Asymmetric Shocks in Trade Distances

The correlation between trade and income has been extensively documented in empirical research.  But the ‘endogeneity issue’ of whether trade increases income or income increases trade has not received a definite answer.  The first attempts to solve the endogeneity issue involved the use of geographical instruments.  A natural choice of instrument is the geographical distance from one country to other countries, since distance provides considerable information about trade volumes.  For example, New Zealand is far from most other countries and the amount it trades is reduced when compared to Belgium, which is close to many of the world’s richest countries.  But the concern with this approach is that distance may be acting through channels other than trade.  For example, countries close to the equator may be further from the world’s richest countries, but this happens to coincide with the fact that they have weak institutions, which may be the real cause for reduced trade volumes.

An alternative approach, which still relies on geography as an instrument for trade, is to observe natural experiments that generate asymmetric shocks in trade distances. One type of experiment focuses on the effects of trade disruption associated with wars or natural disasters.  The Six Day War fought between Israel and Egypt, which resulted in the closure of the Suez Canal between 1967 and 1975, is an example of such a natural experiment.  Because the Suez Canal provides the shortest sea route between Asia and Europe, its closure implied that in some cases the transport of goods through the alternative route around the Cape of Good Hope would take almost double the nautical miles.  This variation in shipping distance allows for the analysis of the impact of pure transportation costs on trade and the effect of trade on output.  Another experiment, that explores the effects of unexpected variation in trade distances in a similar manner, focuses on air transportation.  It uses the two months disruption in flights caused by the eruption of a volcano in Iceland in 2010, allowing for the direct analysis of goods flows to European destinations, and an indirect analysis of non-European destinations via network effects.  Not only do both of these experiments enable the evaluation of the effect of trade to be free from confounding factors, like the movement of people.  They also create the opportunity for research in economic development, patterns of production specialization across countries, and the ability of supply chains to react to these shocks.

A second type of natural experiment is the change in transportation technology over time.  One striking example is the reduction of the costs of air freight between 1955 and 2004, which fell by a factor of ten, leading to a substantial shift toward air freight around the globe.  Similar effects have been found for the development of ‘containerization’ in shipping.  Both of these innovations can be interpreted in terms of a change in the physical distance between countries over time that may be used to identify the effect of trade on income.  One of the main findings of the work on air freight is that, in general, trade has a significant positive effect on income.  However, a different technological shock indicates a more nuanced story.  Going back to the first wave of globalization at the end of 19th century and beginning of the 20th century, the invention of the steamship removed the dependence of transport on wind.  This produced an asymmetric change in shipping times across countries because some shipping routes benefited more from trade winds than others.  After this change, the research found that the income per capita gap between poor and rich countries increased even more.  One explanation is that a reduction in relative trade costs together with increasing returns in manufactures causes a process of industrial agglomeration that is beneficial for countries that specialize in manufacturing but might actually harm countries that specialize in agriculture which is characterized by constant returns to scale.  Since this suggests that a reduction in trade costs across countries does not automatically generate large positive effects on economic development, more research is necessary to understand the mechanisms through which trade may lead to positive effects on income.

Bernhofen, Daniel M. & El-Sahli, Zouheir & Kneller, Richard, 2016. “Estimating the Effects of the Container Revolution on World Trade.” Journal of International Economics, 98: 36-50. [working paper].

Besedes, Tibor, Antu Mushid (2017) “Experimenting with Ash: The Trade-Effects of Airspace Closures in the Aftermath of Eyjafjallajökull,” Working Paper.

Frankel, Jeffrey and David Romer (1999) “Does Trade Cause Growth? American Economic Review, 89 (3): 379-99.

Freyer, James (2009) “Trade and Income: Exploiting Time Series in Geography.” NBER Working Paper 14910.

Freyer, James (2009) “Distance, Trade, and Income: The 1967 to 1975 Closing of the Suez Canal as a Natural ExperimentNBER Working Paper 15557.

