Does Appreciation of the RMB Decrease Imports to the U.S. from China?

In 2005, China abated its fixed exchange rate against the U.S. dollar and began to appreciate the Renminbi (RMB). In this paper, I explore the effect of the appreciation of the RMB on imports to the U.S. from China by augmenting the gravity model with the exchange rate. Using an industrial panel data set during the period 2002 to 2008 and controlling for the endogeneity of the bilateral exchange rate, this extensive empirical analysis suggests that the appreciation of the RMB against the U.S. dollar significantly reduced imports to the U.S. from China. This finding is robust to a variety of econometric methods and to coverage in different periods.exchange rate, pass-through, Bilateral Trade, Gravity Model

Electoral Competiton and Optimal Tariffs

I show that the unique Nash equilibrium of a model of political competition between two parties in a Heckscher-Ohlin setting entails differentiated trade policies, with a party proposing a high tariff, and the other one a low one. The basic departure from a median voter model is the introduction of campaign contributions, which influence the vote of a group of uninformed voters. Parties are Downsian, not ideological, yet campaign contributions create an asymmetry between them. Thus, the heterogeneous behavior of parties, protectionism and pro-trade, is endogenously decided, rather than a prior assumed in previous works.tariff, political competition, median voter

Impact of U.S. Tariffs on Democratic Vote Share

This paper provides evidence on an amended Mayer-Heckscher-Ohlin model with parties by studying the effects of U.S. tariffs on the Democratic vote share. The effects are estimated with fixed effects and Two-Stage Least Squares based on data from the House of Representatives from the years 1982 to 2000. Weighted trade policy proxy for each congressional district are constructed and shown to be significant. Overall, a 10% decrease of weighted tariffs leads to a 12% decrease in the Democratic vote share in the election to the House, ceteris paribus. Also, the predictions of the model for electoral outcome are consistent with today’s U.S. politics.tariffs, Democratic vote share, campaign contributions, House election

Exports, Productivity, and Credit Constraints: A Firm-Level Empirical Investigation of China

Recent Melitz-type (2003) intra-industry heterogonous trade models argue that a firmfs productivity has significant effects on the firmfs exports. This paper examines how a firmfs credit constraints as well as its productivity affect its export decisions. We imbed the firmfs credit constraints into a Melitz-type general-equilibrium model by endogenizing the probability of the success of firm-specific projects. We show that, all else equal, it is easier for firms to enter the export market if (1) the probability of the success of their project is higher and consequently they have easier access to external finance from financial intermediaries; or (2) they have alternative sources, other than from financial intermediaries, to obtain funds. We test these theoretical hypotheses using firm-level data from Chinese manufacturing industries and find strong evidence supporting the predictions of the model.Credit Constraints, Heterogeneous Firms, Productivity, Trade

Exports, Productivity, and Credit Constraints : A Firmâ€ÂLevel Empirical Investigation of China

Recent Melitz-type (2003) intra-industry heterogonous trade models argue that a firm's productivity has significant effects on the firm's exports. This paper examines how a firms credit constraints as well as its productivity affect its export decisions. We imbed the firm's credit constraints into a Melitz-type general-equilibrium model by endogenizing the probability of the success of firm-specific projects. We show that, all else equal, it is easier for firms to enter the export market if (1) the probability of the success of their project is higher and consequently they have easier access to external finance from financial intermediaries; or (2) they have alternative sources, other than from financial intermediaries, to obtain funds. We test these theoretical hypotheses using firm-level data from Chinese manufacturing industries and find strong evidence supporting the predictions of the model.Credit Constraints, Heterogeneous Firms, productivity, trade

The Economics of Price Scissors : An Empirical Investigation for China.

The Sah-Stiglitz "Economics of Price Scissors' model, concerning the political economy of price scissors, formulates the optimal terms of trade against peasants. In the present paper, by extending this model to an open economy and allowing agricultural rationing, we first check if the model stands up to China's data from 1949-1992, we find that the importance of peasants in the government's objective function is less than the importance of workers. In addition, the importance of consumption is also less than that of investment. Such findings are consistent with the reality of China.China, Price Scissors, trade, political economy

Processing Trade, Firm's Productivity, and Tariff Reductions : Evidence from Chinese Products

This paper explores how processing trade, jointly with tariff reduction, can improve a firm's productivity. Tariff reductions generate productivity gain via competition, whereas processing export does so via spillovers. Using mostly disaggregated Chinese product-level trade data and firm-level production data from 2000--2006, after constructing firm-level tariffs based on product information and controlling for possible endogeneity, I found that a 10% tariff decrease generates a 12% increase in a firm's productivity gain. In addition, processing firms enjoy significant productivity gains via spillovers, with heterogeneity across firms divided according to ownership. These findings are robust to various econometric methods, disaggregated specifications, and measures.Processing Trade, productivity, Firm's Heterogeneity, Chinese Plants

Trade globalization and political liberalization: A gravity approach

The literature has paid very little attention to a potential positive endogenous nexus between trade globalization and political liberalization. In this paper, I apply a structural approach to investigate two-way causality between the two based on the gravity trade theory, using data from a sample of 134 IMF countries over the pe- riod 1974-1998. An extensive search shows that trade globalization dampens political liberalization, though political liberalization fosters trade globalization. The paper also presents ample evidence of simultaneous bias when such bidirectional causality is ignored. Finally, it contains a thorough exploration of parameter heterogeneity by income and by region

Exports and Credit Constraints Under Incomplete Information: Theory and Evidence from China

This paper examines why credit constraints for domestic and exporting firms arise in a setting where banks do not observe firms' productivities. To maintain incentive-compatibility, banks lend below the amount needed for first-best production. The longer time needed for export shipments induces a tighter credit constraint on exporters than on purely domestic firms, even in the exporters' home market. Greater risk faced by exporters also affects the credit extended by banks. Extra fixed costs reduce exports on the extensive margin, but can be offset by collateral held by exporting firms. The empirical application to Chinese firms strongly supports these theoretical results, and we find a sizable impact of the financial crisis in reducing exports.

Species identification of biological ingredients in herbal product, Gurigumu-7, based on DNA barcoding and shotgun metagenomics

Accurate identification the species composition in mixtures poses a significant challenge, especially in processed mixtures comprising multiple species, such as those found in food and pharmaceuticals. Therefore, we have attempted to utilize shotgun metabarcoding technology to tackle this issue. In this study, the method was initially established using two mock samples of the Mongolian compound preparation Gurigumu-7 (G-7), which was then applied to three pharmaceutical products and 12 hospital-made preparations. A total of 119.72 Gb of raw data sets were obtained through shotgun metagenomic sequencing. By combining ITS2, matK, and rbcL, all the labeled bio-ingredients specified in the G-7 prescription can be detected, although some species may not be detectable in all samples. The prevalent substitution of Akebia quinata can be found in all the pharmaceutical and hospital samples, except for YN02 and YN12. The toxic alternative to Akebia quinata, Aristolochia manshuriensis, was exclusively identified in the YN02 sample. To further confirm this result, we validated it in YN02 using HPLC and real-time PCR with TaqMan probes. The results showed that aristolochic acid A (AAA) was detected in YN02 using HPLC, and the ITS2 sequence of Aristolochia manshuriensis has been validated in YN02 through qPCR and the use of a TaqMan probe. This study confirms that shotgun metabarcoding can effectively identify the biological components in Mongolian medicine compound preparation G-7. It also demonstrates the method’s potential to be utilized as a general identification technique for mixtures containing a variety of plants