The interplay of export supply and the real exchange rate. Evidence for Mercosur exports to the EU.

This paper applies a dynamic macroeconomic trade model to assess Mercosur-European Union trade. Looking at export supply of Mercosur countries (the four formal members plus Chile), the role of the real exchange rate, income and the income-absorption surplus or deficit are evaluated. Special emphasis is put on the reaction of exports with respect to changes of the real exchange rate. The model is tested for a sample of five countries (Argentina, Brazil, Chile, Paraguay and Uruguay) over the period of 1961-1996. A panel data analysis is used to disentangle the time invariant country-specific effects and to capture the relationships between the relevant variables over time. We find that the fixed effect model is to be preferred to the common effect model. The variables income and income-absorption surplus are found to be important determinants of trade flows. The real exchange rate has a positive and significant impact on export supply in the long-term, whereas current and past changes in the real exchange rate seem to play no role for current total export trade in the short-and medium-term. Having this latter time horizon, it could be shown that Mercosur´s total exports react extremely parsimoniously and slowly with respect to changes in the real exchange rate. This phenomenon could be due to the large share of agricultural and forestry products in Mercosur´s exports.export supply, exchange rates, dynamic panel analysis

Augmented gravity model: An empirical application to Mercosur- European trade flows

This paper applies the gravity trade model to assess Mercosur-European Union trade, and trade potential following the agreements reached recently between both trade blocks. The model ist tested for a sample of 19 countries, the four formal members of Mercosur plus Chile and the fifteen members of the European Union. A panel data analysis is used to disentangle the time invariant country-specific effects and to capture the relationships between the relevant variables over time. We find that the fixed effect model is to be preferred to the random effects gravity model. Furthermore, a number of variables, namely, infrastructure, income differences and exchange rates added to the standard gravity equation, are found to be important determinants of bilateral trade flows.Gravity equation, panel data, infrastructure, integration

Would MERCOSUR’s Exports to the EU Profit from Trade Liberalisation? Some General Insights and a Simulation Study for Argentina

In this study, MERCOSUR\'s past exports to the EU under the protectionist environment of the period between 1988 and 1996 are examined and an attempt is made to determine MERCOSUR\'s exports\' growth potential in a liberalised EU market. A sectoral study is considered indispensable since tariff and non-tariff trade barriers vary strongly among sectors. The influence of the macroeconomic environment on MERCOSUR\'s exports is examined in a dynamic panel analysis. A simulation study based on a quite comprehensive evaluation of EU trade barriers is performed for the Argentinean case in order to evaluate the impact of EU trade liberalisation.MERCOSUR-EU trade trade barriers sectoral study panel data

Road and Maritime Transport Costs: A Comparative Analysis of Spanish Exports to Poland and Turkey

In this paper, we analyze the determinants of maritime and road transport costs for Spanish exports to Poland and Turkey and investigate the different effects of these costs on international trade. First, we investigate the extent to which maritime and road transport costs depend on different factors such as unit values, distances, transport conditions, service structures, and service quality. Second, we analyze the relative importance of road and maritime transport costs as determinants of trade flows. The data on transport costs are drawn from a new database compiled from primary data sources. The main results of this investigation identify the central variables influencing road and maritime transportation costs: for both modes, transport conditions are strong determinants, whereas efficiency and service quality are more important for maritime transport costs, and geographical distance is more important for road transport. Road and maritime transport costs are important explanatory factors of exports and they seem to deter trade to a greater extent than road or maritime transit time when considered endogenously determined.Transport costs, transport mode, Spanish exports, international trade

Explaining MERCOSUR sectoral exports to the EU: The role of economic and geographical distance

We used a variant of the gravity equation to classify products according to their sensitivity to geographical and economic distance. We argue that products which are highly sensitive to economic distance (proxied with absolute differences in per capita income) and barely sensitive to geographical distance are the best candidates for future trade between the European Union and Mercosur. We estimated our empirical model by applying panel data methodology to allow for trading pair specific effects. In the estimation we made use of two additional explanatory variables which are found to be relevant when explaining trade, namely, infrastructure and exchange rates. Our results support the view that different products have a different sensitivity to distance and highlight the importance of using disaggregated data when analysing international trade flows.gravity model, panel data, sectoral trade flows, distance

Would MERCOSUR´s Exports to the EU Profit from Trade Liberalisation? Some General Insights and a Simulation Study for Argentina

In this study, MERCOSUR's past exports to the EU under the protectionist environment of the period between 1988 and 1996 are examined and an attempt is made to determine MERCOSUR's exports' growth potential in a liberalised EU market. A sectoral study is considered indispensable since tariff and non-tariff trade barriers vary strongly among sectors. The influence of the macroeconomic environment on MERCOSUR's exports is examined in a dynamic panel analysis. A simulation study based on a quite comprehensive evaluation of EU trade barriers is performed for the Argentinean case in order to evaluate the impact of EU trade liberalisation.MERCOSUR-EU trade, trade barriers, sectoral study, panel data

Single Parameter Combinatorial Auctions with Partially Public Valuations

We consider the problem of designing truthful auctions, when the bidders' valuations have a public and a private component. In particular, we consider combinatorial auctions where the valuation of an agent $i$ for a set $S$ of items can be expressed as $v_if(S)$, where $v_i$ is a private single parameter of the agent, and the function $f$ is publicly known. Our motivation behind studying this problem is two-fold: (a) Such valuation functions arise naturally in the case of ad-slots in broadcast media such as Television and Radio. For an ad shown in a set $S$ of ad-slots, $f(S)$ is, say, the number of {\em unique} viewers reached by the ad, and $v_i$ is the valuation per-unique-viewer. (b) From a theoretical point of view, this factorization of the valuation function simplifies the bidding language, and renders the combinatorial auction more amenable to better approximation factors. We present a general technique, based on maximal-in-range mechanisms, that converts any $\alpha$-approximation non-truthful algorithm ($\alpha \leq 1$) for this problem into $\Omega(\frac{\alpha}{\log{n}})$ and $\Omega(\alpha)$-approximate truthful mechanisms which run in polynomial time and quasi-polynomial time, respectively