College of Behavioral & Social Sciences
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The collections in this community comprise faculty research works, as well as graduate theses and dissertations..
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Item ESSAYS ON INTERNATIONAL TRADE AND THE ENVIRONMENT(2022) Lim, Heehyun Rosa; Limão, Nuno; Lee, Eunhee; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation examines the relationship between international trade and environmental outcomes. In particular, I study the impact of international trade on airborne pollutants, including the change in emissions and concentration as well as their welfare consequences. In the first chapter, I suggest the intermediate import channel as a new perspective to understand the linkage between international trade and air pollutant emissions. I first review the existing literature's understanding of the impact of trade on emissions. The review shows that the literature mostly focuses on the increased market access but overlooks the increased access to imported inputs. Using the data on the US manufacturing industries, I then document a few stylized facts that are suggestive of the linkage between intermediate imports, input usage, and emissions. I show that in the US, the import penetration among inputs used has increased while the energy intensity of US manufacturing has declined, the latter of which explains a third of the within-industry reduction in $NO_x$ emission intensity. To analyze the channels by which trade in intermediate inputs affects emission intensity, I build a model of heterogeneous firms, intermediate trade, and inputs with different emission profiles. By focusing primarily on the emissions linked with input usage, my model examines the effect of improved access to foreign intermediates on firms' input choices and emission outcomes. The model shows that with lower intermediate import costs, firms become less energy-intensive by either increasing their intermediate intensity, using energy-saving technology, or both. Moreover, the general equilibrium force, as well as amplification through the input-output linkage, bring a further decrease in emission intensity in all firms. The model also presents the selection and reallocation effect which further amplifies the within-firm improvements. In the second chapter, I run empirical and quantitative analyses to test the theoretical model from the first chapter against the US manufacturing data. In the empirical analysis, I estimate the model prediction, which states that industry-level emission intensity can be expressed in the producer price index when the cost of energy and market access are controlled,using the industry-level panel data between 1998 and 2014. By using the import price of intermediates as an instrumental variable for the producer price index, I find evidence that a lower producer price, driven by a lower intermediate import price, leads to lower $NO_x$ emission intensity. The reduced-form evidence supports the model mechanism that states that a lower import price of intermediates decreases emission intensity. I then calibrate the model to 1998 aggregate US manufacturing and quantify the change in emission intensity driven by the change in intermediate import cost. The quantification shows that the fall in intermediate import cost between 1998 and 2014 explains about 8-10\% of the observed technique effect in $NO_x$ emissions. 68\% of the decrease comes from the within-firm changes via firms' substituting away from energy inputs, global sourcing, and adopting energy-saving technology, which highlights the importance of taking within-firm channels into account to understand the effects of trade policies on emissions. The third chapter (co-authored) re-examines the welfare gains from international trade by incorporating the transboundary nature of air pollutants.\footnote{This chapter is from a joint work with Eunhee Lee.} We run country-level panel regressions and find that concentration is correlated with transboundary pollution, constructed as the weighted sum of other countries' emissions. We then build a general equilibrium model of international trade and environmental externality from local pollutants of transboundary nature, in which the concentration of a country is affected by both its own and other countries' emissions. The model shows that the change in welfare can be decomposed into the change in real income and the change in air pollutant concentration, the latter of which can further be decomposed into that driven by own emissions and by other countries' emissions. We use this model to quantify the welfare implications of two trade shocks -- China shock and the EU 2004 enlargement. The results show multiple channels that shape heterogeneous welfare consequences across countries. First, liberalizing countries experience an increase in emissions due to an increase in production. Second, the emissions of other countries move in either direction, depending on the effects of pollution relocation and increased production due to cheaper inputs. Third, the levels of concentration increase in liberalized countries and some other countries due to the increase in own emissions or transboundary pollution, or both. We run additional counterfactual exercises with stricter environmental regulations imposed on liberalized countries and show that there can be welfare gains in many countries by lowering emissions and transboundary pollution, suggesting the potential effects of combining trade and environmental policies.Item Essays on Global Supply Chains and Trade Policies(2022) Zhang, Shihangyin; Limao, Nuno; Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)The structure of international