Gerritse, Michiel (2017) “Does Trade Cause Unfortunate Specialization in Developing Economies? Evidence from Countries South of the Suez Canal,” Working Paper.

Pascali, Luigi (forthcoming) “The Wind of Change: Maritime Techonology, Trade, and Economic Development,” American Economic Review. [working paper]

Rodriguez, Francisco. and Dani Rodrik (2000) “Trade Policy and Economic Growth: A Skeptics Guide to the Cross-national Evidence“. NBER Macroeconomics Annual 15, 261-338.

New Working Papers April 2017

The following working papers have recently been added to our working papers page

Andersen, Thomas B. and Peter S. Jensen (2017) “Preaching Democracy

Baier, Scott L., Amanda Kerr and Yoto V. Yotov (2017) “Gravity, Distance, and International Trade

Berkowitz, Daniel,  Hong Ma and Shuichiro Nishioka (2017) “Does Capital-Labor Substitution or Do Institutions Explain Declining Labor Shares?

Dhillon, Amrita, Vegard Iversen and Gaute Torsvik (2013) “Employee referral, social proximity and worker discipline: Theory and Evidence from India

Stroup, Caleb and Ben Zissimos (2017) “Pampered Bureaucracy, Political Stability, and Trade Integration

Welcome new members – April 2017

We would like to welcome the following new members of the InsTED network:

Prof. Elisa Cavatorta (King’s College London) Her research interests are in the fields of behavioural and experimental economics and development economics.

Prof. Tommaso Tempesti (University of Massachusetts Lowell) His research fields are international trade, labour economics and health economics.

Dr. Hyunjoo Yang (Korea Development Institute) His research interests are development and growth, social capital and Korean history.

IDB-ELSNIT Annual Conference

The Euro-Latin Network on Integration and Trade (ELSNIT) is now accepting submissions of papers examining adjustment to deeper economic integration –global and regional- (in terms of trade, FDI, migration), the challenges thereof, and adjustment policies along the economic and institutional dimensions. In particular, submitted papers should address questions such the following:

  • Adjustment to Deeper Economic Integration. More
  • Challenges to Adjusting to Deeper Economic Integration.More
  • Policies to Adjust to Deeper Economic Integration. More

Both theoretical and empirical contributions will be considered, but in all cases priority will be given to papers identifying and shedding light on relevant policy questions such as those outlined above, including case studies of policies followed by national or international organizations, in particular. Furthermore, submission of papers that, in doing this, explicitly contrast successful and failed cases, comparing countries within a certain a geographical area, is strongly encouraged. Important lessons are expected to be drawn from these contributions for Latin American and Caribbean countries.

The selected papers will be presented along invited contributions at the XV Annual ELSNIT Conference that will be hosted by the Centre for Economic Performance (CEP) in London, United Kingdom, on October 20-21, 2017. This year the conference is part of a series of activities and events organized and taking place in the framework of an Asian Development Bank Institute (ADBI)-Inter-American Development Bank (IDB)-World Trade Organization (WTO) research initiative on adjustment to deeper economic integration. In this regard, this ELSNIT conference will be followed by another meeting focused on the same topic but primarily concentrated on the Asian experiences that will be hosted by the ADBI in Tokyo in November 2017.


  • The deadline for submissions is May 15, 2017.
  • The final selection of papers will be made by June 5, 2017 by the network coordinators. More
  • The final versions of the papers must be delivered by September 20, 2017.
  • The selected papers will be presented along invited contributions at the XV Annual ELSNIT Conference that will be hosted by the CEP in London, United Kingdom, on October 20-21, 2017.


The selected authors’ and invited discussants’ travel expenditures (economy class) and per diems to participate at the conference will be reimbursed by the IDB. Detailed guidelines explaining the logistics of the conference will be provided at a later stage. Please circulate this call for papers among your colleagues and other potentially interested parties.


If you are interested in participating, please fill out the form online and submit your work through this website.

