The World EconomyEarly View ANNOUNCEMENT The Corden Prize 2023 David Greenaway, David GreenawaySearch for more papers by this authorRichard Kneller, Richard KnellerSearch for more papers by this authorChris Milner, Chris MilnerSearch for more papers by this authorZhihong Yu, Zhihong YuSearch for more papers by this author David Greenaway, David GreenawaySearch for more papers by this authorRichard Kneller, Richard KnellerSearch for more papers by this authorChris Milner, Chris MilnerSearch for more papers by this authorZhihong Yu, Zhihong YuSearch for more papers by this author First published: 09 April 2024 https://doi.org/10.1111/twec.13574Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onEmailFacebookTwitterLinkedInRedditWechat No abstract is available for this article. REFERENCE Athukorala, P., Hill, H., & Jayasuriya, S. (2021). Economist as public intellectual: Max Corden's journey through life. The World Economy, 44, 1472–1483. 10.1111/twec.13129 Web of Science®Google Scholar Early ViewOnline Version of Record before inclusion in an issue ReferencesRelatedInformation

The 2008–2009 global financial crisis was a once-in-a-century financial shock; COVID-19 has been a once-in-a-century public health shock. Both were largely unexpected; both have had massive economic impacts. A cocktail of factors catalysed the global financial crisis, in particular: low-interest rates; boom in subprime lending; the use of derivative assets based on mortgage securities that were treated as essentially riskless in the shadow banking sector. With hindsight, it could be said that the inevitability of a crash ought to have been obvious, and indeed some commentators had the foresight to say just that. But, as Reinhart and Rogoff explain so well in their panoramic view of ‘Eight Centuries of Financial Folly’ those driving financial markets tend to have short memories and discount warning signs because ‘This Time is Different’. The same cannot be said for COVID. Although many public health experts have drawn attention to the possibility (for some, inevitability) of a global pandemic, it tended to be predicated on some kind of influenza outbreak. The emergence of a novel coronavirus as easily transmissible and as deadly as COVID-19 was completely unexpected. Such as the infectivity of the virus that community transmission has been rapid, with profound consequences for morbidity and mortality. At the time of writing, more than 275 million cases globally, and 5.4 million deaths had been reported. These are undoubtedly underestimated due to cases and deaths either not being recorded or being intentionally underreported. Moreover, the crisis is far from over, with new strains emerging (most recently Omicron) challenging the capacity of public health care in general, and acute care in particular. It is also the case that health burdens have been differential. We know now that demographical factors matter, in particular age, ethnicity and deprivation are associated with morbidity and mortality. Geography also matters: in terms of deaths per million of the population, 42 of the top 50 countries are in Europe and in the America. We can speculate on the causal factors driving these outcomes, but it would be just that, speculation. In time epidemiologists and public health experts will give us some answers. In the absence of safe and effective vaccines, many governments responded with measures to limit social contact and interaction, most dramatically through lockdowns, and travel bans, with significant economic consequences. In 2020 global GDP contracted sharply by 3.3%. As with health effects, there were differential economic effects; the UK economy for example shrank by 9.9%, whilst Vietnam actually grew by 2.9%. But the bottom line is that in almost all economies GDP contracted. Trade was also hit badly, falling by 5.3% in 2020. Both the IMF and WTO are forecasting a strong recovery in 2021: 6% growth in GDP and 8% growth in trade, respectively, with considerable slowing for 2022. But that is of course contingent on a number of factors, not least the balance between rising infections in many developing and emerging economies, and access to vaccines. And once we get beyond 2021, the world is just a very uncertain place, with prospects for GDP and trade-dependent on a range of downside risks (e.g. debt overhang, inflation and financial tightening, trade tensions and conflict) and upside risks (e.g. acceleration of access to vaccines, hard wiring of global value chains, scope for policy intervention and coordination). It is astonishing to reflect on the fact that the extent of the public health challenge posed by COVID only became apparent in Q1 2020, yet by Q4 2020 several vaccines had been developed, undergone clinical trials to demonstrate safety and efficacy, and received regulatory approval for deployment in several polities. That is a tribute to past public investment in science in many countries (e.g. in genome sequencing), the quality and ingenuity of the scientists involved, the extent of scientific collaboration internationally, the willingness of governments to invest and share risk, and further below the radar the hard wiring and resilience of global value chains. So, COVID has not run its course, there are many uncertainties, and much research needs to be done. Nevertheless, it is worth reflecting on some of what we already know, and what we have learned from this. That is the rationale for this Special Issue of The World Economy, which brings together 11 papers focussed on aspects of trade and trade policy. Has COVID affected trade policy? Public discourse suggests it has, with interventions to restrict exports and/or facilitate imports of, for example, personal protective equipment (PPE). Historically, changes in trade policy have tended to be discontinuous and inconsistently reported. So, can we say anything of value about COVID and trade policy? Simon Evenett et al. argue we can. They leverage a unique database assembled by the Global Trade Alert (GTA), which tracks weekly changes in interventions in