Trade

Blog

LSE Business Review:

Brazil's comparative advantage in soybean production triggered deforestation

Tropical ecosystems house an immense biomass, which makes it imperative to understand how they are affected by technology and trade. Igor Carreira, Francisco Costa and Joao Paulo Pessoa examine the Brazilian rainforest's...Read more...

Submission to a parliamentary inquiry and government consultation

Bank of England Monetary Policy Reports

The Bank of England publishes a Monetary Policy Report four times a year. After publication, the Treasury Committee holds sessions with the Governor of the Bank of England and members of the Monetary Policy Committee to ...Read more...

Blog

Trade Talks:

Did responsible sourcing by multinationals help workers in poor countries? (podcast)

A series of industrial accidents that killed workers in the supply chains of multinational corporations triggered backlash by Western consumers. In response, many global companies committed to treat workers in poor count...Read more...

CEP occasional paper

The linear algebra of economic geography models

We provide sufficient statistics for nominal and real wage exposure to productivity shocks in a constant elasticity economic geography model. These exposure measures summarize the first-order general equilibrium elastici...Read more...

Blog

Trade Talks:

Industrial policy and the rise of Romania's Silicon Valley (podcast)

In 2001, Romania gave an income tax break to a select group of software programmers. Isabela Manelici explains how this particular industrial policy helped stem Romania's "brain drain" problem, transformed the country's ...Read more...

Journal article

IMF Economic Review: Forthcoming

Jobless and stuck: youth unemployment and Covid-19 in India

Youth unemployment is a big challenge in developing economies, but there is a limited understanding of the dynamics underlying the rise in unemployment among young workers. This article examines youth unemployment and in...Read more...

External publication

Trading up

After nearly half a century of EU membership, Britain needs a trade strategy. The stakes are high: such a strategy shapes what families and firms buy from abroad, and what gets produced domestically; influences our jobs,...Read more...

Blog

Economics Observatory:

How has the Russian invasion of Ukraine affected global financial markets?

As Russia's war against Ukraine continues to unfold, its global economic impact remains uncertain. Evidence from the stock market indicates that firms with strong trade or ownership ties to Russia are more likely to face...Read more...

Blog

Vox EU:

Accounting for imported and domestically generated inflation: Supply chains, monetary policy, and the UK's cost of living crisis

Inflation has increased sharply since the start of 2021 as the global economy grapples with the aftermath of the COVID-19 pandemic and Russia's invasion of Ukraine. Swati Dhingra and Jack Page draw on a long tradition of...Read more...

CEP Brexit analysis

Brexit and consumer food prices: May 2023 update

Brexit continues to affect the UK economy. The results in this report are updates to the original study of Bakker et al. (2022), showing that higher non-tariff barriers due to Brexit are affecting food price inflation an...Read more...

Journal article

Applied Economics Letters: Forthcoming

Telework and productivity: insights from an original survey

Using a unique dataset of approximately 1,400 French manufacturing firms, this study provides insights into their utilization of telework in 2019. Our findings reveal firms that engaged in telework benefit from a Total F...Read more...

Journal article

American Economic Review:

Globalization and pandemics

We provide theory and evidence on the relationship between globalization and pandemics. Business travel facilitates trade and travel leads to human interactions that transmit disease. Trade-motivated travel generates an ...Read more...

Journal article

Journal of the European Economic Association:

City of dreams

Bigger cities offer more valuable experiences and opportunities in exchange for higher housing costs. While higher-ability workers benefit more from bigger cities, they are not more likely to move to one. Our model of ur...Read more...

Blog

LSE Impact of Social Sciences:

Standing on the shoulders of Chinese (Scientific) Giants - Evidence for a citation discount for Chinese Researchers

Chinese researchers are increasingly leading scientific research, yet their contributions are not fully recognized, notably by US researchers. Shumin Qiu, Claudia Steinwender and Pierre Azoulay discuss the reasons why ar...Read more...

Journal article

Econometrica:

Dynamic spatial general equilibrium

We incorporate forward-looking capital accumulation into a dynamic discrete choice model of migration. We characterize the steady-state equilibrium; generalize existing dynamic exact-hat algebra techniques to incorporate...Read more...

CEP discussion paper

Strapped for cash: the role of financial constraints for innovating firms

This paper makes use of a reform that allowed firms to use patents as stand-alone collateral, to estimate the magnitude of collateral constraints and to quantify the aggregate impact of these constraints on misallocation...Read more...

Journal article

Journal of Economic Perspectives:

Quantitative urban models: from theory to data

Economic activity is highly unevenly distributed within cities, as reflected in the concentration of economic functions in specific locations, such as finance in the Square Mile in London. The extent to which this concen...Read more...

Journal article

Regional Science and Urban Economics:

Working from home and corporate real estate

We examine how corporate real estate market participants adjust to the take-off of teleworking. We develop an index for the exposure of counties to teleworking in France by combining teleworking capacity with incentives ...Read more...

Blog

LSE Business Review:

Automation creates the space for entirely new jobs: the UK must adopt, adapt and improve

Fears about robots taking people's jobs are overplayed, say Rui Costa and Yuanhang Yu. Their research shows the real fear to overcome should be Britain's lack of productivity-enhancing robots, software, artificial intell...Read more...

Blog

Vox EU:

Radical climate policies

The transition to net zero will require policies that promote switching to carbon-free technologies on a large scale and will often involve complementarities and peer effects in demand. Frederick van der Ploeg and Anthon...Read more...

CentrePiece article

Deep trade agreements: proliferation, provisions, impact

Modern trade agreements between countries contain a host of provisions beyond simple tariff reductions on traded products. Research by Holger Breinlich, Valentina Corradi, Nadia Rocha, Michele Ruta, João Santos Silva and...Read more...

Journal article

Journal of International Economics: Forthcoming

Sequentially exporting products across countries

Exploiting disaggregated data on French exporters, we show that firms expand their product scope and geographical presence sequentially. This process of internationalization is uneven over time, exhibiting more volatilit...Read more...

CEP discussion paper

Robot adoption, worker-firm sorting and wage inequality: evidence from administrative panel data

Leveraging the geographic dimension of a large administrative panel on employer-employee contracts, we study the impact of robot adoption on wage inequality through changes in worker-firm assortativity. Using recently de...Read more...

CEP discussion paper

Import competition, trade credit and financial frictions in general equilibrium

We analyze the role of trade credit and financial frictions in the propagation of international trade shocks along the supply chain. First, we show empirically that exposure to import competition from China increased the...Read more...

CEP discussion paper

Multinationals, robots and the labor share

Using a panel of Spanish manufacturing firms covering the 1990-2017 period, this paper shows that firms acquired by multinational enterprises experience a reduction in the labor share. Acquisitions drive significant chan...Read more...

Blog

Vox EU:

Flight from Russia

In addition to the human tragedy in Ukraine, Russia's invasion has led to a series of economic, social, and political events in Russia itself. This column uses outgoing flight prices before and after the invasion on 24 F...Read more...

Blog

LSE American Politics and Policy:

For the US to again become the "Land of Opportunity" we need a better understanding of how geography and industrial change affects incomes

Kohei Takeda unpacks the relationship between declining manufacturing in parts of the US - which are often termed the 'Rust Belt' - and workers' income mobility....Read more...

Journal article

American Economic Review :

Technology gaps, trade and income

This paper quantifies the contribution of technology gaps to international income inequality. I develop an endogenous growth model where cross-country differences in R&D efficiency and cross-industry differences in innov...Read more...

CEP discussion paper

The indirect effect of the Russian-Ukrainian war through international linkages: early evidence from the stock market

This paper investigates how firms' international linkages to Russia and Ukraine affected investors' expectations following the escalation of the Russian-Ukrainian war. For this, we perform an event study around the Russi...Read more...

Blog

Vox EU:

Robot adoption, worker-firm sorting, and wage inequality: Evidence from administrative panel data

Technological progress has contributed to rising wage inequality in recent decades. Automation and digitalisation increasingly require workers with specialised knowledge for specific tasks, say Ester Faia, Gianmarco Otta...Read more...

Journal article

Industrial and Corporate Change :

Industry concentration in Europe and North America

This paper presents new evidence on industry concentration at both the country and the world-region levels. It calculates country-level industry concentration measures from the novel data representative of the entire fir...Read more...

Blog

LSE EUROPP:

Why political trust and voluntary compliance have been key to government pandemic responsiveness in Europe

The effectiveness of policy responses to Covid-19 has varied substantially across Europe. Drawing on new research, Timothy Besley and Christopher Dann illustrate how political trust and voluntary compliance have underpin...Read more...

Journal article

Research Policy: Forthcoming

Global value chains and domestic innovation

This paper explores how changes in both position and participation in Global Value Chain (GVC) networks affect firm innovation. The analysis combines matched patent-firm data for Japan with measures of GVC network centra...Read more...

Journal article

Economie et Statistique :

Recruitment difficulties and firms' characteristics: an analysis of French company data

This article uses a survey conducted in 2019 among companies in the manufacturing sector on recruitment difficulties they may encounter. By linking this information with the companies' income statements, we show that the...Read more...

Journal article

Economica:

The impact of non-tariff barriers on trade and welfare

Deep trade agreements (DTAs) are widespread and have taken the world beyond tariff liberalization in goods trade. As the importance of global supply chains and the services sector has increased across the world, shallow ...Read more...

Blog

Vox EU:

Responsible sourcing: Theory and evidence from Costa Rica

There is growing pressure on multinational enterprises to implement 'responsible sourcing' requirements for their suppliers in low- and middle-income countries. These include minimum standards on working conditions, such...Read more...

CEP discussion paper

The geography of structural transformation: effects on inequality and mobility

The interplay between structural transformation in the aggregate and local economies is key to understanding spatial inequality and worker mobility. This paper develops a dynamic overlapping generations model of economic...Read more...

CEP discussion paper

The spillover effect of services offshoring on local labour markets

I provide new empirical evidence on the direct and indirect impact of services off-shoring on local employment and wages, using a unique dataset on firms in the UK for the period 2000-2015. Exploiting variation in firms'...Read more...

CEP discussion paper

New dawn fades: trade, labour and the Brexit exchange rate depreciation

This paper studies consequences of the very large exchange rate depreciation occurring in June 2016 due to the UK electorate unexpectedly voting to leave the European Union. As news of a leave vote came in, the value of ...Read more...

Journal article

European Journal of Political Economy:

Voting under threat: evidence from the 2020 French local elections

We study how COVID-related risk affected participation across the French territory in the March 2020 local elections. We document that participation went down disproportionately in towns exposed to higher COVID-19 risk. ...Read more...

CEP discussion paper

Non-tariff barriers and consumer prices: evidence from Brexit

Non-Tariff Barriers (NTBs) are the main policy impediment to international trade, yet little is known about their pass-through to prices. This paper exploits the Brexit trade policy shock to quantify how NTBs affect cons...Read more...

Journal article

Oxford Bulletin of Economics and Statistics :

The UK's great demand and supply recession*

We revisit the weak productivity performance of the UK since the Great Recession by means of both a suitable theoretical framework and firm-level price and quantity data for detailed products, allowing us to measure both...Read more...

CEP discussion paper

Sanctions and misallocation. How sanctioned firms won and Russia lost

Using a unique natural experiment of staggered firm-level sanctions against Russia in 2014-2020 and the data on over 600,000 Russian firms, I estimate the effect of "smart" sanctions on targeted firms and on the aggregat...Read more...

Blog

Vox EU:

How US sanctions increased the economic activity of sanctioned Russian firms

Dzhamilya Nigmatulina assesses the impact of sanctions following the 2014 annexation of Crimea on Russian sanctioned firms. The capital, materials inputs, and revenue of sanctioned firms actually increased relative to no...Read more...

Journal article

Journal of Political Economy: Forthcoming

The comparative advantage of firms

Resource-based theories propose that firms grow by diversifying into products that use common capabilities. We provide evidence for common-input capabilities, using a policy that removed entry barriers in input markets t...Read more...

CentrePiece article

In brief... Women economists benefit when seminars go online

The rise in working from home and the fall in business travel during the pandemic prompted a huge increase in remote meetings. Marcus Biermann looks at who benefitted from the shift to online research seminars in economi...Read more...

CEP discussion paper

Sparse production networks

Firm-to-firm connections in domestic and international production networks play a fundamental role in economic outcomes. Firm heterogeneity and the sparse nature of firm-to-firm connections implicitly discipline network ...Read more...

CEP discussion paper

Cultural homophily and collaboration in superstar teams

One may reasonably think that cultural preferences affect collaboration in multinational teams in general, but not in superstar teams of professionals at the top of their industry. We reject this hypothesis by creating a...Read more...

Blog

CEPR & VideoVox Economics:

Why do some regions fail to recover from economic shocks? (video)

Recorded at CEPR's June Paris Symposium, Tony Venables presents his research on those regional disparities in the UK which originated in the 1970s through negative trade and technology shocks and whose long run consequen...Read more...

Journal article

Journal of the European Economic Association :

Talents and cultures: immigrant inventors and ethnic diversity in the age of mass migration

We investigate the importance of co-ethnic networks and diversity in determining immigrant inventors' settlements in the United States by following the location choices of thousands of them across counties during the Age...Read more...

Journal article

Economics Letters:

Firm-destination heterogeneity and the distribution of export intensity

We derive closed-form expressions for the distribution of export intensity when firm-destination-specific revenue shifters are distributed gamma, Frechet and Weibull in a two-country model of trade with isoelastic demand...Read more...

Blog

Vox EU:

The G7 plan for a price cap on Russian oil: Views of leading economists

To limit the funding of Russia's continued aggravation towards Ukraine and its subsequent impact on soaring energy prices, the G7 countries plan to impose a price cap on purchases of Russian oil and related products. Man...Read more...

Blog

Vox Dev:

Responsible sourcing? Theory and evidence from Costa Rica

The authors investigate whether responsible sourcing policies implemented by multinational enterprises for their suppliers have impacts on the ground and, if they do, what these mean for firms and workers in the host cou...Read more...

Journal article

Journal of International Economics:

Intra-bloc tariffs and preferential margins in trade agreements

We study how countries choose intra-bloc tariffs and preferential margins in Preferential Trade Agreements (PTAs). Our model indicates that countries should set systematically lower preferential margins when the bloc tak...Read more...

CEP discussion paper

The costs and benefits of rules of origin in modern free trade agreements

We study the welfare impact of rules of origin in free trade agreements where final-good producers source customized inputs from suppliers within the trading bloc. We employ a property-rights framework that features hold...Read more...

CEP discussion paper

Globalization and market power

Economic theory suggests that the markup is a key measure of market power and that its relationship with trade is rich and complex. Trade liberalisation can reduce markups via a decline in the residual domestic demand bu...Read more...

Blog

Vox EU:

Structural change within versus across firms: evidence from the US

One feature of the US economy over the last five decades has been the transition away from manufacturing towards services. This column takes a firm-level view of structural change from 1977-2019 to study these sectoral d...Read more...

Blog

LSE Business Review:

Britain, a services superpower sinking into stagnation

British households have low levels of financial resilience and are forecast a sluggish living standards recovery coming out of the COVID-19 pandemic. Currently, Britain is the result of an economy defined by the low grow...Read more...

Journal article

Annual Review of Economics:

Expecting Brexit

The Brexit vote precipitated the unraveling of the United Kingdom's membership in the world's deepest economic integration agreement. This article reviews evidence on the realized economic effects of Brexit. The 2016 Bre...Read more...

Journal article

The Quarterly Journal of Economics:

The effects of joining multinational supply chains: new evidence from firm-to-firm linkages

We study the effects of becoming a supplier to multinational corporations (MNCs) using tax data tracking firm-to-firm transactions in Costa Rica. Event study estimates reveal that domestic firms experience strong and per...Read more...

Journal article

Review of Economics and Statistics: Forthcoming

Trade, gravity and aggregation.

Gravity equations are an important tool in empirical international trade research. We study to what extent sector-level parameters can be recovered from aggregate gravity equations estimated via Poisson pseudo maximum li...Read more...

Journal article

Journal of Operations Management: Forthcoming

Working from home and firm resilience to the Covid-19 pandemic

The COVID-19 pandemic has disrupted firms' operations. To cope with the crisis, many firms have allowed their employees to work from home (WFH). We examine whether a firm's WFH capacity has increased its resilience durin...Read more...

CEP discussion paper

Endogenous cross-region human mobility and pandemics

We study infectious diseases using a Susceptible-Infected-Recovered-Deceased model with endogenous cross-region human mobility. Individuals weigh the risk of infection against economic opportunities when moving across re...Read more...

External publication

Stagnation nation: navigating a route to a fairer and more prosperous Britain

The UK has great strengths, but is over a decade into a period of stagnation. The toxic combination of slow growth and high inequality was posing challenges for low-to-middle income Britain's living standards even before...Read more...

Blog

Vox EU:

Using machine learning to assess the impact of deep trade agreements

Modern preferential trade agreements contain a host of provisions that go beyond tariff liberalisation. By adapting techniques from the machine learning literature, this column develops data-driven methods for selecting ...Read more...

Blog

Vox EU:

Financial crises as drivers of populism: a new channel

Financial crises have severe economic costs. This column shows that they also entail major political costs. It argues that the global financial crisis, and associated Great Recession, represents a watershed for populism ...Read more...

Journal article

Economy Policy: Forthcoming

Dennis Novy discussion of: Startups and employment

New firms, or startups, come into being all the time. Their lives are precarious at the beginning: many firms close down after a short while, and only few firms have a long-run future. Among those that survive, a small m...Read more...

Journal article

Journal of Political Economy:

The origins of firm heterogeneity: a production network approach

We explore firm size heterogeneity in production networks. In comprehensive data for Belgium, firms with more customers have higher total sales but lower sales and lower market shares per customer. Downstream factors, es...Read more...

Journal article

Indian Economic Review:

Unemployment and labour market recovery policies

Evidence shows long-term unemployment (LTU) can have life-long scarring impacts on the future employment and earning prospects of individuals and lead to an overall deterioration in the wellbeing of communities. This art...Read more...

Journal article

Strategy Science: Forthcoming

Local value chains in European MNEs

Ghemawat's work in international business strategy demonstrates that Multinational Enterprises (MNEs) create value both by overcoming and by exploiting the price differences that exist at country borders. This paper eval...Read more...

Blog

LSE Business Review:

Brexit will exacerbate long-term challenges facing the UK economy

Leaving the EU represents the largest change in the UK's relationship with the rest of the world in half a century. The impact won't be a one-off event. Structural changes will take place over the long term, as capital a...Read more...

External publication

The economics of Brexit: what have we learned?

This eBook, produced by VoxEU/CEPR and UK in a Changing Europe, brings together leading academic researchers on trade, immigration and political economy to assess what we have learned, 18 months on from its implementatio...Read more...

Chapter

The impact of Brexit on UK-EU trade

in The Economics of Brexit: What Have We Learned?

Read more...

Chapter

Post-Brexit imports, supply chains, and the effect on consumer prices

in The Economics of Brexit: What Have We Learned?

Read more...

Blog

VoxTalks Economics:

The economics of Brexit (podcast)

The latest CEPR ebook investigates the impact of Brexit so far on the economies of the UK and EU. Tim Phillips talks to three of the authors: Jonathan Portes, Thomas Sampson and Sarah Hall....Read more...

Blog

Vox EU:

The economics of Brexit: a new eBook

What has Brexit meant for the UK economy? Six years on from the referendum, and over a year since the implementation of the UK-EU Trade and Cooperation Agreement, this column introduces a new eBook which brings together ...Read more...

External publication

The big Brexit

Leaving the EU represents the largest change in the UK's relationship with the rest of the world in nearly half a century. It is a profound change in economic governance, that will reorient production and trade away from...Read more...

CentrePiece article

How Brexit has raised UK food prices

Some products imported to the UK from the European Union have been more affected by the post-Brexit trading rules than others. Jan David Bakker, Nikhil Datta, Josh De Lyon, Luisa Opitz and Dilan Yang find that leaving th...Read more...

CentrePiece article

Trade disruptions in the wake of Brexit

A dramatic fall in the value of UK imports from the European Union relative to the rest of the world occurred when the post-Brexit Trade and Cooperation Agreement came into effect. What's more, according to research by R...Read more...

Blog

Centre for European Reform:

Is Brexit to blame for Britain's economic woes? (podcast)

Thomas Sampson, of the London School of Economics, and John Springford, the CER's deputy director, discuss and compare their findings on how Brexit has affected UK goods trade and inflation, and John shares his latest re...Read more...

Chapter

On the employment consequences of automation and offshoring

in Robots and AI - a new economic era

We argue that automation may make workers and firms more selective in matching their specialized skills and tasks. We call this phenomenon "core-biased technological change", and wonder whether something similar could be...Read more...

CEP discussion paper

Foreign ownership and robot adoption

This paper shows that multinational enterprises (MNEs) spur the adoption of industrial robots. First, I document a positive and robust correlation between multinational production and robot adoption using a new cross-cou...Read more...

Journal article

Journal of the European Economic Association:

The twin peaks of the export intensity distribution

Received wisdom suggests that most exporters sell most of their output domestically. We show, however, that the distribution of export intensity varies substantially across countries and is often bimodal, displaying “twi...Read more...

CEP discussion paper

Structural change within versus across firms: evidence from the United States

We document the role of intangible capital in manufacturing firms' substantial contribution to non-manufacturing employment growth from 1977-2019. Exploiting data on firms' "auxiliary" establishments, we develop a novel ...Read more...

Blog

LSE Covid-19:

What we learnt about the Covid economy

In spring 2020, many countries imposed radical, urgent actions including lockdowns to protect their citizens' health - but there was also a need to protect people from the worst of the ensuing economic storm. Academics a...Read more...

Blog

LSE Business Review:

Imposing high tariffs on imported Russian gas: would it be effective?

As Russia's invasion of Ukraine continues and many call for a strengthening of sanctions, an alternative to a full energy embargo has been discussed in the form of European Union tariffs on imports of Russian gas. The In...Read more...

Blog

LSE Research:

State effectiveness and the climate crisis

Combatting the climate crisis is not just an issue of finding money for the right kinds of investment but also ensuring that it is spent effectively, says economist Tim Besley....Read more...

Journal article

World Economy:

The trade impact of the Covid-19 pandemic

Using a gravity-like approach, we study how COVID-19 deaths and lockdown policies affected countries' imports from China during 2020. We find that a country's own COVID-19 deaths and lockdowns significantly reduced its i...Read more...

Journal article

Journal of Political Economy:

Trade, structural transformation, and development: evidence from Argentina 1869-1914

We provide new theory and evidence on the role of external and internal integration in structural transformation and economic development, using Argentina's integration into the world economy in the late nineteenth centu...Read more...

Journal article

The Economic Journal:

Gravity and heterogeneous trade cost elasticities

How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this ...Read more...

External publication

Enduring strengths

A decade of stagnant living standards, weak productivity and low investment combined with a coming decade of major change - driven by Covid-19, Brexit and Net Zero - mean that it is crucial for the UK to renew its econom...Read more...

External publication

Post-Brexit imports, supply chains, and the effect on consumer prices

This report documents the decrease in imports and shows how the patterns of imports vary across sectors following the UK's departure from the Single Market and Customs Union at the end of 2020. The authors, Jan David Bak...Read more...

Blog

LSE Business Review:

Brexit: the major trade disruption came after the UK-EU agreement took effect in 2021

The impact of Brexit on UK trade is a highly contested topic. Rebecca Freeman, Kalina Manova, Thomas Prayer, and Thomas Sampson summarise the findings of new research on how Brexit has affected the UK's goods trade with ...Read more...

CEP discussion paper

UK trade in the wake of Brexit

This paper studies the impact of Brexit on the UK's trade with the EU relative to its trade with the rest of the world. We find no evidence that uncertainty and anticipation effects led to a significant decline in relati...Read more...

Blog

VoxEU:

Import liberalisation as export destruction: evidence from the United States

Holger Breinlich, Elsa Leromain, Dennis Novy and Thomas Sampson look at US-China trade relations to examine how import liberalisation brings down import costs and increases competition, but can also lead to lower export ...Read more...

Journal article

Annual Review of Economics :

Risks and global supply chains: what we know and what we need to know

Recent supply disruptions catapulted the issue of risk in global supply chains (GSCs) to the top of policy agendas and created the impression that shortages would have been less severe if GSCs had been either shorter and...Read more...

Blog

VoxEU:

Global supply chain risk and resilience

Supply disruptions caused by systemic shocks such as Brexit, Covid, and Russia-Ukraine tensions have catapulted the issue of risk in global supply chains to the top of policy agendas. In some sectors, however, there is a...Read more...

CEP discussion paper

Managing export complexity: the role of service outsourcing

Exporting involves sunk and fixed costs in the form of service inputs, and whether such services are 'made' in-house or 'bought' from external agencies is a key organizational margin: it is not a core-competence of manuf...Read more...

Blog

VoxTalks Economics:

Motivated science and green innovation (podcast)

Scientists create innovation. Is this because they are paid to do it, or because they care about the outcome? Tim Besley tells Tim Phillips how motivated science drives down the cost of innovation and may accelerate the ...Read more...

Chapter

The backlash of globalization

in Handbook of International Economics

We review the literature on the globalization backlash, seen as the political shift of voters and parties in a protectionist and isolationist direction, with substantive implications on governments' leaning and enacted p...Read more...

Blog

Africa at LSE:

How multinationals exploited a health crisis to accelerate deforestation in Liberia

The way multinational enterprises conduct themselves during periods of crisis, such as an epidemic, is of key importance in light of the Covid-19 pandemic. A health crisis may alter the short-run incentives of some multi...Read more...

Journal article

Management Science: Forthcoming

Vertical integration and foreclosure: evidence from production network data

This paper studies the prevalence of potential anticompetitive effects of vertical mergers using a novel data set on U.S. and international buyer-seller relationships and across a large range of industries. We find that ...Read more...

Blog

VoxEU:

Economic consequences of Russia's invasion of Ukraine: views of leading economists

Romesh Vaitilingam reports on the views of leading economists concerning the likely economic consequences of Russia's invasion of Ukraine and the responses by the international community....Read more...

Journal article

Journal of International Economics:

Technology, market structure and the gains from trade

We study the gains from trade in a model with oligopolistic competition, heterogeneous firms and innovation. Our key finding is that a trade-induced increase in market concentration can be an important source of the gain...Read more...

CEP discussion paper

Epidemics and rapacity of multinational companies

Do multinationals engage in rent-seeking behaviour in developing countries during crises? With a difference in discontinuity approach, we use the Ebola epidemic in Liberia as a natural experiment on the sharp increase in...Read more...

Blog

VoxEU:

Inflation, market power, and price controls: views of leading economists

With sharply rising US inflation prompting debate about the potential role of powerful firms in driving up prices and whether antitrust interventions and/or price controls may be an effective policy response, the IGM For...Read more...

CentrePiece article

India: the economic impact of Covid-19

India has been hit hard by the pandemic, particularly during the second wave of the virus in the spring of 2021. Swati Dhingra and Maitreesh Ghatak reveal how the largest drop in GDP in the country's history may still un...Read more...

Blog

Economics Observatory:

How might Scottish independence affect the costs of international trade?

If Scotland were to become an independent country, there would be a new international border with the rest of the UK. Thomas Sampson considers how additional costs that are inevitably created by borders would affect trad...Read more...

CEP discussion paper

Omnia Juncta in Uno*: foreign powers and trademark protection in Shanghai's concession era

We investigate how firms and markets adapt to trademark protection, an extensively used but under-examined form of IP protection to address asymmetric information, by exploring a historical precedent: China's trademark l...Read more...

Journal article

Journal of the European Economic Association:

Vehicle currency pricing and exchange rate pass-through

Using detailed firm-level transactions data for UK imports, we find that invoicing in a vehicle currency is pervasive, with more than half of the transactions in our sample invoiced in neither sterling nor the exporter’s...Read more...

Journal article

International Economic Review:

The Brexit vote, inflation and UK living standards

This article studies how voting for Brexit affected living standards in the United Kingdom. Using heterogeneity in exposure to import costs across product groups, we analyze how the depreciation of sterling caused by the...Read more...

CEP discussion paper

Technology transfer in global value chains

Firm-to-firm relationships in global value chains create opportunities for North-South technology diffusion. This paper studies technology transfer in value chains when contracts are incomplete and in-put production tech...Read more...

Journal article

Scientific Reports:

Impact of vaccination on the Covid-19 pandemic in US states

Governments worldwide are implementing mass vaccination programs in an effort to end the novel coronavirus (COVID-19) pandemic. Here, we evaluated the effectiveness of the COVID-19 vaccination program in its early stage ...Read more...

Blog

Economics Observatory:

How might an independent Scotland build fiscal capacity?

Tim Besley and Chris Dann explain how developing a sense of common purpose is critical for nation-building - and would be a key issue for an independent Scotland....Read more...

Blog

UK in a Changing Europe:

Expecting Brexit

Swati Dhingra and Thomas Sampson examine how Brexit impacted UK trade and GDP before being implemented in 2021. Finding evidence that the UK's economy was around two to three per cent smaller at the end of 2019 than it w...Read more...

CEP discussion paper

Expecting Brexit

The Brexit vote precipitated the unravelling of the UK's membership of the world's deepest economic integration agreement. This paper reviews evidence on the realized economic effects of Brexit. The 2016 Brexit referendu...Read more...

Blog

VoxEU:

The value of online gig economy platforms

The gig economy and online labour platforms often trade off increased flexibility for lower employment security. Christopher Stanton and Catherine Thomas show how traditional labour market regulations, such as minimum wa...Read more...

Blog

VoxEU:

Quantifying the full impact of country-specific policies on trade flows

Rebecca Freeman, Mario Larch, Angelos Theodorakopoulos and Yoto Yotov propose a solution to issues measuring country-specific impact using structural gravity models - a popular way to analyse the impact of trade policie...Read more...

Journal article

Economic Policy:

The role of schools in transmission of the SARS-CoV-2 virus: quasi-experimental evidence from Germany

his paper considers the role of school closures in the spread of the SARS-CoV-2 virus. To isolate the impact of the closures from other containment measures and identify a causal effect, we exploit variation in the start...Read more...

Journal article

Journal of Urban Economics:

JUE insight: How much does Covid-19 increase with mobility? Evidence from New York and four other US cities

How effective are restrictions on mobility in limiting COVID-19 spread? Using zip code data across five U.S. cities, we estimate that total cases per capita decrease by 19% for every ten percentage point fall in mobility...Read more...

Blog

LSE Business Review:

Labour shortages have become widespread - this is how firms are responding

The majority of firms saw business grow between April and October 2021, after the shocks of Covid-19 and Brexit in 2020. But a new analysis by Swati Dhingra and Josh De Lyon into firms' experiences and expectations for t...Read more...

CEP Covid-19 analysis

Real-time updates on the UK economy: trends, expectations and implications from business survey data

Covid-19 has caused substantial shocks to the UK economy, highlighting a need for real-time data to analyse trends. We use monthly business survey data from the Confederation of British Industry (CBI) to document recent ...Read more...

Blog

LSE Covid-19:

Which speakers will benefit from the rise in remote seminar presentations?

The pandemic has led to a surge in working from home and a fall in business travel. More meetings have taken place remotely. Marcus Biermann (Universite Catholique de Louvain and Centre for Economic Performance, LSE) loo...Read more...

Journal article

World Trade Review:

The Pursuit of Non-Trade Policy Objectives in EU Trade Policy

The European Union (EU) often conditions preferential access to its market on compliance with Non-Trade Policy Objectives (NTPOs), including human rights and labor and environmental standards. In this paper, we first sys...Read more...

Blog

LSE Business Review:

The risks of prolonged higher inflation

With consumer prices rising at the fastest pace for three decades, what are the risks of prolonged higher inflation as a result of the current stance of fiscal and monetary policy, and what is the likely impact of an eas...Read more...

CEP discussion paper

Labor unions and the electoral consequences of trade liberalization

We show that the Brazilian trade liberalization in the early 1990s led to a permanent relative decline in the vote share of left-wing presidential candidates in the regions more affected by the tariff cuts. This happened...Read more...

Blog

VoxEU:

Bureaucracy and development

How does bureaucracy matter for development? Over the last years, an enormous interest in this question has created a large body of research, mostly focused around evidence from field experiments and micro-level administ...Read more...

Journal article

Journal of International Economics:

Import competition, heterogeneous preferences of managers, and productivity

When managers have objectives beyond maximizing monetary profits, inefficiencies may arise. An increase in competition may then force managers to improve the productivity of the firm in order to ensure survival. While th...Read more...

Journal article

International Economic Review:

Estimating border effects: the impact of spatial aggregation

Trade data are typically aggregated across space. In this article, we investigate the sensitivity of gravity estimation to spatial aggregation. We build a model in which micro regions are aggregated into macro regions. W...Read more...

Blog

VoxEU:

The globalisation backlash

As populist parties have surged across advanced democracies so, it seems, has a 'globalisation backlash'. This column provides descriptive evidence on the backlash, discusses its theoretical underpinnings within standard...Read more...

CEP discussion paper

Minimum wages and the China syndrome: causal evidence from US local labor markets

Exposure to Chinese import competition led to significant manufacturing job losses in the United States. Local labor markets, however, differ significantly in how they fared with respect to manufacturing employment. An i...Read more...

CEP discussion paper

Business groups as knowledge-based hierarchies of firms

Hierarchical differentiation is a cornerstone of the organizing process. In this paper, we do three things. First, exploiting a newly assembled dataset, we provide the first worldwide overview of the patterns of hierarch...Read more...

External publication

Trading places

This briefing note is the launch paper for the Brexit research theme of The Economy 2030 Inquiry, a joint project between the Resolution Foundation and the London School of Economics, funded by the Nuffield Foundation. I...Read more...

Journal article

World Trade Review:

Leveling the Playing Field: Industrial Policy and Export-Contingent Subsidies in India-Export Related Measures

In India-Export Related Measures, the United States challenged a range of Indian measures as prohibited export-contingent subsidies, and a WTO panel largely agreed. This article examines the factors at play in the United...Read more...

Blog

LSE Covid-19:

A sense of mutual obligation means that even the rich should see the point of paying their taxes

Creating a strong sense of reciprocity between the state and its citizens makes it more likely they will pay taxes willingly, says Timothy Besley (LSE). As we emerge from a pandemic that emphasised the importance of mutu...Read more...

Journal article

The Review of Economics and Statistics:

Of Mice and Merchants: Connectedness and the Location of Economic Activity in the Iron Age

We study the causal relationship between geographic connectedness and development using one of the earliest massive trade expansions: the first systematic crossing of open seas in the Mediterranean during the time of the...Read more...

CEP discussion paper

Trade, gravity and aggregation

Gravity regressions are a common tool in the empirical international trade literature and serve an important function for many policy purposes. We study to what extent micro-level parameters can be recovered from gravity...Read more...

Blog

VoxEU:

The impact of trade costs can be weak or strong - depending on how much countries trade

Many countries try to bring down trade costs by striking free trade agreements, forming currency unions or joining the WTO. But when trade costs fall, how much does trade increase? Natalie Chen and Dennis Novy explain th...Read more...

CEP discussion paper

The backlash of globalization

We review the literature on the globalization backlash, seen as the political shift of voters and parties in a protectionist and isolationist direction, with substantive implications on governments' leaning and enacted p...Read more...

CEP discussion paper

Intra-bloc tariffs and preferential margins in trade agreements

We study, theoretically and empirically, how countries choose intra-bloc tariffs and preferential margins when they form Preferential Trade Agreements (PTAs). Our model indicates that countries should set systematically ...Read more...

CEP discussion paper

Opposing firm-level responses to the China shock: horizontal competition versus vertical relationships

We decompose the "China shock" into two components that induce different adjustments for firms exposed to Chinese exports: a horizontal shock affecting firms selling goods that compete with similar imported Chinese goods...Read more...

