Browsing by Subject "F14"

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  • Cheung, Yin-Wong; Chinn, Menzie D.; Qian, XingWang (2012)
    BOFIT Discussion Papers 14/2012
    Published in Journal of International Money and Finance, Volume 31, Issue 8, 2012, Pages 2127-2146
    We find that Chinese trade flows respond to economic activity and relative prices -- as represented by a trade weighted exchange rate -- but the relationships are not always precisely or robustly estimated. Chinese exports are generally well-behaved, rising with foreign GDP and decreasing as the Chinese renminbi (RMB) appreciates. However, the estimated income elasticity is sensitive to the treatment of time trends. Estimates of aggregate imports are more problematic. In many cases, Chinese aggregate imports actually rise in response to a RMB depreciation and decline with Chinese GDP. This is true even after accounting for the fact a substantial share of imports are subsequently incorporated into Chinese exports. We find that some of these counter-intuitive results are mitigated when we disaggregate the trade flows by customs type, commodity type, and the type of firm undertaking the transactions. However, for imports, we only obtain more reasonable estimates of elasticities when we allow for different import intensities for different components of aggregate demand (specifically, consumption versus investment), or when we include a relative productivity variable. Keywords: China, imports, exports, real exchange rate JEL: F14, F41
  • Gluschenko, Konstantin; Kulighina, Darya (2006)
    BOFIT Discussion Papers 3/2006
    Published in Journal of Economic Studies, Volume 37, Issue 4/2010
    Perfect integration eludes the real world, so we suggest a realistic benchmark standard for judging the extent of market integration in various economies.We estimate the degree of integration in the US product market, widely acknowledged to be the most integrated among geographically large economies, so as to provide a reference for measuring Russian market integration. Prices for 27 grocery items across 29 cities of the United States in the first quarter of 2000 are used as empirical data.The estimated degree of integration turns out to be very close to values obtained for Russia for 2000.Apparently, market integration in Russia has in recent years moved toward conditions found in advanced market economies.The roles of other factors that could potentially cause segmentation of the US market are also analyzed. JEL Classification: F14, F15, L81, R1 Keywords: market integration, price dispersion, law of one price, United States, Russia
  • Garcia-Herrero, Alicia; Koivu, Tuuli (2007)
    BOFIT Discussion Papers 6/2007
    Published in Economie Internationale, Volume 116, Issue 4, 2008, Pages 53-92 as China's exchange rate policy and asian trade
    This paper shows empirically that China's trade balance is sensitive to fluctuations in the real effective exchange rate of the renminbi, although the size of the surplus is such that exchange rate policy alone will be unable to address the imbalance. One of the main reasons why the reduction in the trade surplus is limited is that Chinese imports are reduced with a real appreciation of the renminbi.By estimating bilateral import equations, we find that it is imports from other Southeast Asian countries which fall.This result reflects the vertical integration of Southeast Asia with China through the 'Asian production network'.We find, in turn, that imports from Germany - which serve China's domestic demand - behave as one would expect, ie they increase with renminbi real appreciation.All in all, our results raise concerns on the impact of renminbi appreciation on Southeast Asia even if regional currencies do not follow the renminbi's upward trajectory. Keywords: China, trade, exports, real exchange rate JEL classification: F1, F14
  • Simola, Heli (2019)
    BOFIT Discussion Papers 17/2019
    The slowing in China’s massive economy has wide implications. China plays an essential role in international production chains, so disturbances can spill over to other economies in the global production network. We evaluate the international transmission and impact of various China-specific shocks with an input-output framework applied to the World Input-Output Database (WIOD). We consider shocks to Chinese final demand at the aggregate level, bilateral import tariffs between the US and China and sector-specific shocks to Chinese final demand and supply. Our results suggest that aggregate level shocks, as well as certain sector-specific shocks originating in China, may have large impacts elsewhere. Transmission of shocks through the global production network, however, is mitigated by the relatively low import-intensity of Chinese production.