trade has become increasingly complex in recent decades. Advances in productivity, transportation, and information and communications technology (ICT) have significantly changed the nature of cross-border activities between countries, and global supply chains have become a substantial component of the world economy. Despite the importance of global supply chains, most existing studies take them as fixed and generally overlooked their endogenous responses to trade policies and economic shocks. This dissertation examines the role of global supply chains in shaping trade and welfare consequences of modern trade agreements, such as preferential trade agreements (PTAs). The first chapter of this dissertation studies the trade effect of supply chain reallocations, with a focus on producers' endogenous input sourcing decisions. I first introduce a global sourcing framework where producers optimally choose their input sourcing locations based on tradeoffs between variable input prices and fixed sourcing costs. As one of the major characterizations of the global supply chain structure, the distribution of producers' sourcing locations will endogenously respond to economic and trade conditions, amplifying the corresponding impact on input trade flows. Based on the model-implied relationship between individual import values and the number of imported intermediate products for any given sourcing location, I find supporting evidence of this transmission channel using US product-level import data. The estimation results indicate that an increase in expected import values or a reduction in fixed sourcing costs equivalent to a 10% annual average import value would induce around a 1% increase in the number of US producers sourcing from a given location. To capture the cross-country and cross-sector transmission and spillovers generated by global supply chains, the second chapter extends the global sourcing framework introduced in Chapter 1 to a general equilibrium (GE) structure and further studies the welfare consequences of several trade policy events. In addition to their input sourcing decisions, producers also make market entry decisions, which determine the size of domestic supply chains. These two decisions jointly characterize the supply chain structure in the model. I then calibrate the model to the World Input-Output Database (WIOD) and use it to quantify the trade and welfare consequences of two hypothetical trade policy changes, namely a US-China tariff war and the elimination of all preferential trade agreements. The quantitative analysis reveals two novel angles through which global supply chains transmit shocks. First, allowing endogenous supply chain reallocations amplifies the trade and welfare consequences of shocks to variable trade costs. Second, changes in fixed sourcing costs are essential in welfare evaluation and could generate a larger impact than similar changes in variable trade costs. These results suggest an important role of supply chain reallocations and fixed sourcing costs in shaping the macroeconomic impact of trade shocks. In the third chapter, I examine dynamic features of global supply chains by investigating the interaction between global supply chains and preferential trade agreements during the Great Trade Collapse (GTC) and the subsequent recovery. Using time-series data from WIOD, I first empirically test the relationship between bilateral trade flows and PTA status using a gravity specification. The estimated results indicate that a bilateral PTA relation can generate additional effects for supply chain-related (intermediate) trade during post-GTC recovery. I then introduce a novel method to decompose the impact of PTAs into a direct border price channel and an indirect behind-border channel. With the data structure of WIOT and some additional assumptions, I find that: (i) the structure of global supply chains changed significantly after the GTC, and behaved differently across countries; (ii) the border price channel was dominant before the GTC, the behind-border channel contributed considerably to the recovery of GVC-related trade and accounted for 26% of the aggregate impact. These results suggest an important role of PTAs in securing GVC growth after the GTC.Item Using Quantitative Methods to Explore Political Leverage, Trade Policy, and Food Security: A Case Study of the Middle East(2016) Kishi, Katayoun Mirfendereski; Telhami, Shibley; Government and Politics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)This dissertation explores why some states consistently secure food imports at prices higher than the world market price, thereby exacerbating food insecurity domestically. I challenge the idea that free market economics alone can explain these trade behaviors, and instead argue that states take into account political considerations when engaging in food trade that results in inefficient trade. In particular, states that are dependent on imports of staple food products, like cereals, are wary of the potential strategic value of these goods to exporters. I argue that this consideration, combined with the importing state’s ability to mitigate that risk through its own forms of political or economic leverage, will shape the behavior of the importing state and contribute to its potential for food security. In addition to cross-national analyses, I use case studies of the Gulf Cooperation Council states and Jordan to demonstrate how the political tools available to these importers affect their food security. The results of my analyses suggest that when import dependent states have access to forms of political leverage, they are more likely to trade efficiently, thereby increasing their potential for food security.