Most manufacturing activities use inputs from the financial and business services sectors. But these services sectors also compete for resources with manufacturing activities, provoking concerns about de-industrialization -- financial services in industrial countries like the United States and the United Kingdom, and business services in developing countries like India and the Philippines.
... See More + This paper examines the implications of services development for the export performance of manufacturing sectors. It develops a methodology to quantify the indirect role of services in international trade in goods and constructs new measures of revealed comparative advantage based on domestic value added in gross exports. The paper shows that the development of financial and business services enhances the revealed comparative advantage of manufacturing sectors that use these services intensively but not that of other manufacturing sectors. It also finds that a country can partially overcome the handicap of an underdeveloped domestic services sector by relying more on imported services inputs. Thus, lower services trade barriers in developing countries can help to promote their manufacturing exports.
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Policy Research Working Paper WPS8450 MAY 22, 2018
The free flow of data across borders underpins today's globalized economy. But the flow of personal data outside the jurisdiction of national regulators also raises concerns about the protection of privacy.
... See More + Addressing these legitimate concerns without undermining international integration is a challenge. This paper describes and assesses three types of responses to this challenge: unilateral development of national or regional regulation, such as the European Union's Data Protection Directive and forthcoming General Data Protection Regulation; international negotiation of trade disciplines, most recently in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP); and international cooperation involving regulators, most significantly in the EU-U.S. Privacy Shield Agreement. The paper argues that unilateral restrictions on data flows are costly and can hurt exports, especially of data-processing and other data-based services; international trade rules that limit only the importers' freedom to regulate cannot address the challenge posed by privacy; and regulatory cooperation that aims at harmonization and mutual recognition is not likely to succeed, given the desirable divergence in national privacy regulation. The way forward is to design trade rules (as the CPTPP seeks to do) that reflect the bargain central to successful international cooperation (as in the EU-US Privacy Shield): regulators in data destination countries would assume legal obligations to protect the privacy of foreign citizens in return for obligations on data source countries not to restrict the flow of data. Existing multilateral rules can help ensure that any such arrangements do not discriminate against and are open to participation by other countries.
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Policy Research Working Paper WPS8431 MAY 07, 2018
The 2015 Paris Climate Agreement was the first instance of countries adhering to take a collective action against global warming. More than 190 countries came forward and submitted their contributions in the form of Intended Nationally Determined Contributions, reflective of their ability and capacity to reduce greenhouse gas emissions, as each country set its own targets and actions.
... See More + For some countries, it meant a significant decline in their emissions by 2030, while others, like China, the United States, and India, decided on a more gradual phasing out extending beyond 2030. This paper estimates the economic impacts of implementation of the Paris Climate Agreement in terms of its implications for welfare, gross domestic product, investments, and trade for major countries and regions. It uses a computable general equilibrium framework to model global, regional, and country impacts. The analysis suggests that the economic impacts will be mostly felt in the European Union if the Paris Agreement is fully implemented. The European Union is likely to suffer a welfare loss of 1.0 to 1.5 percent by 2030. Among non-European countries, Australia, New Zealand, and Mexico will also be affected, with an expected welfare loss of about 1.5 percent. Some of the major emitters, such as China and India, will experience minimal impacts to their welfare, and the United States will experience a welfare loss of only about 0.7 by 2030. The sectoral analysis of production and trade suggests a significant loss to fossil fuel–based sectors, while clean energy sectors can experience significant gains.
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Policy Research Working Paper WPS8392 APR 02, 2018
Corporations often have strong incentives to exert influence on the tax code and obtain additional tax benefits through lobbying. For the U.S.
... See More + financial crisis of 2007-09, this paper shows that lobbying activity intensified, driven by large firms in sectors that depend more on external finance. Using a heterogeneous agent model with financial frictions and endogenous lobbying, the paper studies the aggregate consequences of this rise in lobbying activity. When calibrated to U.S. micro data, the model generates an increase in lobbying that matches the magnitude and the cross-sector and within-sector variation observed in the data. The analysis finds that lobbying for capital tax benefits, together with financial frictions, accounts for 80 percent of the decline in output and almost all the drop in total factor productivity observed during the crisis for the non-financial corporate sector. Relative to an economy without lobbying, this mechanism increases the dispersion in the marginal product of capital and amplifies the credit shock, leading to a one-third larger decline in output. The paper also studies the long run effects of lobbying. Restricting lobbying implies welfare gains of 0.3 percent after considering the transitional dynamics to the new steady state.
