Essays On Institutional And Macroeconomic Aspects Of International Trade

The overarching theme of this dissertation is the analysis of institutional and macroeconomic factors that shape and interact with international trade. Chapters 1, 2 and 4 of this dissertation examine how institutional arrangements impact trade policy decisions and bilateral trade flows, while chapter 3 analyzes how the structural composition of trade affects macroeconomic development. Chapters 1 and 2 focus on the emergence of trade disputes in the World Trade Organization (WTO). Starting out in chapter 1 with a thorough stylized facts analysis of the usage pattern of the WTO dispute settlement mechanism, chapter 2 develops and empirically tests a model of members' selection into WTO disputes which can account for a number of key discoveries in the data. In particular, I extend the standard WTO theory by incorporating a link between endogenous trade policy formation and agreement violation and dispute filing decisions. I show that countries are more likely to engage in trade disputes as complainants or defendants when they have a small ``tariff overhang'', which represents the difference between bound tariffs (by WTO negotiations) and the actually applied tariffs. Chapter 3 considers the question whether the structure of a nation's trade flows has a clear-cut effect on economic growth. In the growth determinants literature, numerous alternative candidate regressors have been motivated by alternative theories but not one trade regressor has been robustly related to growth. Instead of relying on aggregate trade measures as previous studies, chapter 3 proposes a structured approach and examines the diversity of sectoral exports as a potential growth determinant. Controlling for model uncertainty and endogeneity, chapter 3 shows that export diversity serves as a crucial growth determinant for low income countries, an effect that weakens with the level of development. Chapter 4 examines to what extent underlying differences in the design of preferential trade agreements (PTAs) are responsible for the observed heterogeneity in PTA effects on bilateral trade flows. Controlling in the estimation framework for multilateral resistance terms and bilateral heterogeneity to reduce omitted variable and endogeneity biases, chapter 4 shows that PTAs focusing on goods trade liberalization and the legal enforceability of agreement provisions are most successful in raising trade flows. Moreover, countries' efforts to harmonize product standards and other regulations decrease bilateral trade flows, at least initially. The results also show that the underlying agreement dimension effects mostly operate through the intensive margin of trade.

This festschrift volume presents discussions on contemporary issues in international economics and finance. It is aimed to serve as a reference material for researchers. There are two broad sections of the book -- International Macroeconomics and International Finance. The chapters in the International Macroeconomics section discuss critical topics like aggregate level macro model for India with a new Keynesian perspective, balance of payments, service sector exports, foreign exchange constraints for import demands, foreign direct investment and knowledge spill over, the relationship between forex rate fluctuation and investment, Institutional quality-trade openness-economic growth nexus, currency crises and debt-deficit relationship in the BRICS countries in the backdrop of COVID-19. Apart from these, various analytical issues related to macroeconomic policies are also covered in this section. The topics discussed includes the nature of forex market interventions, the issue of disinvestment and privatization, changing nature of fiscal policy, the inflation-growth nexus, macroeconomic simulation modelling, measuring core inflation, central bank credibility, monetary policy, inflation targeting, Infrastructure, trade, unemployment and inequality nexus. In the International Finance section, topics such as COVID-19 induced financial crisis, commodity futures volatility, stock market connectivity, volatility persistence, determinants of sovereign bond yields, FII and stock market volatility, cryptocurrency price formation, financialization of Indian commodity market, and a Keynesian view of the financial crisis are discussed. Overall, thirty two chapters in the volume discuss cutting edge research in the areas of the two sections. A tour de force... a lucid guide to some of the diverse and complex issues in International Macroeconomics and Finance. This collection of scholarly works is a fitting tribute to respected Prof. Bandi Kamaiah and his enviable academic contributions. - Prof. Y V Reddy, Former Governor, Reserve Bank of India This volume comprising thoughtful essays by our leading scholars on some of important policy issues that India is facing is indeed a rich tribute to Professor Bandi Kamaiah . This book will greatly benefit the academic community as well as our policy makers. - Prof. Vijay Kelkar, Chairman, 13th Finance Commission of India; Chairman, India Development Foundation, Mumbai, India Noted economists from India and abroad gather to apply the rigorous searchlight that Professor Bandi Kamaiah used so effectively in his career. Major current topics in macroeconomics and international finance are effectively explored in the volume. - Prof. Ashima Goyal, Emeritus Professor, Indira Gandhi Institute of Development Research, Mumbai, India; and Member, Monetary Policy Committee of Reserve Bank of India This volume of 32 papers in macroeconomics, international economics, and international finance is intended as a tribute to the eminent econometrician , Prof B Kamaiah. Post-graduate students and researchers will find much valuable literature in the volume, which is a fitting tribute to Prof Kamaiah. The editors and authors deserve rich compliments. - Prof. K L Krishna, Former Director, Delhi School of Economics, New Delhi, India I am so happy to hear that Dr. Kamaiah's colleagues and ex-students are bringing out a special volume of articles in his honor. Nothing can be more appropriate. Dr. Kamaiah, being a man of tremendous publications, deserves this tribute. I wish all the luck and success to the new book. - Prof. Kishore Kulkarni, Distinguished Professor of Economics, Metropolitan State University of Denver, USA

