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  • Author: Vincent Stamer
  • Publication Date: 01-2021
  • Content Type: Working Paper
  • Institution: Kiel Institute for the World Economy (IfW)
  • Abstract: Global container ship movements may reliably predict global trade flows. Aggregating both movements at sea and port call events produces a wealth of explanatory variables. The machine learning algorithm partial least squares can map these explanatory time series to unilateral imports and exports, as well as bilateral trade flows. Applying out-of-sample and time series methods on monthly trade data of 75 countries, this paper shows that the new shipping indicator outperforms benchmark models for the vast majority of countries. This holds true for predictions for the current and subsequent month even if one limits the analysis to data during the first half of the month. This makes the indicator available at least as early as other leading indicators.
  • Topic: Economics, Science and Technology, Trade, Shipping, Machine Learning
  • Political Geography: Global Focus
  • Author: Chuck Fang, Julian Schumacher, Christoph Trebesch
  • Publication Date: 01-2021
  • Content Type: Working Paper
  • Institution: Kiel Institute for the World Economy (IfW)
  • Abstract: Sovereign debt crises are difficult to solve. This paper studies the “holdout problem”, meaning the risk that creditors refuse to participate in a debt restructuring. We document a large variation in holdout rates, based on a comprehensive new dataset of 23 bond restructurings with external creditors since 1994. We then study the determinants of holdouts and find that the size of creditor losses (haircuts) is among the best predictors at the bond level. In a restructuring, bonds with higher haircuts see higher holdout rates, and the same is true for small bonds and those issued under foreign law. Collective action clauses (CACs) are effective in reducing holdout risks. However, classic CACs, with bond-by-bond voting, are not sufficient to assure high participation rates. Only the strongest form of CACs, with single-limb aggregate voting, minimizes the holdout problem according to our simulations. The results help to inform theory as well as current policy initiatives on reforming sovereign bond markets.
  • Topic: Debt, Economics, International Political Economy, Law, Credit
  • Political Geography: Global Focus
  • Author: Ingrid Ott, Ivan Savin, Chris Konop
  • Publication Date: 01-2021
  • Content Type: Working Paper
  • Institution: Kiel Institute for the World Economy (IfW)
  • Abstract: Taking robotic patents between 1977 and 2017 and building upon the topic modeling technique, we extract their latent topics, analyze how important these topics are over time, and how they are related to each other looking at how often they are recombined in the same patents. This allows us to differentiate between more and less important technological trends in robotics based on their stage of diffusion and position in the space of knowledge, where some topics appear isolated while others are highly interconnected. Furthermore, we propose a novel approach to match the constructed topics to the IFR classification of service robots based on frequency and exclusivity of words overlapping between them. We identify around 20 topics belonging to service robotics. Our results corroborate earlier findings, but also provide novel insights on the content and stage of development of application areas in service robotics. With this study we contribute to a better understanding of the highly dynamic field of robotics and contribute to new practices of utilizing the topic modeling approach.
  • Topic: International Political Economy, Science and Technology, Robotics, Models
  • Political Geography: Global Focus
  • Author: Dennis Görlich, Aoife Hanley, Wan-Hsin Liu, Finn Ole Semrau
  • Publication Date: 12-2020
  • Content Type: Working Paper
  • Institution: Kiel Institute for the World Economy (IfW)
  • Abstract: The overarching aim of the study is to investigate the key factors that determine how and how intensively countries can be integrated into the coffee global value chain (GVC) and thus can better reap the globalization benefits. The empirical analysis shows how the international trade in coffee has developed across regions/countries over the past three decades. It provides evidence-based insights into the key determinants of countries’ GVC integration in the coffee industry. It discusses countries’ functional and product upgrading for their GVC integration. Based on the empirical results obtained, policy implications are derived to support the further development of the coffee GVC. This study serves as a background study for the Coffee Development Report 2020 in preparation by the International Coffee Organisation.
  • Topic: International Political Economy, Food, Global Value Chains, Coffee, Value Chains
  • Political Geography: Global Focus
  • Author: Marcel Fratzscher, Tobias Heidland, Lukas Menkhoff, Lucio Sarno, Maik Schmeling
  • Publication Date: 11-2020
  • Content Type: Working Paper
  • Institution: Kiel Institute for the World Economy (IfW)
  • Abstract: We construct a novel database of monthly foreign exchange interventions for 49 countries over up to 22 years. We build on a text classification approach that extracts information about interventions from news articles and calibrate our procedure to data about actual interventions. Our new dataset allows us to document stylized facts about the use of foreign exchange interventions for countries that neither publish their data nor make them available to researchers. Moreover, we show that foreign exchange interventions are used in a complementary way with capital controls and macroprudential regulation.