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Policy Research Working Paper WPS8394 APR 02, 2018
This paper examines the impact of U.S. market access on local labor markets in a developing country, Vietnam. The study finds that following the implementation of the Vietnam–United States bilateral trade agreement in December 2001, manufacturing employment increased in provinces that were more exposed to U.S. tariff cuts.
... See More + In those provinces, employment also increased in many service sectors, reflecting strong spillovers of job gains. The new job opportunities have attracted labor from agriculture, thus reducing agricultural employment. The paper examines three possible channels of job gain spillovers, namely, demand, production, and real estate. Although there is evidence for all three channels, the demand channel is the most important.
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Policy Research Working Paper WPS8366 MAR 13, 2018
This paper presents and discusses the arguments offered by several sovereigns that have joined a trend starting in 2013 whereby sovereign and corporate issuers, especially in Latin America, have gradually replaced a portion of the funding raised in U.S. dollars with euros.
... See More + The trend seems to respond to the divergent monetary policies followed by the U.S. Federal Reserve Board and the European Central Bank. The selected country cases state strategic and tactical arguments for increasing their issuance in euros. The strategic reasons relate to internal currency benchmarks and their rationale. In some cases, such substitution is supported by the argument that further diversification in the investor base was needed. This argument was reinforced by the relatively tight conditions in the U.S. dollar market. Tactical arguments refer to the need to open the market to the private sector and raise funding in euros, or the need to access new investors as a preliminary step to attract them to the domestic market. Several countries also admit that the optical effect of lower coupons was a relevant consideration. This paper highlights that it is important that sovereigns avoid making decisions by comparing nominal coupons in both currencies. More important, a formal debt management strategy, including a target for the currency composition, should guide debt managers. Without a strategy, the debt manager cannot tell how the issuance in a particular currency affects the exposure of the debt portfolio to foreign currency risk and helps or not in achieving the debt management objectives.
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Policy Research Working Paper WPS8324 JAN 30, 2018
This paper finds that capital and labor incomes in the United States have become more closely associated since the 1980s. This contributed to the well-known increase in the top 1 percent's share of total income, exacerbating rising inequality in capital incomes and earnings.
... See More + The paper shows that the trend in the association is U-shaped, as the recent increase contrasts with a tendency toward a weakening association until the 1980s. The paper uses data derived from tax records, studies the asymmetries in the association, tests for robustness to alternative income definitions, and discusses the potential role of declining top marginal tax rates.
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Policy Research Working Paper WPS8268 DEC 11, 2017
Over the past three decades, a Canadian model of public pension has emerged that combines independent governance, professional in-house investment management, scale, and extensive geographic and asset-class diversification.
... See More + This report aims to document the emergence and evolution of this Canadian model, distilling practical lessons for stakeholders in emerging economies working to improve their pension arrangements and retirement systems. Although a growing body of literature exists on the Canadian model of pension organization, this report is unique in two respects: its emphasis on the evolutionary journey of Canadian pension organizations (as opposed to their current state) and its in-depth focus on Canadian pension funds that have received less attention than some of their peers.
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Doing Business 2018 is the 15th in a series of annual reports investigating the regulations that enhance business activity and those that constrain it.
... See More + This economy profile presents the Doing Business indicators for Canada. Doing Business presents quantitative indicators on business regulation and the protection of property rights that can be compared across 190 economies; for 2018 Canada ranks 18. Doing Business measures aspects of regulation affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation, which is not included in this year’s ranking. Data in Doing Business 2018 are current as of June 1, 2017. The indicators are used to analyze economic outcomes and identify what reforms of business regulation have worked, where and why.
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Doing Business 2018 is the 15th in a series of annual reports investigating the regulations that enhance business activity and those that constrain it.
... See More + This economy profile presents the Doing Business indicators for United States. Doing Business presents quantitative indicators on business regulation and the protection of property rights that can be compared across 190 economies; for 2018 United States ranks 6. Doing Business measures aspects of regulation affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation, which is not included in this year’s ranking. Data in Doing Business 2018 are current as of June 1, 2017. The indicators are used to analyze economic outcomes and identify what reforms of business regulation have worked, where and why.