Job Opportunity: Readership in Development Economics, University of Cambridge

The Faculty of Economics seeks applications for a Readership in Development Economics which is a permanent senior position and is available from 1 September 2017. Candidates should have an internationally established academic reputation for excellence in research and a proven capacity to take a leadership role.

Candidates must be able to demonstrate evidence of international recognition and excellence in research/scholarship with reference to originality, contribution to the advancement of knowledge and reputation; the successful candidate will be expected to publish in the best international journals and must have a proven capacity to take a leadership role. It is envisaged that the successful applicant will play a leading role in the research programme of the Faculty.

The successful candidate will be expected to undertake teaching (which may be in the form of lectures, seminars and classes) and will also be expected to act as an examiner, as directed by the Faculty Board. They will also be expected to undertake research with a view to publication in the best international journals and to undertake administrative tasks as directed by the Faculty Board. The Readership is a tenured position.

Appointments are subject to the Statutes and Ordinances of the University of Cambridge. Applications should include:

  • curriculum vitae
  • outline of research plans
  • full list of publications
  • three sample pieces of major work
  • teaching and research interests

The current pensionable stipend is £59,400 (Reader, University Grade 11, Point 63). In exceptional circumstances, it may be possible to offer a supplement to the salary stated for this role of up to £25,600 for five years in the first instance. Any such supplement would be awarded on the basis of a demonstrable history of outstanding achievement and an expected future level of contribution and is entirely at the discretion of the University.

To apply online for this vacancy and to view further information about the role, please visit: This will take you to the role on the University’s Job Opportunities pages. There you will need to click on the ‘Apply online’ button and register an account with the University’s Web Recruitment System (if you have not already) and log in before completing the online application form.

The deadline for applications is Sunday 28 May 2017.

Further information can be found at The generic role profile for a Reader at Cambridge can also be found at Reader Role Profile

Informal enquiries can be addressed to Professor Sanjeev Goyal (email )

Please quote reference JH05696 on your application and in any correspondence about this vacancy.

The University values diversity and is committed to equality of opportunity.

The University has a responsibility to ensure that all employees are eligible to live and work in the UK.

Workshop on Growth, Stagnation and Inequality

Bank of England, London

3rd & 4th October 2017

Call for Papers

The global macroeconomic environment has been characterized by several key trends over the past few decades, from falling real interest rates, investment rates and productivity growth, to rising inequality and wage stagnation. Many potential drivers of these trends have been proposed, from structural or technological changes, such as globalization, ageing population, the rise of the service sector or falling price of investment goods, to institutional factors such as competition, financial markets, central bank policy or tax policy. While all of these explanations can play a part in the overall trends that we observe, there is little consensus on their relative importance, their interactions with one another, or the expected future path of the global economy. Importantly, these different explanations can point to different potential policies for tackling low growth and rising inequality.

This workshop, taking place on the 3rd and 4th October 2017, at the Bank of England, will bring together top researchers to discuss recent work on these different drivers and the relationship between them.  Our hope is to foster dialogue between the different approaches, and also shed light on the policy debate.

We would particularly welcome submissions on the following topics:

  • Productivity trends and drivers
  • Market power, the evolution of market structure and its implication on inequality
  • Corporate governance and the determinants of corporate investment
  • Implications of demographic trends
  • Globalization and the increasingly global role of emerging markets
  • Policies addressing inequality, secular stagnation and low growth

Keynote Speakers: Joseph Stiglitz (Columbia University) and Ayşegül Şahin (Federal Reserve Bank of New York)

Organizers: Ignacio González (Columbia University and American University D.C.), Rana Sajedi and Gregory Thwaites (Bank of England)

Please submit papers via email to:

Deadline: June 30th, 2017. The list of accepted papers will be announced by August 1st, 2017, and authors will be expected to send the final version of papers to discussants by September 5th, 2017. Travel and accommodation reimbursements will be considered on a case-by-case basis for presenters. Please send any queries to .

