WTO Membership and the Extensive Margin of World Trade: New Evidence

Recent literature has argued that, contrary to the results of a seminal paper by Rose (2004), WTO membership does promote bilateral trade, at least for developed economies and if membership includes non-formal compliance. We review the literature in order to identify open issues. We then develop the simplest possible "corner-solutions" version of the gravity model which serves as a framework to readdress these issues. We focus on the extensive margin of trade that separates positive-trade from zero-trade country pairs. We argue that the model can be consistently estimated using Poisson pseudo-maximum-likelihood methods with exporter and importer fixed effects. We account for coding issues and the potential heterogeneity of the WTO membership which recent contributions have stressed. While we find that WTO membership increases the likelihood that a given country pair trades, we do not find that the extensive margin has a strong and systematic effect on the average trade-creating potential of the WTO. JEL classifcation: F12, F13gravity approach, WTO, monopolistic competition, real trade costs

Exploring the Intensive and Extensive Margins of World Trade

World trade evolves at two margins. Where a bilateral trading relationship already exists it may increase through time (intensive margin). But trade may also increase if a trading bilateral relationship is newly established between countries that have not traded with each other in the past (extensive margin). We provide an empirical dissection of post-World-War-II growth in manufacturing world trade along these two margins. We propose a “corner-solutions-version” of the gravity model to explain movements on both margins. A Tobit estimation of this model resolves the so-called “distance-puzzle”. It also finds more convincing evidence than recent literature that WTO-membership enhances trade.bilateral trade, globalization, globalisation, gravity model

Can International Migration Ever Be Made a Pareto Improvement?

We argue that compensating losers is more difficult for immigration than for trade and capital movements. While a tax-cum-subsidy mechanism allows the government to turn the gains from trade into a Pareto improvement, the same is not true for the so-called immigration surplus, if the redistributive mechanism is not allowed to discriminate against migrants. We discuss policy conclusions to be drawn from this fundamental asymmetry between migration and other forms of globalization.Gravity model, international trade, international migration, cross-country income regression

Immigration and native welfare

We unify two approaches towards identifying native welfare effects of immigration, one emphasizing the immigration surplus (Borjas, 1995,1999), the other identifying a welfare loss due to terms-of-trade effects (Davis & Weinstein, 2002). We decompose the native welfare effect of immigration into the standard complementarity effect, augmented by a Stolper-Samuelson effect, and a terms-of-trade effect. Using a structural model with three skill-classes we derive propositions on the wage and native welfare effects of various immigration scenarios. A calibration-based simulation reveals that the size of the inflow and immigrant income repatriation are key determinants of the welfare-ranking of different immigration scenarios.international migration; factor movements; international trade; non-tradable goods; welfare analysis; wages; general equilibrium; terms-of-trade

Speaking Stata: On structure and shape: the case of multiple responses

A frequent problem in data management is that datasets may not arrive in the best structure for many analyses, so that it may be necessary to restructure the data in some way. The particular case of multiple response data is discussed at length, with special attention to different possible structures; the generation of new variables holding the data in different form; valuable inbuilt string and egen functions; using foreach and forvalues to loop over lists; and the use of the reshape command. Tabulations and graphics for such data are also reviewed brießy. Copyright 2003 by Stata Corporation.composite variables, concatenation, egen, foreach, forvalues, graphics, indicator variables, multiple responses, reshape, split, string functions, tabulations

Does WTO Membership Make a Difference at the Extensive Margin of World Trade?

In his seminal paper, Rose (2004) concluded from a gravity-type study of bilateral trade that the GATT/WTO does not play a strong role in encouraging trade. Rose looks at countries where the amount of trade was positive to start with (intensive margin). In this paper, we present a corner-solutions version of the gravity model of bilateral trade which explains zero trade and leaves room for WTO membership to promote trade at the extensive margin of trade. Relying on a Tobit estimation approach, we find that WTO membership has promoted world trade to a larger extent than Rose’s results seem to indicate.gravity approach, WTO, monopolistic competition, real trade costs

The impact of a seasonally ice free Arctic Ocean on the temperature, precipitation and surface mass balance of Svalbard

The observed decline in summer sea ice extent since the 1970s is predicted to continue until the Arctic Ocean is seasonally ice free during the 21st Century. This will lead to a much perturbed Arctic climate with large changes in ocean surface energy flux. Svalbard, located on the present day sea ice edge, contains many low lying ice caps and glaciers and is expected to experience rapid warming over the 21st Century. The total sea level rise if all the land ice on Svalbard were to melt completely is 0.02 m. The purpose of this study is to quantify the impact of climate change on Svalbard’s surface mass balance (SMB) and to determine, in particular, what proportion of the projected changes in precipitation and SMB are a result of changes to the Arctic sea ice cover. To investigate this a regional climate model was forced with monthly mean climatologies of sea surface temperature (SST) and sea ice concentration for the periods 1961–1990 and 2061–2090 under two emission scenarios. In a novel forcing experiment, 20th Century SSTs and 21st Century sea ice were used to force one simulation to investigate the role of sea ice forcing. This experiment results in a 3.5 m water equivalent increase in Svalbard’s SMB compared to the present day. This is because over 50 % of the projected increase in winter precipitation over Svalbard under the A1B emissions scenario is due to an increase in lower atmosphere moisture content associated with evaporation from the ice free ocean. These results indicate that increases in precipitation due to sea ice decline may act to moderate mass loss from Svalbard’s glaciers due to future Arctic warming