Trade Tariffs Research Articles

The Dynamics of Foreign Public Debt and Foreign Exchange Reserve of Ethiopia: Autoregressive Distributed Lag Model Approach

External public debt and foreign exchange reserve (FER) are performing a crucial role in the growth and development of countries. To examine the short-run and long-run dynamics among external public debt (EPD) and FER in Ethiopia, the study used 39 years data (1981 to 2019) from National bank of Ethiopia (NBE) and World Bank data sets. The Autoregressive Distributed Lag (ARDL) model with error correction model (ECM) was employed after checking the possible assumptions of economic series. The results of ADF test statistics confirms our economic series are stationary with a mixture of level form and first difference form. Bounds co-integration test suggests the existence of co-integration among the variables. According to the descriptive method of data analysis, on average, in Ethiopia the trend for service sector indicated that an ever improvement of the sector throughout the periods and supplementing the notion of change from agriculture base to service sector. On the other hand, according to ARDL model in the short -run on average trade tariff rate, share of manufacturing sector from the GDP, and lagged value of EPD itself predicts the EPD significantly at least at less than 10% level of significance . Moreover, the ECM revealed that in the long-run, financial development indicator, debt service payment, and average trade tariff rate were predicting the stock of FER for Ethiopian economy. Finally, the concerned body, the government of Ethiopia, should limit or reduce the amount of external debt (ED) inflows, and recheck the budget sources for financing different projects especially manufacturing industries rather than highly basing on external sources in the form of EPD, among others.

Robust Bounds for Welfare Analysis

Economists routinely make functional form assumptions about consumer demand to obtain welfare estimates—often for convenience, tractability, or both. How sensitive are welfare estimates to these assumptions? In this paper, we answer this question by providing bounds on welfare that hold for families of demand curves commonly considered in different literatures. We show that typical functional forms—such as linear, exponential and CES demand—are extremal in different families: they yield either the highest or lowest welfare estimate among all demand curves in those families. To illustrate the flexibility of our approach, we apply our results to the welfare analysis of trade tariffs, income taxation, and surge pricing.

International trade barriers and regional employment: the case of a no-deal Brexit

We use the World Input–Output Database (WIOD) combined with regional sectoral employment data to estimate the potential regional employment effects of international trade barriers. We study the case of a no-deal Brexit in which imports to the United Kingdom (UK) from the European Union (EU) would be subject to tariffs and non-tariff trade costs. First, we derive the decline in UK final goods imports from the EU from industry-specific international trade elasticities, tariffs and non-tariff trade costs. Using input–output analysis, we estimate the potential output and employment effects for 56 industries and 43 countries on the national level. The absolute effects would be largest in big EU countries which have close trade relationships with the UK, such as Germany and France. However, there would also be large countries outside the EU which would be heavily affected via global value chains, such as China, for example. The relative effects (in percent of total employment) would be largest in Ireland followed by Belgium. In a second step, we split up the national effects on the NUTS-2 level for EU member states and additionally on the county (NUTS-3) level for Germany. The share of affected workers varies between 0.03% and 3.4% among European NUTS-2 regions and between 0.15% and 0.4% among German counties. A general result is that indirect effects via global value chains, i.e., trade in intermediate inputs, are more important than direct effects via final demand.

Strategi Dalam Menciptakan Kesejahteraan Masyarakat Melalui Rekonstruksi APBN: Telaah kritis dari Kitab Al-Amwal

There are at least two approaches taken by the government to deal with the problem of poverty or create prosperity, namely through fiscal policy and monetary policy. In this article, the author will examine the fiscal policies that should be carried out by the government using the reallocation method of state revenue and expenditure funds or the so-called APBN. Several Muslim figures have studied the problem solving, such as, As-Syaibani and Umar bin Abdul Aziz. However, the author focuses on the contribution of Muslim scholar who was born from Byzantine descent in 154/1858, namely Abu Ubaid, his brilliant idea as outlined in the book Al-Amwal in order to create the mashlahat of society in a country. By using a qualitative method with the library research approach and assisted by the final character study approach, it can be concluded that some strategies according to Abu Ubaid are a solution in creating social welfare, namely Zakat, fa'I, khumus, kharja, and jizyah. As well as regarding the import and export of goods, Abu Ubaid uses a strategy of not having zero tariffs in international trade, excise on staples is cheaper, and there are certain limitations to be subject to excise. This means that when goods enter into a country, there is a cut or excise that enters zakat.

