393 research outputs found
The intensity of international transactions remains lower than could be potentially justified on the basis of transportation costs alone. This has become known as the ‘mystery of the missing trade’. Transaction costs may be responsible for ‘under-trading’ across national borders. More specifically, the relatively low intensity of foreign trade may reflect the importance of institutions for cross-border transactions. This paper studies the effect of institutions on trade flows, using a gravity model approach. According to the gravity model, trade between any two countries is a function of each country's gross domestic product, the distance between them, and possibly other variables that reflect the costs of trade between them. We start from a standard gravity equation that incorporates variables for geographical proximity, common language, trade policy and common history. These factors reflect costs of trade across geographical and cultural distances. The quality of governance and the extent of familiarity with the resulting framework of rules and norms also affect the costs of doing business between any pair of countries. The effects of institutional quality and similarity on transaction costs may be substantial in international markets. Because of the greater extent of competition and higher uncertainty in international markets, the impact of quality and similarity of institutions on cross-border trade may be relatively pronounced. Therefore, this paper extends the gravity equation to include proxies for institutional quality and institutional homogeneity between trade partners. We use indicators on political stability, regulatory quality, corruption and other proxies that reflect the quality of governance, available from the comparative data set constructed by Kaufmann and others (World Bank, 2002). Variables that capture similarity in the quality of institutions are then constructed from these indicators. We test whether institutional homogeneity and institutional quality have an independent impact on trade volume between pairs of countries. The results indicate that, for example, having a similar law or regulatory framework promotes bilateral trade. Furthermore, a better quality of formal institutions on average coincides with higher trade. JEL codes: F14 Keywords: bilateral trade flows, gravity model, institution
Abstract In recent years we have observed an increasing interest in the job mobility patterns of employed persons. A new issue in this context is the mutual dependence of job mobility choice of workers who belong to the same household. In the present paper, we focus on bivariate duration models of stock sampled data in which dependence is induced through mixing. We apply the estimation method on the basis of an empirical study on the mutual dependence of job mobility of workers belonging to a two-earner household in the Netherlands. An interesting empirical result is that the marginal willingness to pay for a reduction in commuting time in a two-wage earner household is higher than that usually found for single-earner workers.
Radical technological changes have occurred in the dawn of the twenty-first century, creating high expectations both for short-term and long-term evolutions in the use of information to improve trip accuracy and travel convenience within the transport sector. Information has become the global currency of this century and ICT (Information and Communication Technology) enables the distribution of information, facilitating both physical and digital accessibility. Coupled with increased mobility, the transport sector is constantly generating data through multiple devices, sensors and sources (Pelletier et al., 2011), an illustration of the unique feature of this era. Global mobile data traffic grew 81 per cent in 2013 and forecasts show that Africa and the Middle East are anticipated to grow – based on the compound annual growth rate – by 70 per cent whereas Central and Eastern Europe are anticipated to grow by 68 per cent (Cisco, 2014). So travellers and institutions have the ability to create value about themselves on their own, as members of organized communities or as part of the wider digital domain constantly producing or using data. It has been predicted that user-generated content and networking can act as democratizing forces in this context (Dutton, 2013)
This chapter deals with the impact of infrastructure on regional output, productivity and welfare, focusing on transport infrastructure. After discussing definitions, measurement and impact of infrastructure in general terms, the empirical literature on the productivity effects of infrastructure is reviewed in detail. Important themes are the specification of services provided with infrastructure, spatial spillovers, and, in particular, the rapidly growing literature dealing with causality issues. The chapter then shifts the focus from the macro to the micro perspective and from gross domestic producy effects to welfare effects. Spatial computable equilibrium modelling is introduced as an advanced technique for assessing regional welfare as well as distributional effects of infrastructure. However, this technique is data demanding; reliable parameters are often lacking, and the underlying theory is typically not tested. Gravity analysis is presented as a simplified, though well micro-founded alternative. Final thoughts are devoted to the widely discussed issue of wider economic effects that traditional evaluation methods typically do not account for
Climate change, the ‘boom and bust’ cycles of rivers, and altered water resource management practice have caused significant changes in the spatial distribution of the risk of flooding. Hedonic pricing studies, predominantly for the US, have assessed the spatial incidence of risk and the associated implicit price of flooding risk. Using these implicit price estimates and their associated standard errors, we perform a meta-analysis and find that houses located in the 100-year floodplain have a –0.3 to –0.8% lower price. The actual occurrence of a flooding event or increased stringency in disclosure rules causes ex ante prices to differ from ex post prices, but these effects are small. The marginal willingness to pay for reduced risk exposure has increased over time, and it is slightly lower for areas with a higher per capita income. We show that obfuscating amenity effects and risk exposure associated with proximity to water causes systematic bias in the implicit price of flooding risk
A spatial welfare framework for the analysis of the spatial dimensions of sustainability is developed. It incorporates agglomeration effects, interregional trade, negative environmental externalities and various land use categories. The model is used to compare rankings of spatial configurations according to evaluations based on social welfare and ecological footprint indicators. Five spatial configurations are considered for this purpose. The exercise is operationalized with the help of a two-region model of the economy that is in line with the 'new economic geography'. Various (counter) examples show that the footprint method is not consistent with an approach aimed at maximum social welfare