Round Trade Research Articles

Us Inequality in the 1980s: The Tokyo Round Trade Liberalization and the Swiss Formula

Us Inequality in the 1980s: The Tokyo Round Trade Liberalization and the Swiss Formula

Trade Policy is Real News: Theory and Evidence

<ns2:p>We evaluate the aggregate effects of changes in trade barriers when these changes can be implemented slowly over time and trade responds gradually to changes in trade barriers because firm-level trade costs make exporting a dynamic decision. Our model shows how expectations of changes in trade barriers affect the economy. We find that while decreases in trade barriers increase economic activity, expectations of lower future trade barriers temporarily decrease investment, hours worked, and output. Further- more, canceling an expected decline in future trade barriers raises investment and output in the short run but substantially lowers medium-run growth. These effects are larger when the expected reform is bigger. In the data, we find that countries with more trade growth after the General Agreement on Tariffs and Trade (GATT) rounds decreased investment and hours worked in the years leading to the tariff cuts, as predicted by our model.</ns2:p>

Agro-economic and socio-environmental assessments of food and virtual water trades of Iran

Ending hunger and ensuring food security are among targets of 2030’s SDGs. While food trade and the embedded (virtual) water (VW) may improve food availability and accessibility for more people all year round, the sustainability and efficiency of food and VW trade needs to be revisited. In this research, we assess the sustainability and efficiency of food and VW trades under two food security scenarios for Iran, a country suffering from an escalating water crisis. These scenarios are (1) Individual Crop Food Security (ICFS), which restricts calorie fulfillment from individual crops and (2) Crop Category Food Security (CCFS), which promotes “eating local” by suggesting food substitution within the crop category. To this end, we simulate the water footprint and VW trades of 27 major crops, within 8 crop categories, in 30 provinces of Iran (2005–2015). We investigate the impacts of these two scenarios on (a) provincial food security (FSp) and exports; (b) sustainable and efficient blue water consumption, and (c) blue VW export. We then test the correlation between agro-economic and socio-environmental indicators and provincial food security. Our results show that most provinces were threatened by unsustainable and inefficient blue water consumption for crop production, particularly in the summertime. This water mismanagement results in 14.41 and 8.45 billion m3 y−1 unsustainable and inefficient blue VW exports under ICFS. “Eating local” improves the FSp value by up to 210% which lessens the unsustainable and inefficient blue VW export from hotspots. As illustrated in the graphical abstract, the FSp value strongly correlates with different agro-economic and socio-environmental indicators, but in different ways. Our findings promote “eating local” besides improving agro-economic and socio-environmental conditions to take transformative steps toward eradicating food insecurity not only in Iran but also in other countries facing water limitations.

Hardness of Learning in Rich Environments and Some Consequences for Financial Markets

This paper examines the computational feasibility of the standard model of learning in economic theory. It is shown that the information update technique at the heart of this model is impossible to compute in all but the simplest scenarios. Specifically, using tools from theoretical machine learning, the paper first demonstrates that there is no polynomial implementation of the model unless the independence structure of variables in the data is publicly known. Next, it is shown that there cannot exist a polynomial algorithm to infer the independence structure; consequently, the overall learning problem does not have a polynomial implementation. Using the learning model when it is computationally infeasible carries risks, and some of these are explored in the latter part of the paper in the context of financial markets. Especially in rich, high-frequency environments, it implies discarding a lot of useful information, and this can lead to paradoxical outcomes in interactive game-theoretic situations. This is illustrated in a trading example where market prices can never reflect an informed trader’s information, no matter how many rounds of trade. The paper provides new theoretical motivation for the use of bounded rationality models in the study of financial asset pricing—the bound on rationality arising from the computational hardness in learning.

ОЦЕНКА КРИТЕРИЕВ ДЕЯТЕЛЬНОСТИ ПРЕДСТАВИТЕЛЬСТВ ЯПОНСКИХ КОМПАНИЙ В РОССИЙСКОЙ ФЕДЕРАЦИИ И НЕОБХОДИМОСТЬ ПОВЫШЕНИЯ ИХ ЭФФЕКТИВНОСТИ