Journal article

German Economic Review:

Trade and the size distribution of firms: Evidence from the German Empire

What effect did trade have on the size distribution of firms during the first wave of globalization? Three historical datasets from the German Empire between 1875 and 1907 were collected and harmonized to answer this que...Read more...

Blog

VoxEU:

Consumer city: evidence from smartphone data

Traditional theories emphasise production decisions and the commuting costs of workers in shaping the spatial concentration of economic activity in cities. However, much of urban travel is related to consumption of non-t...Read more...

CEP discussion paper

Dynamic spatial general equilibrium

We develop a dynamic spatial general equilibrium model with forward-looking investment and migration decisions. We characterize analytically the transition path of the spatial distribution of economic activity in respons...Read more...

CEP discussion paper

Firm export responses to tariff hikes

We study how firms react to unexpected increases in import tariffs. We identify our results from a sudden removal of American preferential tariffs applied on Argentine imports under the Generalized System of Preferences,...Read more...

Blog

LSE Covid-19:

A 'lost generation' of young Indian workers urgently needs job opportunities

A year after the pandemic hit India, urban individuals are facing work without pay and long spells of unemployment. Swati Dhingra and Fjolla Kondirolli say a national-level commitment to provide job opportunities is need...Read more...

Blog

Vox EU:

Service offshoring and export experience

Trade in services is important but difficult to measure. This column introduces a new dataset that helps understand the contribution of services to global value chains and their role in the process of exporting goods. Fi...Read more...

Blog

Vox EU:

Trade and innovation

International trade is a key determinant of firm profitability and survival, so it is natural to expect it to influence both incentives to innovate and the rate of creative destruction. This column highlights four key me...Read more...

CEP Insights

Brexit

The UK's vote to leave the European Union in 2016 triggered economic reactions that will define the country's future for years to come. Why does leaving the EU have such a profound impact - and how do economists estimate...Read more...

Blog

VoxEU:

Corporate taxes: views of leading economists on profit-shifting, tax base and a global minimum rate

Romesh Vaitilingam reports on economists' responses to the IGM Forum poll on issues surrounding the G7 global deal on corporate taxes....Read more...

CEP Covid-19 analysis

City of dreams no more, a year on: worklessness and active labour market policies in urban India

This report provides key findings from a new field survey to assess the long-term impact of Covid-19 on urban workers in low-income areas of India. The survey took place during February and March 2021, just before the s...Read more...

Journal article

European Economic Review:

Financial system architecture and the patterns of international trade

Countries differ in the extent to which their financial systems rely on banks or on financial markets. We offer a model featuring a complex relationship between countries’ financial system architecture and their comparat...Read more...

Journal article

Economics Letters:

Gravity model estimates of the spatial determinants of trade, migration, and trade-and-migration policies

Using a gravity model, we explore the effects of distance and borders on trade, migration, and trade-and-migration policies and document three key differences between trade and migration patterns in otherwise equivalent ...Read more...

CEP discussion paper

Import liberalization as export destruction? Evidence from the United States

How does import protection affect export performance? In trade models with scale economies, import liberalization can reduce an industry's exports by cutting domestic production. We find this export destruction mechanism...Read more...

Blog

Economics Observatory:

How has Covid-19 affected India's economy?

India has been hit hard by the pandemic, particularly during the second wave of the virus in the spring of 2021. The sharp drop in GDP is the largest in the country's history, Swati Dhingra and Maitreesh Ghatak point out...Read more...

Journal article

Environmental Research Letters:

Saving the world from your couch: The heterogeneous medium-run benefits of COVID-19 lockdowns on air pollution

In Spring 2020, COVID-19 led to an unprecedented halt in public and economic life across the globe. In an otherwise tragic time, this provides a unique natural experiment to investigate the environmental impact of such a...Read more...

Blog

VoxEU:

Pollution reductions during lockdowns can teach us how to build back better a sustainable economy

Though Covid-19 lockdowns prompted a 35-45% reduction in pollution, effects across the world were unequal and policies aimed at combatting climate change must account for such diverse outcomes. This research highlights h...Read more...

Blog

VoxEU:

State capacity and development clusters

The determinants of economic development have been debated for many years. However, some of these determinants have been hard to measure internationally. Tim Besley, Chris Dann and Torsten Persson review evidence from 25...Read more...

CEP discussion paper

Trade and innovation

Two central insights from the Schumpeterian approach to innovation and growth are that the pace of innovation is endogenously determined by the expectation of future profits and that growth is inherently a process of cre...Read more...

CEP discussion paper

Machine learning in international trade research - evaluating the impact of trade agreements

Modern trade agreements contain a large number of provisions besides tariff reductions, in areas as diverse as services trade, competition policy, trade-related investment measures, or public procurement. Existing resear...Read more...

Blog

VoxEU:

The 2020 trade impact of the Covid-19 pandemic

Worldwide merchandise trade flows decreased significantly in 2020, as Covid-19 disrupted economic activity across the globe. This column analyses how various pandemic-related factors shaped international trade flows. Spe...Read more...

Journal article

The Review of Economic Studies:

Quasi-Experimental Shift-Share Research Designs

Many studies use shift-share (or “Bartik”) instruments, which average a set of shocks with exposure share weights. We provide a new econometric framework for shift-share instrumental variable (SSIV) regressions in which ...Read more...

CEP discussion paper

Service offshoring and export experience

Service inputs are a key component of the costs of exporting, and contribute to explain the process of internationalization of firms. A new dataset on the participation of French firms in global value chains reveals that...Read more...

Journal article

American Economic Review: Insights:

Endogenous Education and Long-Run Factor Shares

We study the determinants of factor shares in a neoclassical environment with capital-skill complementarity and endogenous education. In this environment estimates of the elasticity of substitution between capital and la...Read more...

Blog

VoxEU:

The differing effects of globalisation on trade versus migration

Better communications, enhanced transport links, integration agreements between governments, and other factors have all helped increase global economic interconnectedness over the past few decades. This column compares a...Read more...

CEP discussion paper

Sequential exporting across countries and products

How do exporters expand their product scope and geographical presence? We argue that new exporters are uncertain about their profitability in different countries and products, but learn it as they start to export. As a c...Read more...

Journal article

Journal of the European Economic Association:

Organizing Global Supply Chains: Input-Output Linkages and Vertical Integration

We study how the technological importance of inputs—measured by cost shares—is related to the decision to “make” or “buy” that input. Using detailed French international trade data and an instrumental variable approach b...Read more...

CEP discussion paper

The trade impact of the Covid-19 pandemic

Using a gravity-like approach, we study how Covid-19 deaths and lockdown policies affected countries' imports from China during 2020. We find that a country's own Covid-19 deaths and lockdowns significantly reduced its i...Read more...

CEP Covid-19 analysis

The impacts of Covid-19 and Brexit on the UK economy: early evidence in 2021

We use real-time firm survey data to describe trends in the UK economy in early 2021. As of April 2021, business activity and expectations for the future have improved. However, real wage growth is down and firms are rep...Read more...

CEP discussion paper

Remote talks: changes to economics seminars during Covid-19

This paper analyzes the consequences of the change in the presentation mode of economics seminars triggered by the COVID-19 pandemic. The composition of seminar speakers changed significantly. The leading economists gain...Read more...

Journal article

European Economic Review:

Worker and firm responses to trade shocks: The UK-China case

We exploit the recent surge in Chinese export growth to study the effects of a trade shock on workers and firms in a foreign market, the UK, in the period 2000–2007. We find that individuals initially employed in sectors...Read more...

Journal article

Fiscal Studies:

Global banking: Endogenous competition and risk taking

When banks expand abroad, their riskiness decreases if foreign expansion happens in destination countries that are more competitive than their origin countries. We reach this conclusion in three steps. First, we develop ...Read more...

CEP discussion paper

Globalization, trade imbalances and labor market adjustment

We study the role of global trade imbalances in shaping the adjustment dynamics in response to trade shocks. We build and estimate a general equilibrium, multi-country, multi-sector model of trade with two key ingredient...Read more...

Blog

UK in a Changing Europe:

Trade after Brexit: the initial numbers

Thomas Sampson argues that, although the full effects of Brexit won't be known for many years, regulatory divergence is likely to further reduce trade, as firms face the challenge of satisfying different regulations in t...Read more...

CEP discussion paper

Gravity with granularity

We evaluate the consequences of oligopolistic behavior for the estimation of gravity equations for trade flows. With oligopolistic competition, firm-level gravity equations based on a standard CES demand framework need t...Read more...

Journal article

Journal of World Trade:

EU Trade Agreements: To Mix or not to Mix, That is the Question

The European Union (EU) can only act internationally on competences that have been transferred to it by its Member States. Trade agreements negotiated by the EU that include provisions outside its exclusive competences s...Read more...

Journal article

Review of Economics and Statistics:

The tyranny of the single-minded: Guns, environment, and abortion

We study how electoral incentives affect policy choices on secondary issues, which only minorities of voters care intensely about. We develop a model in which office and policy-motivated politicians vote in favor of or a...Read more...

Blog

Economics Observatory:

What do new UK trade data reveal about the impact of lockdown and Brexit?

Thomas Sampson writes that lockdown probably contributed to the fall in UK exports and imports reported in the January 2021 trade data. But the bigger declines in trade with the European Union than with other countries a...Read more...

Blog

LSE Business Review:

To recover from Covid and Brexit, the UK must upskill its workforce

The twin forces of Covid-19 and Brexit are altering the skills that people require to succeed in work. Skill levels remain low in the UK, compared to other advanced nations. About 30% of adults have low skill levels in l...Read more...

Blog

LSE US Centre:

Trade protection along supply chains: how antidumping measures against China hurt downstream industries

Production processes are often no longer confined to a single country; supply chains can be fragmented across great distances. By contrast, tariffs are often used by individual countries to protect certain industries. In...Read more...

Blog

VoxEU:

Trade protection along supply chains: the negative effects of tariffs on downstream sectors

In a world in which production processes are fragmented across countries, the effects of tariffs propagate along supply chains, with firms in downstream industries suffering from protection upstream. This column studies...Read more...

Blog

VoxEU:

Disunited Kingdom? Brexit, trade and Scottish independence

The Scottish National Party is calling for a second referendum on independence from the UK. This column examines the likely effect of changes in trade costs resulting from independence and Brexit on the Scottish economy,...Read more...

CEP Brexit analysis

Disunited Kingdom? Brexit, trade and Scottish independence

Scotland is a small, open economy that mostly trades with the rest of the UK. There is around six times more trade between Scotland and the rest of the UK than predicted by a standard gravity trade model. Scottish indepe...Read more...

Journal article

Review of International Economics:

The role of management practices in acquisitions and the FDI location decision

This paper investigates how management practices as intangible transfers are associated with the performance of multinational business groups. Differences in the management level across source countries are predictive fo...Read more...

Blog

VoxEU:

The trade and welfare benefits of deep trade agreements

Deep trade agreements are widespread and have taken the world beyond tariff liberalisation in goods trade. As the importance of global supply chains and the services sector increased across the world, shallow tariff redu...Read more...

External publication

Brexit and beyond:

Brexit and UK trade: what next?

Brexit is expected to make the UK poorer in the long run compared to remaining an EU member. Although the analysis used to reach this conclusion is complex, most forecasts depend upon the same economic logic. Brexit will...Read more...

CEP discussion paper

The impact of non-tariff barriers on trade and welfare

Deep trade agreements are widespread and have taken the world beyond tariff liberalization in goods trade. As the importance of global supply chains and the services sector increased across the world, shallow tariff redu...Read more...

CEP discussion paper

Worker and firm responses to trade shocks: the UK-China case

We exploit the recent surge in Chinese export growth to study the effects of a trade shock on workers and firms in a foreign market, the UK, in the period 2000-2007. We find that individuals initially employed in sectors...Read more...

CEP discussion paper

Trade protection along supply chains

During the last decades, the United States has applied increasingly high trade protection against China. We combine detailed information on US antidumping (AD) duties— the most widely used trade barrier — with US input-o...Read more...

Journal article

Journal of International Economics:

Preferential trade agreements and global sourcing

We develop a new framework to study the welfare consequences of preferential trade agreements (PTAs) under global sourcing, incomplete contracts and endogenous matching. We uncover several new channels through which PTAs...Read more...

Journal article

World Trade Evolution: Growth, Productivity and Employment:

Firm-to-firm connections in Colombian imports

Read more...

CEP discussion paper

All aboard: the effects of port development

Transport infrastructure facilitates the fast flow of goods and people across space, but it also occupies extensive amounts of land. This may drive up land rents and crowd out other economic activity. Using the introduct...Read more...

Blog

LSE Brexit:

Covid-19 has disrupted businesses' ability to prepare for Brexit, but the lack of clarity on the UK-EU relationship is worse

Almost half of businesses report that COVID-19 has negatively affected their ability to prepare for Brexit. More than half listed uncertainty on the future arrangements between the UK and EU as a limitation on their abil...Read more...

Blog

LSE History:

The Centre for Economic Performance marks 30 years of world-class research

LSE's Centre for Economic Performance, one of Europe's leading economic research centres, is marking its 30th anniversary in 2020/21. A new video, released to mark the Centre's 30th anniversary, highlights the breadth of...Read more...

CEP discussion paper

Pandemics, global supply chains and local labor demand: evidence from 100 million posted jobs in China

This paper studies how the COVID-19 pandemic has affected labor demand, using over 100 million posted jobs on one of the largest online platforms in China. Our data reveal that the number of newly posted jobs within the ...Read more...

CentrePiece article

Globalisation and pandemics: surprising interactions

Pandemics are only possible because of international travel. But perhaps surprisingly, in the absence of social distancing, a more globalised country will not necessarily suffer a worse outbreak. Pol Antràs, Stephen Redd...Read more...

CentrePiece article

In brief... City of dreams no more: Covid-19 in urban India

The pandemic has decimated livelihoods in urban India and created a new underclass of workers who are being pushed into poverty. A CEP report by Shania Bhalotia, Swati Dhingra and Fjolla Kondirolli calls for a national w...Read more...

Journal article

Quarterly Journal of Economics:

Misallocation in the market for inputs: Enforcement and the organization of production

The strength of contract enforcement determines how firms source inputs and organize production. Using microdata on Indian manufacturing plants, we show that production and sourcing decisions appear systematically distor...Read more...

Journal article

Quarterly Journal of Economics:

Quantifying the gap between equilibrium and optimum under monopolistic competition

Equilibria and optima generally differ in imperfectly competitive markets. Although this is well understood theoretically, it is unclear how large the welfare distortions are in the aggregate economy. Do they matter quan...Read more...

Journal article

Journal of Political Economy:

Productivity and organization in portuguese firms

Using employer-employee matched and firm production quantity and input data for Portuguese firms, we study the endogenous response of productivity to firm reorganizations as measured by changes in the number of managemen...Read more...

Journal article

The Journal of Law, Economics, and Organization:

In-house and arms length: productivity heterogeneity and variation in organizational form

This paper analyzes firm boundaries in the US hotel industry. Hotel properties of a given brand are often managed either by a chain employee or by a franchisee. We document that brand properties with the lowest and the h...Read more...

Journal article

Review of Economics and Statistics:

Trade and uncertainty

We offer a new explanation as to why international trade is so volatile in response to economic shocks. Our approach combines the idea of uncertainty shocks with international trade. Firms order inputs from home and fore...Read more...

Blog

LSE Covid-19 blog:

How do globalisation and pandemics interact? Surprising insights from a new model

Pandemics are only possible because of international travel. But – perhaps surprisingly – in the absence of social distancing a more globalised country will not necessarily suffer a worse outbreak. Pol Antràs (Harvard), ...Read more...

CEP discussion paper

Trade and geography

This paper reviews recent research on geography and trade. One of the key empirical findings over the last decade has been the role of geography in shaping the distributional consequences of trade. One of the major theor...Read more...

Blog

LSE Covid-19:

A no-deal Brexit may still be more costly than Covid-19

Conventional wisdom holds that the impact of COVID-19 on the UK economy dwarfs the potential consequences of Brexit. This has led some Brexiteers to argue there is nothing to fear about a no-deal Brexit. Yet data show th...Read more...

CEP discussion paper

Globalization and pandemics

We develop a model of human interaction to analyze the relationship between globalization and pandemics. Our framework provides joint microfoundations for the gravity equation for international trade and the Susceptible-...Read more...

Blog

LSE Business Review:

Productivity growth in one country affects the relative income and welfare of its trade partners

One of the most dramatic changes in the world economy over the past half century has been the emergence of China as a major force in world trade. A central question in international economics is the implications of such ...Read more...

Blog

LSE Covid-19:

City of dreams no more: Covid-19 in urban India

COVID-19 has decimated livelihoods in urban India and created a new underclass of workers who are being pushed into poverty. Shania Bhalotia, Swati Dhingra and Fjolla Kondirolli (LSE) say a national work guarantee is nee...Read more...

CEP discussion paper

Growing like China: firm performance and global production line position

Global value chains have fundamentally transformed international trade and development in recent decades. We use matched firm-level customs and manufacturing survey data, together with Input-Output tables for China, to e...Read more...

Journal article

Revista do Serviço Público:

Lockdown 101: Managing economic lockdowns in an epidemic

Countries worldwide have implemented lockdown measures to contain the covid-19 pandemic. After more than three months of restrictions to economic activities in many countries, the question has turned to the best ways to ...Read more...

Journal article

Journal of Urban Economics:

Land tenure and land-use in a developing city: A quantitative spatial model applied to Kampala, Uganda

Land rights and tenure systems are an important factor behind poor housing and inefficient land-use in developing country cities. In Kampala, Uganda, four systems of land tenure coexist, allowing a detailed study of the ...Read more...

Journal article

Journal of International Economics:

Trade liberalization, input intermediaries and firm productivity: Evidence from China

We investigate theoretically and empirically the role of wholesalers in mediating the productivity effects of trade liberalization. Intermediaries provide indirect access to foreign produced inputs. The productivity effe...Read more...

Journal article

European Economic Review:

All these worlds are yours, except india: The effectiveness of cash subsidies to export in nepal

This paper studies the impact of a ‘textbook’ ad-valorem export subsidy on firm-level export performance. The Cash Incentive Scheme for Exports (CISE) program offered by the government of Nepal offers a cash subsidy to f...Read more...