two sectors: medical goods and medicines, and agricultural and food products. For this paper, they use a version of the dataset covering the period from January to October 2020. It includes 701 policy measures covering 135 customs territories. Their interrogation of this data reveals a sharp increase in policy activism over the first three months of the pandemic, with measures targeting medical products and PPE accounting for two-thirds of interventions. Although there is considerable heterogeneity, recourse to export controls of one form or another was common. Their analysis poses a number of follow on research questions and raises some important issues for the post-COVID trade policy environment. Kozunobo Hayakawa and Kohei Imai indirectly reference on trade policy responses by focussing on trade in medical products among 35 reporting countries and 250 partner countries, over the period January to August in both 2019 and 2020. Specifically, they investigate trade in four categories: medicines, medical supplies, medical equipment and PPE. Their research strategy involves regressing trade values for each category on COVID cases or deaths in importing and exporting countries to generate a baseline trade effect. They then introduce four measures to capture political, economic demographical and geographical ties, which might shape bilateral trade. They report that an increase in COVID-19 resulted in decreases in exports of medical products, which is consistent with what Evenett et al. reported in the previous paper. Interestingly, however, any decrease is smaller when exporting to countries with political or economic ties or to neighbouring countries. By contrast, demographical ties are critical in the import of medical products, especially PPE. Thus medical products are likely to be exported based on political or economic incentives during the pandemic, whereas identity or demographical ties play a key role in the import of such products. Usman Khalid et al. also focus on stock market effects, asking whether the magnitude of initial stock market responses contributed to the scale of government stimulus packages. Clearly, there are many factors that determine how governments intervened. These include the scale of infection transmission, the capacity of health systems to cope, initial budget balance, level of income and so on. Khalid et al. build a model that accounts for these social and economic factors in order to isolate possible stock market effects and estimate this for a sample of up to 113 (developed and developing) countries. Their results do suggest stock market dips were a determining factor in the scale of fiscal and monetary stimulus responses to the pandemic, though the result is driven largely by the level of development, with richer countries responding more aggressively. A different issue is the effect of the pandemic on specific sectors of the economy. One sector that was particularly affected was tourism. This sector was affected almost immediately, and the effect was large. Pizzuto et al. draw on earlier work, and leverage data from earlier pandemic periods to study the effect of pandemic disease on tourist arrivals. The authors show not only that a pandemic in a country reduces tourist arrivals significantly, but that the effect is larger for countries with low health system performance. These effects can continue for quite some time after the pandemic passes, suggesting in particular that economic recovery for emerging, low income and developing countries with large tourism sectors may face long term economic challenges. Supply chain issues have figured prominently in public discussions of both the economic effects of COVID-19 and the effectiveness of national responses to the virus. Not surprisingly, then, there has been considerable recent research on supply chain issues and we are fortunate to have several fine pieces of original research and a survey paper that seeks to provide an overview of some of the existing research. The overview paper, by a team from the World Trade Organisation (Marc Bacchetta, Eddy Bekkers, Roberta Piermartini, Stela Rubinova, Victor Stolzenburg and Ankai Xu) seeks to provide an overview of current research on COVID-19 and global value chains. Specifically, they seek to distinguish work on the relationship between COVID-19 and value chains as that which is based on positive analysis and that which is based on normative analysis. In either case, the key issue is the organisation/reorganisation of value chains. On the positive side, the authors are interested in the way the pandemic increases trade costs, increases firm risk, and the way firms might respond to those shocks. The main result is that diversification enhances the robustness and resilience of firms facing shocks and, thus, that the pandemic is unlikely to lead to large re-shoring of production. The normative analysis seems to draw on the theory of economic policy as a framework for considering potential welfare-increasing government interventions. The main foci here are informational and externality issues within value chains. These are standard issues in the theory of economic policy, but what distinguishes the assertions in this paper is that these are treated as internal to firms. This would seem to raise questions, central to the literature on theory of the firm, of why firms are not dealing with such issues. Under standard theory of economic policy reasoning, whatever is the barrier to efficient firm response is the source of the problem. The next part of the normative section leaves the firm-level analysis (and pretty much leaves value chains) to discuss the question of essential goods and the appropriate policy response to shortfalls in such goods in time of crisis. These are big and important questions, and it is not surprising that the authors offer very little in the way of results. The paper concludes with a discussion of the role of international coordination in general, and of the WTO in particular. The authors suggest that there is one. Thomas Bollyky and Chad Bown offer