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Valerie Mignon - One of the best experts on this subject based on the ideXlab platform.
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on the impact of volatility on the real exchange rate Terms of Trade nexus revisiting commodity currencies
Journal of International Money and Finance, 2015Co-Authors: Virginie Coudert, Cecile Couharde, Valerie MignonAbstract:Abstract The aim of this paper is to study the relationship between Terms of Trade and real exchange rates in commodity-producing countries on both the short and the long run. We investigate potential non-linearity in the real exchange rate – Terms of Trade nexus according to the level of volatility in commodity and financial markets. To this end, we consider a panel of 68 commodity exporters, split in sub-samples of advanced, intermediate and low-income countries. We first show that there is a long-run relationship between real exchange rates and Terms of Trade, taking also into account productivity and net foreign assets. Then, we run panel smooth transition regressions to estimate the adjustment process of the real effective exchange rate to its equilibrium value depending on different proxies of volatility. Our results show that only advanced oil-exporters' currencies are sensitive to changes in Terms of Trade in the short run especially when volatility is high on commodity markets.
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do Terms of Trade drive real exchange rates comparing oil and commodity currencies
Research Papers in Economics, 2008Co-Authors: Virginie Coudert, Cecile Couharde, Valerie MignonAbstract:This paper investigates whether Terms of Trade have an impact on real exchange rates for commodity exporters and oil exporters. To this end, we estimate a long term relationship between the real effective exchange rate and economic fundamentals, including the commodity Terms of Trade. The estimation relies on panel cointegration techniques and covers annual data from 1980 to 2007. Our results show that real exchange rates co-move with commodity prices in the long run and respond to oil price somewhat less than to commodity prices. We also find that some pegged currencies have been driven away from their equilibria by wild fluctuations in the key currencies, on which they are anchored.
Robert W. Staiger - One of the best experts on this subject based on the ideXlab platform.
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delocation and Trade agreements in imperfectly competitive markets
Research in Economics, 2015Co-Authors: Kyle Bagwell, Robert W. StaigerAbstract:We consider the purpose and design of Trade agreements in imperfectly competitive environments featuring firm-delocation effects. In both the segmented-market Cournot and the integrated-market monopolistic competition settings where these effects have been identified, we show that the only rationale for a Trade agreement is to remedy the inefficiency attributable to the Terms-of-Trade externality, the same rationale that arises in perfectly competitive markets. Furthermore, and again as in the perfectly competitive benchmark case, we show that the principle of reciprocity is efficiency enhancing, as it serves to “undo” the Terms-of-Trade driven inefficiency that occurs when governments pursue unilateral Trade policies. Our results therefore indicate that the Terms-of-Trade theory of Trade agreements applies to a broader set of market structures than previously thought.
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what do Trade negotiators negotiate about empirical evidence from the world Trade organization
The American Economic Review, 2011Co-Authors: Kyle Bagwell, Robert W. StaigerAbstract:According to the Terms-of-Trade theory, governments use Trade agreements to escape from a Terms-of-Trade-driven prisoner's dilemma. We use the Terms-of-Trade theory to develop a relationship that predicts negotiated tariff levels on the basis of pre-negotiation data: tariffs, import volumes and prices, and Trade elasticities. We then confront this predicted relationship with data on the outcomes of tariff negotiations associated with the accession of new members to the World Trade Organization. We find strong and robust sup port for the central predictions of the Terms-of-Trade theory in the observed pattern of negotiated tariff cuts. (JEL F11, F13) {JEL F11, F13) What do Trade negotiators negotiate about? Most of the theoretical literature on Trade agreements can be seen as answering this question from the perspective of the Terms-of-Trade theory, which holds that Trade agreements are useful to governments as a means of escape from a Terms-of-Trade-driven prisoner's dilemma.1 However, little empirical evidence exists to shed light on the relevance of this theory, and none of the evidence results from an investigation that confronts the central predictions of the Terms-of-Trade theory directly with the data. The purpose of this paper is to provide such an investigation. Any theory of Trade agreements must identify a means by which the negotiating governments can enjoy mutual gains from the agreement. From the perspective of the Terms-of-Trade theory, these mutual gains are made possible by the elimination of inefficiencies that arise at the international level. These inefficiencies in turn can be traced to the international cost-shifting that occurs when foreign exporters pay
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what do Trade negotiators negotiate about empirical evidence from the world Trade organization
National Bureau of Economic Research, 2006Co-Authors: Kyle Bagwell, Robert W. StaigerAbstract:What do Trade negotiators negotiate about? There are two distinct theoretical approaches in the economics literature that offer an answer to this question: the Terms-of-Trade theory and the commitment theory. The Terms-of-Trade theory holds that Trade agreements are useful to governments as a means of helping them escape from a Terms-of-Trade-driven Prisoners' Dilemma. The commitment theory holds that Trade agreements are useful to governments as a means of helping them make commitments to the private sector. These theories are not mutually exclusive, but there is little direct evidence on the empirical relevance of either. We attempt to investigate empirically the purpose served by market access commitments negotiated in the World Trade Organization. We find broad support for the Terms-of-Trade theory in the data. We claim more tentatively to find support in the data for the commitment theory as well.
