Do the World Trade Organization and the Generalized System of Preferences foster bilateral trade?

World trade has grown exponentially during the last 60 years. Admittedly, it is not clear if this development can be assigned to international trade agreements like the World Trade Organization or the Generalized System of Preferences as previous empirical studies found contradicting results. In this paper we generalize the different approaches used in the lit- erature to estimate the role of GATT/WTO and the Generalized System of Preferences for trade. We use a gravity model and apply FE estimation on a disaggregated bilateral data set of the trade flows between 145 countries across 1962-99. In our analysis we find a significant positive effect of WTO membership on bilateral trade. Referring to other multi- lateral institutions, we find robust evidence that membership in regional trade agreements or currency unions substantially increase bilateral trade flows as well. By contrast, we fi nd that the Generalized System of Preferences does not foster trade in general, rather the opposite. This might be due to the opportunistic behavior of industrial countries that grant GSP schemes as long as the concerned products are relatively unimportant, but restrict them as soon as they become relevant.WTO, GSP, regional trade agreements, currency union, gravity model, international trade

Multilateralism versus Regionalism!?

The well-known question whether regional trade agreements (RTAs) and the multilateral trading system (MTS) are "strangers, friends, or foes" (Bhagwati and Panagariya, 1996) has gained new importance with the widespread proliferation of RTAs in recent years. Based on an extensive data set which covers most of world trade over the past 60 years and about 240 regional trade agreements, we analyze the relationship between RTAs and the MTS by combining the gravity model framework with vector auto-regression analysis. Impulse-response-functions robustly suggest that multilateral trade liberalization responds in a signifcantly positive way to regional trade liberalization. We also find robust evidence that RTA liberalization Granger-causes GATT/WTO liberalization. Thus, our results indicate that RTAs do not undermine the MTS but serve as building blocs to multilateral trade liberalization.Regionalism, multilateralism, trade agreement, gravity model

Measuring Monetary Conditions in US Asset Markets - A Market Specific Approach

We analyze monetary conditions in US asset markets — corporate equity, real estate, Treasury bond and corporate & foreign bond — from a market specific perspective, proposing the concept of market leverage. Market leverage measures the average leverage of all asset holders in a particular asset market. The concept builds on an accounting based network that links balance sheet leverages of asset holders to their corresponding shares of ownership. Our empirical analysis yields the following results. Firstly, market specific monetary conditions can differ considerably among asset markets. Secondly, market specific monetary conditions are positively related to asset prices. Thirdly, US asset markets have experienced a loosening in market specific monetary conditions in the last decades. Fourthly, the loosening of market specific monetary conditions explains long-term increases in US asset prices. Fifthly, the recent convergence of market specific monetary conditions of real asset markets towards those of financial asset markets implies a rise in upside risk to future US asset price inflation.market leverage; monetary conditions; asset prices

Optimal Simple Rules for Fiscal Policy in a Monetary Union

The paper discusses the stabilizing potential of fiscal policy in a dynamic general-equilibrium model of monetary union. We consider a small open economy inside the currency area. We analyze the demand and supply effects of direct taxation, indirect taxation and government spending and derive optimal simple rules for fiscal stabilization of a technology shock. Fiscal policy achieves substantial macroeconomic stabilization. Simple public-expenditure rules show the highest degree of both output and inflation stabilization. The implementation lag substantially weakens output stabilization, but hardly affects the stabilization of prices. Out-put-oriented rules imply less instrument inertia than inflation-dominated rules. The implemen-tation lag leads to higher coefficients for inflation relative to output in the optimal rule. Com-pared to the single-instrument approach the simultaneous optimization of two instrument rules implies only little additional stabilization gains.Fiscal policy, monetary union, simple policy rules

Is There a Causal Link between Currency and Debt Crisis?

debt crises, currency crises, contagion

Ist die EWU ein Modell für eine EU der zwei Geschwindigkeiten?

Die schwierigen Beratungen zu dem auf dem EU-Gipfel des Europäischen Rates im Juni beschlossenen Reformvertrag haben einmal mehr die Frage nach einer Europäischen Union der verschiedenen Geschwindigkeiten aufgeworfen. Entwickelt sich die EU bereits in diese Richtung und was wären die Vor- und Nachteile? Ist die Währungsunion dafür ein Modell? Bietet der EU-Reformvertrag unterschiedliche Integrationsoptionen? --

Regional Competition in US Banking: Trends and Determinants

Competition in the US banking industry as measured by the Lerner Index has on average increased substantially during the last decade. At the same time, regional differences in competition on the state level have decreased considerably. Based on a dynamic panel framework we find that these developments are mainly driven by industry specific factors such as the costs to income ratio. The empirical evidence indicates that inefficiency and the Lerner index are significant negatively correlated. Macroeconomic conditions appear to have supported these trends in competition, however, to a somewhat lesser extent

Timescale-invariant representation of acoustic communication signals by a bursting neuron

Acoustic communication often involves complex sound motifs in which the relative durations of individual elements, but not their absolute durations, convey meaning. Decoding such signals requires an explicit or implicit calculation of the ratios between time intervals. Using grasshopper communication as a model, we demonstrate how this seemingly difficult computation can be solved in real time by a small set of auditory neurons. One of these cells, an ascending interneuron, generates bursts of action potentials in response to the rhythmic syllable-pause structure of grasshopper calls. Our data show that these bursts are preferentially triggered at syllable onset; the number of spikes within the burst is linearly correlated with the duration of the preceding pause. Integrating the number of spikes over a fixed time window therefore leads to a total spike count that reflects the characteristic syllable-to-pause ratio of the species while being invariant to playing back the call faster or slower. Such a timescale-invariant recognition is essential under natural conditions, because grasshoppers do not thermoregulate; the call of a sender sitting in the shade will be slower than that of a grasshopper in the sun. Our results show that timescale-invariant stimulus recognition can be implemented at the single-cell level without directly calculating the ratio between pulse and interpulse durations