{"title":"Trade under lockdown","authors":"Antoine Berthou , Sebastian Stumpner","doi":"10.1016/j.jinteco.2024.104013","DOIUrl":"10.1016/j.jinteco.2024.104013","url":null,"abstract":"<div><div>To curb the effect of the Covid-19 pandemic on public health, many countries around the world introduced lockdown policies in 2020. This paper estimates the effect of these lockdowns on international trade flows using a rich dataset of monthly bilateral trade flows covering over 80% of world trade. We first document that both exporter and importer lockdowns significantly reduced trade flows, that this effect differed substantially across sectors, and has been declining over time. We then decompose this total effect into a direct effect of lockdowns on trade, and an indirect effect that is mediated by a decline in economic activity. Our results indicate that lockdowns reduced trade also conditional on economic activity, suggesting an important increase in trade costs due to lockdowns. A quantification exercise shows that the welfare consequences of these trade costs were sizable, amounting to about one sixth of the welfare loss under a complete return to autarky.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"152 ","pages":"Article 104013"},"PeriodicalIF":3.8,"publicationDate":"2024-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142660282","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":"The rise of the walking dead: Zombie firms around the world","authors":"Bruno Albuquerque , Roshan Iyer","doi":"10.1016/j.jinteco.2024.104019","DOIUrl":"10.1016/j.jinteco.2024.104019","url":null,"abstract":"<div><div>We build a comprehensive new dataset spanning listed and private nonfinancial zombie firms across Advanced Economies and Emerging Markets over the past two decades. Our findings reveal a global rise in the prevalence of these unproductive and unviable firms, particularly since the Global Financial Crisis and the Covid-19 pandemic. We show that private firms exhibit lower zombification rates due to their lower average survival rates. Our paper also offers a new perspective on zombie lending drivers: lenders may rationalize zombie lending based on overly optimistic expectations of a recovery in zombies’ future earnings. We then document that macroprudential policies targeting bank capital and loan restrictions can effectively mitigate the adverse effects of zombification. However, strengthening the banking sector alone may not suffice without robust insolvency frameworks prepared to manage firm restructuring and insolvency.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"152 ","pages":"Article 104019"},"PeriodicalIF":3.8,"publicationDate":"2024-10-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142527740","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":"The foreign firm wage premium in the Israeli tech sector","authors":"Noam Gruber","doi":"10.1016/j.jinteco.2024.104017","DOIUrl":"10.1016/j.jinteco.2024.104017","url":null,"abstract":"<div><div>Foreign tech multinationals, which have entered Israel en masse in the past two decades, are known to use high wages to draw in the best talent. While paying higher wages no doubt contributes to the domestic economy, local tech firms have argued that the competition for talent inhibits their growth, and that foreign multinationals contribute less in terms of overall economic value compared to local firms. It is thus of great importance to estimate the foreign firm wage premium – by how much do foreign multinationals pay more for comparable talent? Using an extensive micro-level education data and exploiting worker movement and firm shutdowns/downsizing as an unbiased alternative to AKM methodology, this paper finds the foreign firm wage premium to be in the 3%–4% range, much less than previously estimated.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"152 ","pages":"Article 104017"},"PeriodicalIF":3.8,"publicationDate":"2024-10-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142527739","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":"Russian counter-sanctions and smuggling: Forensics with structural gravity estimation","authors":"Vladimir Tyazhelnikov , John Romalis","doi":"10.1016/j.jinteco.2024.104014","DOIUrl":"10.1016/j.jinteco.2024.104014","url":null,"abstract":"<div><div>Trade and other economic sanctions are a common foreign policy instrument, but their imposition may induce smuggling. We develop and implement procedures to study smuggling after the food embargo imposed by Russia on Western countries after the annexation of Crimea in 2014. We construct predicted trade flows for the post-sanctions period using an estimated structural general equilibrium gravity model with many industry sectors and compare those predictions with actual trade flows. We identify a substantial value of suspicious trade flows which we associate with smuggling; especially importing banned goods through third countries such as Belarus. The structural gravity model systematically under-predicts trade volumes for country–product combinations used as channels for smuggling of the banned goods. We identify a quantity of smuggling equivalent to approximately 11 to 17 percent of the pre-embargo trade flows.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"152 ","pages":"Article 104014"},"PeriodicalIF":3.8,"publicationDate":"2024-10-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142527735","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Immigrants, legal status, and illegal trade","authors":"Brett A. McCully","doi":"10.1016/j.jinteco.2024.104016","DOIUrl":"10.1016/j.jinteco.2024.104016","url":null,"abstract":"<div><div>Nearly $2 trillion of illegally trafficked goods flow across international borders every year, generating violence and other social costs along the way. Due to the absence of legal contracts and the challenge of finding trading partners in an illegal market, traffickers may rely on co-ethnic networks to facilitate trade. In this paper, I use novel microdata on the universe of large illegal drug confiscations in Spain to provide the first causal estimates of how immigrants and immigration policy affect the pattern and scale of illegal drug trafficking. I find that immigrants increase both illegal drugs imported from and exported to their origin country, with irregular immigrants raising illegal drug imports. Doubling the number of immigrants from an origin country raises the likelihood of illegal drug imports from that country by 8 percentage points. I find suggestive evidence that granting legal status to immigrants reduces illegal drug imports.