Virginie Coudert - One of the best experts on this subject based on the ideXlab platform.
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on the impact of volatility on the real exchange rate Terms of Trade nexus revisiting commodity currencies
Journal of International Money and Finance, 2015Co-Authors: Virginie Coudert, Cecile Couharde, Valerie MignonAbstract:Abstract The aim of this paper is to study the relationship between Terms of Trade and real exchange rates in commodity-producing countries on both the short and the long run. We investigate potential non-linearity in the real exchange rate – Terms of Trade nexus according to the level of volatility in commodity and financial markets. To this end, we consider a panel of 68 commodity exporters, split in sub-samples of advanced, intermediate and low-income countries. We first show that there is a long-run relationship between real exchange rates and Terms of Trade, taking also into account productivity and net foreign assets. Then, we run panel smooth transition regressions to estimate the adjustment process of the real effective exchange rate to its equilibrium value depending on different proxies of volatility. Our results show that only advanced oil-exporters' currencies are sensitive to changes in Terms of Trade in the short run especially when volatility is high on commodity markets.
-
do Terms of Trade drive real exchange rates comparing oil and commodity currencies
Research Papers in Economics, 2008Co-Authors: Virginie Coudert, Cecile Couharde, Valerie MignonAbstract:This paper investigates whether Terms of Trade have an impact on real exchange rates for commodity exporters and oil exporters. To this end, we estimate a long term relationship between the real effective exchange rate and economic fundamentals, including the commodity Terms of Trade. The estimation relies on panel cointegration techniques and covers annual data from 1980 to 2007. Our results show that real exchange rates co-move with commodity prices in the long run and respond to oil price somewhat less than to commodity prices. We also find that some pegged currencies have been driven away from their equilibria by wild fluctuations in the key currencies, on which they are anchored.
Yoto V Yotov - One of the best experts on this subject based on the ideXlab platform.
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Terms of Trade and global efficiency effects of free Trade agreements 1990 2002
Journal of International Economics, 2016Co-Authors: James E Anderson, Yoto V YotovAbstract:This paper infers the Terms of Trade effects of free Trade agreements (FTAs) implemented in the 1990s. We estimate large FTA effects on bilateral Trade volume in 2 digit manufacturing goods from 1990–2002, using panel data gravity methods to resolve two way causality. The Terms of Trade changes implied by these volume effects are deduced for 40 countries plus a rest-of-the-world aggregate using an endowments general equilibrium model. Some countries gain over 5% of real manufacturing income, some lose less than 0.3%. Global efficiency of manufactures Trade rises 0.9% based on a distance function measure of iceberg melting.
