US policy spillover(?) – China's accession to the WTO and rising exports to the EU
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In: European Economic Review, Vol. 98, 09.2017, p. 169-188.
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TY - JOUR
T1 - US policy spillover(?) – China's accession to the WTO and rising exports to the EU
AU - Mau, Karsten
PY - 2017/9
Y1 - 2017/9
N2 - The paper analyzes transmission of bilateral trade policies on multilateral exports, due to existence of a global component in fixed export entry costs. Liberalization in one destination market induces redistribution of this global burden across multiple export destinations, thereby lowering the entry threshold in each of them. The empirical analysis exploits reduced US tariff uncertainty upon China's WTO accession, and examines its effect on China's EU exports. The main results reveal that: (i) the structure of China's export boom to the EU conforms to patterns of US tariff uncertainty; (ii) the adjustment takes place at the extensive margin; and (iii) the effect phases out after a few years. Evidence in support of a fixed-cost redistribution is also presented. The findings have implications for the scope of international policy negotiations and provide suggestive evidence on the nature of fixed costs faced by manufacturing firms in low-wage countries.
AB - The paper analyzes transmission of bilateral trade policies on multilateral exports, due to existence of a global component in fixed export entry costs. Liberalization in one destination market induces redistribution of this global burden across multiple export destinations, thereby lowering the entry threshold in each of them. The empirical analysis exploits reduced US tariff uncertainty upon China's WTO accession, and examines its effect on China's EU exports. The main results reveal that: (i) the structure of China's export boom to the EU conforms to patterns of US tariff uncertainty; (ii) the adjustment takes place at the extensive margin; and (iii) the effect phases out after a few years. Evidence in support of a fixed-cost redistribution is also presented. The findings have implications for the scope of international policy negotiations and provide suggestive evidence on the nature of fixed costs faced by manufacturing firms in low-wage countries.
KW - China
KW - Exports
KW - Fixed costs
KW - Policy spillover
KW - WTO
KW - Economics
UR - http://www.scopus.com/inward/record.url?scp=85030641950&partnerID=8YFLogxK
U2 - 10.1016/j.euroecorev.2017.06.015
DO - 10.1016/j.euroecorev.2017.06.015
M3 - Journal articles
AN - SCOPUS:85030641950
VL - 98
SP - 169
EP - 188
JO - European Economic Review
JF - European Economic Review
SN - 0014-2921
ER -