Andre Sapir

Competition and imports in the European market

Theoretical and empirical research suggests that import competition within European markets imposes a major constraint on domestic firmss price-cost margins. The programme for the completion of the European Communitys (EC) internal market by 1992 is largely based on the effects expected from a reinforcement of such a constraint. But imports from the rest of the world could also exercise an important trade discipline on European market performance. In fact there are various arguments suggesting that the disciplinary effect of extra-EC imports could be stronger than that of intra-EC imports. The paper develops an empirical model to measure the relative strength of import discipline on price-cost margins in European industries. We find that both potential and actual competition induced by imports are effective in narrowing such margins. Furthermore, trade discipline varies not only according to various features of industry but also according to the origin of imports: only extra-EC imports were found to exercise a significant impact on price-cost margins.

International trade and integration of the European Community: An econometric analysis

The paper contributes to the policy debate on European integration by analyzing intra-Community trade and studying the structural determinants of European competitiveness. Four types of explanatory factors of intra-EC trade are distinguished: (1) factors related to inter-industry trade; (2) factors pertaining to intra-industry trade; (3) factors which reflect natural and policy-induced barriers to trade; and (4) factors reflecting supply constraints. Distinction is drawn between two contrasting factors that favor intra-area trade: those that foster economic welfare and those that hinder a more efficient world division of labor.

Government Size and Output Volatility; Should We Forsake Automatic Stabilization?

Prior to the launch of the euro, academics and policymakers were concerned that the loss of the monetary policy instrument would deprive participating countries of a vital tool to respond to country-specific economic shocks. This concern was rooted in the generally accepted proposition that market-based adjustment channels-i.e. labour mobility and capital flows-tended to be weaker among euro area countries than among regions of existing monetary unions such as the United States. Automatic stabilizers had long been regarded as playing a key role in macroeconomic stabilization. In particular, they were generally considered as having contributed significantly to the decrease of output volatility witnessed in Europe and in the United States after World War II, when the size of governments increased substantially on both sides of the Atlantic. Hence it was hoped that improved national fiscal policy could partly make up for the loss of monetary policy in stabilizing national macroeconomic conditions. The aim of the paper is to discuss this issue in the light of recent experience.

Operationalising the theory of optimum currency areas

Recent years have seen a wave of empirical studies attempting to give empirical content to the theory of optimum currency areas as a way of marshalling evidence on the costs and benefits of EMU. This paper reviews this empirical literature, as a way of examining the success with which theory has been operationalized. We also report some new work on the impact of German unification and increasing economic integration in Europe on correlations of underlying disturbances and on geographic specialization of production. We conclude with some thoughts about directions for future research.

Trade theory and economic reform : North, South, and East : essays in honor of Béla Balassa

To Bela, Jaime de Melo and Andre Sapir a tribute to Bela, Gottfried Haberler Bela at the world bank, Hollis Chenery real exchange rates and purchasing power parity, Rudiger Dornbusch and Timothy Vogelsang measuring the effects of nontariff trade-distorting policies, Robert E.Baldwin importing increasing quantitative trade restrictions, Wendy E.Takacs project evaluation and the samuelson compensation test, Tatsuo Hatta an evaluation of neutral trade policy incentives under increasing returns of scale, Jaime de Melo and David Roland-Holst the food gap of the developing world - what we can learn from a general equilibrium modeling approach, J.M.Burniaux, et al conducting scientific assessments for economic reforms, Edmond Malinvaud France, the German republics, and European economic integration, Charles P.Kindleberger the 1992 European integration program and regional development policies, Paul De Grauwe the discipline of imports in the European market, Alexis Jacquemin and Andre Sapir is Japan an outlier among trading countries?, T.N.Srinivasan export targetting and Japanese industrial policy, Marcus Noland development economics and the general agreement on tariffs and trade, J.Michael Finger exchange rate policy in develping countries, W.Max Corden trade policy, market orientation and productivity change in industry, Mieko Nishimizu and Hohn M.Page, Jr. adjustment under different trade strategies - a mean-variance analysis with CGE model of the Yugoslav economy, Irma Adelman, et al taxes, tariffs, and trade in an industrializing low-income country - simulating policy choices in India, 1973-4 to 1983-4 henrik dahl and pradeep mitra stabilization and economic transition in Hungary - the next two years, Janos Kornai township, village and private industry in Chinas economic reform, William Byrd and Alan Gelb Perestroika in the CMEA and the challenge of the 1992 program for a single western European market, Marie Lavigne.