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Terms of Trade and global efficiency effects of free Trade agreements 1990 2002
Research Papers in Economics, 2011Co-Authors: James E Anderson, Yoto V YotovAbstract:This paper infers the Terms of Trade effects of the Free Trade Agreements (FTAs) of the 1990s. Using panel data methods to resolve two way causality between Trade and FTAs, we estimate large FTA effects on bilateral Trade volume in digit manufacturing goods from 1990-2002. We deduce the Terms of Trade changes implied by these volume effects for 40 countries plus a rest-of-the-world aggregate using the structural gravity model. Some countries gain over 10%, some lose less than 0.2%. Overall, using a novel measure of the change in iceberg melting,global efficiency rises 0.62%
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Terms of Trade and global efficiency effects of free Trade agreements 1990 2002
National Bureau of Economic Research, 2011Co-Authors: James E Anderson, Yoto V YotovAbstract:This paper infers the Terms of Trade effects of Free Trade Agreements (FTA's) with the structural gravity model. Using panel data methods to resolve two way causality between Trade and FTA's, we estimate direct FTA effects on bilateral Trade volume in 2 digit manufacturing goods from 1990-2002. We deduce the Terms of Trade changes implied by these volume effects for 40 countries plus a rest-of-the-world aggregate. Some gain over 10%, some lose less than 0.2%. Overall, using a novel measure of the change in iceberg melting, global efficiency rises 0.62%.
Kyle Bagwell - One of the best experts on this subject based on the ideXlab platform.
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delocation and Trade agreements in imperfectly competitive markets
Research in Economics, 2015Co-Authors: Kyle Bagwell, Robert W. StaigerAbstract:We consider the purpose and design of Trade agreements in imperfectly competitive environments featuring firm-delocation effects. In both the segmented-market Cournot and the integrated-market monopolistic competition settings where these effects have been identified, we show that the only rationale for a Trade agreement is to remedy the inefficiency attributable to the Terms-of-Trade externality, the same rationale that arises in perfectly competitive markets. Furthermore, and again as in the perfectly competitive benchmark case, we show that the principle of reciprocity is efficiency enhancing, as it serves to “undo” the Terms-of-Trade driven inefficiency that occurs when governments pursue unilateral Trade policies. Our results therefore indicate that the Terms-of-Trade theory of Trade agreements applies to a broader set of market structures than previously thought.
-
what do Trade negotiators negotiate about empirical evidence from the world Trade organization
The American Economic Review, 2011Co-Authors: Kyle Bagwell, Robert W. StaigerAbstract:According to the Terms-of-Trade theory, governments use Trade agreements to escape from a Terms-of-Trade-driven prisoner's dilemma. We use the Terms-of-Trade theory to develop a relationship that predicts negotiated tariff levels on the basis of pre-negotiation data: tariffs, import volumes and prices, and Trade elasticities. We then confront this predicted relationship with data on the outcomes of tariff negotiations associated with the accession of new members to the World Trade Organization. We find strong and robust sup port for the central predictions of the Terms-of-Trade theory in the observed pattern of negotiated tariff cuts. (JEL F11, F13) {JEL F11, F13) What do Trade negotiators negotiate about? Most of the theoretical literature on Trade agreements can be seen as answering this question from the perspective of the Terms-of-Trade theory, which holds that Trade agreements are useful to governments as a means of escape from a Terms-of-Trade-driven prisoner's dilemma.1 However, little empirical evidence exists to shed light on the relevance of this theory, and none of the evidence results from an investigation that confronts the central predictions of the Terms-of-Trade theory directly with the data. The purpose of this paper is to provide such an investigation. Any theory of Trade agreements must identify a means by which the negotiating governments can enjoy mutual gains from the agreement. From the perspective of the Terms-of-Trade theory, these mutual gains are made possible by the elimination of inefficiencies that arise at the international level. These inefficiencies in turn can be traced to the international cost-shifting that occurs when foreign exporters pay
-
what do Trade negotiators negotiate about empirical evidence from the world Trade organization
National Bureau of Economic Research, 2006Co-Authors: Kyle Bagwell, Robert W. StaigerAbstract:What do Trade negotiators negotiate about? There are two distinct theoretical approaches in the economics literature that offer an answer to this question: the Terms-of-Trade theory and the commitment theory. The Terms-of-Trade theory holds that Trade agreements are useful to governments as a means of helping them escape from a Terms-of-Trade-driven Prisoners' Dilemma. The commitment theory holds that Trade agreements are useful to governments as a means of helping them make commitments to the private sector. These theories are not mutually exclusive, but there is little direct evidence on the empirical relevance of either. We attempt to investigate empirically the purpose served by market access commitments negotiated in the World Trade Organization. We find broad support for the Terms-of-Trade theory in the data. We claim more tentatively to find support in the data for the commitment theory as well.