Journal article

Early Childhood Research Quarterly:

The when and what of measuring ECE quality: Analysis of variation in the Classroom Assessment Scoring System (CLASS) across the ECE day

Observational assessment has become an integral component of the quality improvement agenda in Early Care and Education (ECE) and has been significant in directing attention to quality of interactions within the ECE sett...Read more...

External publication

Vulnerabilities of supply chains post-Brexit

Arla Foods UK has commissioned LSE Consulting's Trade Policy Hub to deliver a study on the vulnerabilities of supply chains in the United Kingdom and the European Union after Brexit. This study provides a follow up to th...Read more...

Journal article

CESifo Forum:

The Gig Economy Beyond Local Services and Transportation

The gig economy characterizes a wide variety of short-term freelance work, typically intermediated via online platforms that facilitate matching between buyers and providers. The widespread growth of ride-sharing platfor...Read more...

Blog

LSE Consulting:

Vulnerabilities of supply chains post-Brexit

Nikhil Datta, Jan Bakker, Elitsa Garnizova & Josh De-Lyon show how consumers in the UK are highly dependent on products originating in the EU, where 40 percent of all consumption of food products in the UK comes from EU ...Read more...

Journal article

Review of Industrial Organization:

Critically important: the heterogeneous effect of diplomatic tensions on trade

With global value chains interlocking today’s economies, what is the impact of diplomatic tensions on international trade? We exploit variation in monthly data on imports, a measure of imported input use in the domesti...Read more...

CEP Covid-19 analysis

City of dreams no more: the impact of Covid-19 on urban workers in India

Many developing economies have large informal sectors and growing urban youth populations, who lack basic social protections at work. The CEP surveyed 8,500 workers aged 18 to 40 in urban India to understand their experi...Read more...

Journal article

The Review of Economics and Statistics:

Product mix and firm productivity responses to trade competition

We document how demand shocks in export markets lead French multi-product exporters to re-allocate the mix of products sold in those destinations. In response to positive demand shocks, French firms skew their export sal...Read more...

CEP Covid-19 analysis

Covid-19 and Brexit: Real-time updates on business performance in the United Kingdom

Nearly four months have passed since the UK went into lockdown to restrict the spread of Covid-19. The health effects have been severe, and an inevitable consequence of the lockdown was a huge 20 per cent decline in GDP ...Read more...

CEP discussion paper

International friends and enemies

We develop sufficient statistics of countries’ bilateral income and welfare exposure to foreign productivity shocks that are exact for small shocks in the class of models with a constant trade elasticity. For large shock...Read more...

CentrePiece article

Covid-19 and the future of international supply chains

Frank Pisch analyses 'just-in-time' production networks to assess the prospects for world trade after Covid-19...Read more...

CentrePiece article

Covid-19 and Brexit: contrasting sectoral effects

Josh De Lyon and Swati Dhingra show that the UK sectors suffering less during lockdown are those most exposed to damage from leaving the European Union....Read more...

CEP discussion paper

Dream jobs

Understanding why certain jobs are ‘better’ than others and what implications they have for a worker’s career is clearly an important but still relatively unexplored question. We provide both a theoretical framework and ...Read more...

CEP discussion paper

Gravity in international finance: evidence from fees on equity transactions

We shed light on the impact of institutional quality and information barriers on trade in financial services using a novel panel data set on revenue earned on domestic and cross-border equity securities underwriting tran...Read more...

Blog

LSE Business Review:

Dream jobs: managers in internationally active firms have higher lifetime wages

People at managerial level in international companies accumulate strong experience that is useful also in other firms, write Giordano Mion, Luca David Opromolla, and Gianmarco Ottaviano....Read more...

Journal article

Economics and Politics:

The political economy of trade and migration: Evidence from the U.S. Congress

We compare the drivers of U.S. congressmen's votes on trade and migration reforms since the 1970s. Standard trade theory suggests that trade reforms that lower barriers to goods from less skilled-labor abundant countries...Read more...

Journal article

World Economy:

The not-so-generalised effects of the Generalized System of Preferences

We use an empirical gravity equation to study how non-reciprocal trade preferences (NRTPs), enacted mainly through the Generalized System of Preferences, affect the exports of the beneficiary nations. In line with existi...Read more...

Journal article

Asian Economic Policy Review:

Trade Blocs and Trade Wars during the Interwar Period

What precisely were the causes and consequences of the trade wars in the 1930s? Were there perhaps deeper forces at work in reorienting global trade prior to the outbreak of World War II? And what lessons may this partic...Read more...

Blog

LSE Covid-19 blog:

Parts of the economy less hit by the pandemic are exposed to bigger negative impacts from Brexit

Despite the COVID-19 pandemic, the UK has been continuing its preparations to leave the EU by the end of 2020. COVID-19 has had a huge negative impact on the UK economy and Brexit will present another profound change in ...Read more...

CEP discussion paper

Immigrant inventors and diversity in the age of mass migration

A possible unintended but damaging consequence of anti-immigrant rhetoric, and the policies it inspires, is that they may put high-skilled immigrants off more than low-skilled ones at times when countries and businesses ...Read more...

Journal article

Review of Industrial Organization:

The Gravity of Intermediate Goods

One of the puzzles of the gravity literature is the persistent effect of distance on trade flows, despite the dramatic fall in trade costs during the last few decades (Disdier and Head in Rev Econ Stat 90(1):37–48, 2008)...Read more...

CEP discussion paper

International financial flows and misallocation

We study the impact of international financial flows on credit allocation exploiting the early 2000s boom of capital inflows in Italy. Using detailed bank-firm matched data we compare the patterns of credit allocation of...Read more...

Journal article

The Journal of Industrial Economics:

Demand-Driven Technical Change and Productivity Growth: Theory and Evidence from the Energy Policy Act

We present novel evidence on the effect of market size on technology adoption and productivity. Our tests exploit a natural experiment in the U.S. corn industry where changes to national energy policy created exogenous i...Read more...

Journal article

World Bank Economic Review:

Migration and Urbanization in Post-Apartheid South Africa

Although Africa has experienced rapid urbanization in recent decades, little is known about the process of urbanization across the continent. This paper exploits a natural experiment, the abolition of South African pass ...Read more...

CEP discussion paper

Automation, globalization and vanishing jobs: a labor market sorting view

We show, theoretically and empirically, that the effects of technological change associated with automation and offshoring on the labor market can substantially deviate from standard neoclassical conclusions when search ...Read more...

Blog

LSE Brexit:

EU trade is just as important to the UK as it was in 2016. Why?

Has EU trade become less important to the UK since the referendum? Thomas Sampson (LSE) finds it has not. He discusses why this might be the case and whether COVID-19 could be the trigger for more UK firms to permanently...Read more...

CEP discussion paper

All these worlds are yours, except India: the effectiveness of cash subsidies to export in Nepal

This paper studies the impact of a `textbook' ad-valorem export subsidy on firm-level export performance. The Cash Incentive Scheme for Exports (CISE) program offered by the government of Nepal offers a cash subsidy to f...Read more...

Blog

LSE Business Review:

How is Covid-19 affecting businesses in the UK?

The Covid-19 pandemic and lockdown have highlighted the need for real-time data to understand the spread of the disease, identify vulnerable groups and design policies to mitigate the health and economic fallout of the c...Read more...

Journal article

European Economic Review:

Voting with their money: Brexit and outward investment by UK firms

We study the impact of the 2016 Brexit referendum on UK foreign direct investment. Using the synthetic control method to construct appropriate counterfactuals, we show that by March 2019 the Leave vote had led to a 17% i...Read more...

Journal article

Journal of Development Economics:

The Belt and Road Initiative: Reshaping economic geography in Central Asia?

This paper develops a computable spatial equilibrium model of Central Asia and uses it to analyze the possible effects of the Belt and Road Initiative on the economy of the region. The model captures international and su...Read more...

Blog

LSE Business Review:

Covid-19 and the international trade downturn: lessons from 2008

The current Covid-19 outbreak is raising a number of growing concerns about the UK economy and its capacity to cope with the current situation and recover in the near future. One particular area of concern, in the UK and...Read more...

CEP discussion paper

Managing global production: theory and evidence from just-in-time supply chains

Global value chains are highly fragmented across countries and dominated by a few large multinational firms. But the challenges of an increasingly difficult international business environment are raising the question of ...Read more...

Journal article

World Trade Review:

Reopening Pandora's Box in Search of a WTO-Compatible Industrial Policy? the Brazil-Taxation Dispute

We critically assess the Appellate Body (AB) report on the Brazil-Taxation dispute, taken to the World Trade Organisation by the European Union and Japan, and encompassing seven different Brazilian industrial programmes ...Read more...

CEP discussion paper

Rising protectionism and global value chains: quantifying the general equilibrium effects

Quantifying the effects of trade policy in the age of ’global value chains’ (GVCs) requires an enhanced analytical framework that takes the observed international input-output relations in due account. However, existing ...Read more...

Blog

LSE British Politics and Policy:

Budget 2020: a bold response to coronavirus, but more must be done if it becomes widespread in the UK

While the 2020 Budget offers an overall adequate response to the challenges currently posed by coronavirus, there are three issues that need to be addressed further, especially as the outbreak becomes more widespread, wr...Read more...

Blog

LSE Business Review:

Does more competition spur innovation or discourage it?

Less-productive firms that are family owned and managed see the greatest improvement in productivity, write Cheng Chen and Claudia Steinwender....Read more...

Blog

UK in a Changing Europe:

New chancellor, new challenge: evaluating the coronavirus budget

Thomas Sampson examines the first UK budget to balance the shocks of Covid-19 and Brexit....Read more...

CEP discussion paper

The rise of agribusiness and the distributional consequences of policies on intermediated trade

Policies to encourage agribusinesses-led development of crop markets are high on the agenda of many policy-makers. Since the 1980s, several countries have moved to a model in which agribusinesses provide market access to...Read more...

CEP discussion paper

Who's paying for the US tariffs? A longer-term perspective

Using data from 2018, a number of studies have found that recent U.S tariffs have been passed on entirely to U.S. importers and consumers. These results are surprising given that trade theory has long stressed that tarif...Read more...

Journal article

The Economic Journal:

Merger Policy in a Quantitative Model of International Trade

In a two-country international trade model with oligopolistic competition, we study the conditions on market structure and trade costs under which a merger policy designed to benefit domestic consumers is either too toug...Read more...

Journal article

Quarterly Journal of Economics:

Measuring Aggregate Price Indices with Taste Shocks: Theory and Evidence for CES Preferences

We develop an approach to measuring the cost of living for CES preferences that treats demand shocks as taste shocks that are equivalent to price shocks. In the presence of relative taste shocks, the Sato-Vartia price in...Read more...

CEP discussion paper

Import competition, heterogeneous preferences of managers and productivity

When managers have objectives beyond maximizing monetary profits, inefficiencies may arise. An increase in competition may then force managers to improve the productivity of the firm in order to ensure survival. While th...Read more...

CEP discussion paper

Intellectual property and the organization of the global value chain

This paper introduces the concept of intangible assets in a property rights model of sequential supply chains. Firms transmit knowledge to their suppliers to facilitate input customization. Yet, to avoid knowledge dissip...Read more...

Blog

LSE Business Review:

Public investment in defence research can increase business innovation

That doesn't mean that defence R&D is the most efficient way to stimulate private sector innovation and productivity, write Enrico Moretti, Claudia Steinwender and John van Reenen....Read more...

CEP discussion paper

Globalization and conflicts: the good, the bad and the ugly of corporations in Africa

Using georeferenced data on the affiliates and headquarters of multinational enterprises together with georeferenced conflict data, this work is the first to establish a causal link between the activities of multinationa...Read more...

CEP discussion paper

Trade, productivity and (mis)allocation

We examine the gains from globalization in the presence of firm heterogeneity and potential resource misallocation. We show theoretically that without distortions, bilateral and export liberalizations increase aggregate ...Read more...

Journal article

European Economic Review:

Strategic inattention, delegation and endogenous market structure

We model an industry in which a discrete number of firms choose the output of their differentiated products, deciding whether or not to consider the impact of their decisions on aggregate output. The firm's choice of ign...Read more...

Blog

BSI Economics:

Elections britanniques : quels enjeux pour le Brexit ? (Policy Brief)

Utilité de l’article : A l’approche des élections britanniques, l’incertitude quant à la tournure que prendra le Brexit est toujours importante. Cet article expose les scénarios possibles à ce jour ainsi que leurs conséq...Read more...

CEP discussion paper

Exchange rates and consumer prices: evidence from Brexit

This paper studies how the depreciation of sterling following the Brexit referendum affected consumer prices in the United Kingdom. Our identification strategy uses input-output linkages to account for heterogeneity in e...Read more...

CEP discussion paper

Trade liberalization, input intermediaries and firm productivity: evidence from China

We investigate theoretically and empirically the role of wholesalers in mediating the productivity effects of trade liberalization. Intermediaries provide indirect access to foreign produced inputs. The productivity effe...Read more...

Blog

LSE Brexit:

Three years on: the UK is paying a high economic price for its decision to leave the EU

How has the Leave vote affected the UK economy, ask Swati Dhingra and Thomas Sampson (LSE) in this second of two blogs based on the CEP Election Analysis briefing on Brexit. It summarizes CEP research on how the referend...Read more...

Blog

LSE Business Review:

Brexit will leave the UK worse off economically in all scenarios

Since the UK voted to leave the European Union in June 2016, Brexit has dominated UK politics and economic policy. Three and a half years after the referendum, the UK is yet to leave the EU, there is no certainty over if...Read more...

Blog

LSE Brexit:

Economic consequences of Brexit are overwhelmingly negative

The economic consequences of Brexit are overwhelmingly negative, estimate Swati Dhingra and Thomas Sampson (LSE). The more the UK distances itself from the EU’s economic institutions and policies, the greater will be the...Read more...

Journal article

National Institute Economic Review:

Formulating Industrial Policy

Alongside the challenge of maintaining economic competitiveness in the face of great uncertainty, Brexit brings an opportunity for the government to set out a new industrial strategy. The case for doing so rests on the n...Read more...

Blog

LSE Business Review:

When free trade lands on the banking desk

The effect of trade liberalisation on economic activity remains one of the most important questions in economics. While prominent theories of international trade show that free trade improves the allocation of resources ...Read more...

CEP discussion paper

Reopening Pandora's box in search of a WTO-compatible industrial policy? The Brazil-taxation dispute

The Brazil-Taxation dispute concerns the complaints taken to the World Trade Organisation by the European Union and Japan against seven different Brazilian industrial subsidy programmes. One concerned the automotive sect...Read more...

Journal article

Journal of Economic Perspectives:

The impact of the 2018 tariffs on prices and welfare

We examine conventional approaches to evaluating the economic impact of protectionist trade policies. We illustrate these conventional approaches by applying them to the tariffs introduced by the Trump administration dur...Read more...

Blog

VOX:

New dawn fades: The post-referendum rise in import costs has hurt UK workers

Some commentators argue that globalisation is systematically connected to the real-wage and productivity stagnation seen across the developed world. This column analyses the relationship between international trade and w...Read more...

CEP discussion paper

Trade shocks and credit reallocation

The effect of trade liberalization on welfare and economic activity remains one of the most important questions in economics. The literature identifies a number of key determinants that reduce the potential gains from tr...Read more...

Journal article

Journal of International Economics:

Geography, competition, and optimal multilateral trade policy

How should multilateral trade policy be designed in a world in which countries differ in terms of market access and technology, and firms with market power differ in terms of productivity? We answer this question in a mo...Read more...

CEP discussion paper

What are the price effects of trade? Evidence from the US and implications for quantitative trade models

This paper finds that U.S. consumer prices fell substantially due to increased trade with China. With comprehensive price micro-data and two complementary identification strategies, we estimate that a 1pp increase in imp...Read more...

CEP discussion paper

Vertical integration and foreclosure: evidence from production network data

This paper studies the prevalence of vertical market foreclosure using a novel dataset on U.S. and international buyer-seller relationships, and across a large range of industries. We find that relationships are more lik...Read more...

CEP discussion paper

Innovation union: costs and benefits of innovation policy coordination

We build a two-region endogenous growth model to analyse the gains from innovation policy cooperation in an economic union. The model is calibrated to two blocks of the EU: the old and new members. R&D subsidy coordinati...Read more...

Blog

LSE Business Review:

How the Panama Canal reshaped the economic geography of the United States

In the early 20th century a ship travelling from San Francisco to New York or on to Europe first had to travel over 13,000 miles around the entirety of South America. That all changed in August of 1914 with the opening o...Read more...

Blog

LSE Business Review:

The 2018 trade war: consumers are paying a high price

Over the course of 2018, the Trump administration imposed import tariffs on approximately $283 billion of US imports, with rates ranging between 10 and 50 per cent. In response, US trading partners, especially China, ret...Read more...

CEP discussion paper

Voting with their money: Brexit and outward investment by UK firms

We study the impact of the 2016 Brexit referendum on UK foreign direct investment. Using the synthetic control method to construct appropriate counterfactuals, we show that by March 2019 the Leave vote had led to a 17% i...Read more...

CEP discussion paper

Economic geography aspects of the Panama Canal

This paper studies how the opening of the Panama Canal in 1914 changed market access and influenced the economic geography of the United States. We compute shipment distances with and without the canal from each US count...Read more...

Journal article

Journal of International Economics:

Globalization and state capitalism: Assessing Vietnam's accession to the WTO

What do state-owned enterprises (SOEs) do? How do they respond to market incentives? Can we expect substantial efficiency gains from trade liberalization in economies with a strong presence of SOEs? Using a new dataset o...Read more...

Journal article

China and World Economy:

Fiscal Subsidy Policy on Home Appliances: Its Effects on Domestic Consumption and Exports in China

This paper evaluates the effects of the Home Appliances Going to the Countryside (HAGC) policy, a fiscal subsidy program implemented in China to boost private consumption of home appliances in rural areas from 2007 to 20...Read more...