  • Xing, Yuqing (2006)
    BOFIT Discussion Papers 15/2006
    This paper examines the FDI-exchange rate nexus in the context of one FDI source and two host countries.It focuses on the effect of exchange rates on relative FDI inflows between the two host countries.The theoretical analysis shows explicitly that relative FDI inflows are a function of relative real exchange rates.In particular, if one host country devalues its currency against that of the source country more than the other does, FDI into the former country will be expected to increase relative to the other country. The theoretical inference is examined with Japanese FDI in manufacturing industries of China and ASEAN-4 (Indonesia, Malaysia, the Philippines and Thailand).The empirical results generally support the theoretical conclusion, suggesting that the real devaluation of the Chinese Yuan undercut FDI into the ASEAN-4. Keywords: FDI, Exchange rate, China, ASEAN-4 JEL classification: F14, F23, F31
  • Wang, Jiao; Ji, Andy G. (2006)
    BOFIT Discussion Papers 19/2006
    Traditional assessments of the impact of exchange rate depreciation or appreciation on trade have involved estimating the elasticity of trade volume to relative prices.Such studies relied heavily on aggregated trade data.More recent studies employ bilateral trade data and methodologies such as ECM and gravity models.This study uses a generalized gravity model with data panel analysis in assessing the impact of currency depreciation or appreciation on bilateral trade flows between China and its top trading partners. The empirical evidence suggests exchange rates (both real and nominal) do not exert a significant influence on the overall exports from China.Thus, a devaluation or revaluation of the yuan should be expected to have only limited impact on China's trade balance.Moreover, previous studies provide limited evidence of a negative relation between exchange rate volatility and trade flows. Given the current revaluation expectations, we find China's anticipated shift toward a more flexible exchange rate regime fails to address China's trade surplus issues, and thus will merely lead to a revaluation of the nominal exchange rate and increased exchange rate volatility.It appears a major overhaul of the country's heavily subsidized export regime must first occur for the exchange rate to assume a larger role in China's international trade. Keywords: Exchange Rate, Trade, China, Competition, Gravity Model, Panel JEL Classification: C22, C23, F14, F31
  • Xing, Yuqing (2007)
    BOFIT Discussion Papers 1/2007
    Published in Journal of Asian Economics, Volume 18, Issue 4, August 2007, Pages 685-700
    This paper analyzes dynamic changes of China's intra-industry trade with its major trading partners, Japan and the US, from 1980 to 2004.It also investigates to what extent foreign direct investment promoted intra-industry trade.The empirical results show that, while shares of China's intra-industry trade with both Japan and U.S rose substantially, its intraindustry trade with Japan has reached 35 per cent of the overall trade, considerably larger than 10 per cent with the US.Sino-Japan intra-industry trade concentrated in the electrical and machinery sectors accounted for 52 per cent and 46 per cent of overall trade respectively.On the other hand, it is in the chemical and food sectors where intra-industry trade represented a relatively large proportion of Sino-US trade, 50 per cent and 30 per cent accordingly in each sector.In addition, the analysis indicates that Japanese direct investment in China performed a significant role in enhancing intra-industry trade between Japan and China.However, it found no evidence that the US direct investment in China contributed to the growth of the bilateral intra-industry trade between the two countries. JEL:F14, F23 Key Words: Intra-industry trade, FDI, China
  • Dean, Judith; Fung, K.C.; Wang, Zhi (2008)
    BOFIT Discussion Papers 31/2008
    Book Chapter published in: Vertical Specialization and Value-Added Trade, Nova Science Publishers, Inc. 2011, Pages 21-38
    Two recent phenomena have transformed the nature of world trade: the explosive growth of Chinese trade, and the growth of vertically specialized trade due to international production fragmentation. While vertical specialization may explain much of the growth and unique features of Chinese trade, few papers have quantitatively assessed these two phenomena together. In part, this is because it is difficult to measure just how vertically specialized Chinese trade is. The unique features of China's extensive processing trade cause both the identification of imported intermediate goods, and their allocation across sectors, to depend upon the Chinese trade regime. In this paper, we estimate the vertical specialization of Chinese exports, addressing these two challenges. Using two Chinese benchmark input-output tables, and a detailed Chinese trade dataset which distinguishes processing trade from other forms of trade, we develop a new method of identifying intermediate goods imported into China. Vertical specialization is then estimated using two methods. The first method uses the Hummels, Ishii and Yi (2001) measure, the official benchmark IO tables, and incorporates our identification correction. The second method follows the first, but also incorporates the Koopman, Wang and Wei (2008) method of splitting the benchmark IO tables into separate tables for processing and normal exports, in order to address the allocation problem. Results show strong evidence of an Asian network of intermediate suppliers to China, and the two methods provide a range of estimates for the foreign content of Chinese exports. In 2002 aggregate exports ranges between 25% and 46%, with some individual sectors are as high as 52! %-95%. Across destinations, under both methods, the vertical specialization of Chinese exports declines with the level of development of the trading partner. JEL Codes: F10, F14 Keywords: China, fragmentation, vertical specialization, trade growth
