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Research topics

Below you find a commented list of research topics that I have pursued at different times in my career, including selected publications for each topic

Offshoring and global value chains

The 1990s have witnessed a reorientation of trade theory towards analyzing what is meanwhile known as offshoring of globalization of value added chains. Earlier trade theory had conceptualized production as processes integrated within certain countries using primary inputs like labor, physical capital and human capital. This simplification had become increasingly questionable in the face of the increasing empirical evidence of international fragmentation of production processes. Researchers were aiming at new conceptualizations of production reflecting this new phenomenon. Would cherished view about gains from trade as well as the relationship between trade and factor prices survive this reorientation of trade theory? My contributions to this question:

  • “A Specific-Factors View on Outsourcing,” in North American Journal of Economics and Finance, vol. 12, 2001, 31-53.

  • “The Distributional Effects of International Fragmentation,” in German Economic Review, vol. 40, 2003, 89-120.

  • “Aspects of International Fragmentation,” in Review of International Economics, vol. 12(5), 2004, 793-816.

  • “International Outsourcing and Factor Prices With Multistage Production,” in Economic Journal, vol. 114 (494), March 2004, C166-C185.

  • “Global Sourcing Decisions and Firm Productivity: Evidence from Spain,” in Stern, R. M. (ed.), Quantitative Analysis of Newly Evolving Patterns of International Trade: Fragmentation; Offshoring of Activities; and Vertical Intra-Industry Trade. World Scientific Studies in International Economics, 2012 (with Marcel Smolka).

  • “Sourcing Premia with Incomplete Contracts: Theory and Evidence,” in The B.E. Journal of Economic Analysis and Policy, vol.11, Issue 1 (Contributions), January 2011 (with Marcel Smolka).

  • “Managerial versus Production Wages: Offshoring, Country Size and Endowments,” in Canadian Journal of Economics, Vol. 47 (2014/1): 250–271 (with Sebastian Benz).

  • “Global Sourcing and Firm Selection”, in Economics Letters, Vol. 124 (2014/3): 411–415 (with Marcel Smolka).

  • “Offshoring and Volatility of Demand”, in W. Kohler and E. Yalcin (eds.), Developments in Global Sourcing, MIT Press (CESifo Seminar Series), 2018 (with Sebastian Benz and Erdal Yalcin).

International migration

International migration offers a high potential for welfare increases. But as with gains from trade, welfare gains from migration are coupled with changes in factor prices, particularly wages. The fear of unwelcome wage effects is responsible for restrictive immigration policies in almost all high-income countries. Are these fears justified? In a series of papers with Gabriel Felbermayr and varous other coauthors, we address this question both, from a theoretical and an empirical perspective:

  • “Immigration and wages in general equilibrium: A theoretical perspective,” in Foders, F. and R. J. Langhammer (eds.), Labor Mobility and the World Economy, Berlin-Heidelberg: Springer Verlag, 2006, 51-80 (with Gabriel Felbermayr).

  • “Immigration and Native Welfare,” in International Economic Review, vol. 48(3), 2007, 731-760 (with Gabriel Felbermayr).

  • “Restrictive Immigration Policy In Germany: Pains and Gains Foregone?” in Review of World Economics, vol. 146/1, April 2010, 1-21 (with Gabriel Felbermayr and Wido Geis).

  • “Migration, International Trade and Capital Formation: Cause or Effect?” in The Handbook of the Economics of International Migration vol. 1B, edited by Barry R. Chiswick and Paul W. Miller, Amsterdam: Elsevier, 2015, 913–1025 (with Gabriel Felbermayr and Volker Grossmann).

Quantifying the consequences of EU accession and EU enlargement

The European Union (EU) is characterized, among other things, by a single market for goods and services, which means that trade between member states should be free of tariff as well as non-tariff barriers. At the same time, trade with third countries is governed by a common external tariff (customs union). Trade thoery states that this type of (preferential) trade liberalization may, but need not, benefiit member countries in terms of aggregate welfare. The reason is that it causes trade creation according to comparative advantage (which is beneficial) as well as trade diversion running against comparative advantage (which is harmful). Moreover, trade liberalization is likely to cause significant internal redistribution of income, and EU-type integration also causes redistribution between member states through the EU budget (contributions and return flows). How can we quantify the net effect of all this, say for a country becoming a member of the EU, like Austriy in 1995? How can we do so for the effect on incumbent countries of an enlargement of the union, like the eastern enlargements of 2004 und 2007? Christian Keuschnigg and I have developed and calibrated (empirically)  a general equilibrium model addressing these effects and then used this model for a series of numerical simulations in the context of the aforementioned enlargements of the EU:

  • Eastern Enlargement of the EU: A Dynamic General Equilibrium Perspective,” in Harrison, G.W., Hougard Jensen, S.E., Haagen Pedersen, L. and Th. Rutherford (eds.) Using Dynamic General Equilibrium Models for Policy Analysis, Amsterdam: North-Holland, 2000, 1119-170 (with Christian Keuschnigg).

  • “Innovation, Capital Accumulation and Economic Transition,” in Baldwin, R.E. and J.F. Francois (eds.), Dynamic Issues in Applied Commercial Policy Analysis, Cambridge: Cambridge University Press, 1999, 89-137 (with Christian Keuschnigg).

