{"title":"Should governments promote or restrain urbanization?","authors":"Wenbin Wu , Wei You","doi":"10.1016/j.jinteco.2025.104084","DOIUrl":"10.1016/j.jinteco.2025.104084","url":null,"abstract":"<div><div>In a system of cities model that incorporates urban externalities, equilibrium city sizes deviate from optimal city sizes, which suggests a role for government intervention. Using a general equilibrium framework that incorporates agglomeration benefits and costs and that is calibrated to data from China between 2000 and 2020, we show that it is generally welfare-reducing to control city sizes through internal migration restrictions since the frictions they introduce outweigh the benefits of correcting for city size deviations. However, we also find that most large Chinese cities have already surpassed the optimal sizes from their local perspective, so without controlling city sizes, the average welfare of city residents would decrease. This suggests that a combination of policies is needed to both improve aggregate welfare and alleviate the distributional consequences for a rapidly urbanizing country.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104084"},"PeriodicalIF":3.8,"publicationDate":"2025-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144089644","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Maria Bas , Lionel Fontagné , Irene Iodice , Gianluca Orefice
{"title":"Heterogeneous trade elasticity and managerial skills","authors":"Maria Bas , Lionel Fontagné , Irene Iodice , Gianluca Orefice","doi":"10.1016/j.jinteco.2025.104093","DOIUrl":"10.1016/j.jinteco.2025.104093","url":null,"abstract":"<div><div>This paper investigates the role of firms’ managerial skills in the heterogeneous reaction of exporters to common exogenous changes in their international competitiveness (here captured by changes in the real exchange rate). Relying on a simple theoretical framework, we show that firms with better managerial skills have higher profits, market power and are able to adapt their markup more when faced with a competitiveness shock. We test this prediction relying on detailed firm-product-destination level export data from France for the period 1995-2007 matched with specific information on the firms’ share of managers. Our findings show that managerial intensive firms have larger exporter <em>price</em> elasticity to real exchange rate variations. In the wake of a depreciation, exporters whose management intensity is one standard deviation higher than the average, increase their prices by 51% to 73% more than the average exporter. This finding is robust to alternative explanations suggested by the literature.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104093"},"PeriodicalIF":3.8,"publicationDate":"2025-04-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143881500","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Anna L. Sobiech , Lechedzani Kgari , Linh Nguyen , John O.S. Wilson
{"title":"Implicit guarantees and bank stability: Evidence from a quasi-natural experiment","authors":"Anna L. Sobiech , Lechedzani Kgari , Linh Nguyen , John O.S. Wilson","doi":"10.1016/j.jinteco.2025.104094","DOIUrl":"10.1016/j.jinteco.2025.104094","url":null,"abstract":"<div><div>Do parent bank implicit guarantees enhance or diminish the stability of foreign subsidiaries? Using a quasi-natural experiment in the form of a regulatory intervention which removed parent banks' option to provide financial support to affiliated foreign subsidiaries, we find a substantial increase in the overall default risk of foreign subsidiaries. Less stringent private and supervisory oversight in host countries exacerbates the adverse impacts on risk. Overall, the results align with the notion that a loss in implicit guarantees implies a decline in reputational capital and franchise value. Beyond financial stability, the intervention likely has economic implications. Foreign subsidiaries increase lending and deposit funding, particularly those with stronger initial capitalization. These patterns are consistent with risk-compensating behavior where subsidiaries, following the loss of parental guarantees, expand balance sheets to sustain funding and market presence. Our findings inform ongoing policy debates regarding the merits of implicit guarantees for bank stability.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104094"},"PeriodicalIF":3.8,"publicationDate":"2025-04-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143881499","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Monetary policy and exchange rate dynamics in a behavioral open economy model","authors":"Marcin Kolasa , Sahil Ravgotra , Pawel Zabczyk","doi":"10.1016/j.jinteco.2025.104087","DOIUrl":"10.1016/j.jinteco.2025.104087","url":null,"abstract":"<div><div>We analyze the implications of adding boundedly rational agents á la Gabaix (2020) to the canonical New Keynesian open economy model. We show that accounting for myopia mitigates several “puzzling” aspects of the relationship between exchange rates and interest rates and helps explain why some of them only arise in the nested case of rational expectations. Bayesian estimation of the model demonstrates that a high degree of “cognitive discounting” significantly improves empirical fit. We also show that this form of bounded rationality makes positive international monetary spillovers more likely and exacerbates the unit root problem in small open economy models with incomplete markets.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104087"},"PeriodicalIF":3.8,"publicationDate":"2025-04-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143850353","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"How infrastructure shapes comparative advantage","authors":"Luis Baldomero-Quintana","doi":"10.1016/j.jinteco.2025.104083","DOIUrl":"10.1016/j.jinteco.2025.104083","url":null,"abstract":"<div><div>I show that domestic trade costs shape national comparative advantage by studying planned highway upgrades in Colombia. I build a multisectoral economic geography model with multiple shipping routes, industry linkages, external economies of scale, and trade costs that depend on both highways’ speed and ports’ usage. I discipline the model with data on customs transactions, domestic trade, and road travel times. My quantitative results show that the <em>Ruta del Sol</em> national highway would shift Colombia’s comparative advantage toward manufacturing. These upgrades would reduce intermediate input prices, lowering unit production costs, thus inducing an export boom. Manufacturing exports rise the most due to three channels. First, the road connects the largest manufacturing region with ports specialized in this sector. Second, manufacturing uses intensively tradable intermediate inputs, and the roadworks would increase their trade. Last, external economies of scale favor manufacturing because agglomeration forces are stronger for this sector relative to others.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104083"},"PeriodicalIF":3.8,"publicationDate":"2025-04-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143859683","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Felipe Brugués , Ayumu Ken Kikkawa , Yuan Mei , Pablo Robles