  • Pula, Gabor; Santabárbara, Daniel (2012)
    BOFIT Discussion Papers 23/2012
    There is an ongoing debate in the literature about the quality content of Chinese exports and to what extent China imposes a threat to the market positions of advanced economies. While China's export structure is very similar to that of the advanced world, its export unit values are well below the level of developed economies. Building on the assumption that unit values reflect quality the prevailing view of the literature is that China exports low quality varieties of the same products than its advanced competitors. This paper challenges this view by relaxing the assumption that unit values reflect quality. We derive the quality of Chinese exports to the European Union by estimating disaggregated demand functions from a discrete choice model. The paper has three major findings. First, China's share on the European Union market is larger than would be justified only by its low average prices, implying that the quality of Chinese exports is high compared to many competitors. Second, China has gained quality relative to other competitors since 1995, indicating that China is climbing up the quality ladder. Finally, our analysis on the supply side determinants reveals that the relatively high quality of Chinese exports is related to processing trade and the increasing role of global production networks in China. Keywords: Chinese exports, vertical product differentiation, quality ladder, global production networks, discrete choice model, COMEXT database JEL Classification: F1, F12, F14, F15, F23
  • Laine, Olli-Matti (2018)
    BoF Economics Review 2/2018
    This study examines the level, distribution and development of market power in Finland between 1975 and 2016. The paper applies the methods proposed by Hall (2018a) and Hall (2018b). In contrast to some other international evidence, the aggregate level of market power has not risen in Finland during the last decades. The estimate of country level markup ratio in Finland is 1,25. The paper also analyses the distribution of markup ratios across industries. About 90 per cent of industry level markup ratios are between 1 and 1,5. The results suggest that markups are typically higher in exporter firms than in non-exporter firms.
  • Benkovskis, Konstantins; Wörz, Julia (2012)
    BOFIT Discussion Papers 19/2012
    Published in Empirical Economics, Volume 51, Issue 2, Sept. 2016, pp 707–735
    This analysis of global competitiveness of emerging market economies accounts for non-price aspects of competitiveness. Building on the methodology pioneered by Feenstra (1994) and Broda and Weinstein (2006), we construct an export price index that adjusts for changes in the set of competitors (variety) and changes in non-price factors (quality in a broad sense) for nine emerging economies (Argentina, Brazil, Chile, China, India, Indonesia, Mexico, Russia and Turkey). The highly disaggregated dataset covers the period 1999?2010 and is based on the standardized 6-digit Harmonized System (HS). Unlike studies that use a CPI-based real effective exchange rate, our method highlights notable differences in non-price competitiveness across markets. China shows a huge gain in international competitiveness due to non-price factors, suggesting that China critics may be overstressing the role of renminbi undervaluation in explaining China's competitive position. Oil exports account for strong improvement in Russia's non-price competitiveness, as well as the modest losses of competitiveness for Argentina and Indonesia. Brazil, Chile, India and Turkey show discernible improvements in their competitive position when accounting for non-price factors. Mexico's competitiveness deteriorates regardless of the index chosen. JEL Classification: C43, F12, F14, L15 Keywords: non-price competitiveness, quality, relative export price, emerging countries
  • Balistreri, Edward J.; Olekseyuk, Zoryana; Tarr, David G. (2017)
    BOFIT Discussion Papers 2/2017
    The accession negotiations of Belarus to the WTO are unusual since, due to its obligations in the Eurasian Economic Union, WTO accession is not expected to impact its tariffs or formerly substantial trade distorting agricultural subsidies. Nonetheless, we estimate that WTO accession will increase welfare by 8.8 percent per year in Belarus in the medium term. We show that inclusion of (i) foreign direct investment; (ii) reduction on non-discriminatory barriers against services providers; and (iii) our model with imperfect competition and endogenous productivity effects together produce esti-mated gains eleven times larger than a model of perfect competition with only cross-border trade in services. Our analysis is enabled by our production of a dataset on both discriminatory and non-discriminatory barriers in services and their ad valorem equivalents. Based on a new dataset on labor productivity by sector and type of ownership, in our central model we estimate that privatization will increase welfare by 35.4 percent. We find substantial variance in the estimated gains from privatiza-tion depending on model assumptions; but all the estimates of the impacts of privatization indicate substantial welfare gains.
