The Structural Determinants of the US Competitiveness in the Last Decades: A 'Trade-Revealing' Analysis
Massimo Del Gatto, Filippo di Mauro, Joseph Gruber, Benjamin Mandel
ECB Working Paper,
No. 1443,
2012
Abstract
We analyze the decline in the U.S. share of world merchandise exports against the backdrop of a model-based measure of competitiveness. We preliminarily use constant market share analysis and gravity estimations to show that the majority of the decline in export shares can be associated with a declining share of world income, suggesting that the dismal performance of the U.S. market share is not a sufficient statistic for competitiveness. We then derive a computable measure of country-sector specific real marginal costs (i.e. competitiveness) which, insofar it is inferred from actual trade ows, is referred to as 'revealed'. Brought to the data, this measure reveals that most U.S. manufacturing industries are losing momentum relative to their main competitors, as we find U.S. revealed marginal costs to grow by more than 38% on average. At the sectoral level, the "Machinery" industry is the most critical.
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Central Bank, Trade Unions, and Reputation – Is there Room for an Expansionist Manoeuvre in the European Union?
Toralf Pusch, A. Heise
A. Heise (ed.), Market Constellation Research: A Modern Governance Approach to Macroeconomic Policy. Institutionelle und Sozial-Ökonomie, Bd. 19,
2011
Abstract
The objective of this reader is manifold: On the one hand, it intends to establish a new perspective at the policy level named 'market constellations': institutionally embedded systems of macroeconomic governance which are able to explain differences in growth and employment developments. At the polity level, the question raised is whether or not market constellations can be governed and, thus, whether institutions can be created which will provide the incentives necessary for favourable market constellations.
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International Trade Patterns and Labour Markets – An Empirical Analysis for EU Member States
Götz Zeddies
International Journal of Economics and Business Research,
2012
Abstract
During the last decades, international trade flows of the industrialized countries became more and more intra-industry. At the same time, employment perspectives particularly of the low-skilled by tendency deteriorated in these countries. This phenomenon is often traced back to the fact that intra-industry trade (IIT), which should theoretically involve low labour market adjustment, became increasingly vertical in nature. Against this background, the present paper investigates the relationship between international trade patterns and selected labour market indicators in European countries. As the results show, neither inter- nor vertical intra-industry trade (VIIT) do have a verifiable effect on wage spread in EU member states. As far as structural unemployment is concerned, the latter increases only with the degree of countries’ specialization on capital intensively manufactured products in inter-industry trade relations. Only for unemployment of the less-skilled, a slightly significant impact of superior VIIT seems to exist.
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Optimum Currency Areas in Emerging Market Regions: Evidence Based on the Symmetry of Economic Shocks
Stefan Eichler, Alexander Karmann
Open Economies Review,
No. 5,
2011
Abstract
This paper examines which emerging market regions form optimum currency areas (OCAs) by assessing the symmetry of macroeconomic shocks. We extend the output-prices-VAR framework by adding net exports and the real effective exchange rate as endogenous variables. Based on theoretical considerations, we derive which shocks affect these variables in the long run: shocks to labor productivity, foreign trade, labor supply, and money supply. The considered economies of Central and Eastern Europe, the Commonwealth of Independent States, East and Southeast Asia, and South Asia, exhibit large enough shock symmetry to form a currency union; the economies of Africa, Latin America, and the Middle East do not.
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Extreme Dependence with Asymmetric Thresholds: Evidence for the European Monetary Union
Stefan Eichler, R. Herrera
Journal of Banking and Finance,
No. 11,
2011
Abstract
Existing papers on extreme dependence use symmetrical thresholds to define simultaneous stock market booms or crashes such as the joint occurrence of the upper or lower one percent return quantile in both stock markets. We show that the probability of the joint occurrence of extreme stock returns may be higher for asymmetric thresholds than for symmetric thresholds. We propose a non-parametric measure of extreme dependence which allows capturing extreme events for different thresholds and can be used to compute different types of extreme dependence. We find that extreme dependence among the stock markets of ten initial EMU member countries, the United Kingdom, and the United States is largely asymmetrical in the pre-EMU period (1989–1998) and largely symmetrical in the EMU period (1999–2010). Our findings suggest that ignoring the possibility of asymmetric extreme dependence may lead to an underestimation of the probability of co-booms and co-crashes.