Being one of the most important tools of the national economy, foreign direct investment provides means for production expansion, creating employment opportunities and jobs, accelerating structural changes, improving the country’s financial standing in foreign relations, increasing its foreign exchange reserves, reducing budget holdbacks, and improving its credit rating. In Russia, foreign investments are primarily made through capital contributions by registered foreign residents. According to official reports, in the total annual capital inflows into the Russian Federation, 10 to 12% are attributable to foreign direct investment, 1 to 2% - to indirect investment, and up to 80% - to other investments. The current state of the world economy is characterized by many challenges: from increased competition and a new round of trade wars between major economic powers to a shift in emphasis in approaches to assessing the effectiveness of economic entities from exclusively financial to mainly non-financial, including environmental and social aspects. The corresponding economic conditions, coupled with significant political and economic pressure from a number of countries, sharply raise the issue of developing new approaches to determining the effectiveness of their own activities. Determining the effectiveness of business entities is necessary in order to ensure timely and adequate assessment of their business model from the perspective of key stakeholders and to develop an effective strategy for long-term sustainable functioning in the new business environment. This issue is particularly relevant for those economic entities that implement their activities, including through foreign representative offices. Determining the effectiveness of business entities ' representative offices abroad and evaluating their strategic performance, in addition to differences in approaches to accounting and public reporting, is also complicated by the specifics of the legal status of representative offices of economic entities, as well as the processes of legal regulation of their activities in different countries.

A fair, preference-based posted price resale e-market model and clearing heuristics for circular economy

Resale markets in which secondhand new and used goods are traded play an important role in circular economy with significant economic and environmental benefits. This study proposes a preference-based posted price electronic market model for resale markets which features several mechanisms to improve the market outcome. The proposed model allows market participants to post sales and purchase orders simultaneously inside a trading round which also enables participants to use the revenue obtained from the items to be sold to purchase other items in the market. Besides, each participant is allowed to declare a budget constraint which restricts the amount that the participant will spend in the market to prevent a possible budget deficiency. Furthermore, the model also allows participants to declare their preferences of substitutabilities in their orders. In this study, the proposed model is formally defined, the corresponding market clearing problem is formulated as a hierarchical multi-objective linear integer program to provide fair allocation between the participants. Four different objective functions are proposed, and their outcomes are compared to the current market system. Since the clearing problem is NP-Hard, several heuristic methods including ant colony optimization, artificial bee colony and genetic algorithms along with problem-specific operators are proposed. The performance of the model is statistically analyzed based on several experiments. The genetic algorithm using the proposed problem-specific operators provides solutions within 3% of the optimal objective values and within 1% of the optimal fairness on average. The results also indicate that the model provides improved market outcomes and fair allocation of items among the participants, and thus it has a potential to contribute to the growth of circular economy.

The Evolution of Digital Trade from the North American Trade Agreement to the United States Mexico Canada Agreement

The Evolution of Digital Trade from the North American Trade Agreement to the United States Mexico Canada Agreement

Behavioural Effects and Market Dynamics in Field and Laboratory Experimental Asset Markets.

A vast literature investigating behavioural underpinnings of financial bubbles and crashes relies on laboratory experiments. However, it is not yet clear how findings generated in a highly artificial environment relate to the human behaviour in the wild. It is of concern that the laboratory setting may create a confound variable that impacts the experimental results. To explore the similarities and differences between human behaviour in the laboratory environment and in a realistic natural setting, with the same type of participants, we translate a field study conducted by reference (Sornette, D.; et al. Econ. E-J. 2020, 14, 1–53) with trading rounds each lasting six full days to a laboratory experiment lasting two hours. The laboratory experiment replicates the key findings from the field study but we observe substantial differences in the market dynamics between the two settings. The replication of the results in the two distinct settings indicates that relaxing some of the laboratory control does not corrupt the main findings, while at the same time it offers several advantages such as the possibility to increase the number of participants interacting with each other at the same time and the number of traded securities. These findings pose important insights for future experiments investigating human behaviour in complex systems.

What do I get? How do states’ negotiation alternatives influence the concessions they receive in multilateral negotiations?

When will states receive concessions in multilateral negotiations? And on which issues are those concessions likely to be received? I highlight two factors that influence the likelihood a state will receive concessions on an issue in multilateral negotiations: (1) the degree to which the issues linked together in the negotiation are “differently valued” by the negotiating states, and (2) the costliness of states’ “best alternative to a negotiated agreement” on each individual issue. The former creates the opportunity for an exchange of concessions; the latter creates the incentive for that exchange to occur. It is the interaction of having more differently valued issues on the table and having a more costly best alternative to a negotiated agreement on an issue that makes a state more likely to receive concessions on that issue. This argument stands in contrast to the standard negotiation literature, which has shown that having a more beneficial best alternative to a negotiated agreement will yield greater concessions. I argue that these contradictory assertions exist because there are two types of best alternatives to a negotiated agreement that must be taken into account – one at the negotiation level and those at the issue-specific level. The current literature has tended to focus on the former while I focus on the latter. I test my argument on an originally constructed dataset of concessions states received in the Uruguay Round trade negotiations of the General Agreement on Tariffs and Trade. For each issue in the Round, I coded the costliness of each state's issue-specific best alternative to a negotiated agreement and the level of concessions it received on that issue. The results provide insights into the workings of multilateral negotiations.