  • Simola, Heli (2021)
    BOFIT Discussion Papers 12/2021
    We examine the role of demand composition in explaining the trade collapse and recovery during the ongoing covid-19 crisis. We apply an import-intensity-adjusted measure of demand to examineimport trends in 40 advanced and emerging economies over the period 1Q95 to 4Q20. We focus on the crisis periods related to covid-19 and the global financial crisis in 2008–2009. As during the global financial crisis, we find that import-intensity-adjusted demand is a key factor contributing to trade developments during the covid-19 crisis. The analysis also reveals substantial differences between the current crisis and the global financial crisis. Trade decline during the global financial crisis was heavily investment-led. In the current crisis, consumption and import demand from the service sector have had much larger roles. The recovery of trade has been notably faster during the covid-19 crisis and led by exports as opposed to the much more important role played by domestic demand during the global financial crisis.
  • Funke, Michael; Ruhwedel, Ralf (2003)
    BOFIT Discussion Papers 17/2003
    Published in China Economic Journal, 2008, Volume 1 (2): 203-212
    We calculate welfare gains of trade liberalization in the Central and East European transition economies, following the approach of Romer (1994), who emphasized that proper modeling of the impact of trade restrictions on the number of available product varieties is crucial to quantifying the welfare impact of trade liberalization. The empirical work relies on direct measures of product variety calculated from 5-digit trade data.Although the issue is far from settled, the emerging conclusion is that freer trade has boosted welfare. Trade Liberalization, Product Variety, Welfare, Transition Economies D60, F14, F15
  • Garanina, Olga (2008)
    BOFIT Discussion Papers 23/2008
    Published in Post-Communist Economies, vol. 21, no. 1, March 2009, 1-29
    The objective of the paper is to study Russia's pattern of specialisation in the manufactures trade since 1998. Russia's global trade balance for manufactures is rapidly deteriorating. However, the trade pattern in manufactures should be differentiated according to Russia's main trading partners: the European Union (EU), the Commonwealth of Independent States (CIS) and China. On the basis of trade indicator analysis (revealed comparative advantages and Grubel-Lloyd index of intra-industry trade), we show that Russia is globally disadvantaged in the manufactures trade vis-à-vis the EU and China, and advantaged in the trade with the within the CIS. Russia is managing to expand its manufactured exports to other CIS countries. However, it is gradually losing its role of main supplier of capital goods in the post-Soviet space. Keywords: international trade, trade specialisation, revealed comparative advantage, intra-industry trade, Russia JEL Classification: F14
  • Benkovskis, Konstantins; Wörz, Julia (2013)
    BOFIT Discussion Papers 18/2013
    The paper proposes a theoretical framework to explain gains and losses in export market shares by their price and non-price determinants. Starting from a demand-side model à la Armington (1969), we relax several restrictive assumptions to evaluate the contribution of unobservable changes in taste and quality, taking into account differences in elasticities of substitution across product markets. Using highly disaggregated trade data from UN Com-trade, our empirical analysis for the major world exporters (G7 and BRIC countries) reveals the dominant role of non-price factors in explaining the competitive gains of BRIC countries and concurrent decline in the G7's share of world exports. JEL classification: C43, F12, F14, L15 Keywords: export market share decomposition, non-price competitiveness, real effective exchange rate