a forensic analysis of how COVID-19 vaccine supply chains emerged in the midst of a pandemic, and the critical role that at-risk public investments played. They carefully explain a process, which starts with fundamental R&D prior to clinical trials, and when a decision to manufacture is made through drug substance and drug product formulation, fill and finish, then distribution. A bespoke database allows them to explain how manufacturing networks were scaled up for six vaccine candidates: Pfizer/BioNTech, Moderna, Oxford/Astra Zeneca, Johnson&Johnson, Novavax, and CureVac. From this, we see how dozens of other companies in almost 100 different geographical locations came together to scale up global manufacturing. It provides a compelling insight into how the pharmaceutical sector responded to an unprecedented challenge. Bown and Bollyky also analyse the role of policy intervention in general, and at-risk public investment in particular. These include Operation Warp Speed in the US, subsidies to accelerate manufacturing in the UK and Germany, and multilateral initiatives like CEPI. They conclude that ‘Heavy government involvement – especially considerable public investment made at risk – shaped the evolution of these supply chains and the speed at which they were formed’. Where Bown and Bollyky present a very interesting case of the way access to global partners in the formation of value chains permits more effective response to an unexpected shock, and the ways governments might support this response, the remaining three papers provide evidence on the way the spread of COVID-19 has affected national (or more local) economies. In their contribution, Peter Egger and Jiaqing Zhu begin from the proposition that the proliferation of international values chains results in increased business travel, and as well as providing a mechanism for transmission of ideas and propagation of economic shocks, this also offers a mechanism for transmission of disease. To investigate this possibility, they focus on the early stages of the pandemic in China. Specifically, they use input–output data to disentangle mobility of people between Chinese cities into a component that is driven by business linked to value chains (in China) and a component, which is unrelated to value chains. Egger and Zhu find that, in the earliest stages of the pandemic, what mattered most was the concentration of local infection, both to transmission and to stock market effects (as a proxy for short term economic impact). However, as the pandemic evolved, city to city value chain transmission of disease became more noticeable, and inter-city stock market effects also became more important. Stefan Pahl et al. address a somewhat different question: how have value chain links through key GVC hubs (the EU, the US and China) both assisted in the spread of the virus, but also helped ameliorate the effects of the virus? Using modern global input–output techniques, the authors estimate the effect of trade in value added on national demand and supply, thus providing estimates of the effect of GVC trade on the macroeconomies of developing countries. They find significant effects of both demand and supply shocks, but they also find that these effects vary considerably across countries. Perhaps not surprisingly, the countries least engaged in GVC trade (e.g. sub-Saharan Africa) are least affected. Finally, Alvaro Espitia, Aaditya Mattoo, Nadia Rocha, Michele Ruta, and Deborah Winkler, all from the World Bank, develop a sophisticated econometric approach to the evaluation of pandemic shock that incorporates: home shocks; shocks to partner countries; and shocks to third countries; and that also permits multiple margins of adjustment. These are embedded in a sector-level gravity framework, which is applied to a difference-in-differences analysis. The authors find considerable cross-sectoral heterogeneity with factors such as feasibility of remote work, durability of goods, and participation in GVCs affecting the trade effects. The papers in the Special Issue are obviously not the last word on the trade and trade policy effects of COVID-19, but do provide valuable insights into impact effects and set out agendas for future research. We are very grateful to all of the contributors for their cooperation in preparing this Special Issue.

The World EconomyVolume 44, Issue 10 p. 2794-2794 EDITORIAL Mini-symposium: Institutions, policies and performance Managing Editor’s Note David Greenaway, Corresponding Author David Greenaway Joint Managing Editor david.greenaway@nottingham.ac.uk University of NottinghamSearch for more papers by this author David Greenaway, Corresponding Author David Greenaway Joint Managing Editor david.greenaway@nottingham.ac.uk University of NottinghamSearch for more papers by this author First published: 07 October 2021 https://doi.org/10.1111/twec.13197Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat No abstract is available for this article. Volume44, Issue10October 2021Pages 2794-2794 RelatedInformation

This paper examines whether increased import competition induces domestic workers to skill upgrade and/or switch industries. The analysis makes use of a large unique longitudinal matched employer-employee dataset that covers virtually all workers and firms in Portugal over the 1986-2000 period. Our identification strategy uses two exogenous changes in the degree of international competition. First, we exploit the strong appreciation of the Portuguese currency in 1989-1992 and pre-existing differences in trade exposure across industries in a differences-in-differences estimation. Second, we make use of changes in industry-specific (source-weighted) real exchange rates. A bivariate probit model is used to analyse the impact of increased international competition on skill-upgrading and/or industry switching. Based on both empirical strategies, and on two different skill definitions, we find strong confirmation for the hypothesis that increased international competition increases the returns to skill and induces skill upgrading.