Quality of public institutions has been recognized as a crucial determinant of macroeconomic outcomes. We propose that a country's intrinsic level of openness (due to population size, geography, or exogenous trade opportunities) affects its incentives in investing in better institutions. We present a simple theory and extensive empirical evidence validating the role of intrinsic openness in determining institutional quality. This suggests an indirect but important channel for globalization to improve welfare by raising the quality of institutions.

The point of departure for this book is the fundamental assertion that managers of international enterprises must cope not only with the hazards that jeopardize the success of ordinary domestic transactions but also with additional perils that are uniquely international. Two of the most important of these are the risk of a breakdown in the rules and practices that govern international trade and investment flows, and country risk - the risk that a sovereign power will interfere with the repatriation of profits, interest payments, principal repayments, or the control of foreign assets. The issues addressed include the prospects for foreign exchange crises, trade wars, international banking crises, and oil shortages; the factors that generate economic, political, and social risk; organizational strategies for mitigating country risk; and the scope for insuring against international risks. The contributors include academic experts from the fields of economics and finance and distinguished practitioners from international corporations, financial institutions, and international agencies.

The dissertation consists of three papers exploring the macroeconomic implications of heterogeneity of countries in financial development, economic interconnectedness via trade and financial linkages. Chapter 1 examines whether countries which are more centrally located in the global trade network have more synchronized stock markets. Global trade data is used to construct a novel measure of random walk betweenness centrality (RWBC), measuring the extent to which a country lies on random pathways in-between other countries and is therefore likely to be a conduit in the transmission of a shock across global markets. Based on a panel dataset of 58 countries over the period 1990--2000, the study finds that higher centrality of a country in the world trade network is indeed associated with greater stock market synchronicity, ceteris paribus. Chapter 2 uses aggregate macroeconomic experiences of 118 countries over the period 1994--2008 to establish benchmark relationships between macroeconomic fundamentals and levels of financial development of the banking sector, equity markets, and private bond markets. The analysis quantifies the extent to which de-facto financial development of emerging market economies (EMEs) deviates from the levels predicted by their macroeconomic stance. While financial markets in Latin American EMEs are found to be well aligned with their macroeconomic fundamentals, Asian EMEs exceed their reference levels, and European EMEs are found to be systematically financially underdeveloped. No support is found for the argument that these misalignments are caused by heterogeneity in institutional development. Finally, chapter 3 studies the properties and evolution of the product space---a network of relatedness between products. We use bilateral trade data for 187 countries to construct the product space and export specialization of individual countries over the period 1965--2000. The study shows that the product space changed significantly during the 20th century and represents a highly uneven core-periphery structure. The highly interconnected core consists of three industries---chemicals, industrial machinery, and crude materials, each forming around 20% of all linkages. Product synergies that these "commanding heights" industries yield are strategically important for industrialization policies. Regression analysis confirms that specialization in these industries is associated with higher real income levels.

Research papers, economic policy, economic development, India - examines development policy, trade policy, balance of payments, agricultural policy, inflation, income distribution, economic planning, productivity policy, etc.; studies the repercussions on employment, basic needs fulfilment, low income families, etc; evaluates the impact on developing countries of development aid, economic aid and economic cooperation.