  • Topic: Economics, Foreign Exchange, International Political Economy, Data, Capital Controls
  • Political Geography: Global Focus
  • Author: Manuel Funke, Moritz Schularick, Christoph Trebesch
  • Publication Date: 10-2020
  • Content Type: Working Paper
  • Institution: Kiel Institute for the World Economy (IfW)
  • Abstract: Populism at the country level is at an all-time high, with more than 25% of nations currently governed by populists. How do economies perform under populist leaders? We build a new cross-country database identifying 50 populist presidents and prime ministers 1900-2018. We find that the economic cost of populism is high. After 15 years, GDP per capita is more than 10% lower compared to a plausible non-populist counterfactual. Rising economic nationalism and protectionism, unsustainable macroeconomic policies, and institutional decay under populist rule do lasting damage to the economy.
  • Topic: Economics, Nationalism, Populism, Economic Growth
  • Political Geography: Global Focus
  • Author: Gabriel Felbermayr, Mario Larch, Erdal Yalcin, Yoto V. Yotov
  • Publication Date: 09-2020
  • Content Type: Working Paper
  • Institution: Kiel Institute for the World Economy (IfW)
  • Abstract: We build on the latest developments in the structural gravity literature to quantify the partial and general equilibrium effects of GATT/WTO membership on trade and welfare. Using an extensive database covering manufacturing trade for 186 countries over the period 1980-2016, we find that the average impact of GATT/WTO membership on trade among member counties is large, positive, and significant. We contribute to the literature by estimating country-specific estimates and find them to vary widely across the countries in our sample with poorer members benefitting more. Using these estimates, we simulate the general equilibrium effects of GATT/WTO on welfare, which are sizable and heterogeneous across members, and relatively small for non-member countries. We show that countries not experiencing positive trade effects from joining GATT/WTO can still gain in terms of welfare, due to beneficial terms-of-trade effects.
  • Topic: International Political Economy, Trade, WTO, GATT
  • Political Geography: Global Focus
  • Author: Helios Herrera, Maximilian Konradt, Guillermo Ordoñez, Christoph Trebesch
  • Publication Date: 09-2020
  • Content Type: Working Paper
  • Institution: Kiel Institute for the World Economy (IfW)
  • Abstract: The Covid-19 pandemic is a major test for governments around the world. We study the political consequences of (mis-)managing the Covid crisis by constructing a highfrequency dataset of government approval for 35 countries. In the first weeks after the outbreak, approval rates for incumbents increase strongly, consistent with a global “rally around the flag” effect. Approval, however, drops again in countries where Covid cases continue to grow. This is especially true for governments that do not implement stringent policies to control the number of infections. Overall, the evidence suggests that loose pandemic policies are politically costly. Governments that placed more weight on health rather than short-term economic outcomes obtained higher approval.
  • Topic: Government, Health, International Political Economy, Health Care Policy, Pandemic, COVID-19
  • Political Geography: Global Focus
  • Author: Peter Eppinger, Gabriel Felbermayr, Oliver Krebs, Bohdan Kukharsky
  • Publication Date: 09-2020
  • Content Type: Working Paper
  • Institution: Kiel Institute for the World Economy (IfW)
  • Abstract: In early 2020, the disease Covid-19 caused a drastic lockdown of the Chinese economy. We use a quantitative trade model with input-output linkages to gauge the effects of this adverse supply shock in China on the global economy through international trade and global value chains (GVCs). We find moderate welfare losses in most countries outside of China, while a few countries even gain from the shock due to trade diversion. As a key methodological contribution, we quantify the role of GVCs (in contrast to final goods trade) in transmitting the shock. In a hypothetical world without GVCs, the welfare loss due to the Covid-19 shock in China is reduced by 40% in the median country. In several other countries, the effects are magnified or reversed for several countries. Had the U.S. unilaterally repatriated GVCs, the country would have incurred a substantial welfare loss while its exposure to the shock would have barely changed.
  • Topic: International Political Economy, Trade, Pandemic, Global Value Chains, COVID-19, Supply Chains
  • Political Geography: China, Global Focus
  • Author: Ingrid Ott, Susanne Soretz
  • Publication Date: 08-2020
  • Content Type: Working Paper
  • Institution: Kiel Institute for the World Economy (IfW)
  • Abstract: This paper analyzes within a spatial endogenous growth setting the impact of public policy coordination on agglomeration. Governments in each of the two symmetric regions provide a local public input that becomes globally effective due to integration. Micro-foundation of governmental behavior is based on three different coordination schemes: autarky, full or partial coordination. Scale effects act as agglomeration force and in addition to private capital agglomeration increase the concentration of the public input. Integration promotes dispersion forces with respect to the distribution of physical capital which are based on decreasing private returns. However, within the governments’ decision on the concentration of the public input, increasing integration reinforces agglomeration because it promotes the interregional productive use of the public input. Taking feedback effects between the private and the public sector into account leads to mutual reinforcement, hence agglomeration forces almost always dominate and the spreading equilibrium becomes unstable. If convergence is a separate (additional) political objective, it needs sustained additional political effort.
  • Topic: Government, International Political Economy, Economic Growth, Public Policy, Private Sector, Capital
  • Political Geography: Global Focus