Tax evasion; public and political corruption and international trade: a global perspective

PurposeThis study aims to examine the significance of public/political corruption; trade tax revenue (import and export) on tax evasion in a group of 140 countries for the period 2008–2017. Sampled countries were subsequently grouped into four clusters for further testing. With the increase in globalization and technology, there is a potential of increased tax corruption on trade tariffs revenue activities.Design/methodology/approachThe empirical testing was carried out using the technical and more advanced dynamic two-step system-generalized moment method. The econometrical method solves the problem of autocorrelation and heteroskedasticity on cross-sectional data. This study used the data from World Bank, Transparency International, World Economic Forum and Kaufmann’s governance indicators.FindingsThere is statistical interaction between the corruption perception index (CPI) and international trade activities. Moreover, other results revealed that CPI and trade tax revenue activities are statistically insignificant to tax evasion in three groups; low corrupt countries, high corrupt and trade surplus countries although the coefficient signs remain consistent. This can be attributed by a low level of corruption in the low corrupt countries or concealment of corruption-related information in high corrupt countries and the low level of import evasion in trade surplus countries.Originality/valueBased on the theory and results, public and political officials should promote good corporate governance by strictly monitoring trade revenue activities because parties involved can use technical criminality to conceal illegal behavior. Additionally, all jurisdictions should apply the economic theory of crime, especially in high political corrupt countries and perennial trade deficit countries because key macroeconomic tax revenue activities such as imports invite numerous forms of dishonesty.

Analysis of Dividend Yield and Stock Return in Nairobi Securities Exchange in Kenya

Capital Markets have been reflecting erratic performance coupled with volatility globally, regionally and in domestic market. According to Capital market 2030, the future of equity capital markets report (2018), United States of America outperformed her major emerging markets. The combined United State of American’s Domestic market caps total US$30.4 trillion; total mainland China and Hong Kong was US$10.1 trillion. In 2011, it was US$ 15.6 trillion and US$ 5.7 trillion respectively. United States of America Securities exchanges are now three times the size of their Chinese counterparts compared with 2.7 times in 2011. The growth in the US market has outstripped expectations, while the growth of China and other emerging markets has lagged. Despite Capital markets performance in USA, indices showed volatility in performance of the S&P 500 and the Hang Seng relative to FTSE/JSE, Africa all All-share index and S&P Pan Africa with the FTSE 100 showing relative stability. Among other factors, volatility could be attributed to trade tariffs imposed by the US, primarily impacting China, continuing political. In Kenya, 20 shares Index which is used as a proxy of stock return in this study performed dismally in 2011 as compared to 2012 (Kenya Economic report, 2011). The total number of shares traded went down in 2014 and NSE 20 Share Index declined in the fourth quarter of 2016 (The Kenya economic survey, 2016). With volatility witnessed between 2009 and 2018, analysis of relationship between dividend yield and stock return is imperative. This study used quarterly data between 2009 and 2018. The study is a time series study and research design used is correlation. The data was transformed by converting them to their natural logarithms and then differenced to their first differences. After the first differences, the data became stationary. Results revealed that dividend yield has an inverse significant relationship on Nairobi Securities Exchange 20 Share Index, (t=-2.91, p=0.006). Results of this study are useful to policy makers, investors, regulators and finance analyst. Keywords : Dividend yield, NSE-20 Share Index, Stock Return, emerging markets, Volatility, Capital markets. DOI: 10.7176/RJFA/12-8-01 Publication date: April 30 th 2021

Luigi Luzzatti and the making of the Italian monetary system

After unification (1861) Italy had to face a badly integrated and oddly struc-tured financial system as well as some fragmented or lacking institutions. The fi-nancial position of the country was characterised by double deficit in public and external balance. That caused several monetary and financial difficulties. In par-ticular, monetary and banking institutions had to be step-by-step integrated and reorganised to support economic development in this new economic space. Luigi Luzzatti has been one of the main protagonists of this process of institution build-ing. Besides his commitment with trade tariff negotiation and a variety of initiative in industry and environmental protection, he dedicated a wide effort to monetary institutions. He was one of the main supporters of the "Latin Monetary Union", which lasted from 1865 to 1928 and contributed to reforms dealing with the prob-lem of the plurality of emission banks and of their control. Luzzatti also engaged in the development of "popular banks" to contribute to the structuring of the credit system from the bottom.