{"title":"The impact of NAFTA on prices and competition: Evidence from Mexican manufacturing plants","authors":"Felipe Brugués , Ayumu Ken Kikkawa , Yuan Mei , Pablo Robles","doi":"10.1016/j.jinteco.2025.104085","DOIUrl":"10.1016/j.jinteco.2025.104085","url":null,"abstract":"<div><div>This paper assesses the impact of the North American Free Trade Agreement on Mexican manufacturing plants’ output prices and markups. We distinguish between Mexican goods that are exported and those sold domestically, and decompose their prices separately into markups and marginal costs. We then analyze how these components were affected by the reductions in Mexican output tariffs, intermediate input tariffs, and U.S. tariffs on Mexican exports. We find that domestically sold products saw a decline in prices as Mexican plants faced more competition and gained access to cheaper inputs. Prices of exported goods fell only slightly as plants increased their markups in response to a favorable competitive environment due to declines in U.S. tariffs.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104085"},"PeriodicalIF":3.8,"publicationDate":"2025-04-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143777599","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Pains or gains: Trade war, trade deficit, and tariff evasion","authors":"Yi Che , Donglin Lin , Yan Zhang","doi":"10.1016/j.jinteco.2025.104090","DOIUrl":"10.1016/j.jinteco.2025.104090","url":null,"abstract":"<div><div>This paper reveals that the reduction in the US-China trade deficit during the trade war obscured reporting discrepancies in US imports of Chinese products due to tariff evasion. We empirically examine the effect of the US-China trade war on tariff evasion in US imports of Chinese goods and provide direct evidence that market demand of entry states contributes significantly to tariff evasion. Using the input-output table, we find that a one standard deviation increase in local demand causes a 1.312-fold rise in tariff evasion for affected products post–trade war. This effect mainly works through intermediate goods, and its impact grows as importers' tariff liabilities increase. Further analysis considering local social environments shows that voters' attitudes toward trade protection and the development of labor unions play crucial roles in mediating the influence of market demand on tariff evasion.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104090"},"PeriodicalIF":3.8,"publicationDate":"2025-04-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143807887","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Gita Gopinath , Josefin Meyer , Carmen M. Reinhart , Christoph Trebesch
{"title":"Sovereign vs. corporate debt and default: More similar than you think","authors":"Gita Gopinath , Josefin Meyer , Carmen M. Reinhart , Christoph Trebesch","doi":"10.1016/j.jinteco.2025.104082","DOIUrl":"10.1016/j.jinteco.2025.104082","url":null,"abstract":"<div><div>Theory suggests that corporate and sovereign bonds are fundamentally different, also because sovereign debt has no bankruptcy mechanism and is hard to enforce. We show empirically that the two assets are more similar than you think, at least when it comes to high-yield bonds over the past 20 years. We use rich new data to compare high-yield US corporate (“junk”) bonds to high-yield emerging market sovereign bonds, 2002–2021. Investor experiences in these two asset classes were surprisingly aligned, with (i) similar average excess returns, (ii) similar average risk-return patterns (Sharpe ratios), (iii) similar default frequency, and (iv) comparable haircuts. A notable difference is that the average default duration is higher for sovereigns. Moreover, the two markets co-move differently with domestic and global factors. US “junk” bond yields are more closely linked to US market conditions such as US stock returns, US stock price volatility (VIX), or US monetary policy.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104082"},"PeriodicalIF":3.8,"publicationDate":"2025-04-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143859682","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Got milk? The effect of export price shocks on exchange rates","authors":"Hillary Stein","doi":"10.1016/j.jinteco.2025.104080","DOIUrl":"10.1016/j.jinteco.2025.104080","url":null,"abstract":"<div><div>I examine the effect of exogenous terms of trade shocks on an exchange rate by turning to New Zealand’s dairy auctions. Dairy is New Zealand’s largest export category, making up almost 20 percent of exports. Specifically, whole milk powder accounts for 6 to 11 percent of total exports, and its price is determined in twice-monthly auctions. I use event studies to quantify the impact of surprise auction results on the New Zealand dollar on a high-frequency basis. I find that a 1 percent surprise increase in whole milk powder prices has a modest, but nevertheless significant, effect on the nominal exchange rate. The methodology developed here can potentially be applied to other commodity exporters.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104080"},"PeriodicalIF":3.8,"publicationDate":"2025-03-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143786123","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Marius Faber , Kemal Kilic , Gleb Kozliakov , Dalia Marin
{"title":"Global value chains in a world of uncertainty and automation","authors":"Marius Faber , Kemal Kilic , Gleb Kozliakov , Dalia Marin","doi":"10.1016/j.jinteco.2025.104079","DOIUrl":"10.1016/j.jinteco.2025.104079","url":null,"abstract":"<div><div>The world economy has become more and more globalized as firms have organized production along global value chains. But more recently, globalization has stalled. This paper shows that higher uncertainty, in combination with better automation technologies, has likely contributed to that trend reversal. We show that plausibly exogenous exposure to uncertainty in developing countries leads to reshoring to high-income countries, but only if industrial robots have made this economically feasible. In contrast, we find no strong evidence of nearshoring or diversification. We address concerns about reverse causality by showing that results hold when using two alternative identification strategies. In a narrative approach, we use only locally generated spikes in uncertainty, for which the narratives around the events suggest that they are plausibly exogenous. In a small open economy approach, we restrict the sample to small developed countries that are unlikely to cause uncertainty in the developing world. Moreover, we show that results are robust to the main threats to identification related to shift-share instruments.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"155 ","pages":"Article 104079"},"PeriodicalIF":3.8,"publicationDate":"2025-03-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143799971","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}