Institutionelle Aspekte einer neuen Handelsordnung
Diversification and the world trading system
Diversification is important because it is associated with economic growth and re- duced volatility. Diversification of exports, which provide foreign exchange and en- able imports of critical goods, services, and know-how, is crucial for developing coun- tries. The question we address in this brief is how export diversification is affected by trade policies, including multilateral rules, regional trade agreements, and national measures. The record on diversification is poor across a large number of developing countries, especially in Africa, the Middle East, and Latin America. Asian and Eastern European countries have performed better. Though diversification first requires do- mestic reforms, the current trading system does not help. The world trading system does not support developing countries with export diversification; moreover, the sit- uation is deteriorating. To promote export diversification in developing countries and to sustain long-term global growth, the Group of Twenty (G20) must restore the cred- ibility of the rule-based system. Reducing tariffs and tariff escalation in labor-intensive manufactures is critical. In many developing countries, the diversification potential for agriculture is severely impeded by subsidies, tariff barriers, and protectionist stan- dards. Individual countries can take many steps to foster export diversification, the most important of which are improving the efficiency of their service sector, liberal- izing imports of services, and encouraging inward direct investment. Reforms of the world trading system, spearheaded by the G20, can help promote these changes at the country level.
EU-China trade and investment relations in challenging times
In this report, we have focused on trade and investment relations and have not attempted to define the many other policy instruments that the EU can and should pursue to increase its leverage towards China, and to protect its domestic economy while boosting domestic investment and trade.
An analysis of EU FDI inflow into Russia
This paper analyzes the trends and drivers of inward foreign direct investment in Russia between 2009 and 2019. The EU is the premier provider of FDI into Russia, even though we find that reported values overstate its role given the use of Special Purpose Entities (SPEs). Key drivers of Russian FDI flows are the price of oil and natural resource markets, macroeconomic volatility, monetary policy, sanctions and trade impediments. As FDI is highly concentrated in natural resource rich regions, we argue that a sectoral decomposi- tion understates the importance of fossil fuel extraction. Based on this analysis as well as the literature on growth effects of FDI, we argue that Russia needs more investment into higher-value added activities.
FDI another day: Russian reliance on European investment
Most foreign direct investment into Russia originates in the European Union: European investors own between 55 percent and 75 percent of Russian FDI stock. This points to a Russian dependence on European investment, making the EU paramount for Russian medium-term growth. Even if we consider ‘phantom’ FDI that transits through Europe, the EU remains the primary investor in Russia. Most phantom FDI into Russia is believed to originate from Russia itself and thus is by construction not foreign.
Multilateralism in Crisis: The EU’s Response To Trade Wars
Chapter in “Europe in Identity Crisis: The Future of the EU in the Age of Nationalism“, edited by Carlo Altomonte and Antonio Villafranca
The Impact of Wage Premiums on Educational Attainment and Social Mobility
This paper investigates the role that wage premiums play for educational attainment and intergenerational social mobility. An important difference between countries with low and high levels of social mobility is the extent of upward mobility of children from low income families. This is mainly explained by the probability of high school dropout. I develop a model with three levels of education in which children facing a credit constraint choose which level of education to attain based on a transfer that they receive from their parents. I find in an empirical exercise that in the U. S. the opportunity cost of education is more important in explaining the high school dropout rate of men than the return on education. The model and the empirical results imply that a policy that reduces the opportunity cost of education and is paid by higher taxation on graduates, reducing the return on education, could decrease dropout rates, and also increase the number of graduates not facing a binding credit constraint. Such a policy could also be effective in increasing the college graduation rate of poor students and in decreasing levels of student debt.
Explaining Trends in Fertility and Childlessness in Germany
In this paper, I analyse the decline in fertility in Germany. Decomposing the decline in completed fertility in Germany of the cohorts of women born between 1930 and 1965, I observe two distinct stages: In the first stage the decline in fertility is due to a decrease in intensive fertility (number of children per women with at least one child), whereas in the second stage the decline is due to a decrease in extensive fertility (increase in childlessness). Based on an event study approach, I argue that there are high opportunity cost of having children for women in terms of working time (and hence forgone income) independent of their education level. Based on these findings, I develop an overlapping generations model with childlessness and quantity/quality trade-off driven by the time cost of children. In a calibration exercise, this model is able to generate the decline in intensive fertility as well as the increase in childlessness that I observe in the data with an decrease in the gender wage gap.
Working Paper following soon.
Determining Education Quality in a Greying Society
With Gianko Michailidis
The increase in income inequality and the population ageing are two of the major trends in developed countries. In this paper, we analyse the effect of these trends on the level of public education and pensions spending. For this, we developed an overlapping generations model with public and private education, a pay-as-you-go pension system, endogenous fertility, and probabilistic voting on pensions and education spending. In this model, an increase in income inequality increases public education and pensions spending per enrolled student and retiree, respectively, and decreases the participation in public education and fertility. An increase in the share of retirees in the economy decreases the per student spending on public education and pensions, while decreasing the participation in public education and the fertility rate. The empirical evidences from OECD countries confirm our theoretical predictions regarding public education spending.