Christis G. Tombazos

New light on the 'impressionistic view' of the balancing item in Australia's balance of payments accounts

Recently, Fausten and Brooks offered (what they refer to as) an ‘impressionistic view’ of the temporal evolution of Australias balancing item, which is a measure of the accuracy of the balance of payments accounts. They claim that the balancing item ‘has been increasing in magnitude and volatility, violating with increasing frequency internationally agreed acceptability criteria for smallness. In the present paper it is shown that Fausten and Brooks results derive from data that incorporates excessively a dynamically asymmetric concentration of revisions and is therefore unsuitable for statistical analysis. This paper develops, and empirically evaluates, a model of the process of revisions of balance of payments data. This model illustrates that dynamically inconsistent time series of the balancing item, such as that employed by Fausten and Brooks, are bound to generate an artificial impression that it follows an ‘explosive’ time trend. Subsequently, it is illustrated that when alternative, dynamically consistent editions of the balancing item data for the same period as that examined by Fausten and Brooks are employed, their results are reversed. Indeed, the findings here contradict diametrically the conclusions of these authors by suggesting that the decline in the frequency of balancing item ‘violations’ observed in the latter portion of the relevant time period is unparalleled in the history of the balance of payments accounts.

The impact of imports on the demand for labor in Australia

Abstract In this paper we examine the impact of imports, disaggregated by origin, on the Australian demand for labor. Contrary to widely accepted stylized facts, we find evidence that imports from East Asia and the Pacific stimulate labor demand.

Distinguished Fellow of the Economic Society of Australia, 2007: Yew-Kwang Ng

This article surveys the work of Yew-Kwang Ng who, in 2007, was elected Distinguished Fellow of the Economic Society of Australia. Emphasis is given to the distinctive, wide ranging and original aspects of his work.

SPECIALIZATION, THE INTERMEDIATE NATURE OF TRADED PRODUCTS AND THE MYTH OF IMPORT DRIVEN WAGE INEQUALITY IN THE UNITED STATES

Using a model that recognises the prevalent cross-country specialization in production and the intermediate nature of all traded products, I investigate the effect of observed trends in the prices of ordinary intermediate and semi-final imports on the expanding wage differential between skilled and unskilled labour in the USA. Contrary to widely accepted stylised facts, my results suggest that decreases in import prices increase both wage rates, while compressing their differential. Sources of wage dispersion are, however, found in skill-biased economy-wide dynamic processes of capital accumulation and technical change. Copyright 2007 The Author Journal compilation 2007 Blackwell Publishing Ltd

Negotiation as the Art of the Deal

We develop a theory of negotiation in which deals have multiple dimensions that can be bundled together. We use theory and experiments to show that in such settings efficient trade is possible even with substantial asymmetric information. The benefits of identifying areas of mutual gain guide agents away from posturing and manipulating their share of the pie, and instead to finding the deals that maximize their mutual gains from trade.

Trade and Wage Inequality in a World of Incomplete Diversification

Given the importance of globalization in today’s world, this salutary and timely book explores how globalization is specifically shaping the Asia-Pacific. It investigates future prospects and challenges, identifies the key winners and losers, and concludes in many cases that the portents for globalization are not particularly promising.

Unprotective Tariffs, Ineffective Liberalization, and Other Mysteries: An Investigation of the Endogenous Dimensions of Trade Policy Formation in Australia

At the forefront of research on Australias trade policies two items have attracted considerable interest: (1) the endogeneity of tariff concessions and (2) the impact of liberalization on imports. Studies that investigate the former examine the impact of import penetration on tariffs, and studies that explore the latter consider the effect of tariffs on import penetration. Despite the simultaneity of these variables, research lines (1) and (2) followed separate paths by only considering unidirectional causal relationships. And yet, these paths do converge. The meeting point: perplexing results! Tariffs are found to protect those industries that have the least use for protection, and liberalization is often determined to be entirely ineffectual in stimulating imports. The present article explains that the source of such puzzling results is found in the misspecification of the employed frameworks of analysis, which ignore relevant feedback effects. When reciprocal causation is addressed in the analysis, the estimated impact of import penetration on the tariff level increases by almost fivefold and that of tariffs on import penetration more than doubles.