distribution of the benefits of this policy along another one (caste). We propose an important variation in gender norms across caste groups as a plausible mechanism.
The paper shows that international government borrowing from multilateral development banks is countercyclical while international government borrowing form private sector lenders is procyclical. The countercyclicality of official lending is mostly driven by the behavior of the World Bank (borrowing from regional development banks tends to be acyclical). The paper also shows that official sector lending to Latin America and East Asia is more countercyclical than official lending to other regions. Private sector lending is instead procyclical in all developing regions. While the cyclicality of official lending does not depend on domestic or international conditions, private lending becomes particularly procyclical in periods of limited global capital flows. By focusing on both borrowers and lenders' heterogeneity the paper shows that the cyclical properties of international government debt are mostly driven by credit supply shocks. Demand factors appear to be less important drivers of procyclical international government borrowing. The paper's focus on supply and demand factors is different from the traditional push and pull classification, as push and pull factors could affect both the demand and the supply of international government debt.
The impact of institutional quality on the exchange rate-export relation is assessed in a panel of 33 countries and quarterly time period of 1991Q1 - 2016Q3. Empirical estimation is conducted in 2 steps. As a first step, using panel DOLS, FMOLS and PMG estimation techniques, it is confirmed that a negative and significant relation between exchange rates and exports exists. The estimation suggests that in the countries under study, 1% appreciation of the real effective exchange rate leads to, approximately, 0.55% decrease in total exports on average, holding other variables constant. In a separate cross-sectional estimation using simple OLS, some empirical evidence has been found to prove that institutional quality positively affects the exchange rate elasticity of exports. Also it has been shown that in oil exporting countries institutional quality has a greater impact on exchange rate-export link, compared to oil importers. But these results are only weakly significant and are not robust to the use of other proxy variables.
Over the last decade, the economic linkages between Switzerland and the rest of the world have been transformed. First, merchanting and the chemical industry account for an increasing share of international trade, with chemicals exports expanding robustly in recent years despite the European crisis and the strong Swiss franc. Second, the nature of international financial integration has changed. While private investors drove Switzerland's financial flows and net foreign assets before the financial crisis, the foreign reserves accumulation by the Swiss National Bank has been playing a major role since. Third, asset prices and foreign exchange movements led to substantial capital losses in foreign assets which fully absorbed the surplus on the current account. Finally, the crisis has weakened the role of foreign trade as an engine of growth and narrowed it across sectors.
Over the past decade, the WTO dispute settlement system has continued to be used extensively, contrasting with the very few disputes taken to inter-state adjudication under FTAs. This paper discusses the causes of this discrepancy, arguing that, besides specific procedural difficulties, it may be explained by a more structural difference between adjudication in a multilateral and in a bilateral setting. The WTO's global scope and the collective surveillance established by the DSU ensure that findings of breach harm a wrongdoer's reputation and mobilize community pressure for compliance. Because adjudication within an FTA cannot mobilize the same multilateral forces, it may not only be less effective than WTO adjudication – it may also be perceived as less effective than unilateral retaliation.
We revisit the public banks debate, survey the theoretical arguments and test the robustness (and expand) the existing empirical evidence. While we find some support for the view that public banks do not allocate credit optimally, we also report indicative evidence that they exert a positive influence on private bank efficiency, and may contribute to reduce credit procyclicality. Ultimately, we find that the recent criticism to public banks has generally been based on inconclusive cross-country evidence. More specific bank-level research is still needed to substantiate a case for or against public banks in developing economies.
Preferential trade agreements (PTAs) form an intricate web that connects countries across the globe. In this article, we introduce a PTA text corpus and research tools for its finegrained, automated analysis. Recent computational advances allow for efficient and effective content analysis by treating text as data. We digitize PTA texts and use textual similarity tools to assess PTA design patterns on the global, national, and chapter level. Our descriptive analysis reveals, inter alia, that PTAs are more heterogeneous as a group than, for instance, bilateral investment agreements, but that they converge in regional or inter-regional clusters of similarly worded agreements. Following our descriptive account, we provide three concrete, interdisciplinary examples of how text-as-data analysis can advance the study of trade economics, politics, and law. In trade economics, similarity measures can provide more detailed representations of PTA design differences. These allow researchers to capture more meaningful variation when studying the economic impact of PTAs. In trade politics, scholars can use treaty similarity to trace design diffusion more accurately and test competing explanations for treaty design choices. Finally, in trade law, similarity measures offer new insights into the processes of normative convergence between legal regimes such as trade and investment law.
The aim of the paper is to foresee the constitutional and international status of Scotland and Northern Ireland following the triggering of the art. 50 Treaty of the European Union's (TEU) mechanism by the British Government, with a special focus on the possible termination of the free movement of goods within the British Isles.
We analyze the role of Domestic Value Chains (DVCs) for Global Value Chain (GVC) integration. In the presence of industry specific fixed costs of fragmenting production and of switching across input suppliers, DVCs can either be stepping stones or stumbling blocks for GVCs. Focusing on backward linkages, that is the sourcing of intermediates, we provide robust empirical evidence in favour of the stepping stone hypothesis. In our benchmark specification a one standard deviation increase in DVC integration raises subsequent GVC integration by about 0.4%. To identify the mechanisms at work, we exploit two dimensions of industry level heterogeneity: product differentiation and relationship specificity. Product differentiation can be taken as a proxy of fragmentation costs, while relationship specificity can be taken as a proxy of the costs of switching between suppliers. We find that DVC integration is less conducive to GVC integration in industries that are characterized by relatively high switching costs and relatively low fragmentation costs. This finding supports our hypothesized mechanism.
Countries can challenge potential trade violations using the WTO's dispute settlement system, yet many policies that appear to violate WTO rules remain unchallenged, even when they have a significant economic impact. Why is this? We argue that the likelihood that a country challenges a protectionist policy is linked to how concentrated or diffuse the policy is. When a policy is concentrated|because it affects only one country|litigation is a private good, meaning that a country that pays the cost of litigation receives the full benefit of litigation. But when a policy is "diffuse" - because it affects many countries - litigation is a public good and countries face a collective action problem: many countries can benefit from litigation, but each country wants to free-ride by having another country pay the cost. The resulting selection effect has two consequences. First, the free-rider problem reduces the likelihood that a diffuse policy will be challenged in any given period, generating a longer "enforcement delay" for diffuse trade violations. Second, cases must have higher odds of success in order for countries to overcome the collective action problem, meaning that conditional on being filed, cases that challenge concentrated policies will be less likely to succeed in litigation than cases that challenge diffuse policies. We leverage selection effects to test our argument using data on the timing and outcomes of trade disputes. The evidence, which considers all WTO disputes from 1995 to 2013, bears out these beliefs.