Inventory Management for High-Frequency Trading With Imperfect Competition

We study Nash equilibria for inventory-averse high-frequency traders (HFTs), who trade to exploit information about future price changes. For discrete trading rounds, the HFTs' optimal trading strategies and their equilibrium price impact are described by a system of nonlinear equations; explicit solutions obtain around the continuous-time limit. Unlike in the risk-neutral case, the optimal inventories become mean-reverting and vanish as the number of trading rounds becomes large. In contrast, the HFTs' risk-adjusted profits and the equilibrium price impact converge to their risk-neutral counterparts. Compared to a social-planner solution for cooperative HFTs, Nash competition leads to excess trading, so that marginal transaction taxes in fact decrease market liquidity.

Inventory Management for High-Frequency Trading with Imperfect Competition

We study Nash equilibria for inventory-averse high-frequency traders (HFTs), who trade to exploit information about future price changes. For discrete trading rounds, the HFTs' optimal trading stra...

CHALLENGES FACED BY THE WTO’S ECONOMIC SYSTEM IN TRADE IN SERVICES NEGOTIATIONS

resent paper focuses on current crises in international trade in services negotiations from the perspective of consideration of trading interests of developing and least developed countries in line with the operational agenda of the World Trade Organization (WTO). Through the analysis of the existing international legal texts and scholarly works particular attention is paid to the different rounds of trade in services negotiations in parallel to the consideration of the results of relevant ministerial conferences of the World Trade Organization, drawing attention to the situation with regards of consideration of the interests of developing and least developed country members of the WTO. Special focus is paid to the complexity of the decision making process and it’s complication over time due to increased participation of parties concerned in the process of trade in services negotiations resulting in no progress in the overall process. Next to analyzing the challenges faced by the WTO in trade in services negotiations, especially in terms of considering the interests of developing and least developed countries, paper shows the ways that could be used during 2020 Kazakhstan Ministerial Conference of the World Trade Organization for finding solutions to simplify the decision making process and establish freer international trade in services by the way of either implying new approaches in interpreting the existing multilateral treaties that deal with trade in services between all member states of the WTO or deepening the discussions on a new plurilateral agreement helping the organization to overcome the stagnated process of trade in services negotiations and therefore ensuring the compliance with it’s own operational goals.

Trading while sleepy? Circadian mismatch and mispricing in a global experimental asset market

Traders in global markets operate at different local times-of-day. This implies heterogeneity in circadian timing and likely sleepiness or alertness of those traders operating at less or more optimal times of the day, respectively. This, in turn, may lead to differences in both individual-level trader behavior as well as market level outcomes. We examined these factors by administering single-location and global sessions of an online asset market experiment that regularly produces mispricing and valuation bubbles. Global sessions involved real time trades between subjects in New Zealand and the U.S (i.e., “global” markets) with varied local times of day for each location. Individual traders at suboptimal times of day (or, “circadian mismatched” traders) engaged in riskier trading strategies, such as holding shares (the riskier asset) in later trading rounds and mispricing shares to a greater degree. These strategies resulted in lower earnings for circadian mismatched traders, especially in heterogeneous markets that also included traders at more optimal times-of-day. These differences were also reflected in market level outcomes. Markets with higher circadian mismatch heterogeneity across traders were more likely to exhibit longer lasting asset bubbles and greater share turnover volume. Overall, our results draw attention to a unique, but underappreciated, factor present across traders in global market environments, namely, differences in sleepiness across traders. Thus, this study hopes to highlight the role of circadian mismatch in attempting to understand trader behavior and, ultimately, market volatility.

Information Diffusion and Speed Competition

Do faster information diffusion and informed trading improve price discovery? Based on Hong and Stein (1999), we develop a two-period endogenous equilibrium model of speed acquisition where traders receive heterogeneous information from a diffusion process. While faster information diffusion makes slow traders more informed, it also intensifies competition as the same information is observed by more traders. When there is sufficiently large fraction of slow traders, the competition effect dominates, which increases a first-mover advantage to fast traders. Hence faster information dissemination can “crowd in” fast trading and improve price discovery in both periods, although more investors rush to trade quickly with less precise information. However, with fully informed traders participating in the market at late trading round, faster information dissemination reduces information rent. Due to the complementarity of speed acquisition to information production, this further “crowds out” fast traders and therefore reduces price discovery.