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International Fragmentation of Production and the Labour Input into Germany’s Exports – An Input-Output-analysis
Hans-Ulrich Brautzsch, Udo Ludwig
IWH Discussion Papers,
No. 14,
2011
Abstract
The import penetration of exports has become a topic of public debate, particularly in the context of Germany’s position as one of the world’s leading exporters. The growth in the volume of intermediate products purchased from abroad for subsequent processing into export goods in Germany seems to be undermining the importance of exports as a driver of domestic production and employment. The gains that arise from an increase in exports seem to have been offset by the losses caused by the crowding out of local production by imports. Empirical evidence on the impact of this international integration of the goods market on the German labour market is ambiguous. Short-term negative effects on employment are claimed to be offset by the long-term benefit that the jobs lost in the short run will eventually be replaced by higher-skilled jobs with better
perspectives. Against this background, the following hypothesis is tested empirically: Germany is poor in natural resources, but rich in skilled labour. In line with the Heckscher- Ohlin theory, Germany should therefore specialize in the production of export goods and services that are relatively intensive in these factors and should import those goods and services that are relatively intensive in unskilled labour. The empirical part of the paper deals with the extent of the German export penetration by imports. At first, it analyses by what ways imports are affecting the exports directly and indirectly and shows the consequences of import penetration of exports for the national output and employment. Secondly, consequences for employment are split in different skill types of labour. These issues are discussed with the standard open static inputoutput- model. The data base is a time series of official input-output tables. The employment effects for Germany divided by skill types of labour are investigated using skill matrices generated by the authors.
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Trade Misinvoicing: The Dark Side of World Trade
A. Buehn, Stefan Eichler
World Economy,
No. 8,
2011
Abstract
We analyse the determinants of trade misinvoicing using data on 86 countries from 1980 to 2005. In a simple microeconomic framework, we derive the determinants of four different types of trade misinvoicing taking into account that only the financial incentives determine whether and how much exports/imports to underinvoice or overinvoice, whereas the deterrents only affect the extent of misinvoicing. The hypothesised determinants are tested using data on discrepancies in bilateral trade with the United States. We find that the black market premia and tariffs motivate illegal trading activities. Higher financial penalties effectively act as a deterrent to this crime.
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Stock Market Firm-Level Information and Real Economic Activity
Filippo di Mauro, Fabio Fornari, Dario Mannucci
ECB Working Paper,
No. 1366,
2011
Abstract
We provide evidence that changes in the equity price and volatility of individual firms (measures that approximate the definition of 'granular shock' given in Gabaix, 2010) are key to improve the predictability of aggregate business cycle fluctuations in a number of countries. Specifically, adding the return and the volatility of firm-level equity prices to aggregate financial information leads to a significant improvement in forecasting business cycle developments in four economic areas, at various horizons. Importantly, not only domestic firms but also foreign firms improve business cycle predictability for a given economic area. This is not immediately visible when one takes an unconditional standpoint (i.e. an average across the sample). However, conditioning on the business cycle position of the domestic economy, the relative importance of the two sets of firms - foreign and domestic - exhibits noticeable swings across time. Analogously, the sectoral classification of the firms that in a given month retain the highest predictive power for future IP changes also varies significantly over time as a function of the business cycle position of the domestic economy. Limited to the United States, predictive ability is found to be related to selected balance sheet items, suggesting that structural features differentiate the firms that can anticipate aggregate fluctuations from those that do not help to this aim. Beyond the purely forecasting application, this finding may enhance our understanding of the underlying origins of aggregate fluctuations. We also propose to use the cross sectional stock market information to macro-prudential aims through an economic Value at Risk.
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What Can Currency Crisis Models Tell Us about the Risk of Withdrawal from the EMU? Evidence from ADR Data
Stefan Eichler
Journal of Common Market Studies,
No. 4,
2011
Abstract
We study whether ADR (American depositary receipt) investors perceive the risk that countries such as Greece, Ireland, Italy, Portugal or Spain could leave the eurozone to address financial problems produced by the sub-prime crisis. Using daily data, we analyse the impact of vulnerability measures related to currency crisis theories on ADR returns. We find that ADR returns fall when yield spreads of sovereign bonds or CDSs (credit default swaps) rise (i.e. when debt crisis risk increases); when banks' CDS premiums rise or stock returns fall (i.e. when banking crisis risk increases); or when the euro's overvaluation increases (i.e. when the risk of competitive devaluation increases).
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Informed and Uninformed Investment in Housing: The Downside of Diversification
Elena Loutskina, Philip E. Strahan
Review of Financial Studies,
No. 5,
2011
Abstract
Mortgage lenders that concentrate in a few markets invest more in information collection than diversified lenders. Concentrated lenders focus on the information-intensive jumbo market and on high-risk borrowers. They are better positioned to price risks and, thus, ration credit less. Adverse selection, however, leads to higher retention of mortgages relative to diversified lenders. Finally, concentrated lenders have higher profits than diversified lenders, their profits vary less systematically, and their stock prices fell less during the 2007—2008 credit crisis. The results imply that geographic diversification led to a decline in screening by lenders, which likely played a role in the 2007–2008 crisis.
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