Three essays in international economics
Title: Three essays in international economics
Author: BALTEANU, Irina
Citation: Florence, European University Institute, 2009
Series/Number: EUI PhD theses; Department of Economics
This thesis is a collection of three empirical papers in international economics. The first paper discusses the suitability of fixed-basket price indexes to provide accurate macroeconomic description in countries where the scope for variety change is particularly large, such as the transition countries. Price-mismeasurement has important implications for the assessment of inflation, real growth, welfare, terms of trade and the real exchange rate behaviour. The following two papers use firm-level data from several countries in Europe and Asia to provide novel stylised facts on the importing behaviour of firms, and to examine the specific firm-level characteristics that are likely to be correlated with access to credit markets. Chapter 1 studies the impact of imported variety expansion on prices and welfare in two Eastern European countries, the Czech Republic and Hungary. Using detailed information on import volumes, disaggregated by product-categories and supplying countries, the chapter first documents that the sharp increase in trade with the rest of the world since the start of the transition process has been accompanied by a similar increase in imported variety. The chapter then follows the methodology of Feenstra (1994) and Broda and Weinstein (2004) and computes the bias in the import price index that is due to ignoring variety change over nine years, from 1995 to 2004. It finds that the conventional price index overstates import price inflation by around 1% per year in Hungary and 0.5% per year in the Czech Republic, equivalent to a cumulative of 8.4% and 4.2%, respectively, over the entire period. Due to the sector-level nature of the dataset and its not so low level of aggregation, as well as to the geographical concentration of these countries’ imports, these estimates are likely to be a lower bound. Chapter 2 uses firm-level data from 11 countries in Europe and Asia to provide a set of novel stylised facts on the importing behaviour of firms. The data is collected from two rounds of the "Business Environment and Enterprise Performance Survey" (BEEPS), a cross- country survey of individual firms conducted by the European Bank for Reconstruction and Development and the World Bank in 2001 and 2004. Firms using imported intermediate inputs are found to be a distinct group from the firms that only use domestic inputs in their production process. Importers are larger, more productive, more capital-intensive and more skill-intensive than non-importers. Importers are also significantly more likely to introduce new product varieties, invest in research and development, provide formal training to their workers and upgrade their production technology. These differences are robust to controlling for alternative ways in which firms are exposed to foreign markets, such as exporting, being foreign-owned or supplying to multinational firms. The third chapter uses the same firm-level dataset as chapter 2, but exploits a different set of questions contained in the BEEPS questionnaire. Specifically, it takes advantage of the fact that firms are asked detailed questions about their borrowing behaviour and financing patterns, and directly identifies those firms which are shut o¤ from financial markets. The chapter then studies those firm-level characteristics that are likely to affect the probability of being credit constrained. It finds that the variables capturing the severity of informational asymmetries present in financial markets are large and significant predictors of access to credit. The chapter represents an attempt to study liquidity constraints at firm level, from a perspective that is different from the standard "investment-cash flow sensitivity" literature.
LC Subject Heading: International economic relations -- European Union countries; Macroeconomics -- European Union countries
Defense date: 04/06/2009; Examining Board: Prof. Claudia Buch, Universität Tübingen Prof. Giancarlo Corsetti, EUI, supervisor Dr. Marcel Fratzscher, European Central Bank Prof. Morten Ravn, EUI and University of Southampton
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