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Begin New Search Topic International Political Economy Political Geography United States Content Type Working Paper Publication Year within 25 Years

1. Risk Shocks and Divergence between the Euro Area and the US in the aftermath of the Great Recession

Author:
Thomas Brand and Fabien Tripier
Publication Date:
03-2021
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Highly synchronized during the Great Recession of 2008-2009, the Euro area and the US have diverged in the period that followed. To explain this divergence, we provide a structural interpretation of these episodes through the estimation for both economies of a business cycle model with financial frictions and risk shocks, measured as the volatility of idiosyncratic uncertainty in the financial sector. Our results show that risk shocks have stimulated US growth in the aftermath of the Great Recession and have been the main driver of the double-dip recession in the Euro area. They play a positive role in the Euro area only after 2015. Risk shocks therefore seem well suited to account for the consequences of the sovereign debt crisis in Europe and the subsequent positive effects of unconventional monetary policies, notably the ECB’s Asset Purchase Programme (APP).
Topic:
Debt, Economics, International Political Economy, Global Recession, Finance, Europe Union, Economic Growth, and Risk
Political Geography:
United States, Europe, and Global Focus

2. Global giants and local stars: How changes in brand ownership affect competition

Author:
Vanessa Alviarez, Keith Head, and Thierry Mayer
Publication Date:
11-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
We assess the consequences for consumers in 76 countries of multinational acquisitions in beer and spirits. Outcomes depend on how changes in ownership affect markups versus efficiency. We find that owner fixed effects contribute very little to the performance of brands. On average, foreign ownership tends to raise costs and lower appeal. Using the estimated model, we simulate the consequences of counterfactual national merger regulation. The US beer price index would have been 4-7% higher without divestitures. Up to 30% savings could have been obtained in Latin America by emulating the pro-competition policies of the US and EU.
Topic:
Economics, International Political Economy, and Multinational Corporations
Political Geography:
United States, United Kingdom, Latin America, and Global Focus

3. Corporate tax avoidance and industry concentration

Author:
Farid Toubal, Mathieu Parenti, and Julien Martin
Publication Date:
07-2020
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
This paper argues that tax avoidance by large corporations has contributed to the 25% increase in concentration among U.S. firms since the mid-1990s. Corporate tax avoidance gives large firms a competitive edge, which translates into larger market shares and an increase in the granularity of the economy. We develop IV and difference-in-differences strategies that show the causal impact of tax avoidance on firm-level sales. Had firms not resorted to tax avoidance in 2017, our results imply that the average industry concentration would have been 8.3% lower, which is around its early 2000 level.
Topic:
Economics, International Political Economy, Markets, Tax Systems, Corporations, Tax Evasion, and Corporate Tax
Political Geography:
United States and Global Focus

4. The dynamic impact of FX interventions on financial markets

Author:
Lukas Menkhoff, Malte Rieth, and Tobias Stöhr
Publication Date:
03-2020
Content Type:
Working Paper
Institution:
Kiel Institute for the World Economy (IfW)
Abstract:
Evidence on the effectiveness of FX interventions in the prevailing higher frequency approaches leaves a gap at horizons going beyond a few days. This is addressed by identifying a structural vector autoregressive model for the daily frequency with an external instrument. Using Japanese data, we find that FX interventions significantly affect exchange rates, although the effect is smaller than in emerging markets, and this impact persists for up to a year. There is no major effect on interest rates, but stock prices increase in line with currency devaluation, in particular those of large (exporting) firms. The results qualitatively hold for US and UK interventions.
Topic:
International Political Economy, Exports, Data, and Models
Political Geography:
United States, Japan, and United Kingdom

5. Shooting Oneself in the Foot? Trade War and Global Value Chains

Author:
Cecilia Bellora and Lionel Fontagné
Publication Date:
12-2019
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Despite the “Phase One Deal” agreed on mid-December 2019, bilateral tariffs between US and China remain at unprecedented high levels, which will have long-lasting effects. US tariffs remain very high on parts, components and other intermediate products; similarly, only the last wave of Chinese retaliatory tariffs has been half cut. We investigate in this paper how such tensions between highly interdependent economies will impact trade, income and jobs. We rely on a set-up featuring General Equilibrium, imperfect competition and importantly differentiating demand of goods according to their use, for final or intermediate consumption. This authorizes tracing the impact of protection along the value chains, on prices, value added and factor income. Additional tariffs from official lists are taken into account at the tariff line level, before being aggregated within sectors. Beyond the direct toll of sanctions, US exports to the world post a sizeable decrease as a result of reduced competitiveness led by vertical linkages along the value chains. Because of the tariffs in place as of February 2020, three quarters of the sectors decrease their value added in the US. Consistent with political economy determinants, these twists of value added are transmitted to production factors, leading to sizeable creation and destruction of jobs, and reallocation of capital to the benefit of protected sectors, mostly at the expense of their clients. Ultimately, this paper sheds light on the economic consequences of policies disrupting global value chains.
Topic:
Economics, International Political Economy, Bilateral Relations, Tariffs, Trade Wars, and Trade
Political Geography:
United States and China