Journal article

Economica:

Special Economic Zones and WTO Compliance: Evidence from the Dominican Republic

Special economic zones (SEZ), one of the most important instruments of industrial policy used in developing countries, often impose export share requirements (ESR). That is, firms located in SEZ are required to export mo...Read more...

CentrePiece article

In brief... Globalisation and its discontents

CEP's Trade Week brought together researchers and policy-makers to discuss the recent trend towards protectionism, its causes and directions for future policy. Josh De Lyon and Elsa Leromain report....Read more...

CentrePiece article

The impact of the 2018 trade war on US prices and welfare

What has been happening to the US economy as a result of the Trump administration's 2018 round of import tariffs? Research by Mary Amiti, Stephen Redding and David Weinstein estimates the effects of this change in US tra...Read more...

CentrePiece article

In brief... Brexit and outward investment by UK firms

Media reports have highlighted that some UK firms have started to move production abroad in anticipation of Brexit. CEP analysis confirms that there has indeed been a substantial increase in outward investments. The shif...Read more...

CEP discussion paper

Technology gaps, trade and income

This paper studies the origins and consequences of international technology gaps. I develop an endogenous growth model where R&D efficiency varies across countries and productivity differences emerge from firm-level tech...Read more...

CEP discussion paper

Vehicle currency pricing and exchange rate pass-through

Using detailed firm-level transactions data for UK imports, we find that invoicing in a vehicle currency is pervasive, with more than half of transactions in our sample invoiced in neither sterling nor the exporter's cur...Read more...

Journal article

Journal of the European Economic Association:

Task specialization in U.S. Cities from 1880 to 2000

We develop a new methodology for quantifying the tasks undertaken within occupations using over 3,000 verbs from more than 12,000 occupational descriptions in the Dictionary of Occupational Titles (DOTs). Using micro dat...Read more...

Journal article

European Economic Review:

Host-country financial development and multinational activity

This paper evaluates the influence of host-country financial conditions on the global operations of multinational firms. Using detailed U.S. data, we establish that financial development in a country is associated with r...Read more...

CEP discussion paper

Trade and worker deskilling

This paper presents new evidence on international trade and worker outcomes. It examines a big world event that produced an unprecedentedly large shock to the UK exchange rate. In the 24 hours in June 2016 during which t...Read more...

CEP discussion paper

Trade blocs and trade wars during the interwar period

What precisely were the causes and consequences of the trade wars in the 1930s? Were there perhaps deeper forces at work in reorienting global trade prior to the outbreak of World War II? And what lessons may this partic...Read more...

Journal article

Journal of International Economics:

Foreign expansion, competition and bank risk

Using a novel dataset on the 15 European banks classified as G-SIBs from 2005 to 2014, we find that the impact of foreign expansion on risk is always negative and significant for most individual and systemic risk metrics...Read more...

Journal article

Review of World Economics:

Are all trade agreements equal? The role of distance in shaping the effect of economic integration agreements on trade flows

How does geographic distance affect the impact of trade agreements on bilateral exports, and through what channels? This paper examines this questions in a gravity model context for different types of goods for 185 count...Read more...

CEP discussion paper

The comparative advantage of firms

Resource based theories propose that firms grow by diversifying into products which use common capabilities. We provide evidence for common input capabilities using a policy that removed entry barriers in input markets t...Read more...

Journal article

Journal of Political Economy:

Production networks, geography, and firm performance

This paper examines the importance of buyer-supplier relationships for firm performance. We develop a model in which firms outsource tasks and search for suppliers. Lower search and outsourcing costs lead firms to search...Read more...

CEP discussion paper

Geography, competition and optimal multilateral trade policy

How should multilateral trade policy be designed in a world in which countries differ in terms of market access and technology, and firms with market power differ in terms of productivity? We answer this question in a mo...Read more...

CEP Brexit analysis

Economic performance since the EU referendum

The impact of the Brexit vote can now begin to be evaluated with greater accuracy than previous forecasts, thanks to the emergence of new data. In the run-up to the UK’s referendum on membership of the European Union (EU...Read more...

CEP Brexit analysis

Economic performance since the EU referendum

The impact of the Brexit vote can now begin to be evaluated with greater accuracy than previous forecasts, thanks to the emergence of new data. In the run-up to the UK’s referendum on membership of the European Union (EU...Read more...

CEP discussion paper

Missing trade in tasks: employer outsourcing in the gig economy

Only a small share of employers in high-wage locations procure services from abroad. We document heterogeneous employer adoption of an online labor market that facilitates trade in tasks with global workers. Job vacancie...Read more...

CEP discussion paper

The impact of the 2018 trade war on US prices and welfare

This paper explores the impacts of the Trump administration’s trade policy on prices and welfare. Over the course of 2018, the U.S. experienced substantial increases in the prices of intermediates and final goods, dramat...Read more...

Journal article

Review of Economic Studies:

Carry-along trade

Large multi-product firms dominate international trade flows. This paper documents new facts about multi-product manufacturing exporters that are not easily reconciled with existing multi-product models. Using novel link...Read more...

CEP Brexit analysis

Voting with their money: Brexit and outward investment by UK firms

Foreign direct investment (FDI) has grown rapidly in recent decades. Through FDI, firms headquartered in the UK can own and operate subsidiaries throughout the world. FDI opportunities give firms a choice between investi...Read more...

Journal article

Journal of Political Economy:

Monopolistic competition and optimum product diversity under firm heterogeneity

Empirical work has drawn attention to the high degree of productivity differences within industries and their role in resource allocation. This paper examines the allocational efficiency of such markets. Productivity dif...Read more...

CEP discussion paper

International buyers' sourcing and suppliers' markups in Bangladeshi garments

Large international buyers play a key role in global value chains. We exploit detailed transaction-level data on the usage of material inputs to study how Bangladeshi garment suppliers' markups vary across international ...Read more...

CEP discussion paper

Aggregation and the gravity equation

One of the most successful empirical relationships in international trade is the gravity equation, which relates bilateral trade flows between an origin and destination to bilateral trade frictions, origin characteristic...Read more...

CEP discussion paper

Globalization and state capitalism: assessing Vietnam's accession to the WTO

What do state-owned enterprises (SOEs) do? How do they respond to market incentives? Can we expect substantial efficiency gains from trade liberalization in economies with a strong presence of SOEs? Using a new dataset o...Read more...

CEP discussion paper

The origins of firm heterogeneity: a production network approach

This paper quantifies the origins of firm size heterogeneity when firms are interconnected in a production network. Using the universe of buyer-supplier relationships in Belgium, the paper develops a set of stylized fact...Read more...

Journal article

Journal of International Economics:

The interconnections between services and goods trade at the firm-level

In this paper we study how international trade in goods and services interact at the firm level. Using a rich dataset on Belgian firms for the period 1995–2005, we show that: i) firms are much more likely to source servi...Read more...

Journal article

European Journal of Political Economy:

Who voted for Brexit? Individual and regional data combined

Previous analyses of the 2016 Brexit referendum used region-level data or small samples based on polling data. The former might be subject to ecological fallacy and the latter might suffer from small-sample bias. We use ...Read more...

Journal article

Economic Policy:

Global crises and populism: The role of Eurozone institutions

Populist parties are likely to gain consensus when mainstream parties and status quo institutions fail to manage the shocks faced by their economies. Institutional constraints, which limit the possible actions in the fac...Read more...

CEP discussion paper

Innovation and trade policy in a globalized world

How do import tariffs and R&D subsidies help domestic firms compete globally? How do these policies affect aggregate growth and economic welfare? To answer these questions we build a dynamic general equilibrium growth mo...Read more...

CEP discussion paper

Technology, market structure and the gains from trade

We study the gains from trade in a new model with oligopolistic competition, firm heterogeneity, and innovation. Lowering trade costs reduces markups on domestic sales but increases markups on export sales, as firms do n...Read more...

Journal article

Fiscal Studies:

The Economic Effects of Brexit: Evidence from the Stock Market

We study stock market reactions to the Brexit referendum on 23 June 2016 in order to assess investors� expectations about the effects of leaving theEuropean Union on the UK economy. Our results suggest that initial sto...Read more...

Journal article

Journal of the European Economic Association:

The impact of trade agreements on consumerwelfare-evidence from the EU common external trade policy

This paper estimates the consumer welfare impact of the new generation of trade agreements implemented by the European Union between 1993 and 2013. We decompose the overall effect into contributions of changes in prices,...Read more...

CEP Brexit analysis

The economic consequences of the Brexit deal

Amidst the political fighting and fevered speculation about leadership challenges and parliamentary defeats for the government, one crucial issue seems to have been lost from sight. The deal negotiated with the European ...Read more...

CEP discussion paper

Organizing global supply chains: input-output linkages and vertical integration

We study whether and how the technological importance of an input – measured by its cost share – is related to the decision of whether to “make” or “buy” that input. Using detailed French international trade data and an ...Read more...

Journal article

American Economic Journal: Economic Policy:

From selling goods to selling services: Firm responses to trade liberalization

In this paper, we focus on a new channel of adaptation to trade liberalization , namely the shift toward increased provision of services in lieu of goods production. We exploit variation in European Union trade policy to...Read more...

CEP discussion paper

Preferential trade agreements and global sourcing

We study how a preferential trade agreement (PTA) affects international sourcing decisions, aggregate productivity and welfare under incomplete contracting and endogenous matching. Contract incompleteness implies underin...Read more...

CEP discussion paper

In-house and arms length: productivity heterogeneity and variation in organizational form

This paper analyzes how firms are organized in the U.S. hotel management industry. For most hotel brands, properties with intermediate room occupancy rates are relatively more likely to be managed by company employees ra...Read more...

CEP discussion paper

The not-so-generalized effects of the generalized system of preferences

We use an empirical gravity equation approach to study how nonreciprocal trade preferences (NRTPs), enacted mainly through the Generalized System of Preferences, affect the exports of the beneficiary nations. In line wit...Read more...

Journal article

Journal of the European Economic Association:

Firm dynamics and residual inequality in open economies

Wage inequality between similar workers has been on the rise in many rich countries. Recent empirical research suggests that heterogeneity in firm characteristics is crucial to understand wage dispersion. Lower trade cos...Read more...

Journal article

Economic Policy:

The productivity puzzle and misallocation: an Italian perspective

Productivity has recently slowed down in many economies around the world. A crucial challenge in understanding what lies behind this 'productivity puzzle' is the still short time span for which data can be analysed. An e...Read more...

CEP industrial strategy paper

Local Economic Effects of Brexit: Factsheet

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CEP industrial strategy paper

Local Economic Effects of Brexit: Factsheet

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CEP discussion paper

Misallocation in the market for inputs: enforcement and the organization of production

The strength of contract enforcement determines how firms source inputs and organize production. Using microdata on Indian manufacturing plants, we show that production and sourcing decisions appear systematically distor...Read more...

CEP discussion paper

The economic effects of Brexit - evidence from the stock market

We study stock market reactions to the Brexit referendum on 23 June 2016 in order to assess investors’ expectations about the effects of leaving the European Union on the UK economy. Our results suggest that initial stoc...Read more...

Journal article

Journal of International Economics:

Market Potential and Global Growth over the Long Twentieth Century

We examine the evolution of market potential and its role in driving economic growth over the long twentieth century. Theoretically, we exploit a structural gravity model to derive a closed-form solution for a widely-use...Read more...

CEP discussion paper

Foreign expansion, competition and bank risk

Using a novel dataset on the 15 European banks classified as G-SIBs from 2005 to 2014, we find that the impact of foreign expansion on risk is always negative and significant for most individual and systemic risk metrics...Read more...

CEP discussion paper

The political economy of trade and migration: evidence from the US Congress

We systematically examine the drivers of U.S. congressmen's votes on trade and migration reforms since the 1970's. Standard trade theory suggests that reforms that lower barriers to goods and migrants should have similar...Read more...

Journal article

Annual Review of Economics:

Networks and Trade

Trade occurs between firms both across borders and within countries, and most trade transactions include at least one large firm with many trading partners. This article reviews the literature on firm-to-firm connections...Read more...

Journal article

American Economic Review:

From final goods to inputs: The protectionist effect of rules of origin

Recent decades have witnessed a surge of trade in intermediate goods and a proliferation of free trade agreements (FTAs). FTAs use rules of origin (RoO) to distinguish goods originating from member countries from those o...Read more...

Journal article

International Economics:

Relaxing credit constraints in emerging economies: The impact of public loans on the productivity of Brazilian manufacturers

In emerging economies credit constraints are often perceived as one of the most important market frictions hampering firm productivity growth in manufacturing. Huge amount of public money is devoted to the removal of suc...Read more...

CentrePiece article

In brief... Multinationals and the customs union

Leaving the customs union may lead multinationals to move out of the UK, resulting in the loss of thousands of jobs. That is the conclusion of research by Paola Conconi. She explains that in a customs union, goods cross ...Read more...

CEP discussion paper

Market potential and global growth over the long twentieth century

We examine the evolution of market potential and its role in driving economic growth over the long twentieth century. Theoretically, we exploit a structural gravity model to derive a closed-form solution for a widely-use...Read more...

CEP discussion paper

Of mice and merchants: trade and growth in the Iron Age

We study the causal connection between trade and development using one of the earliest massive trade expansions: the first systematic crossing of open seas in the Mediterranean during the time of the Phoenicians. We cons...Read more...

CEP discussion paper

Financial markets and the allocation of capital: the role of productivity

The efficient allocation of credit is a key element for the success of an economy. Traditional measures of allocative efficiency focus on the Q-theory of investment and, in particular, on the elasticity of finance to inv...Read more...

Journal article

Review of Economics and Statistics:

Two-sided heterogeneity and trade

This paper develops a multicountry model of international trade that provides a simple microfoundation for buyer-seller relationships in trade. We explore a rich data set that identifies buyers and sellers in trade and e...Read more...

Journal article

Journal of Economic History:

A Dissection of Trading Capital: Trade in the Aftermath of the Fall of the Iron Curtain

We study trade in Europe after the fall of the Iron Curtain, and show that the countries of the former Austro-Hungarian monarchy trade significantly more with one another after 1989 than predicted by a standard gravity m...Read more...

CentrePiece article

The price of Brexit

Writing in the summer 2018 issue of CentrePiece magazine, Thomas Sampson notes that the full economic consequences of the UK’s leave vote will not be realised for many years. But two years after the referendum, we can al...Read more...

CentrePiece article

The price of Brexit

Writing in the summer 2018 issue of CentrePiece magazine, Thomas Sampson notes that the full economic consequences of the UK’s leave vote will not be realised for many years. But two years after the referendum, we can al...Read more...

CentrePiece article

The price of Brexit

Writing in the summer 2018 issue of CentrePiece magazine, Thomas Sampson notes that the full economic consequences of the UK’s leave vote will not be realised for many years. But two years after the referendum, we can al...Read more...

CEP discussion paper

Geography, ties and knowledge flows: evidence from citations in mathematics

Using data on academic citations, career and educational histories of mathematicians, and disaggregated distance data for the world's top 1000 math departments, we study how geography and ties affect knowledge flows amon...Read more...

CEP discussion paper

Brands in motion: how frictions shape multinational production

Following the 2016 Leave vote in the referendum on UK membership in the EU and the election of Donald Trump, trade agreements have entered a period of great instability. To predict the impact of possible disruptions to e...Read more...

CEP discussion paper

Currency unions, trade and heterogeneity

How do trade costs affect international trade? This paper offers a new approach. We rely on a flexible gravity equation that predicts variable trade cost elasticities, both across and within country pairs. We apply this ...Read more...

Journal article

Journal of Economic Literature:

Global firms

Research in international trade has changed dramatically over the last twenty years, as attention has shifted from countries and industries towards the firms actually engaged in international trade. The now-standard hete...Read more...

Journal article

Journal of the European Economic Association:

The limits of political compromise: Debt ceilings and political turnover

We study the desirability of limits on the public debt and of political turnover in an economy where incumbents have an incentive to set public expenditures above the socially optimal level due to rent-seeking motives. P...Read more...

Journal article

Journal of International Economics:

The buyer margins of firms’ exports

We use detailed data on exporters from Costa Rica, Ecuador and Uruguay as well as on their buyers to show that: aggregate exports are disproportionally driven by few multi-buyers exporters; and each multi-buyer exporter'...Read more...

CEP discussion paper

Firm-to-firm connections in Colombian imports

The vast majority of world trade flows is between firms. Only recently has research in international trade started to emphasize the importance of the connections between exporters and importers both in aggregate trade fl...Read more...

CEP discussion paper

Networks and trade

Trade occurs between firms both across borders and within countries, and the vast majority of trade transactions includes at least one large firm with many trading partners. This paper reviews the literature on firm-to-f...Read more...

CEP discussion paper

Beyond tariff reductions: what extra boost from trade agreement provisions?

There is a growing recognition that for developed economies, like the UK, tariff-free market access is just one of a number of measures that ease cross-border trade flows. Modern trade agreements go beyond tariff reducti...Read more...

Journal article

Journal of International Economics:

Immigration, trade and productivity in services: Evidence from U.K. firms

This paper explores the impact of immigrants on the imports, exports and productivity of service-producing firms in the U.K. Immigrants may substitute for imported intermediate inputs (offshore production) and they may i...Read more...

Journal article

Papers in Regional Science:

UK trade and FDI: A post-Brexit perspective

Leaving the EU will reshape the UK's economic relations with the rest of the world. This paper summarizes the findings of recent research studying the UK's role in the global economy, and the consequences of Brexit for U...Read more...

Journal article

American Economic Review:

Real effects of information frictions: When the states and the Kingdom Became United

How do information frictions distort international trade? This paper exploits a unique historical experiment to estimate the magnitude of these distortions: the establishment of the transatlantic telegraph connection in ...Read more...

Journal article

Journal of International Economics:

Working across time zones: Exporters and the gender wage gap

This study argues that there is a systematic difference in the gender wage gap (GWG) between exporting firms and non-exporters. Exporters may require greater commitment from their employees, such as working particular ho...Read more...

Journal article

Journal of Industrial Economics:

Firm Productivity Differences From Factor Markets

We model firm adaptation to local factor markets in which firms care about both the price and availability of inputs. The model is estimated by combining firm and population census data, and quantifies the role of factor...Read more...

