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Reciprocity in trade negotiations and welfare

Pascalis Raimondos and Alan Woodland

Journal of International EconomicsVolume 111March 2018

We propose a reciprocity rule for use in multilateral trade policy negotiations that is guaranteed to raise welfare of all participating countries under minimal assumptions. Our reciprocity rule requires all countries to raise the quantities of their net imports by the same proportion. We show that, starting from a Nash tariff equilibrium, a tariff reform that delivers proportional increases in all countries’ net imports will unambiguously raise welfare in each country. The structure imposed by the quantity-based reciprocity rule delivers this strong welfare result for a household welfare maximizing government without concern for general equilibrium price impacts. However, it does not generalize to the wide range of political economy welfare functions handled by Bagwell and Staiger.

URL: https://www.sciencedirect.com/journal/journal-of-international-economics/vol/111/suppl/C

Courtesy: Sciencedirect


Trade, Financial Flows and Stock Market Interdependence: Evidence from Asian Markets

Sowmya Dhanaraj, Arun Kumar Gopalaswamy and M. Suresh Babu


Liberalization and globalization of Newly Industrialized Economies have contributed to increased integration of capital markets. This study tests whether convergence of macroeconomic variables and enhanced bilateral trade and financial flows causes greater interdependence of markets.Daily closing indices and quarterly differentials in interest, inflation,
growth rates, exchange rates, trade of goods and services, direct and portfolio investment were used. Results revealed that markets of Asia arenot immune to shocks originating in US although co-movements of macroeconomic variables do not help in explaining level of interdependence. Portfolio flows were found to be important than tradeflows in explaining market interdependence.

URL: http://www.mse.ac.in/wp-content/uploads/2017/03/Working-Paper-158-.pdf

Courtesy: MSE

Interplay between Patents and Standards in the Information and Communication Technology (ICT) Sector and its Relevance to the Implementation of the WTO Agreements

Xiaoping Wu

ERSD-2017-08, April 2017

While standard setting organizations (SSOs), industry bodies, as well as judicial and administrative authorities have made great efforts to solve the issue of patent holdup and holdout, there is still an ongoing struggle among divergent stakeholders. Patent holdup and holdout directly impacts the innovation and dissemination of patented technology, the harmonization and implementation of standards, and international trade, which are promoted by the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) and the Agreement on Technical Barriers to Trade (TBT Agreement). This working paper provides an overview of the current debate on patent holdup and holdout in the ICT sector, analyses existing policy measures and their limitations, and then highlights the relevance of the WTO to this debate.

URL: https://www.wto.org/english/res_e/reser_e/ersd201708_e.htm

Courtesy: WTO

Fair Trade Certification and Livelihoods: A Panel Data Analysis of Coffee-growing Households in India

Income inequality and export prices across countries

Lisandra Flach and Eckhard Janeba

Canadian Journal of Economics, Volume 50Issue 1, February  2017

This paper provides theory and evidence on the links between income inequality within a destination country and the patterns of trade and export prices. The theoretical framework relates income inequality to product quality and prices using a simple demand composition effect. The model predicts that a more unequal income distribution in a destination country leads to higher average prices, though the effect is nonlinear and disappears for rich enough countries. The predictions are tested using detailed firm-level data. Controlling for income per capita, prices are systematically higher in more unequal destinations, and the strength of this effect depends on income per capita. Results are particularly important for middle-income countries and hold only for differentiated goods, and in particular for products with a high degree of vertical differentiation.

URL: http://onlinelibrary.wiley.com/doi/10.1111/caje.12254/abstract

Courtesy: Wiley online library

Does ASEAN–India Trade Stimulate Income? A Cointegration Analysis Using the ARDL Approach

South Asia Economic Journal,|Volume 17, Issue 2, September 2016
This article aims to address the extent of income that has been attributed by trade between India and the ASEAN-5 countries (namely, Indonesia, Malaysia, the Philippines and Thailand) from the year 1970 till 2014. This study adopts the autoregressive distributed lag (ARDL) bound test approach to cointegration, with long- and short-run parameter estimates to investigate the impact of regional trade between India and ASEAN-5. The cointegration test results confirmed the presence of a long-run relationship only for India, and no cointegration evidence was found for the ASEAN-5 economies. The long-run parameter estimates showed no influence of ASEAN–India trade on India’s income and a positive impact of India’s trade to the rest of the world on India’s income by about 0.58 per cent in the long run. Interestingly, ASEAN–India trade is positively influencing India’s income in the short run, and the extent of the impact tends to be small. This article concludes that there is limited evidence to support the claim that ASEAN–India trade stimulates income for the case of India and ASEAN-5 countries.
Courtesy: Sage

China-Africa and India-Africa trade in the years 2000-2014

Wioletta Nowak

Procedia Economics and Finance, Volume 39,  (2016)

The paper presents merchandise trade between China and Africa and between India and Africa over the period from 2000 to 2014. The analysis is based on the data retrieved from the UN Comtrade Database. Both, China and India have significantly increased their trade in goods with 54 African countries since the beginning of the 21st century. In the analysed period, China’s bilateral trade with Africa increased 21 times while India’s about 13 times. The Asian countries increased their merchandise trade with Africa mainly due to the development of South-South cooperation and diplomatic relations with the region, and combining trade with development assistance. So far the winner of the Sino-Indian trade competition in Africa is China. The value of China’s total trade with Africa surpassed India’s nearly 3 times in the years 2000-2014.

URL: http://www.sciencedirect.com/science/journal/22125671

Courtesy: Sciencedirect