On the relation between purchasing manager’s index and trade policy uncertainty: evidence from China, Japan and the USA

PurposeTrade uncertainty does influence the firm’s new investment, profitability and supply chain finance. Consequently, it results in decreased consumption and low consumer confidence and eventually disrupts global economic activity. This paper aims to propose a model to uncover the effects of trade policy uncertainty (TPU) on the real economic activity and economy’s health measured in terms of the purchasing manager’s index (PMI).Design/methodology/approachThis study uses the PMI, trade policy uncertainty index, economic policy uncertainty index and short-term interest rate. The relation between economic activity and uncertainty was studied using nested regression and vector autoregressive model.FindingsThe empirical results show that PMI of China and Japan were more responsive to the TPU of the USA and remained more fluctuating during the year 2018–2019. Importantly, this paper notices that the US’s PMI reached a low historically subject to its own trade policy and tension with China. Overall, TPU has shown more pronounced effects on PMI across China, Japan and the USA, followed by important economic and political events and major trade tariff uncertainty deals.Practical implicationsThe empirical outcome holds some practical implications trade uncertainty affects not only the economic health of the economy but also market participants, global investors and international political environment, recent trade barriers, tariff wars and ambiguity raise question about free and fair global trade and competitiveness of the member country of the world trade organization.Originality/valueThe work is a novel that attempts to explain economic activity and supply chain through PMI. Unlike conventional economic indicators, e.g. gross domestic product, producer price index, consumer price index, employment, etc. PMI measures manufacturing industries’ overall status concerning the number of orders, inventory levels, productions, supplier deliveries and employment.

Comprehensive Analysis of Tariff Barriers Worldwide: A Composite Assessment Approach

International trade has fundamental importance for all the countries and the analysis concerning international trade particularly concerning tariff barriers is high on the agenda of researchers in the field of economics, business and politics. Aim of the study is to assess the world tariff barriers of 158 countries. Overall design of the study comprises of a crisp literature review, data extraction and analysis. It is a study of one hundred fifty-eight countries that uses secondary data taken from World Development Indicators (WDI) 2020. It uses Grey Relational Analysis (GRA) as research methodology. Results of GRA show that Macao SAR, China, Hong Kong, Singapore, Montenegro, Mauritius, Brunei Darussalam, Myanmar, Chile, Peru and Australia have relatively highest grey relational grades meaning thereby, low tariff trade barriers whereas Grenada, Antigua and Barbuda, Belize, Central African Republic, Nepal, Guinea-Bissau, Fiji, Gabon, Barbados, Djibouti, St. Kitts and Nevis have lowest grey relational grade meaning thereby, these countries have high level of tariff based barriers of international trade. Interestingly, all the member countries of European Union occupy the rank of 27 (i.e. all countries have the same rank) which can be explained in the perspective of their union of tariff. Since, they have uniformed tariff policy as against rest of the world, therefore, have same rank. It is a study based on reliable real time data set. The study has value for all stakeholders i.e. international community, local governments, society at large, policy makers, researchers and international institutions.

Paradoxes & Mysteries in Virus-Infected Supply Chains: Hidden Bottlenecks, Changing Consumer Behaviors, and Other Non-Usual Suspects

In the early onset of the pandemic, COVID-19, in the U.S., consumers experienced surprising shortages of essential, and unrelated at a first look to the pandemic, goods such as toilet paper, yeast and flour, and some of their favorite meat cuts. The “usual” explanations of “demand spikes,” foreign suppliers, trade tariffs, and “hoarding behavior” of panicked consumers, often were failing to explain their persistence. The shortages ended up being real “supply chain struggles,” with their true causes going beyond the “usual” ones, and revealing a set of deeper and “unusual causes.” Our detailed analysis of the affected chains identifies these overlooked failure factors and hidden causes. Such causes include demand shifts among market segments, siloed demand planning, bottlenecks in shared resources of transportation and distribution, and inflexible supply chain structures. We conclude on the lessons from the pandemic crisis on supply chains, and the implied challenges for building resilient supply chains for the future. We need to rethink what is the relevant “system” we plan and optimize (e.g., firm, industry, region, global factor resources, etc.). Building firm-specific redundancy of assets and operational flexibility might be prohibitive in the level of investment required for any one firm, or their financial stakeholders.