CentrePiece article

Brexit: the economics of international disintegration

Pro-Brexit rhetoric mixes up two distinct interpretations of what made people vote to Leave the European Union – and they have very different policy implications. As Thomas Sampson explains, those voters wanting to recla...Read more...

CentrePiece article

Poor productivity: an Italian perspective

Productivity growth has been slow in Western countries since the global financial crisis, but in Italy it has been stagnating for 25 years. Fadi Hassan and Gianmarco Ottaviano investigate inefficiency and misallocation i...Read more...

Journal article

Economic Journal:

Trade, Firm Selection and Innovation: The Competition Channel

We study the welfare gains from trade in an economy with heterogeneous firms, variable markups and endogenous growth. Variable markups arise from oligopolistic competition, and cost-reducing innovation is the engine of l...Read more...

Journal article

European Journal of Political Economy:

Electoral incentives, term limits, and the sustainability of peace

One of the few stylized facts in international relations is that democracies, unlike autocracies, almost never fight each other. Recent empirical findings show that binding term limits invalidate this result: democratic ...Read more...

CEP discussion paper

From final goods to inputs: the protectionist effect of rules of origin

Recent decades have witnessed a surge of trade in intermediate goods and a proliferation of free trade agreements (FTAs). FTAs use rules of origin (RoO) to distinguish goods originating from member countries from those o...Read more...

CEP discussion paper

The productivity puzzle and misallocation: an Italian perspective

Productivity has recently slowed down in many economies around the world. A crucial challenge in understanding what lies behind this \productivity puzzle" is the still short time span for which data can be analysed. An e...Read more...

Journal article

Research in Economics:

Efficiency in large markets with firm heterogeneity

Empirical work has drawn attention to the high degree of productivity differences within industries, and its role in resource allocation. In a benchmark monopolistically competitive economy, productivity differences intr...Read more...

CEP discussion paper

Special economic zones and WTO compliance: evidence from the Dominican Republic

Special economic zones (SEZ), one of the most important instruments of industrial policy used in developing countries, often impose export share requirements (ESR). That is, firms located in SEZ are required to export mo...Read more...

CEP discussion paper

Supplier search and re-matching in global sourcing: theory and evidence from China

In this paper, we consider a dynamic search-and-matching problem of a firm with its intermediate input supplier. In our model, a headquarter currently matched with a supplier, has an interest to find and collaborate with...Read more...

CEP Brexit analysis

The Brexit vote, inflation and UK living standards

The vote to leave the European Union (EU) was an unanticipated shock to the UK economy that increased uncertainty and reduced the country’s expected future openness to trade, investment and immigration with the EU. Our r...Read more...

CEP discussion paper

Aggregating from micro to macro patterns of trade

We develop a new framework for aggregating from micro to macro patterns of trade. We derive price indexes that determine comparative advantage across countries and sectors and the aggregate cost of living. If firms and p...Read more...

CEP discussion paper

The interconnections between services and goods trade at the firm-level

In this paper we study how international trade in goods and services interact at the firm level. Using a rich dataset on Belgian firms during the period 1995-2005, we show that: i) firms are much more likely to source se...Read more...

CEP discussion paper

Product diversification in Indian manufacturing

The presence of global value chains challenges the neoclassical idea of the firm since it implies firms are not monolithic but are rather interdependent on the larger economic environment. Examining establishments, the s...Read more...

CEP discussion paper

Structural adjustments and international trade: theory and evidence from China

This paper studies how changes in factor endowment, technology, and trade costs jointly determine the structural adjustments, which are defined as changes in distributions of production and exports. We document the struc...Read more...

Journal article

Journal of Public Economics:

Learning about the prospects for mobility: Economic and political dynamics following fundamental policy reform

The political left turn in Latin America, which lagged its transition to liberalized market economies by a decade or more, challenges conventional economic explanations of voting behavior. This paper generalizes the forw...Read more...

Journal article

Journal of Regional Science:

A review of volume 5 of the Handbook of Regional and Urban Economics

[No abstract available]...Read more...

Journal article

National Institute Economic Review:

Local economic effects of Brexit

This paper studies local economic impacts of the increases in trade barriers associated with Brexit. Predictions of the local impact of Brexit are presented under two different scenarios, soft and hard Brexit, which are ...Read more...

CEP discussion paper

Internalizing global value chains: a firm-level analysis

In recent decades, advances in information and communication technology and falling trade barriers have led firms to retain within their boundaries and in their domestic economies only a subset of their production stages...Read more...

CEP discussion paper

Twin peaks

Received wisdom suggests that most exporters sell the majority of their output domestically. In this paper, however, we show that the distribution of export intensity not only varies substantially across countries, but i...Read more...

CEP discussion paper

Efficiency in large markets with firm heterogeneity

Abstract Empirical work has drawn attention to the high degree of productivity differences within industries, and its role in resource allocation. In a benchmark monopolistically competitive economy, productivity differe...Read more...

Journal article

Economic Policy:

Who voted for Brexit? A comprehensive district-level analysis

On 23 June 2016, the British electorate voted to leave the European Union (EU). We analyse vote and turnout shares across 380 local authority areas in the United Kingdom. We find that exposure to the EU in terms of immig...Read more...

Journal article

American Economic Review:

Exporter dynamics and partial-year effects

Two identical firms who start exporting in different months, one each in January and December, will report dramatically different exports for the first calendar year. This partial-year effect biases down firstyear export...Read more...

Journal article

Journal of Economic Perspectives:

Brexit: the economics of international disintegration

On June 23, 2016, the United Kingdom held a referendum on its membership in the European Union. Although most of Britain's establishment backed remaining in the European Union, 52 percent of voters disagreed and handed a...Read more...

Journal article

Economic Policy:

The costs and benefits of leaving the EU: trade effects

This paper estimates the welfare effects of Brexit in the medium to long run, focusing on trade and fiscal transfers.We use a standard quantitative general equilibrium trade model with many countries and sectors and trad...Read more...

CentrePiece article

In brief... Brexit: the impact on prices

Following last year’s referendum on the UK’s membership of the European Union, there has been a significant rise in consumer prices, particularly food prices. Rising prices coupled with limited increases in nominal wages...Read more...

CEP discussion paper

Brexit: the economics of international disintegration

This paper reviews the literature on the likely economic consequences of Brexit and considers the lessons of the Brexit vote for the future of European and global integration. Brexit will make the United Kingdom poorer b...Read more...

Journal article

The World Economy:

Service Trade and Occupational Tasks: An Empirical Investigation

Using microdata for Belgium, we investigate the relationship between changes in the task content of production and the rise in the number of service exporters. We show that occupational tasks changes display an extremely...Read more...

Journal article

Journal of Economic Literature:

On economic interdependence and war

In this article, we review the book Economic Interdependence and War by Dale C. Copeland, and take this opportunity to describe and discuss the current debate on the topic from an interdisciplinary perspective. We also p...Read more...

CEP discussion paper

Goods and factor market integration: a quantitative assessment of the EU enlargement

The economic effects from labor market integration are crucially affected by the extent to which countries are open to trade. In this paper we build a multi-country dynamic general equilibrium model with trade in goods a...Read more...

Journal article

Annual Review of Economics:

Quantitative spatial economics

The observed uneven distribution of economic activity across space is influenced by variation in exogenous geographical characteristics and endogenous interactions between agents in goods and factor markets. Until the pa...Read more...

CEP Brexit analysis

The local economic effects of Brexit

This paper studies the local impacts of the increases in trade barriers associated with Brexit. Predictions of the local impact of Brexit are presented under two different scenarios, soft and hard Brexit. Average effects...Read more...

CEP discussion paper

Specialization in bank lending: evidence from exporting firms

We develop an empirical approach for identifying specialization in bank lending using granular data on borrower activities. We illustrate the approach by characterizing bank specialization by export market, combining ban...Read more...

Journal article

Journal of International Economics:

On the comparative advantage of U.S. manufacturing: Evidence from the shale gas revolution

This paper provides novel empirical evidence of the effects of a plausibly exogenous change in relative factor prices on U.S. manufacturing production and trade. The shale gas revolution has led to (very) large and persi...Read more...

CEP discussion paper

UK trade and FDI: a post-Brexit perspective

Leaving the EU will change the UK’s economic relations with the rest of the world. This paper discusses the UK’s role in the global economy and the consequences of Brexit for the UK’s trade, investment and living standar...Read more...

CEP election analysis

#GE2017Economists: The Research Evidence on Key Issues for Voters in the 2017 UK General Election

The unexpected UK general election of 2017 was intended to be all about Brexit, one that will give the incoming government a mandate to negotiate the terms of the UK’s exit from the European Union (EU). But many other pu...Read more...

Journal article

Journal of Development Economics:

Subsidies with export share requirements in China

A subsidy is subject to an export share requirement (ESR) when firms must export more than a certain share of their output to receive it. Such incentives are frequently found in free trade zones, export processing regime...Read more...

CEP discussion paper

International expansion and riskiness of banks

We exploit an original dataset on European G-SIBs to assess how banks’ internationalization affects risk in the banking sector. We find a robust negative correlation between foreign expansion and banking risk as captured...Read more...

CEP discussion paper

Who voted for Brexit? A comprehensive district-level analysis

On 23 June 2016, the British electorate voted to leave the European Union. We analyse vote and turnout shares across 380 local authority areas in the United Kingdom. We find that exposure to the EU in terms of immigratio...Read more...

CEP discussion paper

The costs and benefits of leaving the EU: trade effects

This paper estimates the welfare effects of Brexit, focusing on trade and fiscal transfers. We use a standard quantitative general equilibrium trade model with many countries and sectors and trade in intermediates, as in...Read more...

Journal article

American Economic Review:

Balanced growth despite uzawa

The evidence for the United States points to balanced growth despite falling investment-good prices and a less-than-unitary elasticity of substitution between capital and labor. This is inconsistent with the Uzawa Growth...Read more...

CEP discussion paper

Global banking: risk taking and competition

Direct involvement of global banks in local retail activities can reduce risk-taking by promoting local competition. We develop this argument through a model in which multinational banks operate simultaneously in differe...Read more...

Journal article

Journal of International Economics:

Suspiciously timed trade disputes

This paper shows that electoral incentives crucially affect the initiation of trade disputes. Focusing on WTO disputes filed by the United States during the 1995–2014 period, we find that U.S. presidents are more likely ...Read more...

Journal article

Oxford Review of Economic Policy:

A hitch-hiker's guide to post-Brexit trade negotiations: Options and principles

Brexit will require the UK to negotiate new trade arrangements with the EU. After summarizing the main options for future UK-EU trade relations, this article reviews the purpose of trade agreements. We highlight that tra...Read more...

CEP discussion paper

Multi-product firms and product quality

We examine the global operations of multi-product firms. We present a flexible heterogeneous-firm trade model with either limited or strong scope for quality differentiation. Using customs data for China during 2002-2006...Read more...

Journal article

Management Science:

Risk aversion and wealth: Evidence from person-to-person lending portfolios

We estimate risk aversion from investors' financial decisions in a person-toperson lending platform. We develop a method that obtains a risk-aversion parameter from each portfolio choice. Since the same individuals inves...Read more...

Journal article

The Review of Economic Studies:

Trade and inequality: From theory to estimation

While neoclassical theory emphasizes the impact of trade on wage inequality between occupations and sectors, more recent theories of firm heterogeneity point to the impact of trade on wage dispersion within occupations a...Read more...

Journal article

Journal of Urban Economics:

Spatial frictions

The world is replete with spatial frictions. Shipping goods across cities entails trade frictions. Commuting within cities causes urban frictions. How important are these frictions in shaping the spatial economy? We deve...Read more...

Journal article

International Journal of Industrial Organization:

International aspects of merger policy: A survey

This paper surveys the literature on merger policy in open economies. We first adopt a reduced-form approach to derive general insights on the scope for conflict between national antitrust authorities and on the gains fr...Read more...

CEP discussion paper

The diffusion of knowledge via managers' mobility

Better managers and managerial practices lead to better firm performance. Yet, little is known about what happens when managers move across firms. Does a firm hiring a good manager improve its performance? If yes is ther...Read more...

CentrePiece article

Four principles for the UK's Brexit trade negotiations

The first priority in the UK government’s plans for Brexit trade negotiations should be to agree a transitional deal to cover its relations with the European Union (EU) until a long-term agreement is reached. What’s more...Read more...

CentrePiece article

Fracking: the boost to US manufacturing

Research by Rabah Arezki, Thiemo Fetzer and Frank Pisch shows that the surge in shale gas production – ‘fracking’ – since the early 2000s has not only made the United States the world’s largest producer of natural gas. I...Read more...

CEP discussion paper

Distorted monopolistic competition

We characterize the equilibrium and optimal resource allocations in a general equilibrium model of monopolistic competition with multiple asymmetric sectors and heterogeneous firms. We first derive general results for ad...Read more...

Journal article

Journal of International Economics:

Multi-product firms and product quality

We examine the global operations of multi-product firms. We present a flexible heterogeneous-firm trade model with either limited or strong scope for quality differentiation. Using customs data for China during 2002–2006...Read more...

Journal article

Journal of International Economics:

Relational contracts and supplier turnover in the global economy

Headquarters and their specialized component suppliers have a vital interest in establishing long-term collaborations. When formal contracts are not enforceable, such efficiency-enhancing cooperations can be established ...Read more...

CEP discussion paper

On the comparative advantage of US manufacturing: evidence from the shale gas revolution

This paper provides novel empirical evidence of the effects of a plausibly exogenous change in relative factor prices on United States manufacturing production and trade. The shale gas revolution has led to (very) large ...Read more...

CEP Brexit analysis

Four principles for the UK's Brexit trade negotiations

The UK has yet to decide what post-Brexit trade deals it wants with other countries. To achieve the objectives it ends up choosing, the UK should develop a negotiating strategy based on four principles outlined in this p...Read more...

CEP discussion paper

Foreign direct investment and the relationship between the United Kingdom and the European Union

This paper investigates whether and to what extent foreign direct investment inflows into the United Kingdom are caused by its membership in the European Union (EU). It reports two main sets of econometric estimates: (a)...Read more...

CEP discussion paper

Quantitative spatial economics

The observed uneven distribution of economic activity across space is influenced by variation in exogenous geographical characteristics and endogenous interactions between agents in goods and factor markets. Until recent...Read more...

CEP discussion paper

Trade and the size distribution of firms: evidence from the German Empire

What is the effect of trade on the size distribution of firms? We collect historical data between 1882 and 1907 from the German Empire to address this question. Our data allow us to match three data sets according to the...Read more...

CentrePiece article

High-speed rail in China

Encouraging innovation is a perennial policy goal – and one common approach is to promote the adoption of foreign technology. Yatang Lin and colleagues examine the impact of China’s technology transfer policy, which has ...Read more...

CEP discussion paper

Financial system architecture and the patterns of international trade

Countries differ on the extent to which their financial system relies on banks or on the financial market. We offer a model featuring a possible two-way relationship between countries’ financial system architecture and t...Read more...

Journal article

The Economic Journal:

Tariffs, Trade and Productivity: A Quantitative Evaluation of Heterogeneous Firm Models

We examine the quantitative predictions of heterogeneous firm in the context of the Canada–US Free Trade Agreement (CUSFTA) of 1989. We compute predicted increases in trade flows and measured productivity and compare the...Read more...

Journal article

Journal of International Economics:

The price of development: The Penn–Balassa–Samuelson effect revisited

The Penn–Balassa–Samuelson effect is the stylized fact about the positive correlation between cross-country price level and per-capita income. This paper provides evidence that the price–income relation is actually non-l...Read more...

CEP discussion paper

A unified approach to estimating demand and welfare

The measurement of price changes, economic welfare, and demand parameters is currently based on three disjoint approaches: macroeconomic models derived from time-invariant utility functions, microeconomic estimation base...Read more...

Journal article

The Quarterly Journal of Economics:

Quantifying the sources of firm heterogeneity

We develop and structurally estimate a model of heterogeneous multiproduct firms that can be used to decompose the firm-size distribution into the contributions of costs, "appeal" (quality or taste), markups, and product...Read more...

CEP discussion paper

Product mix and firm productivity responses to trade competition

We document how demand shocks in export markets lead French multi-product exporters to re-allocate the mix of products sold in those destinations. In response to positive demand shocks, those French firms skew their expo...Read more...

CEP discussion paper

Powering education

More than 1.3 billion people worldwide have no access to electricity and this has first-order effects on several development dimensions. In this paper we focus on the link between access to light and education. We random...Read more...

Journal article

Journal of International Economics:

Goods trade, factor mobility and welfare

We develop a quantitative spatial model that incorporates a rich geography of trade costs and labor mobility with heterogeneous worker preferences across locations. We provide comparative statics for the unique equilibri...Read more...

Journal article

Journal of Economics and Management Strategy:

Capacity Investment under Demand Uncertainty: The Role of Imports in the U.S. Cement Industry

Demand uncertainty is thought to influence irreversible capacity decisions. Suppose that local demand can be sourced from domestic (rigid) production or from (flexible) imports. This paper shows that the optimal domestic...Read more...

CEP discussion paper

Local and sectoral import spillovers in Sweden

In this paper I investigate the relevance and explore the nature of import spillovers on the firms' decision to start importing using an exceptionally detailed data set on Swedish firms' imports, at the product-level and...Read more...

Blog

LSE British Politics and Policy:

Foreign investors love Britain – but Brexit would end the affair

Foreign investment brings many benefits to the UK, including higher pay and productivity. But a Brexit vote could end it all, write Swati Dhingra, Gianmarco Ottaviano, Thomas Sampson and John Van Reenen. First, not being...Read more...

CEP Brexit analysis

BREXIT 2016: policy analysis from the Centre for Economic Performance

On June 23rd, the British people will vote in a referendum over whether or not to remain in the European Union. It is the most important vote that most of us will have in our lifetimes. And one that will have major reper...Read more...

CEP discussion paper

Production networks, geography and firm performance

This paper examines the importance of buyer-supplier relationships, geography and the structure of the production network in firm performance. We develop a simple model where firms can outsource tasks and search for supp...Read more...

