Working Papers
January 1, 0001
$name
January 1, 0001
$name
January 1, 0001
$name
2004
August 1, 2004
Russia and the WTO: The "Gravity" of Outsider Status
Description: With China's accession to the WTO in 2001, Russia is by far that organization's most prominent nonmember. This paper applies the gravity model to gauge whether this "outsider" status has been affecting Russia's export structure. On the basis of cross-section and panel regressions for 1995-2002, we find that Russian exports to WTO members have fallen short of the model's predictions. The paper discusses possible explanations of this result, including Russia's exclusion from various WTO procedures, although own-export restrictions could have a similar effect. The model points to Russia's further trade reorientation toward WTO members after a putative accession. Our results also prompt some ideas that may resolve the recent empirical controversy over the WTO's overall role in promoting trade.
August 1, 2004
Dimensions of Land Inequality and Economic Development
Description: There are several theories linking land inequality with aspects of economic development. Empirical work on these theories has attempted to establish a relationship between land inequality and institutions, financial development, and education. This research, though, has relied on measures of land inequality that capture only inequality within the class of landholders, ignoring completely the issue of landlessness. This omission raises suspicion about the usefulness of those empirical results. We use a new measure of the breadth of landholdings across the agricultural population to address this issue. We test the proposed relationships regarding land inequality and development using the new measure. The regressions fail to find significant and robust relationships between land inequality of either type and institutions or financial development. We do find that lower land inequality across agricultural populations, but not inequality within the landholding class, is associated with greater public provision of education.
August 1, 2004
Measuring the Trade Effects of EMU
Description: This paper examines the impact of European Economic and Monetary Union (EMU) on trade within the euro area. Using panel data for 22 industrial countries, the analysis estimates the effect of the euro's arrival on area-wide trade compared to bilateral trade flows between other industrial countries. Controlling for other influences according to the "gravity" model of trade, the panel analysis employs cointegration techniques to obtain reliable point estimates of EMU trade effects. Cross-country differences with respect to EMU trade gains and underlying factors accounting for these differences are also further explored.
August 1, 2004
What Are the Potential Economic Benefits of Enlarging the Gulf Cooperation Council?
Description: This paper uses a variant of the IMF's Global Economy Model (GEM) to estimate the macroeconomic effects of Yemen's full accession into the Gulf Cooperation Council (GCC). After calibrating the model to Yemen and the GCC countries, several simulations were carried out to estimate the potential impact of economic integration on both. The paper draws two fundamental conclusions. First, further steps in regional integration would enhance competition and produce large economic benefits for both Yemen and the GCC countries. In particular, we show that in some cases economic integration could increase GDP in Yemen by as much as 18 percent and in the GCC by as much as 20 percent over the long run. Second, even if market structures do not improve substantially, GCC enlargement can still generate substantial spillover gains with consumption increasing by up to 7 percent in Yemen and 8 percent in the GCC, respectively.
August 1, 2004
Identifying Threshold Effects in Credit Risk Stress Testing
Description: Using data from Argentina, Australia, Colombia, El Salvador, Peru, and the United States, we identify three types of threshold effects when assessing the impact of economic activity on nonperforming loans (NPLs). For advanced financial systems showing low NPLs, there is an embedded self-correcting adjustment when NPLs exceed a minimum threshold. For financial systems in emerging markets in Latin America showing higher NPLs, there is instead a magnifying effect once NPLs cross a (higher) threshold. GDP growth apparently affects NPLs only below a certain threshold, which is consistent with observed lower elasticity of credit risk to changes in economic activity in boom periods.
August 1, 2004
Regional Economic Disparities in Australia
Description: Australia's remarkable economic performance during the 1990s has not resulted in a significant convergence of real per capita income, output, and employment levels across the country's states and territories. This paper explores the role of certain economic rigidities that may have contributed to the lack of convergence, including rigidities in labor markets and in the structure of federal government transfers to households and subnational governments. The analysis suggests that the wage awards system has restricted the adjustment of real wages to productivity differentials, thus contributing to higher unemployment rates in some states. Federal government transfers to households also appear to have adversely affected work incentives in high unemployment states by limiting participation in the labor force.
August 1, 2004
Economic Integration, Business Cycle, and Productivity in North America
Description: This paper examines the effect of the major Canada-U.S. trade agreements on the dynamics of business cycles and productivity in Canada. The North American Free Trade Agreement (NAFTA) and its predecessor, the Canada-U.S. Free Trade Agreement (CUSFTA), have led to a substantial expansion of trade flows. Although common factors have played a larger role in explaining business cycles in Canada and the United States since the early 1980s, country-specific and idiosyncratic factors remain important for Canada. At the same time, while increased trade integration seems to have positively contributed to total factor productivity of Canadian industries, the persistence of structural differences between the two countries has prevented convergence of aggregate labor productivity. While these findings seem to weigh against moving toward a monetary union, they also suggest that substantial benefits could be reaped from further reducing remaining barriers to trade.