EC Regionalism at the Turn of the Millennium: Towards a New Paradigm?

The paper examines the development of regional trade agreements (RTAs) between the European Community (EC) and its partners during the past decade. It finds that EC regionalism has recently entered a new phase: regional trade agreements with countries outside Europe. As a result of parallel initiatives by the United States, the world trading system finds itself in virgin, and potentially dangerous, territory. (This abstract was borrowed from another version of this item.)

Political Cycles, Fiscal Deficits, and Output Spillovers in Europe

This paper investigates whether national elections in Europegenerate political cycles in other European countries, and, ifso, whether these spillover effects are likely to surviveinside EMU. The paper first tests whether elections in Germanyaffect macroeconomic outcomes in other European countries andthen investigates the impact of elections on budget deficits.The results indicate that German politics significantlyimpacts macroeconomic variables in other European countries,and also that politics significantly affects the behaviour ofEuropean budgetary policy. The prospect of elections tends toincrease public deficits in recessions, whereas left-winggovernments tend to be more deficit-prone than right-winggovernments regardless of the state of the economy. Moreover,the existence of political cycles spillovers among Europeancountries suggest that there may be a need for electoralcoordination.

The Impact of the Single Market on the Big European Countries

At the request of the European Council, the Commission conducted an in-depth economic evaluation of the impact of implementation of the single market programme (European Commission, 1996). This was based on 40 or so reports published by the Commission on individual sectors or general matters, which are the principal source for this article.

United States - Subsidies on Upland Cotton Recourse to Article 21.5 by Brazil, WT/DS267/AB/RW (2 June 2008)

Two of the four issues in this Appellate Body Report concerned the proper scope of Article 21.5 DSU compliance panel proceedings; the other two issues concerned the Appellate Bodys review of the Panels use of evidence. On the Article 21.5 issues, the Appellate Body essentially ruled that an Article 21.5 compliance proceeding could evaluate the WTO consistency of: (i) the entirety of an implementation measure (including parts of the measure that did not specifically implement DSB recommendations and rulings) and (ii) new subsidy grants made under a program in respect of which prior subsidy grants had been found to cause serious prejudice so as to determine whether the new grants also resulted in serious prejudice. On the evidentiary issues, the Appellate Body upheld the Panels conclusions, although it modified certain of the Panels reasoning. Probably the most interesting aspect of the case was the substantial deference showed by the Appellate Body to the Panels consideration of causation and non-attribution issues. This deference was striking compared to the lack of deference that the Appellate Body has given to national authorities on those issues. We detect, however, a welcome interest on the part of the Appellate Body to require the use of analytical tools on the part of panels evaluating serious-prejudice cases.

The EU and the governance of globalisation

The system of multilateral rules and institutions that constitute the global economic governance regime trails the rapid transformation of the world economy. That system needs to adapt to geopolitical changes and to a growing number and diversity of participants in global economic integration, and must coexist with regionalism and market-led governance. Globalisation could proceed with weak global governance, but not without significant risks to its sustainability. The EU, which has a stake in the multilateral system and most likely a comparative advantage in institutional design, should be a key player in its reform agenda. The difficulty of the task is no excuse for avoiding it and for hiding behind US leadership. To equip itself with the ability to take initiatives towards reform, the EU requires changes in its own internal governance and its external representation. Contrary to conventional wisdom, these changes need not imply a federalisation of external relations.