CentrePiece article

Why immigration is no reason to leave the EU

A major argument of Brexit campaigners is that leaving the European Union would give the UK more control over the flow of immigrants, who they claim hurt the jobs and pay of native-born workers. CEP research shows that E...Read more...

CentrePiece article

Foreign investors love Britain - but Brexit would end the affair

Investment from overseas brings many benefits to the UK economy, including higher pay and productivity. According to CEP research, leaving the European Union could lead to a fall in inward foreign direct investment in th...Read more...

CentrePiece article

Brexit: the impact on UK trade and living standards

For over two years, a CEP research team has been studying the likely impact on the living standards of UK households of a referendum vote to leave the European Union. The first of three reports summarised here focuses on...Read more...

Blog

LSE British Politics and Policy:

No one would be spared: how the costs of Brexit would be distributed across households

That leaving the EU would damage the overall economy is now being treated as more of a fact than a speculation. But those for Brexit argue that the rich will be negatively affected while the poor will benefit. This is no...Read more...

Blog

LSE European Politics and Policy Blog:

The ‘Britain Alone’ scenario: how Economists for Brexit defy the laws of gravity

There is a degree of consensus among economists that a Brexit will make us worse off. The exception is recent work by Economists for Brexit. Their forecast of income gains from Brexit contrasts with all other economic an...Read more...

Blog

LSE British Politics and Policy:

The ‘Britain Alone’ scenario: how Economists for Brexit defy the laws of gravity

There is a degree of consensus among economists that a Brexit will make us worse off. The exception is recent work by Economists for Brexit. Their forecast of income gains from Brexit contrasts with all other economic an...Read more...

CEP Brexit analysis

‘ECONOMISTS FOR BREXIT’: A critique

Read more...

CEP discussion paper

Product switching and the business cycle

This paper explores role of product adding and dropping within manufacturing firms over the business cycle. While a substantial body of work has explored the importance of the extensive margins of firm entry and exit in ...Read more...

CEP discussion paper

Protectionism through exporting: subsidies with export share requirements in China

We study the effect of subsidies subject to export share requirements (ESR) - that is, conditioned on a firm exporting at least a given fraction of its output - on exports, the intensity of competition and welfare, throu...Read more...

CEP Brexit analysis

Brexit and the impact of immigration on the UK

A reduction in immigration from the European Union (EU) following a vote for Brexit would not lead to any improvement in living standards for those born in the UK. Cuts in EU immigration would not offset the big fall in ...Read more...

CEP discussion paper

Exporter dynamics and partial-year effects

Two identical firms that start exporting in different months, one each in January and December, will report dramatically different exports for the first calendar year. This partial-year effect biases down first year expo...Read more...

CEP discussion paper

Estimating border effects: the impact of spatial aggregation

Trade data are typically reported at the level of regions or countries and are therefore aggregates across space. In this paper, we investigate the sensitivity of standard gravity estimation to spatial aggregation. We bu...Read more...

Journal article

Journal of International Economics:

How firms export: Processing vs. ordinary trade with financial frictions

The fragmentation of production across borders allows firms to make and export final goods, or to perform only intermediate stages of production by processing imported inputs for re-exporting. We examine how financial fr...Read more...

Journal article

Journal of Economic Theory:

Assignment reversals: Trade, skill allocation and wage inequality

The allocation of skilled labor across industries shapes inter-industry wage differences and wage inequality. This paper shows the ranking of industries by workforce skill differs between developed and developing countri...Read more...

CEP discussion paper

Two-sided heterogeneity and trade

This paper develops a multi-country model of international trade that provides a simple micro-foundation for buyer-seller relationships in trade. We explore a rich dataset that identifies buyers and sellers in trade and ...Read more...

CEP discussion paper

Where does the wind blow? Green preferences and spatial misallocation in renewable energy sector

Are "greener" investments less efficient? This paper looks at the location choices by wind power investors. I measures the efficiency loss in this sector due to wrong project location and explore the factors contributing...Read more...

CEP Brexit analysis

The UK Treasury analysis of 'The long-term economic impact of EU membership and the alternatives': CEP Commentary

Overly cautious assumptions in the Treasury’s recent report on the long-run consequences for the UK economy of leaving the European Union (EU) mean that it has probably underestimated the economic costs. That is one of t...Read more...

CEP Brexit analysis

The impact of Brexit on foreign investment in the UK

The third in a series of Brexit reports from the Centre for Economic Performance (CEP), examines how leaving the EU would affect UK incomes through changes in foreign investment in the UK. Leaving the European Union (EU)...Read more...

CEP discussion paper

Rethinking deindustrialization

Manufacturing in high-income countries is on the decline and Denmark is no exception. Manufacturing employment and the number of firms have been shrinking as a share of the total and in absolute levels. This paper uses a...Read more...

CEP discussion paper

Global firms

Research in international trade has changed dramatically over the last twenty years, as attention has shifted from countries and industries towards the firms actually engaged in international trade. The now-standard hete...Read more...

Journal article

The Review of Economic Studies:

Landing the first job: The value of intermediaries in online hiring

Online markets for remote labour services allow workers and firms to contract with each other directly. Despite this, intermediaries-called outsourcing agencies-have emerged in these markets. This article shows that agen...Read more...

Journal article

Research Policy:

Measuring technological novelty with patent-based indicators

This study provides a new, more comprehensive measurement of technological novelty. Integrating insights from the existing economics and management literature, we characterize inventions ex ante along two dimensions of t...Read more...

Blog

LSE British Politics and Policy:

The question is not whether Brexit will cost the UK in economic terms but how much

For over two years, a research team at the Centre for Economic Performance (CEP) has been studying the likely impact of the UK leaving the European Union. Their latest report focuses on the impact of ‘Brexit’ through cha...Read more...

CEP Brexit analysis

The consequences of Brexit for UK trade and living standards

The economic consequences of leaving the EU will depend on what policies the UK adopts following Brexit. But lower trade due to reduced integration with EU countries is likely to cost the UK economy far more than is gain...Read more...

CEP discussion paper

State capacity and public goods: institutional change, human capital and growth in early modern Germany

What are the origins and consequences of the state as a provider of public goods? We study legal reforms that established mass public education and increased state capacity in German cities during the 1500s. These fundam...Read more...

CEP discussion paper

How have EU's trade agreements impacted consumers?

Over the past two decades, the European Commission has negotiated a number of Free Trade Agreements (FTAs) which contain both traditional elements of bilateral tariff reductions, as well as additional liberalisation meas...Read more...

CEP discussion paper

Special and differential treatment for developing countries

Special and Differential Treatment for Developing Countries (SDT) constitutes a central feature of the GATT/WTO system. Its formal goal is to foster export-led growth in developing countries. Its theoretical foundations ...Read more...

CEP discussion paper

Swimming upstream: input-output linkages and the direction of product adoption

Multiproduct firms dominate production, and their product turnover contributes substantially to aggregate growth. Firms continually adapt their product mix, but what determines which products firms expand into? Theories ...Read more...

CentrePiece article

Online hiring of offshore workers: the value of intermediaries

‘Old boy networks’ have not been rendered obsolete by modern communications technology. That is one of the conclusions of a study of global online labour markets by Christopher Stanton and Catherine Thomas. Their researc...Read more...

CentrePiece article

Flooded cities

Economic activity tends to return to flood-prone areas after floods rather than relocating to higher ground. What’s more, cities built in flood-prone areas are locking in exposure to flood risk for the long term. These a...Read more...

CEP discussion paper

Stagnation traps

We provide a Keynesian growth theory in which pessimistic expectations can lead to very persistent, or even permanent, slumps characterized by unemployment and weak growth. We refer to these episodes as stagnation traps,...Read more...

Journal article

The Quarterly Journal of Economics:

Dynamic selection: An idea flows theory of entry, trade, and growth

This article develops an idea flows theory of trade and growth with heterogeneous firms. Entrants learn from incumbent firms, and the diffusion technology is such that learning depends not on the frontier technology, but...Read more...

External publication

Measuring competitiveness in Europe: resource allocation, granularity and trade:

The importance of micro data in assessing aggregate outcomes

In recent years, researchers and policymakers have been able to use sophisticated databases to provide insightful economic analysis. The increasing variety of available microeconomic databases and the improvement in the ...Read more...

CEP discussion paper

Balanced growth despite Uzawa

Evidence for the United States suggests balanced growth despite falling investment-good prices and less than unitary elasticity of substitution between capital and labor. This is inconsistent with the Uzawa Growth Theore...Read more...

CEP discussion paper

The effect of trade liberalization on firm-level profits: an event-study approach

I use an event study approach to present novel evidence on the impact of trade liberalization on firm-level profits. Using the uncertainty surrounding the negotiation and ratification process of the Canada-United States ...Read more...

Journal article

Scientometrics:

Patent citation indicators: One size fits all?

The number of citations that a patent receives is considered an important indicator of the quality and impact of the patent. However, a variety of methods and data sources can be used to calculate this measure. This pape...Read more...

Journal article

Journal of International Economics:

Intrafirm trade and vertical fragmentation in U.S. multinational corporations

Using firm-level data, we document two new facts regarding intrafirm trade and the activities of the foreign affiliates of U.S. multinational corporations. First, intrafirm trade is concentrated among a small number of l...Read more...

Journal article

Journal of International Economics:

Institutions and export dynamics

We study how contract enforcement and export experience shape firm export dynamics in an environment with incomplete information. We show that exporters start with higher volumes and sell for longer periods in countries ...Read more...

CEP discussion paper

International technology transfer and domestic innovation: evidence from the high-speed rail sector in China

How does the transfer of advanced technology spur innovation in developing countries? This paper exploits the large-scale introduction of high-speed railway (HSR) technology into China in 2004 as a natural experiment to ...Read more...

Journal article

American Economic Review:

R and D, international sourcing, and the joint impact on firm performance

This paper studies the impact of an R&D cost shock on R&D investments, imported inputs, and their joint impact on firm performance. We introduce imported inputs into a model of R&D and endogenous productivity, and show t...Read more...

CEP discussion paper

Commuting, migration and local employment elasticities

Many changes in the economic environment are local, including policy changes and infrastructure investments. The effect of these changes depends crucially on the ability of factors to move in response. Therefore a key ob...Read more...

CentrePiece article

Immigration: the link to international trade in services

Two notable features of globalisation are the growth of immigration and the growth of international trade in services. Exploring links between these phenomena, Gianmarco Ottaviano, Giovanni Peri and Greg Wright find that...Read more...

CEP discussion paper

Contracting and the division of the gains from trade

This paper examines the microstructure of import markets and the division of the gains from trade among consumers, importers and exporters. When exporters and importers transact through anonymous markets, double marginal...Read more...

CEP discussion paper

Merger policy in a quantitative model of international trade

In a two-country international trade model with oligopolistic competition, we study the conditions on market structure and trade costs under which a merger policy designed to benefit domestic consumers is too tough or to...Read more...

CEP discussion paper

Relational contracts and supplier turnover in the global economy

Headquarters and their specialized component suppliers have a vital interest in establishing long-term collaborations. When formal contracts are not enforceable, such efficiency enhancing cooperations can be established ...Read more...

Journal article

The Review of Economics and Statistics:

Intermediaries in international trade: Products and destinations

This paper examines the factors that give rise to intermediaries in exporting and explores the implications for trade volumes. Export intermediaries such as wholesalers serve different markets and export different produc...Read more...

CEP discussion paper

The benefits of forced experimentation: striking evidence from the London Underground network

We estimate that a significant fraction of commuters on the London underground do not travel their optimal route. Consequently, a tube strike (which forced many commuters to experiment with new routes) taught commuters a...Read more...

CEP discussion paper

Media, markets and institutional change: evidence from the protestant reformation

This research studies the role of competition in the diffusion of radical ideas and institutional change during the Protestant Reformation. We construct a new measure of religious content in the media using data on all k...Read more...

CEP discussion paper

New media, competition and growth: European cities After Gutenberg

This research studies how variations in competition and in media content characterized the use and impact of Gutenberg's printing press technology during the European Renaissance. The research constructs annual firm-leve...Read more...

CEP discussion paper

Globalization: a woman's best friend? Exporters and the gender wage gap

While the impact of globalization on income inequality has received a lot of attention, little is known about its effect on the gender wage gap (GWG). This study argues that there is a systematic difference in the GWG be...Read more...

CEP discussion paper

Immigration, trade and productivity in services: evidence from UK firms

This paper explores the impact of immigrants on the imports, exports and productivity of service-producing firms in the U.K. Immigrants may substitute for imported intermediate inputs (offshore production) and they may i...Read more...

CEP discussion paper

Retail globalization and household welfare: evidence from Mexico

The arrival of global retail chains in developing countries is causing a radical transformation in the way that households source their consumption. This paper draws on a new collection of Mexican microdata to estimate t...Read more...

Journal article

American Economic Review:

Factoryless goods producing firms

This paper documents the existence and characteristics of US firms that do not manufacture themselves, but nonetheless are heavily involved in the production of goods. These factoryless goods producing firms (FGPFs) are ...Read more...

CEP discussion paper

Large capital inflows, sectoral allocation and economic performance

This paper describes the stylized facts characterizing periods of exceptionally large capital inflows in a sample of 70 middle- and high-income countries over the last 35 years. We identify 155 episodes of large capital ...Read more...

CEP discussion paper

The roles of import competition and export opportunities for technical change

A variety of empirical and theoretical trade papers have suggested and documented a positive impact of trade on the productivity of firms. However, there is less consensus about the underlying mechanism at work. While tr...Read more...

Journal article

The World Bank Economic Review:

The political economyof trade policy: Gone for good? Subsidies with export share requirements in China: 2002-13

This paper presents a simple model of subsidies with export share requirements (ESR) in a heterogeneous firm environment. A two-country general equilibrium version of the model with a single 100% ESR is calibrated using ...Read more...

CentrePiece article

Napoleonic protectionism: how France's cotton industry gained

Can temporary protection from trade with advanced economies foster the development of ‘infant industries’ in developing countries? Reka Juhasz considers a natural experiment: Napoleon’s wartime blockade of British export...Read more...

CentrePiece article

TTIP: is free trade coming to the North Atlantic?

If successfully concluded, the Transatlantic Trade and Investment Partnership (TTIP) would be the most ambitious free trade agreement in history. Dennis Novy explains that while the potential benefits from liberalised tr...Read more...

Journal article

Journal of International Economics:

Spatial exporters

In this paper, we provide causal evidence that firms serve new markets which are geographically close to their prior export destinations with a higher probability than standard gravity models predict. We quantify the imp...Read more...

CEP discussion paper

Temporary protection and technology adoption: evidence from the Napoleonic blockade

This paper uses a natural experiment to assess whether temporary protection from trade with industrial leaders can foster development of infant industries in follower countries. Using a new dataset compiled from primary ...Read more...

CEP discussion paper

Relaxing credit constraints in emerging economies: the impact of public loans on the performance of Brazilian manufacturers

n emerging economies credit constraints are often perceived as one of the most important market frictions hampering firm innovation and productivity growth in manufacturing. Huge amounts of public money are devoted to th...Read more...

CentrePiece article

Fiat Chrysler and the future of industry

Machines cannot fully replace people even in a high-tech industry like car-making. That is one of the conclusions of research which uses the example of the newly merged transatlantic car-maker Fiat Chrysler to debunk a n...Read more...

CEP discussion paper

From selling goods to selling services: firm responses to trade liberalization

In the face of trade liberalization domestic firms are often forced out of the market, whereas others adapt and survive. In this paper we focus on a new channel of adaptation, namely the shift toward increased provision ...Read more...

CEP discussion paper

European integration and the gains from trade

This chapter discusses whether and how .new quantitative trade models.(NQTMs) can be fruitfully applied to quantify the welfare effects of trade liberalization, thus shedding light on the trade-related effects of further...Read more...

CEP discussion paper

What is 'firm heterogeneity' in trade models? The role of quality, scope, markups and cost

We estimate a structural model of heterogeneous multiproduct firms to examine the sources of firm heterogeneity emphasized in the recent trade and macro literatures. Using Nielsen barcode data on prices and sales, we est...Read more...

CEP discussion paper

Immigration, diversity and the labour market outcomes of native workers: some recent developments

This brief essay provides a selective discussion of how in recent years economists in the neoclassical tradition have addressed the questions whether and how immigration affects native workers’ labour market outcomes. In...Read more...

CEP discussion paper

Benford's law, families of distributions and a test basis

Benford's Law is used to test for data irregularities. While novel, there are two weaknesses in the current methodology. First, test values used in practice are too conservative and the test values of this paper are more...Read more...

CEP discussion paper

Dynamic selection: an idea flows theory of entry, trade and growth

This paper develops an idea flows theory of trade and growth with heterogeneous firms. New firms learn from incumbent firms, but the diffusion technology ensures entrants learn not only from frontier technologies, but fr...Read more...

CEP discussion paper

Gone for good? Subsidies with export share requirements in China: 2002-2013

This paper presents a simple model of subsidies with export share requirements (ESR) in a heterogeneous firm environment. A two-country general equilibrium version of the model with a single 100% ESR is calibrated using ...Read more...

CEP discussion paper

Reconciling observed tariffs and the median voter model

Median voter theory applied to trade policy predicts positive tariffs in capital-abundant countries and negative tariffs in labor-abundant countries. Negative tariffs are rare, and this paper reconciles the median voter ...Read more...

CEP discussion paper

Transportation costs and the spatial organization of economic activity

This paper surveys the theoretical and empirical literature on the relationship between the spatial distribution of economic activity and transportation costs. We develop a multi-region model of economic geography that w...Read more...

CEP discussion paper

External integration, structural transformation and economic development: evidence from Argentina

This paper uses the natural experiment of Argentina’s integration into world markets in the late-nineteenth century to provide evidence on the role of internal geography in shaping the effects of external integration. We...Read more...

CEP discussion paper

Winners and losers from a commodities-for-manufactures trade boom

A recent boom in commodities-for-manufactures trade between China and other developing countries has led to much concern about the losers from rising import competition in manufacturing, but little attention on the winne...Read more...

