This article examines the impact of intra-industry trade on Business cycle synchronization in the Economic Community of West African States (ECOWAS). The paper has two primary contributions. First, it utilizes the two-digit level HS classification to measure intra-industry trade, which is easy to interpret and calculate and is suitable for countries with low trade intensity. Second, it employs the system generalized method of moments (system-GMM) to analyze the dynamic relationship between variables and address the issue of endogeneity. Using data from 13 countries between 2000 and 2020 enables the investigation of endogeneity in ECOWAS. Results from the system-GMM estimation indicate a significant and positive relationship between intra-industry trade intensity and business cycle synchronization, advocating for policies focused on reducing tariff barriers, enhancing financial integration, and diversifying production.
This study re-examines the purchasing power parity (PPP) hypothesis for six developed countries, addressing the inconsistent evidence in the existing empirical literature. By applying a newly developed multiple autoregressive distributed lag (MARDL) unit root test, this study updates that both real and real effective exchange rates of the UK, Canada, Australia, Japan, Switzerland, and New Zealand (with the US as a covariate) are non-stationary, I(1) for 2000m1-2023m12, suggesting that the PPP does not hold.
This study examines the impact of global trade disruptions using a Generalized Autoregressive Conditional Heteroskedasticity (GARCH) model, focusing on the Red Sea Crisis, which has disrupted key maritime ports including the Bab el-Mandeb Strait, the Suez Canal and the Cape of Good Hope, and the severe drought constraining traffic through the Panama Canal. By analyzing cargo ship transit data before, during, and after these events, the study quantifies the effects of both geopolitical and environmental disruptions on global trade dynamics. The findings reveal displacement and increased volatility in trade patterns, highlighting the far-reaching impacts of such crises on international commerce. These results emphasize the need for geopolitical stability and environmental resilience in key trade routes, a conclusion that is also relevant for policymakers.
In this paper, we study the effects of heterogeneous sensitivities to social norms when an environmental regulator designs a mechanism for land retirement. We show that when the social norm exceeds the personal norm, as expected, landowners who are relatively sensitive to social norms ("conformists") retire more land. However, when the social norm is below the personal norm, landowners who are more sensitive to personal norms ("individualists") conserve more. Endogenizing the social norm shows that the efficient provider might not supply the efficient quantity of land retirement.
We examine the potential of upcoming Central Bank Digital Currencies (CBDCs) to be used as a means of transferring remittances. In a simple theoretical model, CBDCs compete with traditional channels provided by specialized intermediaries and with digital transfer options already offered by fintech companies. Their success depends on factors such as anonymity, potential conversion into cash, and the network effects generated by CBDC transactions among recipients' families.