Will Liberalizing the Services Trade between Developing and Developed Countries Solve Employment Problems in a Post-Pandemic Recovery? The Case of ACP-EU Services Trade

The COVID-19 pandemic has exacerbated the asymmetric employment problems in the global services sector. Would a liberalization of the highly protected services trade between the rich and poorer countries help solve such problems? This paper contributes to answering that question by analyzing the impacts on welfare and employment of an hypothetical liberalization of the services trade between the Africa, Caribbean and Pacific Group of States (ACP) and their rich partners in the European Union and the United Kingdom (EU+UK). For both the ACP and EU +UK, their service sectors play important role in their economy, especially in providing jobs. The services sectors employ the majority of unskilled labor and the large majority of skilled labor. For instance, in the EU+UK, 67% of employed unskilled and 82% of employed skilled workers are in the service sectors; the respective figures for ACP countries are 54% and 90%. These figures indicate that any change in trade policies for the services sector will affect not just the services but also other sectors such agriculture and manufacturing in ACP and EU countries. To analyze the impacts of services trade liberalization on welfare an employment, I use a Computable General Equilibrium model that takes into account the labor productivity gaps among trading countries. Results show that although ACP services represents only about 24% of ACP’s total exports to and 28% of ACP’s total import from the EU+UK, halving the bilateral tariffs in services trade will generate for the ACP a welfare gain 3.4 times larger than the gain under elimination of bilateral tariffs on goods. Such liberalization of services trade will generate significant endowment effects equivalent to 410,000 new jobs per year, mostly in the services sector. The employment and welfare gains will also reach other sectors, including agriculture, as services trade costs are reduced. The liberalization of services trade will raise wages, especially for ACP’s skilled labor. All these ACP’s gains will increase further if its labor productivity improves. Despite a slight decline in wages for EU+UK’s skilled labor, the EU+UK will gain about 7.8 billion USD in welfare. Overall, liberalization of the services trade between ACP and EU+UK will help solve their employment problems and should not be delayed.

Biden’s China policy: concepts, events, preliminary results

Biden’s foreign policy team worked out the new concept of its relations with China. The main idea of this concept is more nuanced approach to China’s behavior, reassessing bilateral ties with China to separate the spheres of confrontation, regulated competition and possible cooperation for commonly shared goals. However, this concept and ideology still failed to be applied to practical policy. Biden’s many steps towards China, especially in economic and military realms, are in fact showing the inertia and obvious continuity with Trump’s policies. In political sphere, Biden’s stress for «human rights» issues, so typical for Democratic Party, make the dialogue with China the same unproductive, as it was in the Trump’s era. In economic relations Biden’s administration is not cancelling high trade tariffs on China goods, being oriented on “regulated trade” approach in its ties with PRC. Biden’s administration is more successful and active than Trump in pushing through Congress the legislation for spending on innovation and technological upgrading of the U.S. economy, that is vital to successful competition with China.

Fairness in Incomplete Information Bargaining: Theory and Widespread Evidence from the Field

This paper uses detailed data on sequential offers from seven vastly different real-world bargaining settings to document a robust pattern: agents favor offers that split the difference between the two most recent offers on the table. Our settings include negotiations for used cars, insurance injury claims, a TV game show, auto rickshaw rides, housing, international trade tariffs, and online retail. We demonstrate that this pattern can arise in a perfect Bayesian equilibrium of an alternating-offer game with two-sided incomplete information, but this equilibrium is far from unique. We then provide a robust-inference argument to explain why agents may view the two most recent offers as corresponding to the potential surplus. Split-the-difference offers under this weaker, robust inference can then be viewed as fair. We present a number of other patterns in each data setting that point to split-the-difference offers as a strong social norm, whether in high-stakes or low-stakes negotiations.

