Trade Policy and the Marshall–Lerner Condition: Application of the Tobit Model

This paper establishes the micro-foundation for the income-price approach to export and import functions from the firm’s profit maximization problem. Following Boyd et al. (2000), we derive the Marshall–Lerner condition mathematically and analyze the effects of home and foreign trade policies, such as the minimum access and quantitative trade restriction, on the Marshall–Lerner condition. In conclusion, such trade policies make the condition theoretically difficult to hold since the marginal effects of the Tobit estimates under deterministic trade policies are always lower than the ordinary least squares (OLS) estimates under no trade policies in absolute values.

THE EFFECTIVENESS OF ANTIDUMPING IMPOSITION IN INDONESIA 1996-2015

ABSTRACT:With the frequent imposition of anti-dumping (AD) actions carried out by Indonesia over the past two decades, it is necessary to examine what impact these measures have had on the country’s imports. Empirically, this study examines the effect of AD measures on Indonesian imports using UN Comtrade data at the 6-digit HS codes product level. The evidence presented in this paper shows that AD does have a significant restriction effect on imports from named countries. AD measures succeeded in reducing the import value of the products concerned by about 126% during the period of imposition. In addition, there is no evidence of trade diversion effects to non-named countries. During the first three years of AD measures, the value of imports to non-named countries decreased by around 53%. It is therefore concluded that Indonesia's AD policy has helped to check unwanted imports and therefore may qualify as effective. The empirical model of the study is estimated using the system GMM estimator.Keywords: Anti-dumping, trade restriction effect, trade diversion effect, system GMM estimator.ABSTRAK:Diberlakukannya tindakan anti-dumping (AD) yang dilakukan oleh Indonesia terhadap negara-negara yang melakukan dumping selama dua dekade terakhir, penting untuk memeriksa dampak apa yang telah dihasilkan oleh kebijakan ini terhadap impor dari negara-negara tersebut. Secara empiris, penelitian ini menguji pengaruh langkah-langkah AD terhadap impor Indonesia menggunakan data UN Comtrade pada tingkat produk kode HS 6 digit. Bukti yang disajikan dalam makalah ini menunjukkan bahwa AD memang memiliki pengaruh pembatasan yang signifikan terhadap impor dari negara-negara yang dikenakan bea masuk AD. Langkah-langkah AD berhasil mengurangi nilai impor produk yang bersangkutan sekitar 126% selama periode pengenaan. Selain itu, tidak ada bukti efek pengalihan perdagangan ke negara-negara yang tidak dikenakan bea masuk AD. Selama tiga tahun pertama kebijakan AD, nilai impor ke negara-negara yang tidak dikenakan bea masuk AD menurun sekitar 53%. Oleh karena itu disimpulkan bahwa kebijakan AD Indonesia telah membantu menekan impor yang tidak diinginkan dan karenanya memenuhi syarat sebagai efektif. Model empiris studi ini diestimasi menggunakan penduga sistem GMM.Kata Kunci: Anti-dumping, efek pembatasan perdagangan, efek pengalihan perdagangan, penduga sistem GMM.

A Note on Unemployment of Unskilled Labor due to COVID-19 led Restriction on Migration and Trade

To combat COVID-19 the entire world has resorted to global lockdown implying restriction on international labor migration and trade. This paper aims to check the effect of such restrictions on the unemployment of unskilled labor in the source country. In competitive general equilibrium framework with three goods and four factors, restriction on migration raises unemployment for given factor intensity. The results remain same even in a slightly different structure of the economy. In case of trade restriction, however, the rise or fall in unemployment depends on both the structure of the economy and the factor intensity assumption.

High-Frequency Trading and Its Impact on Exogenous Liquidity Risk of China’s Stock Index Futures Market before and after Trading Restrictions

Since China’s first stock index futures, China Securities Index 300 (CSI300) stock index futures were published in 2010, and China’s stock index futures market is now in a period of rapid development and play a key role in price discovery. During 2014 to 2015, China’s stock index futures market fluctuated abnormally, and the overuse of high-frequency trading (HFT) strategies in the stock index futures market was blamed as the main reason of the abnormal volatility. To lower down market fluctuation, the regulatory institute then announced a series of trade restriction policy to prevent the overuse of HFT behaviour. However, until now, the impact of such trade restriction policy for HFT remains uncertain. To tackle this issue, based on minute-level HFT data from the CSI 300 index futures market, this paper aims to investigate the relationship between HFT and the exogenous liquidity risk and how HFT affects China’s stock index futures market on its liquidity using the liquidity-adjusted value at risk (LVaR) model. The findings indicate that HFT improves the return of the liquidity provider and reduces the exogenous liquidity risk significantly.

Unemployment of Unskilled Labor due to COVID-19 led Restriction on Migration and Trade

To combat COVID-19 the entire world has resorted to global lockdown implying restriction on international labor migration and trade. This paper aims to check the effect of such restrictions on the unemployment of unskilled labor in the source country. In competitive general equilibrium framework with three goods and four factors restriction on migration raises unemployment for given factor intensity. The results remain same even in a slightly different structure of the economy. In case of trade restriction, however, the rise or fall in unemployment depends on both the structure of the economy and the factor intensity assumption.

India will accept US trade restriction for now

Headline INDIA/US: Trade restriction will be accepted for now