Trade in Parts and Components across Europe
Journal Title: Finance a uver - Year 2016, Vol 66, Issue 3
Abstract
Based on the factor-proportion gravity framework, we build a model that identifies the driving forces for trade in parts and components. We test our model empirically by using a detailed and large European data set. We show that trade in parts and components is driven by relative supply-side country differences, proxied by wages and capital labor ratios. The pattern is compatible with models of incomplete specialization and trade. We take our results as evidence for the existence of international East-West production networks in Europe, driven by tradeoffs between wages, capital labor ratios and coordination costs. Our results also reveal that (i) in response to stronger relative wage differences, trade in parts and components across Europe is predominantly conducted along the extensive margin but (ii) the potential to intensify the trade and international production network in new EU members has not been exhausted yet.
Authors and Affiliations
Richard Frensch, Jan Hanousek, Evzen Kocenda
Keywords
Related Articles
- EP ID EP297605
- DOI -
- Views 144
- Downloads 0
Effects of Macroeconomic Indicators on the Financial Markets Interrelations
Analyses of financial market interrelationships are important for effective portfolio diversification. The interdependencies between markets are stronger during turbulent times on financial markets than during periods of...
Financing Behavior of Romanian Listed Firms in Adjusting to the Target Capital Structure
This study investigates financing behavior in adjusting to the target capital structure of Romanian firms listed on the Bucharest Stock Exchange during the period 2004–2011. Using a dynamic panel data model and Arrelano’...
Productivity and Efficiency Evaluation of US Mutual Funds
In this paper assess the relative performance of US mutual funds using a non-parametric method such as data envelopment analysis (DEA). In particular, we assess the changes of mutual funds’ total productivity using the D...
Who Gains More Power in the EU after Brexit?
Brexit implications are analysed in most cases from the macroeconomic, financial or legal point of view while these areas are not the only ones the economists or governments should pay attention to. In this article we fo...
Country Risk and Expected Returns Across Global Equity Markets
Assessing and pricing country risk poses a considerable challenge to tactical asset allocation across national equity markets. This research examines the relationship between the country composite risk (together with its...