Research on the Efficiency and Potential of China's Trade with South Asian Countries-Based on the Stochastic Frontier Gravity Model

In the context of COVID-19, international trade has been strongly impacted, and it is of great significance to accelerate trade exchanges with countries along the "Belt and Road" to achieve trade transformation. This paper uses the time-varying stochastic frontier gravity model to measure trade efficiency based on the data of China and South Asia from 2000 to 2019. The empirical results show that economic scale and population have a positive impact on trade. China's GDP growth is not conducive to the growth of bilateral trade volume, and distance is no longer a factor hindering trade. Trade inefficiency has a great impact on trade. Among them, whether to sign a free trade agreement, the quality of port infrastructure, the simple average tax rate of all products, and political risks have a more significant impact on the trade coefficient. The trade potential between China and South Asian countries is very large and different countries are uneven. China has high trade efficiency with Sri Lanka, Pakistan, India, and Bangladesh, while trade with Bhutan has extremely low efficiency, and trade with Maldives and Nepal is average. Based on the above empirical results and combined with the current epidemic situation, the corresponding conclusions and countermeasures are put forward. For example, exporters should continue to innovate to promote trade transformation and diversified development; combine the western development strategy to promote trade and South Asian exchanges; reduce trade tariff barriers between the two countries; Jointly maintain the security and political situation of the two countries.

ТОРГОВЕЛЬНА ВІЙНА МІЖ США І КНР: ВПЛИВ НА СВІТОВУ ЕКОНОМІКУ ТА НАСЛІДКИ ДЛЯ УКРАЇНИ

The article analyzes the economic causes and consequences of the trade and economic war between the USA and PRC. The chronology of the introduction of mutual trade barriers by these countries and a temporary compromise in the form of the first round of the Trade Agreement are considered. Based on the systematisation of estimates of the effects of additional trade tariffs, a contradictory (albeit asymmetric) effect on economic growth, investment and employment in these countries is shown, as well as a predicted increase in the overall negative effect for a significant number of countries in the medium term. The main scenarios of the possible development of trade and economic relations between the United States and China are considered. The authors note that the trade war provoked the effects of trade reorientation and the emergence of beneficiaries among third countries, but, due to the transfer mechanism of global value chains, the losses to the world economy can largely overlap the overall short-term gain from such trade substitution. It has been shown that any trade relocation takes time and has additional costs. Alternative suppliers may not have the same transactional supply efficiency. Particular attention is paid to the impact of the trade and economic war between the USA and PRC on the Ukrainian economy. It is substantiated that Ukraine has also acquired certain export opportunities due to a decrease in the American share in the Chinese market. So, the extremely dynamic growth of Ukrainian exports to China, which has been observed in recent years, testifies to the above effect of reorientation and replacement of trade flows. But, at the same time, the deterioration of world economic dynamics as a result of the trade and economic war increases the overall risks for the Ukrainian economy, especially in the medium term. In the context of the current economic policy of Ukraine, the issue of maximizing the utilization of industrial export opportunities to China and expanding the export of goods with higher added value remains important.

Growing Protectionism After The Financial Crisis: What is the Evidence?

The weak global GDP growth since the financial crisis in 2007-2009 has coincided with unusually weak growth in global trade. Organisations that monitor international macro-economic development have identified growing protectionism – not least the increase in non-tariff barriers to trade, such as local regulations or subsidies – as a potential cause of the weaker growth in global trade. Non-tariff barriers to trade are a significant element of countries’ trade policies and may often be more harmful than tariff trade barriers. In particular, technical trade barriers and other administrative costs that export companies encounter can inhibit trade. The number of initiated and introduced technical trade barriers increased at the beginning of the financial crisis. Both initiated and introduced technical trade barriers have since remained at high levels. At the same time, the number of international health and safety requirements for food, animal and vegetable products has increased. The average global tariff level has decreased somewhat since the mid- 2000s, which is in contrast to the strong increase in various non-tariff barriers to trade. However, according to a report by Global Trade Alert, since the financial crisis the number of policy measures that restrict trade has increased significantly faster than the number of policy measures that liberalise trade. Research shows that protectionist measures affect international trade negatively. There is thus good reason to believe that the sharp increase in non-tariff barriers in recent years is an important contributing factor to the weaker growth in global trade.

