Cost Linkages Transmit Volatility Across Markets

We present and test a model relating a firm's idiosyncratic cost, its exporting status, and the volatilities of its domestic and export sales. In prior models of trade, supply costs for domestic and exports were linear and thus additively separable. We introduce a nonlinear cost function in order to link the domestic and export supply costs. This theoretical contribution has two new implications for the exporting firm. First, the demand volatility in the foreign market now directly affects the firm's domestic sales volatility. Second, firms hedge domestic demand volatility with exports. The model has several testable predictions. First, larger firms have lower total and domestic sales volatilities. Second, foreign market volatility increases domestic sales volatilities for exporters. Third, exporters allocate output across both markets in order to reduce total sales volatility. We find evidence for these predictions with Danish firms operating between 1992 and 2006.

A Quantile Estimation Approach to Identify Income and Age Variation in the Value of Statistical Life

In theory, heterogeneity in individual characteristics translates into variation in the marginal willingness to pay for a mortality risk reduction. Two dimensions of heterogeneity, with respect to income and age, have recently received attention due to their policy relevance. We propose a quantile regression approach to simultaneously explore these two sources of heterogeneity and their interactions within the context of the hedonic wage model, the most common revealed preference approach for obtaining value of statistical life estimates. We illustrate the approach using data from the Health and Retirement Study (HRS). We find that the impact of age on the wage–risk tradeoff varies across the wage distribution. This result indicates important interactions between age and income heterogeneity. Thus, the conventional mean hedonic wage regression, even when the mean effect is allowed to vary with age, masks important heterogeneity

Hedging Price Volatility Using Fast Transport

Purchasing goods from distant locations introduces a significant lag between when a product is shipped and when it arrives. This is problematic for firms facing volatile demand, who must place orders before knowing the resolution of demand uncertainty. We provide a model in which airplanes bring producers and consumers together in time. Fast transport allows firms to respond quickly to favorable demand realizations and to limit the risk of unprofitably large quantities during low demand periods. Fast transport thus provides firms with a real option to smooth demand volatility. The model predicts that the likelihood and extent to which firms employ air shipments is increasing in the volatility of demand they face, decreasing in the air premium they must pay, and increasing in the contemporaneous realization of demand. We confirm all three conjectures using detailed US import data. We provide simple calculations of the option value associated with fast transport and relate it to variation in goods characteristics, technological change, and policies that liberalize trade in air services.

The Effects of Transit Systems on International Trade

In this paper, we estimate the trade effects of a transit system upgrading that streamlines border processing in developing countries. Our empirical approach combines transaction level export data from El Salvador with unique data that distinguishes export flows that were processed on the transit system. Our results indicate that the new transit system lowered regulatory border costs and raised exports. At the low end, our back-of-the-envelope estimate of the return to investment is US$ 3-to-1. This evidence informs a policy covered by the 2013 WTO Agreement of Trade Facilitation

Nova metoda za dokazivanje HNE-histidinskih konjugata u {takorskim upalnim stanicama

Oxidative stress, excessive production of reactive oxygen species, is considered an important part of different disorders, as well as of physiological processes (inflammation). The difference between physiological and pathological oxidative stress is often the occurrence of lipid peroxidation and its final toxic products, among which is 4-hydroxy-2-nonenal (HNE), a reactive aldehyde that forms protein conjugates. The aim of this study was to determine the distribution of HNE-histidine conjugates in leukocytes during systemic inflammation. We used genuine monoclonal antibodies against HNE-histidine conjugates for immuno-cytochemical, immuno- histochemical and immuno-electronmicroscopical analyses of HNE in inflammatory cells. Spleen tissue, leukocytes from blood and macrophages from the peritoneum of rats intraperitoneally (i.p.) injected with micronized zeolite (MZ) were analyzed. HNE-histidine conjugates were predominantly detected near cell membranes, phagosomes and macrophage granules. Immunodetection of HNE-histidine conjugates may be used as an analytical immunochemical method to study HNE formation in pathological and physiological processes and for pathomorphological diagnostic procedures.Oksidacijski stres, stanje prekomjernoga stvaranja reaktivnih kisikovih tvari, bitna je sastavnica različitih bolesti, ali i fizioloških procesa (upala). Često je razlika između fiziološkoga i patološkoga oksidacijskoga stresa pojava lipidne peroksidacije i njenih završnih toksičnih produkata, među kojima posebnu ulogu ima 4-hidroksi- 2-nonenal (HNE), reaktivni aldehid koji tvori konjugate s bjelančevinama. Cilj ovoga istraživanja bio je utvrditi distribuciju HNE-histidinskih konjugata u leukocitima tijekom nespecifične upalne reakcije. Rabili smo izvorna monoklonalna protutijela na HNE-histidinski konjugat, za imuno-citokemijsko, histokemijsko i elektronskomikroskopsko dokazivanje HNE-a u upalnim stanicama. Analizirano je tkivo slezene, leukociti iz krvi te makrofazi štakora kojima je intraperitonealno injiciran mikronizirani zeolit (MZ). HNE-histidinski konjugati pretežito su uočeni uz stanične membrane te pored fagosoma i makrofagnih granula. Imunodetekcija HNE-histidinskih konjugata mogla bi se stoga rabiti kao analitička imunokemijska metoda za istraživanja fizioloških i patoloških procesa te u patomorfološkim dijagnostičkim postupcima