On 23 June 2016, the British electorate were asked to vote on the question “Should the United Kingdom remain a member of the European Union or leave the European Union.” Their answer, by a margin of 51.9%–48.1% of votes cast, was “leave.” It is probably fair to say that most of us did not really know what that meant; not least because the term the “EU” might be considered to encompass some or all of the dimensions of EU policy space—the single market and the customs union. At a headline level, there has been clarity of sorts: for leavers, it offered the prospect of “taking back control of our borders, our money and our laws”; for remainers, it might involve giving up expected increases in living standards from being part of the customs union and single market. But the debate since 2016 has been noisy, sometimes confused, and often without any systematic discussion of evidence. Maybe that is not so surprising, partly because we still do not know what a final separation agreement looks like, and partly because expert evidence tends either to be dismissed, or has real difficulty getting attention. As Williams (2018) has argued persuasively, attention is a scarce resource, increasingly captured by digital technologies. During the referendum campaigns, the then Government's Justice Secretary famously declared “we have had enough of experts” a statement as foolish as it is irresponsible, since Government Ministers should be guided in evidence-based policy, rather than driven by policy-based evidence. In fact what the increasingly febrile debate of the past 2 years has clearly demonstrated is that we have not had or not heard from enough of experts! Exiting the EU is a major policy shock, with unknowable consequences. But unknowable does not mean unpredictable. Whether a remainer or a leaver, our position should be informed by independent expert, analysis and evidence. In this mini-symposium, we bring together three papers on possible consequences of Brexit on the UK economy. Although they have a common focus, they deploy different modelling strategies, and there are some significant differences in predicted outcomes. But that is a strength of the symposium, not a weakness. Our intention in bringing them together is to inform the broader debate at a crucial point in UK-EU negotiations, and understanding what underpins different model outputs is crucial. In the first paper, Arno Hantzsche, Amit Kara and Garry Young of the National Institute for Economic and Social Research have a particular and timely focus, namely Prime Minister May's deal agreed with the European Commission and European Heads of Government. Of course, this particular deal may not come to fruition. Notwithstanding Mrs May and the EU leadership stressing it is the only deal on the table, it may fail to progress through the House of Commons in its current form. Nevertheless, it is essential to have a sense of its possible impact on the UK economy where it to be finalised in any form that resembles the current draft. Hantzsche, Kara and Young first assess how trade, migration, foreign direct investment, productivity and contributions to the EU budget might change by evaluating current proposals against historical evidence. They then deploy the well-established National Institute Global Econometric Model (NiGEM) to analyse macroeconomic effects. The conclusion from their analysis is that trade with the EU, especially in services, would be more costly after Brexit. Other things being equal, this will have adverse effects on living standards in the UK. The central estimate is that GDP in the longer term will be around 3 per cent lower per head than it would have been had the UK remained in the EU. Variations are also evaluated. So, if the UK were to remain in a customs union with the EU, or if the Irish backstop position was to be invoked, there would still be a loss to GDP per capita of 2 per cent. As with all such expert analyses, estimates are fashioned by the modelling structure and framing assumptions, which the authors are quick to stress. And the estimates are obviously subject uncertainty, as there is no historical precedent of a major country leaving a major trading block such as the EU. However, as with the other papers, theirs is a considered view, which is based on a well-regarded econometric modelling framework. In the second paper, Michael Gasoriek, Ilona Serwicka and Alasdair Smith of the University of Sussex adopt a different modelling strategy, and a different focus. Their framework is multisector and partial equilibrium, a key advantage of which is that it enables analysis at a finer level of aggregation than computable general equilibrium analyses or gravity modelling. Thus, whereas HM Treasury's analysis seems to be framed on nine manufacturing sectors, Gasoriek, Serwicka and Smith analyse effects on 122 sectors, using 2016 trade data. The authors argue this greater level of disaggregation really matters and corresponds more closely to the level of detail at which trade negotiations are actually conducted: it allows for more detailed examination of possible impacts on prices, output and trade on specific industries; it facilitates an analysis of the effects of aggregation; it makes it possible to explore the impact of industry characteristics like technological intensity; and it accommodates extension to spatial and labour market effects. Gasoriek, Serwicka and Smith model five different Brexit scenarios on the “soft” to “hard” spectrum. None of the five