This programme addresses recent debates at the frontier of the field: globalization, the distributive effects of trade, the role of large firms in the global economy, advances in methods to analyze firm level export data and finally the revival of trade policies.
- Quantitative International Economics (Peter Egger, ETH Zurich and CEPR) ‐ 8 h
- Trade and Income Distribution (Ariell Reshef, PSE and CEPII) ‐ 6 h
- Trade Policy I (Anne-Celia Disdier, PSE) ‐ 3 h
- Trade Policy II (Mathieu Parenti, ULB and CEPR) ‐ 8 h
Workshop: present your paper
Participants will have the opportunity to submit a paper to be presented within this programme. The three selected papers will be presented in front of participants and faculty in a slot reserved for such presentations.
Quantitative International Economics – Peter Egger
The goal is to study quantitative models as used in international and regional economics to gauge welfare and other responses to counterfactual shocks. Specifically, we will consider models without or with homogeneous firms in a single and multiple sectors, heterogeneous firms, input-output linkages, and modern approaches towards a nonparametric treatment of various ingredients in such models, including firm distributions and trade-cost functions. We will consider variants of these models where labor is immobile and others where it is mobile across locations. We will illustrate how the flexible modelling of firm distributions and of trade-cost functions will add interesting layers to the heterogeneity of responses and how it will exacerbate the heterogeneity of those responses of economic agents at large.
- The generic structure of most quantitative trade models
- Multi-sector versions with and without input-output links and factor mobility between sectors and places
- Heterogeneous firms in quantitative trade models
- Flexible forms: firm distributions and trade-cost functions
- Endogeneity: sneeking reduced forms into structural models
Selected key references
- Baltagi, Badi H. Peter H. Egger, and Katharina Erhardt, 2017. The Estimation of Gravity Models in International Trade. The Econometrics of Multi-dimensional Panels, 323-348.
- Costinot, Arnaud and Andrés Rodríguez-Clare, 2014. Trade Theory with Numbers: Quantifying the Consequences of Globalization. Handbook of International Economics, Volume 4, 197-261.
- Egger, Peter H. and Katharina Erhardt, 2019. Heterogeneous Effects of Tariff and Non-tariff Trade-Policy Barriers in Quantitative General Equilibrium. CEPR Discussion Paper No. 13602.
- Egger, Peter H., Katharina Erhardt, and Sergey Nigai, 2020. Empirical Productivity Distributions and International Trade. CEPR Discussion Paper No. 15160.
- Head, Keith and Thierry Mayer, 2014. Gravity Equations: Workhorse, Toolkit, and Cookbook. Handbook of International Economics, Volume 4, 131-195.
Trade and Income Distribution - Ariell Reshef
The goal is to study the income distribution consequences of globalization: trade in final goods, trade in intermediate inputs, trade in capital, offshoring, foreign direct investment, multinational firm activity. We will consider several channels through which globalization, and in particular changes in market access, affects domestic labor markets, for example, through changes in relative demand for different types of labor inputs, or through changes in incentives to invest and technological responses. These manifest themselves in the distribution of income via reallocation of resources across productive units, changes in the internal organization of productive units, fair wages, sorting, and more. Given the inherent complementarities between investment in technology and market access, it is impossible to discuss globalization without any mention of technological change, so we will also touch upon this topic as well..
- Why do we think trade and income distribution are linked?
- Juxtaposing the technology narrative with trade liberalization
- The capital input channel of trade liberalization
- Foreign direct investment and offshoring
- Trade‐induced technological change
- Individual effects and sorting
- Local labor market effects
Selected key references
- Autor, Dorn and Hanson (2013): “The China Syndrome: Local Labor Effects of Import Competition in the United States”, The American Economic Review
- Bloom, Draca, and Van Reenen, (2016), “Trade induced technical change? The impact of Chinese imports on innovation, IT and productivity”, The Review of Economic Studies.
- Burstein, Cravino and Vogel (2013): “Importing Skill‐Biased Technology”, AEJ: Macroeconomics.
- Harrigan and Reshef (2015): “Skill Biased Heterogeneous Firms, Trade Liberalization and the Skill Premium”, Canadian Journal of Economics.
- Harrigan, Reshef and Toubal (2020): Techies, Trade and Skill-Boased Productitvity, NBER Working Paper No. 25295
- Helpman, Itskhoki and Redding (2010), “Inequality and unemployment in the global economy”, Econometrica.
- Raveh and Reshef (2016), “Capital Imports Composition, Complementarities, and the Skill Premium in Developing Countries”, Journal of Development Economics.
- Reshef and Santoni (2020), “Are Your Labor Shares Set in Beijing? The View Through the Lens of Global Value Chains”.
- Sampson (2014): “Selection into Trade and Wage Inequality”, American Economic Journal: Microeconomics
- Thoenig, and Verdier (2003), “A theory of defensive skill-biased innovation and globalization”, American Economic Review.
Trade Policy (I) – Anne-Célia Disdier
Recent years have seen important changes in the trade policy. First, tariffs on goods have been largely bound and reduced to an average below 5% before increasing again following the US-China trade war, whereas non-tariff measures such as technical, sanitary, and regulatory measures at the border have spread. Second, economic integration is increasingly conducted at the bilateral or regional level through “deep” trade agreements, while the multilateral scene has become too heterogeneous to converge easily on ambitious and mutually beneficial liberalization agendas. This course reviews recent developments in the quantification of trade policy effects though the estimation of structural gravity models. It also investigates the non-tariff measures and their trade, price and welfare effects.
