THE Effects of Multilateral Trade Liberalization on the Extensive and the Intensive Margins of Trade

This paper examines empirically the effects of the WTO and RTA membership on the extensive and the intensive margins of trade. Using disaggregated data for a sample of 177 countries, the main findings of this paper are that WTO membership tends to increase the number of products traded between members (extensive margin), and tends to increase the average sales per product line (intensive margin). I further detect substantial heterogeneity when I examine these effects for various subsamples of the data (e.g. by the degree of product differentiation or the level of development of a country). This demonstrates that many of the aggregate effects estimated in the existing literature (e.g. Rose 2004) hide a substantial amount of variation in the WTO's effect on trade. Finally, accounting for multilateral resistance as in Anderson and van Wincoop (2003), I find that the WTO effect becomes insignificant, while the RTA membership boosts trade between members and between members and outsiders at least in the aggregate level.WTO, Regional Trade Agreements, Extensive margin, Intensive Margin, Poisson Regression

Measuring the effectiveness of cost and price competitiveness in external rebalancing of euro area countries: What do alternative HCIs tell us?

This study examines the marginal effects of traditional determinants of exports and imports with a focus on the role of price competitiveness in restoring external balances. It is a first attempt to compare marginal effects of various harmonised competitiveness indicators (HCIs) on both exports and imports of both goods and services across individual euro area countries. We find evidence that HCIs based on broader cost and price measures have a larger marginal effect (with some exceptions) on exports of goods. Exports of services are sensitive to HCIs in big euro area countries and Slovakia, where exports of services are also found more sensitive to competitiveness indicators based on broader price measures. Imports of goods and imports of services are quite insensitive to changes in relative prices. Finally, in some cases measures of fit indicate that a large unexplained residual part is present, implying that other non-price related factors might play an important role in driving foreign trade

THE Effects of Multilateral Trade Liberalization on the Extensive and the Intensive Margins of Trade

This paper examines empirically the effects of the WTO and RTA membership on the extensive and the intensive margins of trade. Using disaggregated data for a sample of 177 countries, the main findings of this paper are that WTO membership tends to increase the number of products traded between members (extensive margin), and tends to increase the average sales per product line (intensive margin). I further detect substantial heterogeneity when I examine these effects for various subsamples of the data (e.g. by the degree of product differentiation or the level of development of a country). This demonstrates that many of the aggregate effects estimated in the existing literature (e.g. Rose 2004) hide a substantial amount of variation in the WTO's effect on trade. Finally, accounting for multilateral resistance as in Anderson and van Wincoop (2003), I find that the WTO effect becomes insignificant, while the RTA membership boosts trade between members and between members and outsiders at least in the aggregate level

Trade and business cycle effects of regional and multilateral integration

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Wages, compositional effects and the business cycle

During the Great Recession, unemployment increased substantially across several euro area countries, with wages exhibiting a muted response. As low skilled workers lose their jobs first during a recession, the remaining employed workers result in a relatively more skilled employment pool. This change in the composition of the employed workers in ates the aggregate wage mechanically, even in the case of no actual pay rises. This paper uses individual level data to control for the effect of changes in the composition of workers on wages and wage cyclicality. We find that compositional effects are highly correlated with the severity of the business cycle, being significant in countries where employment losses were larger. Thus, the results partially explain the muted response of the observed wages to the business cycle, as wages decreased more than what the aggregate numbers suggest during the downturn, a picture that is reversed somewhat during the recent recovery