Preferential Trade Agreements and Global Value Chains: Theory, Evidence, and Open Questions
In: World Bank Policy Research Working Paper No. 8190
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In: World Bank Policy Research Working Paper No. 8190
SSRN
Working paper
In: Public choice, Band 144, Heft 1-2, S. 275-291
ISSN: 1573-7101
This paper presents a positive theory of (de)centralization of policy decisions in an international union -defined as a supranational jurisdiction that may exercise a policy prerogative on behalf of member countries. I build a benchmark model where national lobbies can coordinate (i.e. form a trans-national lobby) at no cost and show that lobbying does not affect the fiscal regime. On the other hand, when interest groups cannot coordinate, decentralization emerges as a political equilibrium with lobbying. Policy centralization hurts national lobbies by increasing competition for influence. At a constitutional stage, interest groups induce politically motivated governments to reject centralization. Three extensions show that this result depends on the level of cross-border externalities; the voting rule at the constitutional stage; and the details of the institutional decision mechanism under centralization. Adapted from the source document.
In: Public choice, Band 144, Heft 1, S. 275-292
ISSN: 0048-5829
In: Public choice, Band 144, Heft 1-2, S. 275-291
ISSN: 1573-7101
In: Il politico: rivista italiana di scienze politiche ; rivista quardrimestrale, Band 73, Heft 3, S. 108-132
ISSN: 0032-325X
This article looks at the political economy of structural reforms & growth in the European Union. As the EU's; economy approaches the world technology frontier, structural reforms that increase competition in intermediate goods sectors are necessary to boost innovation & productivity growth -- the main objective of the Lisbon Agenda. Such reforms, however, raise the opposition of incumbents and, therefore, are politically difficult to implement. When there are important policy spillover effects, national governments are more easily captured by vested interests, as they fail to internalize the benefits of reforms on the rest of the Union. This suggests that the weak political governance of the Lisbon Agenda, which is centered on the peer pressure of national governments, & the ensuing inability to complete the single market in non-manufacturing sectors, explains the Lisbon failure. Adapted from the source document.
In: Il politico: rivista italiana di scienze politiche ; rivista quardrimestrale, Band 73, Heft 3, S. 108-132
ISSN: 0032-325X
Is the politicisation of monetary policy in a currency union desirable? This paper shows that in a setting where political influence by national governments is modeled as a common agency game with rational expectations, the answer to this question crucially depends on whether the common central bank can commit to follow its policy.
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This paper presents a positive theory of centralization of political decisions in an international union. My central claim is that lobbies play a role in determining the assignment of competencies to the union because their power of influence can increase or decrease under centralization. I show that in this setting a misallocation of prerogatives between the international union and national governments can be an outcome, both leading to excessive decentralization and/or non necessary centralization. This result reconciles a partial inconsistency that recent studies pointed out between the allocation of prerogatives in the EU and normative criteria, as laid out in the theoretical literature.
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In: Journal of policy modeling: JPMOD ; a social science forum of world issues, Band 45, Heft 4, S. 768-780
ISSN: 0161-8938
With the success of the World Trade Organization and its predecessor, the General Agreement on Tariffs and Trade, in reducing conventional tariff barriers, much of the recent focus of regional and multilateral trade agreements has switched to non-tariff measures, both border and behind-the-border policies. This paper considers the recent empirical and theoretical literature on non-tariff measures in the world trading system. It provides a set of stylized facts based on available data on non-tariff measures and reviews the key methods used to estimate their trade impact. It considers the theoretical treatment of these measures in the trade literature with a focus on the rules and institutions that govern non-tariff measures in the world trading system. It discusses some of the major issues regarding international cooperation in these policy areas, in particular whether such cooperation should entail deep integration (involving precise legally binding obligations) or shallow integration (which allows countries greater discretion in the setting of non-tariff measures). Finally, this paper reviews some of the specific features the World Trade Organization uses in dealing with non-tariff measures such as national treatment rules and non-violation complaints, and considers policy options beyond the WTO such as harmonization and mutual recognition of standards.
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In: The B.E. journal of economic analysis & policy, Band 13, Heft 1, S. 239-270
ISSN: 1935-1682
Abstract: This paper examines the rationale for the rules on domestic subsidies in international trade agreements through a framework that emphasizes commitment. We build a model where the policy-maker has a tariff and a production subsidy at its disposal, taxation can be distortionary and the import-competing sector lobbies the government for favorable policies. The model shows that, under political pressures, the government will turn to subsidies when its ability to provide protection is curtailed by a trade agreement that binds tariffs only (policy substitution problem). When the factors of production are mobile in the long-run, but the investments are irreversible in the short-run, the government cannot credibly commit vis-à-vis the domestic lobby unless the trade agreement regulates production subsidies in addition to tariffs (policy credibility problem). We employ the theory to analyze the Subsidies and Countervailing Measures (SCM) Agreement within the WTO system. We show that WTO rules on nullification or impairment solves the policy substitution problem, while serious prejudice rules can address the policy credibility problem in sectors with tariff commitments.
In: The Scandinavian Journal of Economics, Band 115, Heft 3, S. 878-901
SSRN
This paper examines the rationale for the rules on domestic subsidies in international trade agreements through a framework that emphasizes commitment. We build a model where the policy-maker has a tariff and a production subsidy at its disposal, taxation can be distortionary and the import-competing sector lobbies the government for favourable policies. The model shows that, under political pressures, the government will turn to subsidies when its ability to provide protection is curtailed by a trade agreement that binds tariffs only. We refer to this as the policy substitution problem. When factors of production are mobile in the long-run but investments are irreversible in the short-run, we show that the government cannot credibly commit vis-à-vis the domestic lobby unless the trade agreement also regulates production subsidies, thus addressing the policy substitution problem. Finally, we employ the theory to analyze the Subsidies and Countervailing Measures (SCM) Agreement within the GATT/WTO system.
BASE
This paper examines the rationale for the rules on domestic subsidies in international trade agreements through a framework that emphasizes commitment. We build a model where the policy-maker has a tariff and a production subsidy at its disposal, taxation can be distortionary and the import-competing sector lobbies the government for favourable policies. The model shows that, under political pressures, the government will turn to subsidies when its ability to provide protection is curtailed by a trade agreement that binds tariffs only. We refer to this as the policy substitution problem. When factors of production are mobile in the long-run but investments are irreversible in the short-run, we show that the government cannot credibly commit vis-à-vis the domestic lobby unless the trade agreement also regulates production subsidies, thus addressing the policy substitution problem. Finally, we employ the theory to analyze the Subsidies and Countervailing Measures (SCM) Agreement within the GATT/WTO system.
BASE
In: CESifo Working Paper Series No. 3868
SSRN
Working paper