- Quantification of trade policy effects
- Non-tariff measures
Selected key references
- Anderson, J. E. and E. van Wincoop (2003), “Gravity with Gravitas: A Solution to the Border Puzzle,” American Economic Review, 93(1): 170-192.
- Cadot, O. and J. Gourdon (2016), “Non-tariff measures, preferential trade agreements, and prices: new evidence," Review of World Economics, 152(2): 227-249.
- Chen, N. and D. Novy (2011), “Gravity, trade integration, and heterogeneity across industries”, Journal of International Economics, 85(2), 206–221.
- Costinot, A. and A. Rodriguez-Clare (2014), “Trade Theory with Numbers: Quantifying the Consequences of Globalization”, In: Gopinath G., Helpman, E and K. Rogoff (Eds.), Handbook of International Economics, vol. 4. Elsevier, Oxford, pp. 197-261.
- Disdier, A-C. and M. Fugazza (2020), “A Practical Guide to the Economic Analysis of Non-Tariff Measures”, Co-published by UN Conference on Trade and Development and WTO.
- Ederington, J. and M. Ruta (2016), “Nontariff measures and the world trading system”, In K. Bagwell and R. Staiger (Eds.), Handbook of Commercial Policy, vol. 1B. Elsevier, Amsterdam, North-Holland, pp. 211–277.
- Fontagné, L., Orefice, G., Piermartini, R. and N. Rocha (2015), “Product Standards and Margins of Trade: Firm-Level Evidence”, Journal of International Economics, 97(1): 29-44.
- Head, K. and T. Mayer (2014), “Gravity Equations: Workhorse, Toolkit, and Cookbook,” In: Gopinath G., Helpman, E and K. Rogoff (Eds.), Handbook of International Economics, vol. 4. Elsevier, Oxford, pp. 131-195.
- Kee, H.L., A. Nicita, and M. Olarreaga (2009), “Estimating Trade Restrictiveness Indices”, The Economic Journal, 119: 172-199.
- Larch, M., J-A. Monteiro, R. Piermartini and Y. Yotov (2016), “An Advanced Guide to Trade Policy Analysis: The Structural Gravity Model”, Co-published by UN Conference on Trade and Development and WTO.
Trade Policy (II) – Mathieu Parenti
New trade agreements like the EU‐Canada Comprehensive Economic Trade Agreement (CETA) or EU Japan (EPA) go beyond traditional liberalization efforts. Their main goals are to dismantle non‐tariff barriers and to facilitate cross‐border investments. This course starts with a review of the theoretical rationales for (deep) trade agreements and then discusses recent developments in the political economy of trade policy. We will then see how quantitative trade models can be used to evaluate the impact of an economic dis‐integration shock such as Brexit. The last part of the course investigates how tax and trade policies interact when multinational firms are engaged in profit shifting activities.
- Theories of trade agreements under perfect and imperfect competition
- Firm‐level lobbying: the demand for protection and market access
- Trade policy quantified: structural and reduced‐form approaches with an application to Brexit
- Multinational firms and international corporate taxation
Selected key references
- Bagwell, K., Staiger, R.W., (1999) An economic theory of GATT. American Economic Review
- Blanga‐Gubbay, M., Conconi P. & Parenti, M. Lobbying for Globalization, CEPR DP
- Bombardini, M. (2008) Firm heterogeneity and lobby participation, Journal of International Economics ‐ Grossman, G. M., Helpman, E., 1994. Protection for sale. American Economic Review
- *Costinot, A. and Rodriguez‐Clare. (2014) Trade theory with numbers: Quantifying the consequences of globalization, Handbook of International Economics, edited by ‐ Gopinath, Helpman and Rogoff
- Davies, Ronald B., Julien Martin, Mathieu Parenti, and Farid Toubal (2018) Knocking on Tax Haven’s Door: Multinational Firms and Transfer Pricing, The Review of Economics and Statistics.
- Dhingra, S. H Huang G Ottaviano, J Pessoa, T Sampson, J Van Reenen (2018) The costs and benefit of leaving the EU, Economic Policy
- Egger Strecker Zoller‐Rydzek (2018) Estimating Bargaining‐related Tax Advantages of Multinational Firms, Journal of International Economics
- *Grossman, G. The purpose of trade agreements. (2016) Handbook of Commercial Policy, edited by Bagwell and Staiger.
- Grossman, G., Mc Calman, P. Staiger, B. (2020) “The “new” economics of trade agreements”, Econometrica
- Head and Mayer (2014) Gravity equations: workhorse, toolkit and cookbook.
- Laffite, S., Parenti, M., Souillard, B., Toubal, F. (2019) Quantifying the Effects of International Tax Reforms, mimeo
- Li Liu, Tim Schmidt‐Eisenlohr, and Dongxian Guo (2019) International Transfer Pricing and Tax Avoidance: Evidence from Linked Trade‐Tax Statistics in the UK, The Review of Economics and Statistics.
- Ossa, R (2011). A “new trade” theory of GATT/WTO negotiations, Journal of Political Economy
- Parenti, M., Vannoorenberghe, G. (2019) A simple theory of deep trade integration, Respect WP
- *Rodrik, D. (2018). What Do Trade Agreements Really Do? Journal of Economic Perspectives
- Tørsløv, LS Wier, G Zucman (2018) Missing profits of nations, NBER WP
Contents - International Trade