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Doing Business 2018 is the 15th in a series of annual reports investigating the regulations that enhance business activity and those that constrain it.
... See More + This economy profile presents the Doing Business indicators for San Marino. Doing Business presents quantitative indicators on business regulation and the protection of property rights that can be compared across 190 economies; for 2018 San Marino ranks 93. Doing Business measures aspects of regulation affecting 11 areas of the life of a business. Ten of these areas are included in this year's ranking on the ease of doing business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency. Doing Business also measures features of labor market regulation, which is not included in this year's ranking. Data in Doing Business 2018 are current as of June 1, 2017. The indicators are used to analyze economic outcomes and identify what reforms of business regulation have worked, where, and why.
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Despite a world awash with liquidity, large infrastructure supply gaps exist across developing and emerging markets. Infrastructure has been largely decentralized to subnational governments in many countries, and many policymakers are keenly interested in developing subnational bond markets to give subnational governments access to private financing for infrastructure.
... See More + Despite this, the transaction costs of bond issuance are still prohibitive for many subnational governments to access financing. Pooled financing, through regional infrastructure funds, municipal funds, or bond banks, has become a sought-after solution for helping subnational governments access private financing for infrastructure. In the United States, municipal bond banks that were established since the 1970s have become a cost-effective and stable model for expanding subnational financing for many small municipalities, while maintaining strong credit ratings with virtually no defaults from sub-borrowers. The municipal bond banks have been successful in lowering financing costs for many small, unrated local governments, with loan sizes as low as less than $50,000. This paper examines the policies and structures that have made pooled financing successful in the United States, including regulatory frameworks, governance and managerial systems, the role of project appraisal, operations and pricing, and managing the default risks of borrowers. The paper also explores broader lessons for developing countries that are interested in establishing pooled financing for subnational infrastructure.
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Policy Research Working Paper WPS8212 OCT 09, 2017
Liu,Lili; De Angelis,Michael A.; Torbert,Sally M.Disclosed
This paper estimates dynamic employment multipliers in a U.S. county during 1998-2015. On average, one exogenous tradable job gain creates 1.1 jobs in the rest of the county economy in the same year, but is offset by losses of 0.23 job one year later and 0.32 job two years later.
... See More + The multiplier is modest during the 2002-2007 boom and is large during the Great Recession. It is smaller in the initial years of the Recovery but is larger in the latter years. Uncertainty and credit constraints are two possible hindrances to the propagation of job gains during the Recovery.
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Policy Research Working Paper WPS8105 JUN 19, 2017
This paper analyzes the spillover effects of U.S. monetary policy announcements on emerging market economies since end-2008, the period coinciding with the use of unconventional policy measures.
... See More + Monetary policy surprises are measured by changes in two-year Treasury yields in short windows of time around the Federal Reserve Board’s policy announcements. The analysis finds that U.S. monetary policy surprises have a significant impact on emerging economies' exchange rates, equity prices, and bond yields. The impact is larger for surprise tightening of policy than for surprise easing. The impact is disproportionately larger for large surprises, implying that emerging markets are relatively insulated from anticipated policy announcements. The spillover effects of policy announcements of other advanced economies, such as the euro area, Japan, and United Kingdom, are found to be much weaker than those of the United States.
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Policy Research Working Paper WPS8100 JUN 09, 2017
Using close to 800,000 (2,000,000) transactions by 66,000 (303,000) households in the United States (in Finland), this paper shows that individual investors with longer holding periods choose to hold less liquid stocks in their portfolios, consistent with Amihud and Mendelson's (1986) theory of liquidity clienteles.
... See More + The relationship between holding periods and transaction costs is stronger among more financially sophisticated households. Households whose holding periods are positively related to transaction costs also earn higher gross returns on their investments before accounting for transaction costs, suggesting that attention to non-salient transaction costs is an indication of investing ability. The main findings are confirmed by analyzing changes in investors' holding periods around exogenous shocks to stock liquidity.
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Policy Research Working Paper WPS8098 JUN 09, 2017
A substantial literature has examined the impact of stress during the early stages of life on later-life health. This paper contributes to that literature by examining the later-life health impact of stress during adolescence and early adulthood, using a novel proxy for stress: risk of military induction in the United States during the Vietnam War.