Hedging Price Volatility Using Fast Transport

Ocean transportation in international trade imposes a time lag between the departure and arrival of a shipment. This arrival lag creates a problem for firms selling in markets with volatile demand. Specifically, the quantity a firm ships via ocean at a given time may not maximize profits when it arrives. This paper examines whether fast but expensive transportation hedges this uncertainty. Fast air shipments allow a firm to wait until the uncertainty is revealed, meaning that high demand volatility urges greater air shipments. On the other hand, a higher price for air shipment raises the cost of waiting and causes a firm to choose greater ocean quantities to minimize the transport bill. The model in this paper identifies the tradeoff between uncertainty and transportation costs. Monthly data for US imports of merchandise separated by transport mode confirm the predictions

Hedging Price Volatility Using Fast Transport

Purchasing goods from distant locations introduces a significant lag between when a product is shipped and when it arrives. These transit lags are trade barriers for firms facing volatile demand, who must place orders before knowing the resolution of demand uncertainty. We provide a model in which airplanes bring producers and consumers together in time. Fast transport allows firms to respond quickly to favorable demand realizations and to limit the risk of unprofitably large quantities during low demand periods. The model predicts that the likelihood and extent to which firms employ air shipments is increasing in the volatility of demand they face, decreasing in the air premium they must pay, and increasing in the contemporaneous realization of demand. We confirm all three conjectures using detailed US import data. Fast transport thus provides firms with a real option to smooth demand volatility on international markets, and we provide simple calculations of that option value. This enables us to identify how the option value relates to goods characteristics, and to changes in air transport premia associated with technological and policy change including the introduction of jet engines, and liberalization of trade in air services

Essays on firm responses to price volatility and international specialization

Chapter 1 of this thesis examines in theory and empirics how exporters use different modes of transportation to hedge price uncertainty. Ocean transportation in international trade imposes a time lag between the departure and arrival of a shipment. This arrival lag creates a problem for firms selling in markets with volatile demand. Specifically, the quantity a firm ships via ocean at a given time may not maximize profits when it arrives. This chapter examines whether fast but expensive transportation hedges this uncertainty. Fast air shipments allow a firm to wait until the uncertainty is revealed, meaning that high demand volatility urges greater air shipments. On the other hand, a higher price for air shipment raises the cost of waiting and causes a firm to choose greater ocean quantities to minimize the transport bill. The model in this paper identifies the tradeoff between uncertainty and transportation costs. Monthly data for US imports of merchandise separated by transport mode confirm the predictions. Chapter 2 provides direct evidence for the factor proportions theory. We show that in the setting of multiple goods and factors, the factor proportions theory has the following prediction: across industries, the impacts of the endowment of a given factor on industry outputs have positive co-variance with the relative uses of this factor. The intuition is that on average, the industries that use a given factor heavily have positive output responses following an increase in the endowment of this factor. This co-variation condition is robust to Hicks-neutral and factor-augmenting productivity differences and constitutes a direct test of the production side of the factor proportions theory. We also show that the co-variation condition finds empirical support