University of Macau / Faculty of Social Sciences and Humanities / Department of Economics

University of Macau / Faculty of Law

Markets have an important role to play in advancing an improved understanding of international trading relationships. Two most important economic issues, which contribute to improved national welfare and ensure long-run competitive market equilibrium in international markets, are market integration and market efficiency. To provide softwood lumber markets related information to the policy makers, economic analyses relating market integration and market efficiency of the combined markets of Canada and the US have been conducted. The economic analyses include: (i) testing cointegration of prices among North American softwood lumber markets; (ii) identifying price leading markets in long-run price structure of these cointegrated markets; (iii) examining the degree of market integration among these markets; and (iv) testing the efficiency of spatial arbitrage among these markets. First, the price linkages in the North American softwood lumber markets have been explored over different trade regimes. The results indicate that market integration is affected by product aggregation of data. Further investigations of market integration are, therefore, limited to homogeneous softwood lumber product markets. Second, oligopsonistic pricing behavior of traders is identified as the possible reason for imperfect competition among Douglas Fir product markets, while imperfect competition among the markets of Spruce-Pine-Fir and Hem Fir products can not be explained by this behavior. Third, a comprehensive picture of the adherence to price parity is formulated by evaluating the magnitude and persistence of deviations from equilibrium relation of prices. It is found that large volumes of trade, product substitutability, lower prices, and certainty of trade are the factors which contribute to higher degree of market integration among North American softwood lumber product markets. Finally, the inter-temporal shifts in regime probabilities of competitive market equilibrium are assessed over different trade regimes. It is found that lower transaction costs, large volumes of trade, short distances between markets, and certainty of trade contribute to high market efficiency among softwood lumber product markets of North America.

In this paper we examine the extent of international trade synchronization during periods of international trade collapses and US recessions. Using dynamic correlations based on monthly trade data for the G7 economies over the period 1961-2011, our results suggest rather idiosyncratic patterns of international trade synchronization during collapses of international trade and US recessions. During the great recession of 2007-2009, however, international trade experienced the most sudden, severe and globally synchronized collapse. (author's abstract)

This thesis comprises three essays on immigration, innovation, and trade. The first essay utilizes an enhanced gravity model to estimate the effect of lagged immigration waves on Canadian imports and exports, by province. Empirically, this model was tested using Canadian data on import and export flows to the top 40 countries of origin for immigrants to Canada based upon the composition of the most recent wave of immigrants. The results are consistent with previous studies, where immigrants increased both import and export trade flows. By adding the provincial immigrant wave variable, it was also found that new immigrants affect imports almost immediately, whereas for exports, the immigrant effect is not significant for at least 5 years and may take as long as 20 years to reach full impact.<p>The second essay utilizes an enhanced gravity model to estimate the effect of innovative capability on Canadian provincial exports to Canadas top 60 importing countries. Empirically, this model was tested using Canadian data on export flows to Canadas top 60 importing countries. The results are supportive of a provinces innovative capability leading to increased exports, where innovative capacity is measured by international patents, scientific journal articles, and R&D expenditures. For example, in terms of innovative capacity as measured by international (U.S.) patents, provinces with higher levels of international patents had higher levels of total exports, where this effect was greater for exports to developing versus developed countries. Furthermore, provincial R&D expenditures as well as the number of provincial scientific publications (in addition to provincial international patents) were found to be significant drivers in increasing the amount of provincial hi-tech exports to developed countries.<p>The third essay utilizes an augmented national ideas production function to examine skilled immigrants impact on Canadian innovation at the provincial level. Empirically, this model was tested using Canadian data by province on innovation flow over an 11 year time period, where innovation flow is defined in terms of international (U.S.) patents. It was found that skilled immigrants, who are proficient in either English or French, have a significant and positive impact on innovation flow in their home province. Further, in examining skilled immigrants by source region, it was found that skilled immigrants from developed countries have the greatest impact on their home provinces innovation flow. This is true of North American/European skilled immigrants for all skill-level categories including language proficiency, education, and immigrant class. For immigrants from developing countries, only highly educated Eastern Europeans and Low Income Asians classified as Independent Workers are both significant and positively related to their home provinces innovation flow.

Abstract It is well known that geographical distances between nations cause differences in cul-tural resemblances as well as affinity. Defined, affinity is inheriting similarities between nations in familiarity, language and mutual understanding. It cause variations in the uni-lateral trade volume flowing towards the destination countries and can be estimated by a traditional gravity model (GM). So far Swedish affinity towards Czech Republic (CZ) has remained unexplored. Hence, this paper investigates Swedish firm´s export perfor-mance and affinity towards CZ, both through the aggregate export and the extensive margin (average number of exporters). The investigation aims to seek clarification of what particular factors influence unilateral export towards CZ as well as stronger affini-ty in contrast to similar markets. To answer those questions, a one sided GM is re-gressed on two gravity equations, covering panel data for 177 destination countries from year 1997 to 2006. Results are in line with the expected behavior of the GM and show evidently; distance as well as land lock features have negative effects on unilateral ex-ports to CZ. Additionally, evidence of positive influence on unilateral export is found for GDP and familiarity to the nation. Both regressions for the gravity equations are showing high goodness of fit for the panel data. Findings of positive residuals in both the equations conclude that Swedish export have stronger affinity to CZ and solider country characteristics than its resembling countries Slovenia and Slovakia. However, positive residuals also indicate larger export flows to CZ than motivated by the tradi-tional GM coefficients. Various explanations are suggested as origins for those, such as differences in purchasing power and regions, were Prague was found to be the most suitable option for export and other regions rather for outsourcing possibilities.

Distance is of great influence when deciding whom to trade with. This thesis examines how the importance of distance in international trade has evolved. This is done using an extended generalized gravity model, which includes population, real exchange rate and a dummy variable for membership in the European Union. Using data for the EU27 and the four largest economies in the world outside of EU, this model estimates the effect of distance on trade from 1980 to 2005. This thesis shows that the impact of distance has evolved towards having a greater negative effect on trade during the observed years. The reason for this could be a development towards regional trade, at the expense of long-distance trade.

<p>This dissertation presents two essays on endogenous growth and renewable resources.</p><p>The first essay explores the role of renewable resources in a tractable</p><p>model of endogenous growth driven by horizontal and vertical innovation in the closed economy.</p><p>The model is tractable in that it yields a complete, analytical characterization</p><p>of the path of utility and the associated welfare level. This property</p><p>is exploited to compare two cases of renewable resource management:</p><p>open access and full property rights. The first case involves a common</p><p>property problem in which agents ignore the long-term resource viability;</p><p>the second fully internalizes the dynamics of the resource stock.</p><p>Analysis shows that if the natural regeneration rate of the renewable</p><p>resource is too low, the tragedy of the commons occurs. If, instead,</p><p>the natural regeneration rate is sufficiently high, the steady-state</p><p>growth rate of the economy is identical across the two management</p><p>regimes. The reason is because there is no scale effect; that is,</p><p>the steady-state growth rate of the economy does not depend on the</p><p>labor or the resource endowment. However, the development path on</p><p>which the economy transits from the developing stage (no R\&D activity)</p><p>to the developed stage (positive R\&D activity) depends on the resource</p><p>management regime. In particular, a developing economy under full</p><p>property rights will cross its development threshold prior to one</p><p>under open access. This threshold depends on the size of the manufacturing</p><p>firms. When it becomes sufficiently large as a result of the decline</p><p>in the number of firms over time, there will be an incentive for the</p><p>remaining firms to conduct R\&D. Given the same number of manufacturing</p><p>firms, the firm size is larger under full property rights than under</p><p>open access due to higher nominal expenditure per capita. Therefore,</p><p>the development threshold will be reached sooner under full property</p><p>rights. In other words, the economy will start engaging in R\&D activities</p><p>sooner and more quickly accumulate knowledge, which is the source</p><p>of long-run growth. Moreover, switching from full property rights</p><p>to open access is welfare reducing due to two effects. The first is</p><p>through the price of the harvest good. Although the economy initially</p><p>enjoys a lower price of harvest good, the price gradually increases</p><p>as the resource becomes scarcer. Secondly, the competitive household</p><p>instantaneously loses the resource income and thus spends less on</p><p>manufacturing goods. This decreases the incentive for manufacturing</p><p>firms to conduct R\&D and results in a temporary deceleration of the</p><p>growth rate of TFP relative to the baseline case of full property</p><p>rights. The economy therefore experiences a cumulative loss of TFP</p><p>relative to the baseline, which is the novel feature of our model</p><p>of endogenous innovation. This mechanism has interesting and wide-ranging</p><p>implications for the role of resources in development and growth</p><p>The second essay extends the model of endogenous growth and renewable </p><p>resources into the open economy framework. The paper examines the effect of trade liberalization on resource-rich</p><p>countries, based on a two-country model in which the difference in</p><p>endowment of a renewable resource leads to asymmetric trade. In this</p><p>model, the resource-rich economy trades its harvest good and final</p><p>good for the final good from the resource-poor economy. Furthermore,</p><p>the renewable resource is considered to be under open access, where</p><p>there is no clear ownership over the resource, leading to overexploitation.</p><p>Long-term productivity, in this case, stems from endogenously-determined</p><p>knowledge accumulation. Under these circumstances, analysis shows</p><p>that the resource-rich country will lose from trade due to two effects.</p><p>The first effect is the instantaneous loss of income. Higher demand</p><p>for the harvest good, from the combined domestic and international</p><p>demand, diverts labor away from the production of technological goods</p><p>to the harvest sector, where rent is zero. The second effect is a</p><p>scarcity effect, which becomes more severe when trade results in a</p><p>greater demand for the harvest good. Overexploitation of the renewable</p><p>resource today leads to falling resource stock in the future, which</p><p>is then reflected in the higher price of harvest good, other things</p><p>being constant. Since the harvest good is an essential input to produce</p><p>the final good, given the same amount of the other inputs, the amount</p><p>of final good produced will also fall in the long run.</p> / Dissertation

The non-game wildlife trade poses a risk to our natural landscape, natural heritage, economy, and security. Specifically, the trade in non-game reptiles and amphibians exploits native populations, and is likely not sustainable for many species. Exotic amphibian and reptile species pose risk of invasion and directly or indirectly alter the native landscape. The extent of non-game amphibian and reptile trade is not fully understood and is poorly documented. To quantitatively describe the trade in Texas, I solicited data from the United States Fish and Wildlife Service's (USFWS) Law Enforcement Management Information System (LEMIS) and Texas Parks and Wildlife Department's (TPWD) non-game dealer permits. I surveyed amphibian and reptile pet owners, breeders, Internet sites, pet shops, and meat and seafood establishments by visits, electronic surveys, and observations. The trade in exotic species of amphibians and reptiles in the state of Texas was found to be popular in two ways; the importation of wildlife products and sale of live specimens for pets. Persisting in the pet trade were species known to be exotic, a problem made worse by lack of regulations governing the import, export, and keeping of exotic species. Trade in wild collected native species was primarily for export to foreign countries. Collection of turtles from the wild in Texas was heavy until 2008, when TPWD restricted collection to private waters. Collection of other species from the wild was minimal, with the exception of the Western Diamond-backed Rattlsnake (Crotalus atrox) for rattlesnake roundups. Native species were found to exist in the pet trade, but primarily as genetic color variants that do not occur in the wild, an indication that captive breeding may be relieving pressures on wild caught specimens. Minor changes in reporting requirements and permitting systems at the state and federal level would improve the management of exotic and native amphibians and reptiles that persist in the trade. Changes that include standardized taxonomic reporting requirements at state and federal level, streamlined permitting system for individuals wishing to collect from the wild in Texas, bag limits and seasons for wild collection, increased reporting requirements for owners of exotics, and enforcement of reporting errors would aid in management of exotic and native amphibians and reptiles in the trade.

A recent outbreak of bird flu or avian influenza (AI), an especially highly pathogenic strain (HPAI) of H5N1, started in Hong Kong in January 2003 and caused 159 human deaths in Asia, Africa and Europe through early 2007. In addition, this outbreak resulted in millions of slaughtered birds and banned international trade of poultry meat in the infected countries. Such events harmed the poultry, tourism, and other related industries in the infected countries and changed the world poultry trade flow. Even in some uninfected countries, related industries were negatively affected. This study investigates the impact of bird flu outbreaks as manifested in financial markets within the US and Japan. The first essay explores how the avian influenza (AI) outbreaks impacted the security values of poultry-related firms. Using partial equilibrium analysis, this study infers that within a country AI outbreaks drop stock prices of poultry meat producers and raise stock prices of poultry food producers. Simultaneously, we infer that AI outbreaks in other poultry exporting countries raise stock prices of poultry meat producers and drop stock prices of poultry food producers. The empirical findings support our model results. Recent developments in time series method, directed graphs and search methods of cointegration rank are applied in this study. The second essay examines whether avian influenza outbreaks cause structural breaks in a model of their prices. It employs the dynamic programming algorithm and the reduced regression method for a cointegrated vector autoregressive (VAR) model to compute the break dates for the data sample. This research then compares the long run relation, and the short run relation and contemporaneous relation. The model estimations in these three sub-periods find these three sub-samples are significantly different. The breaks were caused by the invasion of Iraq on March 2003 and the 20 Bovine Spongiform Encephalopathy (BSE) induced ban of Canadian live cattle imports to the US on 03 March 2005, not by avian influenza outbreaks in early 2004. The third essay explores the effects of the avian influenza announcement in Japan on the prices of agricultural commodity futures contracts traded in Japan. Both the VAR model with asymmetric generalized autoregressive conditional heteroskedastic (GARCH) terms and the event study methods were used to examine whether avian influenza outbreaks significantly affected these markets. Our findings point out that the avian influenza outbreak only impacted the egg futures contract. These three essays found that outbreaks of avian influenza have significant impact on poultry-related stock prices and futures markets. The examined impacts changed the movement of those financial equity prices in the short run, but not in the long run. Research showed investors and poultry-related producers still encounter huge financial risk and loss.