... See More + The paper estimates that a 10 percentage point (2 standard deviation) increase in induction risk in young adulthood is associated with a 1.5 percentage point (8 percent) increase in the probability of being obese, and a 1 percentage point (10 percent) increase in the probability of being in fair or poor health later in life. These findings do not appear to be due to cohort effects; the associations exist only for men who did not serve in the war, and are not present for women or men who did serve. These findings add to the evidence on the lasting consequences of stress, and indicate that induction risk during the Vietnam War may, in certain contexts, be an invalid instrument for education or marriage, because it appears to have a direct impact on health.
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Policy Research Working Paper WPS8063 MAY 16, 2017
Cawley,John Horan; De Walque,Damien B. C. M.; Grossman,DanielDisclosed
Social enterprises are emerging as a new area of public policy: several countries seek to stimulate private sector contribution to development outcomes, and social enterprises could be important players in that agenda.
... See More + However, those seeking a middle ground between for-profit and non-profit sectors to enable social enterprise have found legal frameworks to be lacking. This has triggered a range of legal developments over the past ten years, with a number of countries seeking to implement appropriate legal frameworks that can support and stimulate the development of social enterprise. These legal frameworks can both define social enterprise as well as to structure it, through the creation of new legal forms and regulations. The objective of this study is to analyze various definitions and forms under which social enterprises operate in five countries and the implications for public policies. The study is based on literature review and a small number of interviews clustered around Italy, Malaysia, South Korea, the United Kingdom, and United States, where social enterprise has attracted government`s interest. The study analyzes how the government operationalized its engagements with social enterprises. It takes a historical perspective to understand the legal forms available to, and adopted by, social enterprises, and the advantages and disadvantages of various approaches.
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Migration and trade are often linked through ethnic networks boosting bilateral trade. This study uses migration to quantify the importance of Ricardian technology differences for international trade.
... See More + The framework provides the first panel estimates connecting country-industry productivity and exports, and the study exploits heterogeneous technology diffusion from immigrant communities in the United States for identification. The latter instruments are developed by combining panel variation on the development of new technologies across US cities with historical settlement patterns for migrants from countries. The instrumented elasticity of export growth on the intensive margin with respect to the exporter's productivity growth is between 1.6 and 2.4, depending upon weighting. This provides an important contribution to the trade literature of Ricardian advantages, and it establishes a connection of migration to home country exports beyond bilateral networks.
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Policy Research Working Paper WPS8027 APR 10, 2017
This paper analyzes the role of the United States in the global economy and examines the extent of global spillovers from changes in U.S. growth, monetary and fiscal policies, and uncertainty in its financial markets and economic policies.
... See More + Developments in the U.S. economy, the world's largest, have effects far beyond its shores. A surge in U.S. growth could provide a significant boost to the global economy. Tightening U.S. financial conditions -- whether due to contractionary U.S. monetary policy or other reasons -- could reverberate across global financial markets, with adverse effects on some emerging market and developing economies that rely heavily on external financing. In addition, lingering uncertainty about the course of U.S. economic policy could have an appreciably negative effect on global growth prospects. While the United States plays a critical role in the world economy, activity in the rest of the world is also important for the United States.
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Policy Research Working Paper WPS7962 FEB 07, 2017
Different episodes of economic growth display widely varying distributional characteristics, both across countries and over time. Growth is sometimes accompanied by rising and sometimes by falling inequality.
... See More + Applied economists have come to rely on the Growth Incidence Curve, which gives the quantile-specific rate of income growth over a certain period, to describe and analyze the incidence of economic growth. This paper discusses the identification conditions, and develops estimation and inference procedures for both actual and counterfactual growth incidence curves, based on general functions of the quantile potential outcome process over the space of quantiles. The paper establishes the limiting 0 distribution of the test statistics of interest for those general functions, and proposes resampling methods to implement inference in practice. The proposed methods are illustrated by a comparison of the growth processes in the United States and Brazil during 1995-2007. Although growth in the average real wage was disappointing in both countries, the distribution of that growth was markedly different. In the United States, wage growth was mediocre for the bottom 80 percent of the sample, but much more rapid for the top 20 percent. In Brazil, conversely, wage growth was rapid below the median, and negative at the top. As a result, inequality rose in the United States and fell markedly in Brazil.
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Policy Research Working Paper WPS7933 JAN 05, 2017
Ferreira,Francisco H. G.; Firpo,Sergio; Galvao,Antonio F.Disclosed