Strategic Effects between Price-takers and Non-price-takers

Abstract Price-taking behavior seems to contradict rationality if a price effect is to be expected. This paper identifies a strategic effect between price-takers and non-price-takers on financial markets. It results from the liquidity reduction non-price-taking induces. Thus, a trade-off between the benefits of calculating price impacts correctly and market liquidity exists. It is shown that price-takers may benefit more from trading than their fully rational counterparts do. Moreover, it is demonstrated that when the choice of behavior is unobservable and decision costs exist an investor would profit more as a non-price-taker when his trading potential is large, and more as a price-taker when it is small. However, when the choice of behavior is observable it is the other way around. If various rounds of trading take place, an investor’s terminal endowment converges to his risk tolerance share. Thus, an efficient allocation is obtained. Furthermore, a paradox concerning the endogenous choice of manners of calculation is identified.

Round Number Effects in Crude Oil Futures Market

Using the entire tick data for West Texas crude oil from 1996 to 2015, we find excess buying (selling) at price points just below (above) a round number over both pre- and post-electronic periods, confirming the existence of round number effects in commodity futures market. Next, we examine whether the trading activity of hedgers or speculators influence round number effects and find that the trading activity of hedgers influence round number effects. We also examine the relation between round number effects buy-sell imbalance and 24-hour trade return. We find that the relation is negative in crude oil futures market and a trading strategy based on round number effects generates the return of negative 0.0014 percent. Our result conflicts the finding of previous literature who documents strong evidence that there is positive relation between round number effects buy-sell imbalance and 24-hour trade return and show that a strategy based on round number effects generate a positive return of 0.11 percent in US stock markets. Lastly, controlling for market liquidity and volatility, we examine whether round number effects persist and find that round number effects persist. Additionally, given that speculation activity in commodity futures market has been the subjective of intense scrutiny since the boom and bust in commodity prices in 2008, we examine the impact of trading activity of speculators on commodity market. We find that speculators provide liquidity to hedgers and find no evidence that the trading activity of speculators increase market volatility.

An Alternative Market Framework for Water Transfers When Third Party Externalities Dominate

Economic studies have argued that transaction costs and third-party impact of water transfers can reduce the potential of water markets in allocating water efficiently across users. The main objective of this study is to design and empirically simulate a market structure, which can overcome the transaction costs and some of the third-party externalities in surface water trading. An important characteristic of this market is trading conducted within a centralized framework by a market manager. Once the bidding rounds are closed, the market manager formulates the market model as a linear programming problem to find the market equilibrium for the bids submitted. The market manager then determines net trades on the basis of each participant’s initial permit allocation. Empirical simulations of the above market design demonstrate that the marginal cost price paid by each participant internalizes the third party impacts of water transfers. Prices are recalculated based upon binding flow constraints in each round of trade and hence additional transaction costs are avoided.

Market Access for African Agricultural Exports: Assessment of the AoA and SPS Agreements

Agriculture plays a critical role in the majority of African Countries’ economy. The sector is not only a major employer but also a significant source of export earnings and hence it has a high multiplier effect. This very fact makes agricultural market access issues of major concern to African countries.This paper aimed at assessing the agricultural market access challenges of African countries through reviewing pertinent literature, WTO Agreements on agriculture (AOA) and the Sanitary and Phytosanitary (SPS) measures and recent developments at the Doha round of trade negotiations.While through the adoption of the AoA, WTO members have brought agricultural trade to a new phase of remarkable reform, African agricultural exports still face significant challenges (both tariff and non-tariff). Particularly, African small holder farmers’ exports hardly penetrate into major export markets due to ever increasing complex nature of SPS measures administered by those markets although a number of preferential market access regimes are available to them. It also appears that the Doha round, on the basis of the different modalities in motion, offers little to most of African countries, leaving “aid for trade” as an important supplementary policy for the round to be pro-development, as it purports to be. Presented at the SIEL 2010 Conference in Barcelona.

Information disclosure and asymmetric speed of learning in booms and busts

We consider a model in which agents gradually learn about the aggregate market conditions — ‘boom’ or ‘bust’ — from the information disclosed after a trading round. The disclosure rules can generate asymmetric learning and affect the degree of asymmetry. In particular, when only winning bids are publicly disclosed, learning is more rapid in a bust.

The Neural Inhibition of Learning Increases Asset Market Bubbles: Experimental Evidence

ABSTRACTThe authors tested a leading theory of bubble formation, insufficient learning, in a laboratory asset market using a drug, Naltrexone, which inhibits reinforcement learning. We found that asset price bubbles in Naltrexone sessions were larger compared with placebo sessions, averaging 60% higher in amplitude and 77% larger in the deviation from fundamental value in the final 12-period trading round. There was no difference between conditions in understanding of the trading rules, overconfidence, or confusion. Participants on Naltrexone appeared unable to determine appropriate trading strategies as prices changed. The findings indicate that specific neural mechanism of reinforcement learning is involved in the formation of asset market bubbles.