  • “Wer gewinnt, wer verliert durch die Osterweiterung der EU?” in Hoffman, L. (Hrsg.), Erweiterung der EU, Berlin: Duncker & Humblot, 2000, 27-78 (Plenarvortrag bei der Jahrestagung des Vereins für Socialpolitik).

  • “Die Osterweiterung der EU aus der Sicht der bestehenden Mitgliedsländer: Was lehrt uns die Theorie der ökonomischen Integration?” in Perspektiven der Wirtschaftspolitik, vol. 1, 2000, 115-141.

  • “The German Perspective on Eastern EU Enlargement,” in The World Economy, vol. 24, April 2001, 513-542 (with Christian Keuschnigg und Mirela Keuschnigg).

  • „An Incumbent Country View on Eastern Enlargement of the EU, Part I: A General Treatment,” in Empirica, vol. 27, 2000, 325-351 (with Christian Keuschnigg). (Keynote bei der Jahrestagung der Österreichischen Nationalökonomischen Gesellschaft).

  • “An Incumbent Country View on Eastern Enlargement of the EU, Part II: The Austrian Case,” in Empirica, vol. 28, 2001, 159-185 (with Christian Keuschnigg).

  • “The Lisbon Goal of the EU: Rhetoric or Substance,” in Journal of Industry, Competition and Trade, vol. 6, 2006, 85-113.

Quantifying the effects of trade liberlization

Trade theory states that unilateral trade liberalization holds aggregate welfare gains for a country. But it also states that these gains come with potential pains from redistribution through facotr price changes. How can we quantify both within a unified approach? In joint work with Christian Keuschnigg, we have developed a dynamic general equilibrium model involving monopolistic competition (product differentiation) and capital accumulation that we have used to address the above issues through numerical simulations for trade liberalization as implemented following the Uruguay-Runde of the GATT (later WTO):

Die wichtigsten Publikationen dazu:

  • “Income Distribution and Labor Market Effects of Austrian Pre- and Post-Tokyo-Round Tariff Protection,” in European Economic Review, vol.35, 1991, 139-154.

  • “Modeling Intertemporal General Equilibrium: An Application to Austrian Commercial Policy,” in Empirical Economics, vol. 19, 1994, 131-164 (with Christian Keuschnigg).

  • “Dynamic Effects of Tariff Liberalization: An Intertemporal CGE Approach,” in Review of International Economics, vol. 3, 1995, 20-35 (with Christian Keuschnigg).

  • “Commercial Policy and Dynamic Adjustment under Monopolistic Competition,” in Journal of International Economics, vol. 40, 1996, 373-410 (with Christian Keuschnigg).

  • “Dynamics of Trade Liberalization,” in Francois, J.F. and K. Reinert (eds.), Applied Trade Policy Modeling: A Handbook, Cambridge and New York: Cambridge University Press, 1997, chapter 13, 383-434 (with Christian Keuschnigg).

  • “Exploring the Intensive and Extensive Margins of World Trade,” in Review of World Economics, vol. 142(4), 2006, 642-674 (with Gabriel Felbermayr).

  • “Modelling the Extensive Margin of World Trade: New Evidence on GATT and WTO Membership,” in The World Economy, vol. 33/11, November 2010, 1430-1469 (with Gabriel Felbermayr).

  • “Does WTO Membership Make a Difference at the Extensive Margin of World Trade?” in Drabek, Z. (ed.), Is the World Trade Organization Attractive Enough for Emerging Economies: Essays in Criticism of the Multilateral Trading System, Palgrave Macmillan, 2010 (with Gabriel Felbermayr).

  • “An adverse social welfare effect of a doubly gainful trade,” in Journal of Development Economics vol. 135, November 2018: 77-84 (with Oded Stark, Ewa Zawojska and Krzysztof Szczygielski).

Empirical tests of the Heckscher-Ohlin theory

The main logic of the Heckscher-Ohlin theory is that a country's factor endowments (capital, labor etc.) determines its comparative advantage and thus the structure of its foreign. Moreover, according to this logic trade should entail an international equalization of factor prices. How can we formulate this logic in a way that is both exact and amenable to empirical testing? My contributions to answering this question:

  • Faktorproportionen und Internationaler Handel: Theorie und empirische Untersuchungen am Beispiel Österreichs, Tübingen. J.C.B. Mohr (Paul Siebeck), 1988 (Habilitationsschrift)

  • “The Factor Content of Austria´s Foreign Trade 1976,” in Empirica, vol. 14, 1/1987, 3-24.

  • “Modeling Heckscher-Ohlin Comparative Advantage in Regression Equations: A Critical Survey,” in Empirica, vol. 15, 2/1988, 263-293.

  • “How Robust are Sign and Rank Order Tests of the Heckscher-Ohlin-Vanek Theorem?” in Oxford Economic Papers, vol. 43, 1991, 158-171.

  • “Factor-Price Equalization Under Joint and Nonjoint Production,” in Journal of Economics, vol. 62, 3/1995, 271-294 (with Max Albert).

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