results in a positive outcome for UK manufacturing. EEA membership is least damaging, and unilateral free trade (and associated loss of preferences in export markets) has the biggest negative impact. Their results point to considerable variation across manufacturing sectors, geographically, and across skill categories of labour. The final paper from Patrick Minford of Cardiff University begins with a challenge to the suitability of gravity modelling for estimating trade and output effects of Brexit. The challenge is twofold. First, the author argues that the outputs of such modelling are essentially a set of correlations (e.g., between trade agreements and trade; trade and FDI; FDI and productivity) with no theoretical grounding. Second, there is no attempt to test outcomes against plausible alternatives, like the (theoretically well specified and general equilibrium) classical model of trade. Minford addresses both challenges. First, he compares simulated data for the gravity and classical models with actual data for the UK, and finds the classical model dominates. Second, he then evaluates the economic consequences of Brexit using the Cardiff World Trade Model. By contrast with results from gravity models (and indeed some computable general equilibrium models), his results point to net gains rather than net losses from a “clean Brexit” (or what some describe as a “hard Brexit”). The source of these gains is fourfold: moving to free trade with non-EU countries which currently face high EU protection; substituting UK-based regulation for EU-based Single Market regulation; discontinuing subsidies the “four freedoms” forces the UK to give EU unskilled immigrants; and ending UK budget contributions to the EU. Together, these could lead to UK growth being 0.5% per annum higher over the next 15 years. These results stand in marked contrast to outputs from gravity models and most CGE results, and Minford carefully explains why this is the case, which emphasises again the importance of being very clear on assumptions, and understanding fully the modelling strategy deployed. We should know the terms of the UK's separation from the EU in the short term, if only because of the imminence of 29 March 2019. It will take a bit more time to establish what follows, and an even longer passage of time before we have the data to establish consequences and causes. But none of that means we cannot deploy careful analysis and modelling to explore what might happen, and inform policy choices. And this is what this collection of papers does. The contrast in methodologies and results is a strength of the mini-symposium, and we hope the papers receive the attention they deserve in informing the current debate.

This paper reflects on the career contributions of Professor Chris Milner to the literature on international trade and economic development. As such, it not only provides an overview of a life's work, but also sets the context for the nine papers which follow. All of these were specially written for this Special Issue of The World Economy, and all relate to different areas that Professor Milner worked in.

Sledgehammer integrates automatic theorem provers in the proof assistant Isabelle/HOL. A key component, the fact selector, heuristically ranks the thousands of facts (lemmas, definitions, or axioms) available and selects a subset, based on syntactic similarity to the current proof goal. We introduce MaSh, an alternative that learns from successful proofs. New challenges arose from our "zero click" vision: MaSh integrates seamlessly with the users' workflow, so that they benefit from machine learning without having to install software, set up servers, or guide the learning. MaSh outperforms the old fact selector on large formalizations.

Before software can be formally reasoned about, it must first be represented in some form of logic. There are two approaches to carrying out this translation: the first is to generate an idealised representation of the program, convenient for reasoning about. The second, safer approach is to perform a precise, conservative translation, at the cost of burdening verification efforts with low-level implementation details. In this thesis, we present methods for bridging the gap between these two approaches. In particular, we describe algorithms for automatically abstracting low-level C code semantics into a higher level representation. These translations include simplifying program control flow, converting finite machine arithmetic into idealised integers, and translating the byte-level C memory model to a split heap model. The generated abstractions are easier to reason about than the input representations, which in turn increases the productivity of formal verification techniques. Critically, we guarantee soundness by automatically generating proofs that our abstractions are correct. Previous work carrying out such transformations has either done so using unverified translations, or required significant manual proof engineering effort. Our algorithms are implemented in a new tool named AutoCorres, built on the Isabelle/HOL interactive theorem prover. We demonstrate the effectiveness of our abstractions in a number of case studies, and show the scalability of AutoCorres by translating realworld programs consisting of tens of thousands of lines of code. While our work focuses on a subset of the C programming language, we believe most of our algorithms are also applicable to other imperative languages, such as Java or C#.