6. The Exorbitant Privilege of High Tax Countries

Author:
Vincent Vicard
Publication Date:
03-2019
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
The well documented US excess returns on its net foreign assets is no exception at the world level. Excess returns on foreign assets owe largely to yield differential within the FDI asset class and are correlated to the corporate tax rate for a large sample of countries, consistently with tax motivated profit shifting by multinational corporations. Using French firm level data on dividends and reinvested earnings from foreign affiliates, I provide evidence and quantify the impact of corporate tax avoidance on international asset returns. Profit shifting inflates the investment income balance and accounts for the average 2 percentage points return differential between French FDI assets and liabilities. Missing profts in France, estimated at €36 billions or 1.6% of GDP in 2015, are mostly shifted to EU countries.
Topic:
Economics, International Political Economy, European Union, GDP, Tax Systems, Profit, and Corporate Tax
Political Geography:
United States and France

7. A Fistful of Dollars? Foreign Sales Platforms and Profit Shifting in Tax Havens

Author:
Sébastien Laffitte and Farid Toubal
Publication Date:
01-2019
Content Type:
Working Paper
Institution:
Centre d'Etudes Prospectives et d'Informations Internationales (CEPII)
Abstract:
Using public macro-level data on activities of multinationals, we document that U.S. firms geographically disconnect sales and production to avoid paying corporate taxes. We revisit both theoretically and empirically the location determinants of foreign platforms and show that market access motives are far less relevant when considering tax havens. We characterize these countries and shed light on the attractiveness of different tax havens for specific sectors of activity. Our quantification shows that profit shifting by foreign sales platforms in tax havens amounts to about $80bn in 2013. Our findings contribute to the recent policy debate on the reform of international taxation.
Topic:
Economics, International Political Economy, Global Political Economy, Multinational Corporations, Tax Systems, and Corporate Tax
Political Geography:
United States

8. Global Safe Haven Bonding Foreign and Domestic Owners of the U.S. Public Debt

Author:
Sandy Brian Hager
Publication Date:
01-2016
Content Type:
Working Paper
Institution:
Centre for Global Political Economy, University of Sussex
Abstract:
This paper offers new theoretical and empirical insights to explain the resilience of the U.S. Treasuries market as a safe haven for global investment. Going beyond the standard systemic explanation, the paper highlights the importance of domestic politics in reinforcing the safe haven status of U.S. Treasury securities. In particular, the research shows how a formidable “bond” of interests unites domestic and foreign owners of the public debt and works to sustain U.S. power in global finance. Foreigners who now own roughly half of the U.S. public debt have something to gain from their domestic counterparts. The top one percent of U.S. households that dominate domestic ownership of the U.S. public debt have considerable political clout, thus alleviating foreign concerns about the creditworthiness of the U.S. federal government. Domestic owners of the U.S. public debt, in turn, have something to gain from the seemingly insatiable foreign appetite for U.S. Treasury securities. In supplying the U.S. federal government and U.S. households with cheap credit, foreign investors in U.S. Treasuries help to deflect challenges to the top one percent within the wealth and income hierarchy.
Topic:
Debt, Economics, International Political Economy, Inequality, and Finance
Political Geography:
United States and United Kingdom

9. Global Value Chains or Global Poverty Chains? A new research agenda

Author:
Benjamin Selwyn
Publication Date:
06-2016
Content Type:
Working Paper
Institution:
Centre for Global Political Economy, University of Sussex
Abstract:
Global Value Chain (GVC) analysis is part and parcel of mainstream development discourse and policy. Supplier firms are encouraged, with state support, to ‘link-up’ with trans-national lead firms. Such arrangements, it is argued, will reduce poverty and contribute to meaningful socio-economic development. This portrayal of global political economic relations represents a ‘problem-solving’ interpretation of reality. This article proposes an alternative analytical approach rooted in ‘critical theory’ which reformulates the GVC approach to better investigate and explain the reproduction of global poverty, inequality and divergent forms of national development. It suggests re-labelling GVC as Global Poverty Chain (GPC) analysis. GPC’s are examined in the textiles, food, and high-tech sectors. The article details how workers in these chains are systematically paid less than their subsistence costs, how trans-national corporations use their global monopoly power to capture the lion’s share of value created within these chains, and how these relations generate processes of immiserating growth. The article concludes by considering how to extend GPC analysis.
Topic:
Development, Economics, International Political Economy, Labor Issues, Inequality, and Global Political Economy
Political Geography:
United States, Eastern Europe, and Asia

10. Iraq's 2014 National Elections

Author:
Ahmed Ali
Publication Date:
04-2014
Content Type:
Working Paper
Institution:
Institute for the Study of War
Abstract:
Iraq's 2014 national elections are taking place at a difficult time. The country is at a crossroads, presented with the possibility of widely different futures. Deteriorating security conditions frame political thought in ways that harken back to Iraq's first national elections in 2005. The Iraqi state does not hold control of territory in some of Iraq's key political provinces, such as Anbar, Ninewa, and Diyala. The disenfranchisement of Iraq's Arab Sunnis; the rising threat of the Islamic State of Iraq and al-Sham (ISIS); and the activation of Ba'athist groups collectively discourage electoral participation.
Topic:
International Relations, International Political Economy, and Politics
Political Geography:
United States, Iraq, Ninewa, Anbar, and Diyala