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"152 ","pages":"Article 104016"},"PeriodicalIF":3.8,"publicationDate":"2024-10-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142527738","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":"Foreign competition and innovation","authors":"Elhanan Helpman","doi":"10.1016/j.jinteco.2024.104007","DOIUrl":"10.1016/j.jinteco.2024.104007","url":null,"abstract":"<div><div>Empirical studies have found that enhanced foreign competition can encourage or discourage innovation. To address this relationship, I examine a market structure in which a small number of large multi-product oligopolists compete with a large number of small single-product firms in the same industry. The single-product firms are short-lived while the multi-product firms live forever, and the large firms invest in innovation in order to enlarge their product spans. All firms export. I show that an increase in the competitiveness of foreign firms can increase or reduce innovation efforts of a large multi-product firm. Moreover, changes in the incentives to innovate can be different for more-productive and less-productive oligopolists. As a result, aggregate sectoral innovation may rise or decline, depending on the productivity distribution of the oligopolists. I also show that changes in short-term operating profits may not be aligned with changes in the incentives to innovate.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"152 ","pages":"Article 104007"},"PeriodicalIF":3.8,"publicationDate":"2024-10-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142527736","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}
Konstantin Kucheryavyy , Gary Lyn , Andrés Rodríguez-Clare
{"title":"Spatial Equilibria: The Case of Two Regions","authors":"Konstantin Kucheryavyy , Gary Lyn , Andrés Rodríguez-Clare","doi":"10.1016/j.jinteco.2024.104008","DOIUrl":"10.1016/j.jinteco.2024.104008","url":null,"abstract":"<div><div>In this paper we characterize the set of equilibria in a generalized version of the canonical two-region economic geography model that nests the class of models in Allen and Arkolakis (2014) as well as Krugman (1991) and features an input–output loop. We provide sufficient conditions for uniqueness of equilibria that — in contrast to the well-know result in Allen and Arkolakis (2014) — allow for positive agglomeration externalities, which concentrate economic activity, even in the absence of congestion effects, which disperse it, and highlight the key role played by three additional parameters: the <em>trade elasticity</em>, which regulates the strength of the dispersion force associated with the decline in the terms of trade caused by migration into a region; <em>trade costs</em>, which weaken this dispersion force by limiting trade across regions; and the importance of the <em>agricultural sector</em>, which pushes against agglomeration forces in manufacturing.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"152 ","pages":"Article 104008"},"PeriodicalIF":3.8,"publicationDate":"2024-10-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142527737","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":"Is US trade policy reshaping global supply chains?","authors":"Caroline Freund , Aaditya Mattoo , Alen Mulabdic , Michele Ruta","doi":"10.1016/j.jinteco.2024.104011","DOIUrl":"10.1016/j.jinteco.2024.104011","url":null,"abstract":"<div><div>This paper examines the reshaping of supply chains using detailed US 10-digit import data between 2017 and 2022. The results show that while US-China decoupling in bilateral trade is real, supply chains remain intertwined with China. Over the period, China's share of US imports fell from 22 % to 16 % as a result of US tariffs. US imports from China are being replaced with imports from large, developing countries with revealed comparative advantage in a product. In strategic industries, countries replacing China tend to be deeply integrated in China's supply chains and are experiencing faster import growth from China. Put differently, to displace China on the export side, countries must embrace China's supply chains. There is no consistent evidence of reshoring but evidence of nearshoring to border nations. Despite the significant reshaping, China remained the top supplier of directly imported goods to the US in 2022.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"152 ","pages":"Article 104011"},"PeriodicalIF":3.8,"publicationDate":"2024-10-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142441126","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":"The network origins of trade comovement","authors":"Justas Dainauskas","doi":"10.1016/j.jinteco.2024.104010","DOIUrl":"10.1016/j.jinteco.2024.104010","url":null,"abstract":"<div><div>I develop a production network model of the world economy that features <em>Transcendental Logarithmic</em> (a.k.a. translog) aggregators of varieties. This gives rise to variable substitution elasticities that consistent with the evidence are inversely related to the importer expenditure shares per exporter at the country-sector level. I quantify the model using data for 1970–2018 from 19 OECD economies and 30 sectors. Compared to the analogous constant elasticity version of the model, I find that the translog model amplifies international shock transmission between major trade partners and attenuates transmission elsewhere, which to an extent resolves the “trade comovement puzzle”.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"152 ","pages":"Article 104010"},"PeriodicalIF":3.8,"publicationDate":"2024-09-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142358094","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":"Sovereign risk and intangible investment","authors":"Minjie Deng , Chang Liu","doi":"10.1016/j.jinteco.2024.104009","DOIUrl":"10.1016/j.jinteco.2024.104009","url":null,"abstract":"<div><div>This paper measures the output and TFP losses from sovereign risk, considering firm-level intangible investment. Using Italian firm-level data, we show that firms reallocated from intangible assets to tangible assets during the 2011–2012 Italian sovereign debt crisis. This asset reallocation is more pronounced among small firms and high-leverage firms. This reallocation affects aggregate output and TFP. To explain the reallocation pattern and quantify the output and TFP losses, we build a sovereign default model incorporating firm intangible investment. In our model, sovereign risk deteriorates bank balance sheets, disrupting banks’ ability to finance firms. Firms with greater external financing needs are more exposed to sovereign risk. Facing tightening financial constraints, firms shift their resources towards tangibles because they can be used as collateral. We find that elevated sovereign risk explains 45% of the observed output losses and 31% of the TFP losses in Italy from 2011 to 2016.</div></div>","PeriodicalId":16276,"journal":{"name":"Journal of International Economics","volume":"152 ","pages":"Article 104009"},"PeriodicalIF":3.8,"publicationDate":"2024-09-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"142428046","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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