Andrea Lassmann

The Causal Impact of Common Native Language on International Trade: Evidence from a Spatial Regression Discontinuity Design

This paper studies the effect of sharing a common native language on inter- national trade. Switzerland hosts three major native language groups which adjoin countries sharing the same native majority languages. In regions close to the internal language border the alternate major language is taught early on in school and not only understood but spoken by the residents. This setting allows for an assessment of the impact of common native rather than spoken language on transaction-level imports from neighbouring countries. Our findings point to an effect of common native language on extensive rather than on intensive margins of trade.

Income Taxes, Sorting, and the Costs of Housing: Evidence from Municipal Boundaries in Switzerland

This paper provides novel evidence on the role of income taxes for residential rents and spatial sorting. Drawing on comprehensive apartment-level data, we identify the effects of tax differentials across municipal boundaries in Switzerland. The boundary discontinuity design (BDD) corrects for unobservable location characteristics such as environmental amenities or the access to public goods and thereby reduces the estimated response of housing prices by one half compared to conventional estimates: we identify an income tax elasticity of rents of about 0.26. We complement this approach with census data on local sociodemographic characteristics and show that about one third of this effect can be traced back to a sorting of high-income households into low-tax municipalities. These findings are robust to a matching approach (MBDD) which compares identical residences on opposite sides of the boundary and a number of further sensitivity checks.

Armington Product Variety Growth in Small versus Large Countries

Recent work in international economics provides insights into the measurement of product variety change - i.e., the change at the extensive margin of trade - and its consequences for a countrys welfare. In such work, the measurement of product variety change is typically taken as given. There is evidence that product variety change is the main source of gains from trade (see Hummels and Klenow, 2005; and Broda and Weinstein, 2006). However, little is known as to what determines product variety growth, e.g., from an Armington perspective as here, and what we can subsequently learn for the inclination of countries, depending on their characteristics, towards trade liberalization. Results in this paper shed first light on a possible nexus between Armingtontype product variety change (i.e., product diversity by virtue of country of origin) and economic size of countries. Our future research will venture to provide an answer to the question about the key determinants of product variety and as to the heterogeneous consequences of trade liberalization across countries.

Income Taxes, Sorting and the Costs of Housing: Evidence from Municipal Boundaries in Switzerland

This paper provides novel evidence on the role of income taxes for residential rents and spatial sorting. Drawing on comprehensive apartment-level data, we identify the effects of tax differentials across municipal boundaries in Switzerland. The boundary discontinuity design (BDD) corrects for unobservable location characteristics such as environmental amenities or the access to public goods and thereby reduces the estimated response of housing prices by one half compared to conventional estimates: we identify an income tax elasticity of rents of about 0.26. We complement this approach with census data on local sociodemographic characteristics and show that about one third of this effect can be traced back to a sorting of high-income households into low-tax municipalities. These findings are robust to a matching approach (MBDD) which compares identical residences on opposite sides of the boundary and a number of further sensitivity checks.

Productivity and R&D as Drivers of Exports and Domestic Sales: Semi-parametric Evidence from French Firm-level Data

Earlier work suggests that the relationship between exports and trade costs and exports and foreign market size is well described by a log‐linear functional form. A log‐linear relationship between exports and productivity is the underlying workhorse models of trade as well. The same pattern is assumed to hold for domestic sales. How the intensity of R&D affects quality or preferences and productivity, and hence, exports and domestic sales, is less well established. This paper is devoted to estimating the relationship between productivity, R&D and sales to different markets in a flexible, nonparametric way which is embedded in a semiparametric estimation approach. Using French firm‐level data, we can confirm a standard log‐linear relationship for exports. However, it takes a rather non‐linear functional form for domestic sales, suggesting that the data are generated by a potentially different class of models than the one considered traditionally.

Switzerland’s electricity trade: A short-term forecasting model and an analysis of multivariate relationships

This study analyses Switzerlandpsilas bilateral electricity trade with Germany, France, Italy, and Austria using monthly data for the 2002-2007 period. We develop a short-term univariate forecasting model for Swiss electricity trade. Next, we analyse the determinants of Switzerlandpsilas bilateral electricity trade using a multivariate approach. We take into account the information contained in relative prices and terms of trade. The in-sample predictive ability of the multivariate models are shown to be better than those of the naive and univariate models. In view of the forthcoming electricity market liberalisations, the information contained in the price variables along with the evidence on the substitution effects in imports and exports by source and destination countries can be valuable in understanding and predicting the future developments in the Swiss electricity trade.

The impact of common native language and immigration on imports

This paper sheds light on the impact of common native language and immigration—both jointly and separately—on imports. Common native language and immigrant networks stimulate bilateral trade relationships by reducing transaction costs through both market creation and the removal of information asymmetries. Whereas evidence on the importance of weak links for trade provides support for the first channel, the need for additional immigrants does not decline, if the second mechanism proves to be a driver of trade relationships. For estimation of a causal and nonlinear effect of the two—common native language and immigration—on imports, we employ a flexible identification strategy, which allows common native language and migration to be endogenous. The results suggest that both common native language and immigration raise imports, but the impact of common native language is ever increasing with its level, whereas that of immigration is of declining importance as its level increases.