CEP discussion paper

Trade and uncertainty

We offer a new explanation as to why international trade is so volatile in response to economic shocks. Our approach combines the uncertainty shock idea of Bloom (2009) with a model of international trade, extending the ...Read more...

CEP policy analysis

Brexit or Fixit? The Trade and Welfare Effects of Leaving the European Union

Since a speech by the Prime Minister in January 2013 , the Conservative party has been committed to holding a referendum on the UK’s membership of the European Union (EU) in 2017. So this is a good moment to consider wha...Read more...

CEP report

Internationalization and Innovation of Firms: Evidence and Policy

We use a representative and cross-country comparable sample of manufacturing firms (EFIGE) to document patterns of interaction among firm-level internationalization, innovation and productivity across seven European coun...Read more...

CEP discussion paper

The political economy of inclusive rural growth

Abstract Commentators on the `East Asian Miracle' of inclusive growth have often pointed toward shared rural growth policies. But why were these policies not chosen elsewhere? This paper models voters who invest in eithe...Read more...

CEP discussion paper

Missing gains from trade?

The theoretical result that there are welfare gains from trade is a central tenet of international economics. In a class of trade models that satisfy a 'gravity equation,' the welfare gains from trade can be computed usi...Read more...

CEP discussion paper

Trade integration, market size and industrialization: evidence from China's national trunk highway system

Large scale transport infrastructure investments connect both large metropolitan centers of production as well as small peripheral regions. Are the resulting trade cost reductions a force for the diffusion of industrial ...Read more...

Journal article

American Economic Review:

Immigration, offshoring, and American jobs

Following Grossman and Rossi-Hansberg (2008) we present a model in which tasks of varying complexity are matched to workers of varying skill in order to develop and test predictions regarding the effects of immigration a...Read more...

CEP discussion paper

The buyer margins of firms' exports

We use detailed data on exporters from Costa Rica, Ecuador and Uruguay as well as on their buyers to show that aggregate exports are disproportionally driven by few multi-buyers exporters whose foreign sales of any produ...Read more...

CEP discussion paper

Regional growth and regional decline

Since the early 1990s, there has been a renaissance in the study of regional growth, spurred by new models, methods and data. We survey a range of modelling traditions, and some formal approaches to the ’hard problem’ of...Read more...

CentrePiece article

In brief... China's trading success: the role of pure exporter subsidies

China's government provides a wide range of incentives to encourage firms to produce almost exclusively for the foreign market. The authors analyse the impact of these 'pure exporter subsidies' on both the Chinese econom...Read more...

CEP discussion paper

The financial resource curse

This paper presents a model of financial resource curse, i.e. episodes of abundant access to foreign capital coupled with weak productivity growth. We study a two-sector, tradable and non-tradable, small open economy. Th...Read more...

CEP discussion paper

Monopolistic Competition and Optimum Product Selection: Why and How Heterogeneity Matters

After some decades of relative oblivion, the interest in the optimality properties of monopolistic competition has recently re-emerged due to the availability of an appropriate and parsimonious framework to deal with fir...Read more...

CEP discussion paper

Firm Heterogeneity and Aggregate Welfare

We examine how firm heterogeneity influences aggregate welfare through endogenous firm selection. We consider a homogeneous firm model that is a special case of a heterogeneous firm model with a degenerate productivity d...Read more...

CEP discussion paper

Task Specialization in U.S. Cities from 1880-2000

We develop a new methodology for quantifying the tasks undertaken within occupations using 3,000 verbs from around 12,000 occupational descriptions in the Dictionary of Occupational Titles (DOTs). Using micro-data from t...Read more...

CEP discussion paper

Free Trade Aggreements and the Consolidation of Democracy

We study the relationship between participation in free trade agreements (FTAs) and the sustainability of democracy. Our model shows that FTAs can critically reduce the incentive of authoritarian groups to seek power by ...Read more...

CEP discussion paper

Heterogeneous Firms and Trade

This paper reviews the new approach to international trade based on firm heterogeneity in differentiated product markets. This approach explains a variety of features exhibited in disaggregated trade data, including the ...Read more...

CEP discussion paper

China's Pure Exporter Subsidies

One third of Chinese exporters sell more than ninety percent of their production abroad. We argue that this distinctive pattern is attributable to a wide range of subsidies that provide incentives to these “pure exporter...Read more...

CentrePiece article

Sexism at work

Women have, on average, been less well-paid than men throughout history. Prior to 1900, most economic historians see the gender wage gap as a reflection of men’s greater strength and correspondingly higher productivity. ...Read more...

CEP discussion paper

Productivity As If Space Mattered: An Application to Factor Markets Across China

Optimal production decisions depend on local market characteristics. This paper develops a model to explain firm labor demand and firm density across regions. Firms vary in their technology to combine imperfectly substit...Read more...

CEP discussion paper

Selection Effects with Heterogeneous Firms

We provide a general characterization of which firms will select alternative ways of serving a market. If and only if firms' maximum profits are supermodular in production and marketaccess costs, more efficient firms wil...Read more...

CEP discussion paper

Optimal Policy for Macro-Financial Stability

In this paper we study whether policy makers should wait to intervene until a financial crisis strikes or rather act in a preemptive manner. We study this question in a relatively simple dynamic stochastic general equili...Read more...

CEP discussion paper

Exporters, Importers and Credit Constraints

This paper analyses the interaction between credit constraints and trading behaviour. I construct a unique dataset containing firm-level trade transactions data, balance sheets and credit scores from an independent credi...Read more...

CEP discussion paper

Brain Drain or Brain Gain? Technology Diffusion and Learning On-the-job

This paper develops a theory of technology transfer when technology is embodied in human capital and learning requires on-the-job communication between managers and workers. Patterns of knowledge diffusion depend on wher...Read more...

CEP discussion paper

On the Measurement of Trade Costs: Direct vs. Indirect Approaches to Quantifying Standards and Technical Regulations

In this article, we review the literature on the measurement of trade costs in international trade with a special emphasis on nontariff measures and in particular on standards and technical regulations. We distinguish ‘d...Read more...

CEP discussion paper

Is the International Border Effect Larger than the Domestic Border Effect? Evidence from U.S. Trade

Many studies have found that international borders represent large barriers to trade. But how do international borders compare to domestic border barriers? We investigate international and domestic border barriers in a u...Read more...

CEP discussion paper

Reserve Accumulation, Growth and Financial Crises

We present a model that reproduces two salient facts characterizing the international monetary system: i) Faster growing countries are associated with lower net capital inflows and ii) Countries that grow faster accumula...Read more...

CEP discussion paper

Capital Controls or Exchange Rate Policy? A Pecuniary Externality Perspective

In the aftermath of the global financial crisis, a new policy paradigm has emerged in which old-fashioned policies such as capital controls and other government distortions have become part of the standard policy toolkit...Read more...

CEP discussion paper

The Economics of Density: Evidence from the Berlin Wall

This paper develops a quantitative model of city structure to separate agglomeration forces, dispersion forces and fundamentals as determinants of location choices. The model remains tractable and amenable to empirical a...Read more...

CEP discussion paper

Selection into Trade and Wage Inequality

This paper analyzes the impact of trade integration on wage inequality when there is heterogeneity across both workers and firms. By incorporating labor assignment into the heterogeneous firms literature I develop a mode...Read more...

CEP discussion paper

Immigration, Offshoring and American Jobs

How do offshoring and immigration affect the employment of native workers? What kinds of jobs suffer, or benefit, most from the competition created by offshore and immigrant workers? In contrast to the existing literatur...Read more...

CEP discussion paper

Market Size, Competition, and the Product Mix of Exporters

We build a theoretical model of multi-product firms that highlights how competition across market destinations affects both a firm's exported product range and product mix. We show how tougher competition in an export ma...Read more...

CEP discussion paper

Goods Trade, Factor Mobility and Welfare

This paper extends a recent class of quantitative models of international trade to incorporate factor mobility within countries. We present a model-based decomposition of the variance of economic activity into the contri...Read more...

CEP discussion paper

Trade and Inequality: From Theory to Estimation

While neoclassical theory emphasizes the impact of trade on wage inequality between occupations and sectors, more recent theories of firm heterogeneity point to the impact of trade on wage dispersion within occupations a...Read more...

CEP discussion paper

Intermediaries in International Trade: Direct Versus Indirect Modes of Export

This paper examines the factors that give rise to intermediaries in exporting and explores the implications for trade volumes. Export intermediaries such as wholesalers serve different markets and export different produc...Read more...

CEP discussion paper

Global Value Chains During the Great Trade Collapse: A Bullwhip Effect?

This paper analyzes the performance of global value chains during the trade collapse. To do so, it exploits a unique transaction-level dataset on French firms containing information on cross-border monthly transactions m...Read more...

CEP discussion paper

The Impact of Integration on Productivity and Welfare Distortions Under Monopolistic Competition

A fundamental question in monopolistic competition theory is whether the market allocates resources efficiently. This paper generalizes the Spence-Dixit-Stiglitz framework to heterogeneous firms, addressing when the mark...Read more...

CEP discussion paper

Agglomeration, Trade and Selection

This paper studies how firm heterogeneity in terms of productivity affects the balance between agglomeration and dispersion forces in the presence of pecuniary externalities through a selection model of monopolistic comp...Read more...

CentrePiece article

Sequential exporting: how firms break into foreign markets

Many countries are looking to their export sectors as a source of future growth, but how do domestic companies make a success of selling their output abroad? Research by Emanuel Ornelas and colleagues finds evidence of '...Read more...

CEP discussion paper

The Determinants of Intrafirm Trade: Evidence from French Firms

How well does the theory of the firm explain the choice between intrafirm and arms' length trade? This paper uses firm-level import data from France to look into this question. We find support for three key predictions o...Read more...

CEP discussion paper

Institutions and Export Dynamics

We study the role of contract enforcement in shaping the dynamics of international trade at the firm level. We develop a theoretical model to describe how agents build reputations to overcome the problems created by weak...Read more...

CEP discussion paper

Institutions and Export Dynamics

We study the role of contract enforcement in shaping the dynamics of international trade at the firm level. We develop a theoretical model to describe how agents build reputations to overcome the problems created by weak...Read more...

CEP discussion paper

Preferential Trade Agreements and the Labor Market

Labor market consequences are at the forefront of most debates on the merits of trade liberalization. Preferential trade agreements (PTAs) have become the primary form of trade liberalization in most countries, and sever...Read more...

CEP discussion paper

Gravity Redux: Measuring International Trade Costs with Panel Data

Barriers to international trade are known to be large but due to data limitations it is hard to measure them directly for a large number of countries over many years. To address this problem I derive a micro-founded meas...Read more...

CEP discussion paper

Spatial Frictions

The world is replete with spatial frictions. Shipping goods across cities entails trade frictions. Commuting within cities causes urban frictions. How important are these frictions in shaping the spatial economy? We deve...Read more...

CEP discussion paper

Service Trade and Occupational Tasks: An Empirical Investigation

Using micro data for Belgium we investigate the relationship between occupational tasks changes and the rise of service trade. We focus the analysis on the extensive margin and look at the heterogeneous proliferation of ...Read more...

CEP discussion paper

Assignment Reversals: Trade, Skill Allocation and Wage Inequality

Understanding the allocation of skilled labor across industries is necessary to explain inter-industry wage differences and the effect of trade on wages. This paper develops a multi-sector assignment model with both hete...Read more...

CEP discussion paper

Trading Away Wide Brands for Cheap Brands

Firms face competing needs to expand product variety and reduce production costs. Trade policy affects firm investments in product variety and production processes differently. Access to larger markets enables innovation...Read more...

CEP discussion paper

Spatial Exporters

In this paper, we provide causal evidence that firms serve new markets which are geographically close to their prior export destinations with a higher probability than standard gravity models predict. We quantify the imp...Read more...

CEP discussion paper

Heterogeneous Firm-Level Responses to Trade Liberalisation: A Test Using Stock Price Reactions

This paper presents novel empirical evidence on key predictions of heterogeneous firm models by examining stock market reactions to the Canada-United States Free Trade Agreement of 1989 (CUSFTA). Using the uncertainty su...Read more...

CEP discussion paper

The Empirics of Firm Heterogeneity and International Trade

This paper reviews the empirical evidence on firm heterogeneity in international trade. A first wave of empirical findings from micro data on plants and firms proposed challenges for existing models of inter- national tr...Read more...

CentrePiece article

In brief... Cotton and cars: the huge gains from process innovation

New inventions are good for economic growth, but equally important are improvements in the way we make things - what's known as process innovation. Tim Leunig and Joachim Voth measure the impact of two such innovations -...Read more...

Journal article

Journal of the European Economic Association:

Rethinking the effect of immigration on wages

This paper calculates the effects of immigration on the wages of native US workers of various skill levels in two steps. In the first step we use labor demand functions to estimate the elasticity of substitution across d...Read more...

CEP discussion paper

A Many-Country Model of Industrialization

We draw attention to the role of economic geography in explaining important cross-sectional facts which are difficult to account for in existing models of industrialization. By construction, closed-economy models that st...Read more...

CEP discussion paper

Managerial Incentives and Compensation in a Global Market

This paper embeds a principal-agent firm in an otherwise standard trade model a la Melitz (2003) to investigate the impact of globalization on the provision of managerial incentives and on the distribution of managerial ...Read more...

CEP discussion paper

Incomplete Contracts and the Impact of Globalization on Consumer Welfare

We embed a North-South trade model into an incomplete contracts setting where the production of heterogeneous firms can be geographically separated. When a Northern headquarter contracts with a Southern supplier instead ...Read more...

CEP discussion paper

Success and Failure of African Exporters

Using a novel dataset with transactions level exports data from four African countries (Malawi, Mali, Senegal and Tanzania), this paper uncovers evidence of a high degree of experimentation at the extensive margin associ...Read more...

CEP discussion paper

Spinning Welfare: the Gains from Process Innovation in Cotton and Car Production

Economists and economic historians want to know how much better life is today than in the past. Fifty years ago economic historians found surprisingly small gains from 19th century US railroads, while more recently econo...Read more...

CEP discussion paper

Portfolio Allocation and International Risk Sharing

Recent contributions have shown that it is possible to account for the so-called consumption-real exchange anomaly in models with goods market frictions where international asset trade is limited to a riskless bond. In t...Read more...

CEP discussion paper

Managers' Mobility, Trade Status and Wages

This paper investigates whether the arrival of managers with export experience, i.e. experience acquired through participation in the export activity of previous employers, is related to firms' international trade status...Read more...

CEP discussion paper

Import Competition from and Outsourcing to China: A Curse or Blessing for Firms?

We use Belgian manufacturing firm-level data over the period 1996- 2007 to analyze the impact of imports from different origins on firm growth, exit, and skill upgrading. For this purpose we use both industry-level and f...Read more...

CEP discussion paper

Second-Order Approximation of Dynamic Models with Time-Varying Risk

This paper provides first and second-order approximation methods for the solution of nonlinear dynamic stochastic models in which the exogenous state variables follow conditionally-linear stochastic processes displaying ...Read more...

CEP discussion paper

Financial Crises and Macro-Prudential Policies

Stochastic general equilibrium models of small open economies with occasionally binding financial frictions are capable of mimicking both the business cycles and the crisis events associated with the sudden stop in acces...Read more...

CEP discussion paper

International Trade Without CES: Estimating Translog Gravity

This paper derives a micro-founded gravity equation in general equilibrium based on a translog demand system that allows for endogenous markups and substitution patterns across goods. In contrast to standard CES-based gr...Read more...

CEP discussion paper

The Spatial Organization of Multinational Firms

Using six years of firm-level data covering 224 regions of the enlarged European Union, we evaluate the importance to a firm of locating its activities (production, headquarters, R&D, logistics and sales) close together....Read more...

CEP discussion paper

Trade and Labor Market Outcomes

This paper reviews a new framework for analyzing the interrelationship between inequality, unemployment, labor market frictions, and foreign trade. This framework emphasizes firm heterogeneity and search and matching fri...Read more...

Submission to a parliamentary inquiry and government consultation

BIS - Trade white paper: call for evidence

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CEP discussion paper

Bank Bailouts, International Linkages and Cooperation

Financial institutions are increasingly linked internationally. As a result, financial crisis and government intervention have stronger effects beyond borders. We provide a model of international contagion allowing for b...Read more...

CEP discussion paper

Monetary Policy Rules and Foreign Currency Positions

Using an endogenous portfolio choice model, this paper examines how different monetary policy regimes can lead to different foreign currency positions by changing the cyclical properties of the nominal exchange rate. We ...Read more...

CEP discussion paper

Is the WTO Article XXIV Bad?

This paper shows that the WTO's Article XXIV increases the likelihood of free trade, but may worsen world welfare when free trade is not reached and customs unions (CUs) form. We consider a model of many countries. Artic...Read more...

CEP discussion paper

Revisiting Overborrowing and Its Policy Implications

This paper analyzes quantitatively the extent to which there is overborrowing (i.e., inefficient borrowing) in a business cycle model for emerging market economies with production and an occasionally binding credit const...Read more...

CEP discussion paper

Adjusting to Capital Account Liberalization

We study theoretically how the adjustment to liberalization of international financial transaction depends upon the degree of domestic financial development. Using a model with domestic and international borrowing constr...Read more...

CEP discussion paper

Political Competition, Policy and Growth: Theory and Evidence from the United States

This paper develops a simple model to analyze how a lack of political competition may lead to policies that hinder economic growth. We test the predictions of the model on panel data for the US states. In these data, we ...Read more...

CEP discussion paper

Trade as an Engine of Creative Destruction: Mexican Experience with Chinese Competition

This paper exploits the surge in Chinese exports from 1994 to 2004 as a natural experiment to evaluate the effects of a unilateral low wage trade and competition shock to producers in Mexico. We find that this shock caus...Read more...

CEP discussion paper

Trade Crisis? What Trade Crisis?

We provide an analysis of the 2008-2009 trade collapse using microdata from a small open economy, Belgium. First, we find that changes in firm-country-product exports and imports occurred mostly at the intensive margin: ...Read more...