The Effect of Brexit and the European Union on Markets in Developing Countries

This paper explores the effects and importance of the EU to developing markets of the world. Using an exploratory method of analysis; the paper recognises that the EU was founded with the aim of establishing a ‘Common Market’ with the ‘four freedoms’ of goods, services, persons, and capital. By aiming for free movement of goods and services, it is proven in the paper that a single market goes beyond a ‘free trade area’ or ‘free trade agreement’, which is predominantly concerned with reducing—and in many cases eliminating—trade tariffs on goods between members. A single market tackles other trade costs—especially non-tariff measures such as licensing and other regulatory barriers to trade. The paper further considers the place of Britain in the EU, and establishes the fact that the EU is important as far as Britain is concerned. It confirms that the EU is the UK’s largest trading partner, comprising around half of all trade. Therefore, the impact of the BREXIT on the UK economy is not farfetched. The paper finally considers the roles of the EU in the ECOWAS by stating that the two regional unions have some common peculiarities. Some of the roles of the EU in nurturing the ECOWAS include: trade and economic structure of ECOWAS, institutional setting and policy coverage, political dialogue, development cooperation, regional integration and trade supports, etc.

Macroeconomic Effects of Trade Tariffs: A Case Study of the U.S.-China Trade War Effects on the Economy of the United States


 
 
 This paper explores the macroeconomic effects of trade tariffs in the context of the recent trade conflict between the United States and China. The focus is laid on two trade war scenarios, and one of them takes into account the effects of the COVID-19 pandemic on the global trade flows. After deploying the partial equilibrium SMART model, the authors conclude that solely due to the trade war with China, in 2020, the US total trade balance will improve by 41,020 million USD (0.21% of real GDP), while 43,777 million USD (0.22% of real GDP) of the US imports will have to be sourced from other countries. The US trade intensity with China and welfare will decline. However, our study has found that the potential economic consequences of COVID-19 will reduce the relative effects of the trade war. The study has revealed that the United States economy will benefit from the trade war, which can be explained by a relatively weak China’s retaliatory response. Nevertheless, the US agriculture and automotive sectors will suffer most.
 
 

Quantitative dynamics of intra-BRICS trade

The study uses an augmented gravity model to analyse intra-BRICS trade flows and the potential for establishing economic cooperation. It examines trade relations between BRICS with the help of the gravity model of international trade. Panel data from 2000 to 2017 were reviewed for bloc analysis of 20 trade partners. The analysis of the intra-BRICS trade flows is based on the Heckscher-Ohlin model. The results obtained confirm that the intra-BRICS trade relations have a sound positive impact on economic performance in these countries. Market size and economic index have a beneficial effect on the intra-BRICS trade flows. Market size is very elastic to trade, while trade tariffs and taxes within BRICS are manageable. Hence, the intra-BRICS trade has the potential to create strong economic ties within the member countries, and cooperation between the BRICS countries can have a significant influence on the globalisation of the world economy.

The effects of logistics performance on international trade: EU15 vs CEMS

Even though trade tariffs have generally fallen since the GATT agreement, non-tariff trade barriers still exist and show an upward trend. An important type of non-tariff trade barrier is logistics service related to the transport of goods to foreign markets. Efficient logistics is of great importance for small and open economies such as the Central and Eastern European EU member countries that became EU members in 2004 or later and are in the process of economic convergence with the old EU member countries, mostly through trade. On the other hand, logistics is important for old EU member countries because it influences competitiveness in global supply chains. The aim of this paper is to examine the homogeneity of the two blocks of EU countries in terms of logistics performance, i.e. to examine the impact of logistics performance on the international bilateral trade of the EU15 and CEMS with the rest of the world in the period 2010–2018. We develop and estimate a structural gravity model with Poisson pseudo-maximum probability estimator, using the LPI and its sub-indices as the main independent variables of interest. Our results show that differences in LPI values have heterogenous impact on bilateral trade, especially when considering trade in different classes of goods and different groups of country pairs.