ABSTRACT Border cities or regions are in theory more affected by the EU integration process than more central locations as it more drastically influences their transaction costs and market potential. We find a positive empirical effect of EU enlargement as measured by the growth in population share along the integration borders. This effect is active for a limited distance (70 km) and time period (30 years), and is more important for large cities and regions. Despite this positive EU enlargement effect along the border, a location close to a border remains a burden in view of the (larger) negative general border effect.
Fully updated with the latest theoretical insights, data, and statistics, this third edition combines the dual perspectives of international economics and international business to provide a complete overview of the changing role of nations and firms in the global economy. International Economics and Business covers the key concepts of an introductory course on the global economy. It avoids complicated mathematical theory to ensure accessibility for all disciplines and includes contemporary case studies from the international business world. The result is a practical guide to the world economy for undergraduate students in economics and business, also suitable for students in other social science disciplines. Supported via full suite of online resources including quizzes, data exercises, additional reading lists, lecture slides, as well as color versions of over 150 figures, International Economics and Business is a lively and engaging textbook providing a complete and practical understanding of international economics and globalization through a uniquely integrated lens.
Since the famous debate between Keynes and Ohlin on German reparation payments after World War I, international transfers have attracted the attention of economists. Today the subject is of even greater importance with billions of dollars flowing between nations as unilateral transfers. However the emphasis has shifted from balance-of-payments issues to the welfare consequences following a transfer and in particular the welfare issues arising from aid to developing countries. In The Economics of International Transfers, first published in 1998, Professors Brakman and van Marrewijk present an overview of transfers (including the history of transfers and current transfer flows) and their own unified framework in which they present important and original research. Subjects considered include welfare effects, distortions, third parties, rent-seeking, the 'trade or aid' discussion, multi-lateral agencies, tied aid and imperfect competition.
It is sometimes argued that news reports in the media suffer from biased reporting. Mullainathan and Shleifer (2002) argue that there are two types of media bias. One bias, called ideology, reflects a news outlet's desire to affect reader opinions in a particular direction. The second bias, referred to as spin, reflects the outlet's attempt to simply create a memorable story. Competition between outlets can eliminate the effect of ideological bias, but increases the incentive to spin stories. We examine whether we find some evidence of spin in Dutch newspaper reporting on the state of the economy. If newspapers are indeed able to create memorable stories this should, according to our hypothesis, affect the opinion of readers with respect to the state of the economy. Sentiments about the actual state of the economy could be magnified by spin. As a result, consumer confidence - a variable that routinely measures the opinion on the state of the economy - can be expected to be affected not only by economic fundamentals, but also by the way these fundamentals are reported. We construct a variable that reflects the way consumers perceive economic news reported in newspapers. We find that this variable indeed has a significant impact on consumer confidence, which is short-lived.
Using German district data we estimate the structural parameters of a new economic geography model as developed by Helpman (1998) and Hanson (1998, 2001a). The advantage of the Helpman-Hanson model is that it incorporates the fact that agglomeration of economic activity increases the prices of local (non-tradable) services, like housing. This model thereby provides an intuitively appealing spreading force that allows for less extreme agglomeration patterns than predicted by the bulk of new economic geography models. Generalizing the Helpman-Hanson model, we also analyze the implications for the spatial distribution of wages once the assumption of real wage equalization is dropped. If we no longer assume real wage equalization we find support for a spatial wage structure as well as for the relevance of the structural parameters of the theoretical model.
Empirically, Trefler (1995) shows that actual trade flows deviate from predictions based on factor abundance theory in a systematic way (which he calls the 'case of the missing trade'). Theoretically, Courant and Deardorff (1992) show that an uneven distribution of factors of production across regions within a country (which they call 'lumpiness') affect aggregate trade flows at the country level. In particular, a country tends to export the good that intensively uses its more unevenly distributed factor of production. Based on the urban economics literature, we use a simple measure of the degree of lumpiness to show that Trefler's missing trade flows are systematically related to our measure of the degree of lumpiness. This implies that not only home bias and technology differences may explain the missing trade flows, but also the uneven distribution of factors of production.
Since the 1980s, the monopolistic competition model has become very popular. It has been applied to a large number of aggregate phenomena in industrial organisation, international trade theory, economic growth and economic geography, with great success. The benchmark model has been developed by Avinash Dixit and Joseph Stiglitz (1977). Their model develops a specific form of imperfect competition, that explains the model's attractiveness, ease of use, and popularity. In particular the following characteristics are important:
