Mathilde Le Moigne, Pandemic and trade: the dynamics of global trade in times of Corona, In: Kühne Center Impact Series, No. 03-20, 2020. (Working Paper)
The Covid-19 pandemic represents an unprecedented economic shock, insofar as it cumulates the effect of both a demand and a supply shock on the aggregate economy, as well as an unprecedented increase in trading costs. In response to this shock, global trade has declined by approximately 30% in the course of the first six months of 2020, but the subsequent rebound of trade volumes during the summer suggests a quick recovery of international exchanges. A detailed analysis of the times series across countries and sectors reveals the magnifying effects of sanitary measures and export restrictions on the effect of the pandemic on global trade. The absence of a significant decline in trade of essential goods and in particular of medical goods is nonetheless cause for optimism, as it illustrates the resilience of global trade relations. |
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Michael Blanga-Gubbay, Roza Khoban, The EU Emissions Trading System: becoming efficient, In: Kühne Center Impact Series, No. 02-22, 2022. (Working Paper)
This Kühne Impact Series focuses on the EU Emissions Trading System, a cornerstone of the European Green Deal and Europe’s attempt to reach climate neutrality by 2050.1 We discuss how the system has been developed, creates a price on carbon, and the efficiency of the allocation of emissions allowances. Moreover, we analyze the evolution of the EU ETS prices and discuss the recent substantial volatility in the price of the carbon permits. The experience with the EU ETS has been mixed. However, we believe that recent and expected developments will make the system more resilient and reliable – and can ensure a credible and efficient path to carbon neutrality. |
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Michael Blanga-Gubbay, Mathilde Le Moigne, Global trade: a future in doubt?, In: Kühne Center Impact Series, No. 03-22, 2022. (Working Paper)
Talks of “deglobalization” or “slowbalization” have multiplied in the aftermath of the Great Trade Collapse of 2008/2009. The recent economic shock of the COVID-19 pandemic and the war in Ukraine have re-ignited fears of global value chain disruptions, and lead many in international trade to claim the end of globalization as we know it. In this Kühne Impact Series we examine these facts and find that while few statistics point towards a slowdown in global trade, looking at the broad picture we can still be cautiously optimistic. More concerns arise, instead, when looking at the policy landscape. |
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Mathilde Le Moigne, Luca Poll, The hidden green sourcing potential in European trade, In: Kühne Center Impact Series, No. 01-22, 2022. (Working Paper)
In this Kühne Impact Series, we substantiate our claim that international trade should play a central role in the fight against climate change. The key message is that “buying green” does not necessarily mean “buying local” and that a smart combination of local and foreign sourcing yields the best results. To this end, we construct an exhaustive database on the greenhouse gas emissions related to international trade flows from and to the European Union. Our first main result is that 28% of European trade flows are already green in the sense of bringing about a net reduction in greenhouse gas emissions relative to domestic sourcing. Our second main result is that a simple green sourcing rule could reduce trade-related emissions by 35%. Hence, there is a substantial green sourcing potential remaining in European trade. |
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Michael Blanga-Gubbay, Africa’s trade potential: escaping the colonial past by building a self-sustaining future, In: Kühne Center Impact Series, No. 04-21, 2021. (Working Paper)
Africa accounts today for 17% of the world’s population, but less than 3% of global GDP. With a fast-growing population, the continent is projected to reach 4.3 billion inhabitants (39% of the world’s total) by the end of the century. This big domestic market could represent a significant opportunity, but the economy of the continent is not growing at the same pace. In fact, Africa is still struggling to overcome its colonial past, and to gain from its current (new-colonial) dependency from China. The consequences of this can be seen in the extremely low share of intra-African trade and the underdeveloped within-continent infrastructure network. The newly implemented African Continent Free Trade Area (AfCFTA) could prove to be a pivotal step forward, paving the way for self-sustaining economic growth and long-lasting social and geo-political stability on the African continent. |
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Michael Blanga-Gubbay, Roza Khoban, The European Green Deal: transforming international trade and transportation, In: Kühne Center Impact Series, No. 06-21, 2021. (Working Paper)
In this Kühne Impact Series, we analyze the effects of the European Green Deal on international trade and transportation. Our main point is that the Green Deal marks a step change in the EU’s climate policy, which will transform European trade and transportation. In particular, by strengthening the EU Emission Trading System and introducing a Carbon Border Adjustment Mechanism, it will increase the carbon price towards its social optimum. This will incentivize households and firms to buy greener products, from greener countries, using greener transportation, and thereby contribute to a more sustainable globalization. In contrast, we believe that the new green agenda in the EU’s trade policy strategy, while ambitious in spirit, is less likely to have concrete effects. |
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Michael Blanga-Gubbay, Ralph Ossa, A new hope for the WTO? Past achievements, current challenges, and planned reforms, In: Kühne Center Impact Series, No. 02-21, 2021. (Working Paper)
The World Trade Organization (WTO) has a new Director General, and we take her appointment as an opportunity to brief the reader on this important international organization. In particular, we (i) explain its past achievements, (ii) discuss its current challenges, and (iii) summarize its planned reforms. |
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Mathilde Le Moigne, Ralph Ossa, Buy green not local: how international trade can help save our planet, In: Kühne Center Impact Series, No. 03-21, 2021. (Working Paper)
In this Kuehne Impact Series, we introduce the Kühne Center’s vision of environmentally sustainable globalization. Our main point is that buying local is not the same as buying green, because international trade can allow firms and households to source products from greener origins. We therefore advocate embracing international trade in the fight against climate change. |
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Lilia Ruslanova, Mathias Hoffmann, Post-COVID19 resilience: lessons from the China Trade Shock for Europeʼs economies, In: Kühne Center Impact Series, No. 05-21, 2021. (Working Paper)
When we talk about the economic consequences of COVID-19, the question arises about the strength and duration of the changes triggered by the pandemic. Currently, all indications are that COVID-19 is likely to change the structure of the world economy permanently. Evidence suggests that the pandemic is a permanent reallocation shock – one that cannot be mitigated with standard fiscal and monetary stimulus. What are the structural reforms and mechanisms that would allow economies to adapt and to effectively reallocate resources in response to such shocks? Which features made economies resilient to major reallocation shocks in the past? To answer these questions, we take a closer look at the China Trade Shock and its impact on the US economy. We then draw lessons for Europe today. |
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Alex Mari, Andreina Mandelli, René Algesheimer, Fear of Missing Out (FOMO) on Emerging Technology: Biased and Unbiased Adoption Decision Making, In: UZH Business Working Paper Series Working Paper, No. 401, 2024. (Working Paper)
Corporate decision-makers (DMs) are increasingly being challenged to adopt emerging technologies with undefined market potential while being susceptible to biases. Failure to achieve the expected benefits may affect collective and individual-level performance. Fear of missing out (FOMO) influences the ability to make rational decisions. Although FOMO can lead DMs to prioritize popular but immature technologies, there remains a limited understanding of the notion in organizational settings. Drawing on semi-structured interviews and archival data corroborated by insights from key stakeholders, our research investigates the role of FOMO when adopting emerging technology. Findings reveal that FOMO (i) is experienced by DMs experience in one of three performance levels (firm, team, employee), each differentiated by specific targets and responses, and (ii) influences the decision process both directly and via inflated expected outcomes. The mere presence of FOMO does not constitute a bias in the decision. Further, we suggest how to regulate FOMO in organizations. |
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Jonathan L Payne, Adam Rebei, Yucheng Yang, Deep Learning for Search and Matching Models, In: SSRN, No. 4768566, 2024. (Working Paper)
We develop a new method for characterizing global solutions to search and matching models with aggregate shocks and heterogeneous agents. We formulate general equilibrium as a high dimensional partial differential equation (PDE) with the distribution as a state variable. Solving this problem has previously been intractable because the distribution impacts agent decisions through the matching mechanism rather than through aggregate prices. We overcome these challenges by developing a new deep learning algorithm with efficient sampling in a high dimensional state space. This allows us to study search markets that are not “block recursive”. In applications to labor search models, we show that while block recursivity may approximately hold under symmetric shocks, it fails to capture the dynamics when shocks have an asymmetric impact. Business cycles have a “cleansing” effect by amplifying positive assortative matching in recessions, and the magnitude of the countercyclicality depends on the bargaining process between workers and firms. |
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Thomas Julian Richter, Per Nils Anders Östberg, The Sovereign Debt Crisis: Rebalancing or Freezes?, In: Swiss Finance Institute Research Paper, No. 17-32, 2017. (Working Paper)
Using high-frequency data we document that episodes of market turmoil in the European sovereign bond market are on average associated with large decreases in trading volume. The response of trading volume to market stress is conditional on transaction costs. Low transaction cost turmoil episodes are associated with volume increases (investors rebalance), while high transaction cost turmoil periods are associated with abnormally low volume (market freezes). We find suggestive evidence of market freezes in response to shocks to the risk bearing capacity of market makers while investor rebalancing is triggered by wealth shocks. Overall, our results show that the recent sovereign debt crisis was not associated with large-scale investor rebalancing. |
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