Gains from trade and the sovereign bond market

Kikkawa, Ayumu Ken; Sasahara, Akira

doi:10.1016/j.euroecorev.2020.103413

Cited by 5 publications

(3 citation statements)

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“…Likewise, the gains from trade are usually evaluated in a long-run general equilibrium model, where allowing free entry in all industries eliminates the need to keep track of the distribution of industry profits throughout the economy. 2 Remarks by Michael Pollan at the University of California, Davis, Mondavi Center, February 12, 2007. Pollan is referring to the social cost of shipping goods between markets, which he views as a waste, but he is not taking into account the beneficial effect of competition between American and Danish firms. If having the cookies sold between the two countries leads to lower prices due to reduced markups, then there can be social gains despite the shipping costs.…”

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confidence: 99%

Alternative Sources of the Gains from International Trade: Variety, Creative Destruction, and Markups

Feenstra

2018

Journal of Economic Perspectives

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The modern theory of international trade identifies several additional sources of the gains from international trade beyond the gains from traditional comparative advantage. These are the gains from importing new product varieties; the gains from “creative destruction” as the relatively most productive firms expand their output by exporting while the less-productive firms exit; and the gains from competition between firms in different countries, which can lead to reduced markups. Estimates of these various gains are provided for the United States and other countries.

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Alternative Sources of the Gains from International Trade: Variety, Creative Destruction, and Markups

Feenstra

2018

Journal of Economic Perspectives

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“…The EM-DAT database is commonly used in studies on natural disasters (e.g.,Escaleras and Register, 2011; Gröschl, 2013, 2014;Hallegatte, 2015;Doytch, 2020;Kikkawa and Sasahara, 2020) 12 The specification is similar to the one byEscaleras and Register (2011). The key differences, however, are that (a)we use FDI inflows rather than FDI inflows divided by GDP; that (b)we include dummies for developing country; and that (c)the accumulated number of prior disasters is decomposed into recent and past ones in Table2.…”

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The Resilience of FDI to Natural Disasters through Industrial Linkages

Kato¹,

Okubo²

2022

Preprint

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When do multinationals show resilience during natural disasters? To answer this, we develop a simple model in which foreign multinationals and local firms in the host country are interacted through input-output linkages. When natural disasters seriously hit local firms and thus increase the cost of sourcing local intermediate inputs, most multinationals may leave the host country. However, they are likely to stay if they are tightly linked with local suppliers and face low trade costs of importing foreign intermediates. We further provide a number of extensions of the basic model to incorporate, for example, multinationals with heterogeneous productivity and disaster reconstruction. Keywords Foreign direct investment (FDI) • Multinational enterprises (MNEs) • Inputoutput linkages • Supply chain disruptions • Multiple equilibriaThis is a substantially revised version of our earlier working paper (Kato and Okubo, 2017). It is conducted as a part of the Project "Economic Policy Issues in the Global Economy" undertaken at the Research Institute of Economy, Trade and Industry (RIETI). We wish to thank Akira Sasahara for extensive discussions and conference/seminar participants at RIETI, Hosei U, Osaka U, Kobe U and EWMES2021 for useful comments. Financial support from the the Japan Society for the Promotion of Science (Grant Numbers: JP19K13693; JP99K13693; JP20K22122) are gratefully acknowledged. All remaining errors are our sole responsibility.

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“…The EM-DAT database is commonly used in studies on natural disasters (e.g.,Escaleras and Register, 2011; Gröschl, 2013, 2014;Hallegatte, 2015;Doytch, 2019;Kikkawa and Sasahara, 2020) 9 Control variables include: population growth, inflation, corporate tax and an index of financial development. See Data Appendix for variable descriptions and full regression results.10 Following the classification of the World Bank, a developed country is defined as one that belongs to the high-income group, while a developing country as one that falls in the other income groups.…”

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The Resilience of FDI to Natural Disasters through Industrial Linkages

Kato

Okubo

2021

SSRN Journal

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When do multinationals show resilience during natural disasters? To answer this, we develop a simple model in which multinationals and local firms in the host country are interacted through input-output linkages. When natural disasters seriously hit local firms and thus increase the cost of sourcing local intermediates, most multinationals may leave the host country. However, they are likely to stay if they are tightly linked with local suppliers and face low trade costs of importing foreign intermediates. We further provide two extensions of the basic model to allow for multinationals with heterogeneous productivity and disaster reconstruction.

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Gains from trade and the sovereign bond market

Cited by 5 publications

References 93 publications

Alternative Sources of the Gains from International Trade: Variety, Creative Destruction, and Markups

Alternative Sources of the Gains from International Trade: Variety, Creative Destruction, and Markups

The Resilience of FDI to Natural Disasters through Industrial Linkages

The Resilience of FDI to Natural Disasters through Industrial Linkages

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