In this paper, we revisit the evidence on the effects of time spent on border‐crossing procedures for international trade
using a theory‐consistent structural gravity model. We exploit a rich panel dataset including domestic trade flows and employ
a recent econometric estimator that exhibits favourable asymptotic properties for inference. The results indicate a significant
negative effect of the time required for border procedures that is driven by the time needed for document preparation. We
find that an additional day spent on those procedures corresponds to an ad valorem tariff equivalent of 0.4 percentage points.
The parameters of our structural model are used to simulate three counterfactual scenarios, quantifying the effect of past
and potential future trade facilitation efforts for middle‐, low‐, and high‐income countries. Full endowment general equilibrium
effects suggest that in times of stagnating multilateral and bilateral trade liberalization efforts, unilateral implementation
of trade facilitation carries the potential to induce an alternative stimulus for trade and welfare, especially for low‐ and
Numerous negative external effects are associated with the transport of goods. Due to the lack of internalising them in transport
prices, too many goods are transported over too long distances. Several approaches are taken to reduce external costs, such
as bans, regulations, taxes, levies and tradable permits. In some areas, however, such interventions are impractical to implement
or do not exist at all. At the EU level external costs associated with the transport of goods are only partially reflected
in transport prices. Applying a quantitative model, the analysis investigates a scenario of a coordinated EU approach to internalise
external transport costs of extra-EU trade activities. The results reveal a positive effect on real GDP and employment in
the EU, provided that the revenues from these trade surcharges are recycled back into the economy. Policy options to achieve
that transport prices reflect social costs are identified in the analysis.
WorldThis paper investigates the relationship between the use of service inputs and integration in global value chains. Using
macro and detailed firm-level data (for 1990-2017), the study documents the extent of India's integration into global value
chains. Older, larger, and more productive firms and firms with a higher leverage ratio are more likely to be deeply integrated
into global value chains. Firms in the information technology services and electronics industry are more deeply integrated
into global value chains, compared with textiles. Services are the engine for many global value chain industries as they help
coordinate the different stages of production across geographical locations. The findings suggest that both the intensity
of service usage as well as the composition or type of service used are important. Firms using service inputs, particularly
complex services and information technology and information technology-enabling services intensively are typically more deeply
integrated into global value chains.
Birgit Meyer, Ruchita Manghani, Erik van Der Marel, Juan Sebastian Saez
This paper explores the relationship between the use of service inputs, participation in global value chains, and firm productivity.
Services play the role of both an intermediate input in production and a coordinator. Using a detailed Indian firm-level data
set from 1990-2017, the paper estimates the productivity premium associated with varying depths of global value chain integration
and different intensities and types of services used in the production. The study finds that firms in global value chains
have a productivity premium between 13 and 22 percent relative to domestic firms, with some variation based on the depth of
global value chain integration and the sector to which the firm belongs. Both the type of service inputs used (composition
of services) and the origin of services (whether sourced domestically or from abroad) matter for firm performance. While higher
aggregate service input use (as captured by the share of expenditure on service inputs) is not necessarily associated with
an increase in productivity, increased use of complex services and information technology services is associated with higher
productivity. The use of imported services is associated with higher productivity. Moreover, firms that are more deeply integrated
in global value chains benefit more from importing services.
The EU has helped shape an international economic system based on openness and fair com-petition. Over the past few years,
the benefits of this approach have come under pressure from foreign trade practices which undermine the principle of reciprocal
treatment. In particular, this is the case with subsidies granted by non-EU governments and protected public procurement markets.
This in-depth analysis reviews the state of play of EU policy action on foreign subsidies and in public procurement markets
and identifies gaps in existing EU instruments. The analysis shows that the EU took the initiative with: First, the completed
FDI screening and trade defence reforms; second, the proposal for an International Procurement Instrument; and third, the
pro-posal for a Regulation targeting the distortive effects of foreign subsidies. In addition, the EU is taking the lead at
the multilateral level, promoting coordinated action in the WTO, G7, G20, OECD, and GAMS fora.
With around 90 percent of the average retirement income received from public pension entitlements, the Austrian pension system
is very reliant on the first pillar. Occupational pensions are primarily offered through pension funds and insurance companies.
Direct commitments are an alternative vehicle, but their usage stagnates. The option for defined contribution plans with favourable
tax treatment offered either by pension funds or insurance companies boosted the prevalence of occupational pensions in Austria.
While occupational pensions have become more popular over time, low interest rates and a high liquidity preference dampened
demand for individual life insurance contracts. Over the years 2002 through 2020, the performance of pension funds in real
net terms has been positive, with an annualised average return of 1.4 percent before tax. The life insurance industry followed
a distinctly more conservative investment policy and achieved an average annual net real return before tax of 2.1 percent.
We propose a modelling approach based on a set of small-scale factor models linked together in a cluster with linkages derived
from Granger causality tests. GDP forecasts are produced using a disaggregated approach across production, expenditure and
income accounts. The method combines the advantages of large structural macroeconomic models and small factor models, making
our cluster of dynamic factor models (CDFM) useful for large-scale model-consistent forecasting. The CDFM has a simple structure,
and its forecasts outperform those of a variety of competing models and professional forecasters. In addition, the CDFM allows
forecasters to use their own judgment to produce conditional forecasts.
Stefan Ederer, Predrag Ćetković, Stefan Humer, Stefan Jestl, Emanuel List
This paper builds Distributional National Accounts (DINA) using household survey data. We develop a transparent and reproducible
methodology that uses only publicly available sources, provides highly comparable results well suited for policy analyses,
and can be applied when administrative tax data are not available for research. We apply this methodology to build synthetic
micro-datafiles for European countries that cover the entire distribution, include all income components separately, are consistent
with national accounts, and preserve the detailed socioeconomic information available in the surveys. We discuss the methodological
steps and their impact on the income distribution. In particular, we highlight the effects of imputations and the adjustment
of variables to national accounts' totals. Furthermore, we compare the different income concepts of the DINA and the EG-DNA
approach in a consistent way. Overall, aligning household incomes with national accounts' totals and imputing incomes from
other sectors increases inequality in most countries, which underlines the importance of reconciling income distributions
with macroeconomic aggregates.