Second World Congress of Comparative Economics “1917 –2017: Revolution and Evolution in Economic Development”

The European Association for Comparative Economic Studies (EACES), The Association for Comparative Economic Studies (ACES), The Japanese Association for Comparative Economic Studies (JACES) and The Korean Association for Comparative Economic Studies (KACES) in collaboration with the Italian Association for Comparative Economic Studies (AISSEC), The Society for the Study of Emerging Markets (SSEM), The Chinese Economists Society (CES), The European Association for Evolutionary Political Economy (EAEPE)  and other scientific associations and networks invite you to submit proposals for  panel sessions and individual papers for the Second World Congress of Comparative Economics in St. Petersburg on June 15-17, 2017.

The Second World Congress of Comparative Economics will be held at National Research University Higher School of Economics (HSE University, St. Petersburg, Russia), June 15 – 17, 2017, following the first successful meeting in Rome in 2015. It is expected that the congress will bring together about 300 – 350 academics and experts from around the world to discuss a broad spectrum of economics issues in a comparative perspective, both at micro and macro level of analysis.

The Congress will include plenary sessions, workshops, as well as the editors’ panel and special events. There will also be a small exhibition area which will give participants the opportunity to meet with vendors who specialize in providing e-resources.

Keynote Speakers

  • Gerard Roland (University of California, Berkeley, USA);
  • Alexander Auzan (Moscow State University, Russia).

Topic Areas for Submission

Sessions (parallels and plenaries) and round tables of the Congress will be devoted  to a broad spectrum of theoretical and empirical contributions on the following topics:

  • institutional design and institutional dynamics;
  • catching up, cyclical development and structural transformation;
  • macroeconomic stability and macroeconomic policies;
  • development of financial and banking sector;
  • labor market and industrial relations;
  • human capital development;
  • industrial organization;
  • issues of regional development;
  • international trade and trade policy;
  • migration and foreign direct investment;
  • issues of international economic integration;
  • economic history.

The above list is not exhaustive and all submissions broadly related to the topic of socio-economic development and policy will be considered.

The Editors’ Panel

The Editors’ Panel will be chaired by Ali M. Kutan (Distinguished Research Professor of Economics and Finance, Department of Economics and Finance, Southern Illinois University Edwardsville; Editor, Emerging Markets Finance and Trade; Co- Editor, Economic Systems). It aims to provide attendees with an opportunity to meet, interact with, and hear the views of journal editors from leading international journals. This panel is targeted toward active researchers interested in learning about possible publication opportunities. Each invited editor will have an opportunity to present their journal, its aims, scope, and submission guidelines.

Special Issues

Papers presented at the Second World Congress of Comparative Economics are eligible, if accepted, for publication in special issues of partner journals listed below. Supporting publications confirmed for now are: Comparative Economic Studies, Review of Industrial Organization, Eastern European Economics, Emerging Markets Finance and Trade, Russian Management Journal, Russian Journal of Economics, and Public Administration Issues.

Working language: English.

Local organizer of the 2nd WCCE is National Research University Higher School of Economics in St. Petersburg (HSE University, St. Petersburg).


For any questions about programme, submission or further information please contact the Local Organizing Committee at

URL for Further Information:

First Conference

We are organizing the First Conference, which will be hosted by the Paris School of Economics on December 14th and 15th, 2017. was initially created as the The World Top Incomes Database in January 2011. Thanks to the contribution of over a hundred researchers, the project expanded to include series on income and wealth inequality for more than thirty countries, spanning over most of the 20th and early 21st centuries, and in some cases going back to the 19th century. To reflect the increasing scope and ambition of the database, the WTID was subsumed into in November 2015. In January 2017, with the objective of reaching yet a wider audience, we launched a new website.
The conference will be structured along three axes:
1-The releasing of the first issue of the World Inequality Report. The report will provide global estimates of income and wealth inequality drawing on the latest evidence gathered in, and will discuss implications for future research and for the global policy debate on rising inequality.
2- A session in honor of Tony Atkinson in the afternoon of December 14th.
3- The presentation of research papers on income and wealth inequality, as well as on progress made in the DINA-Distributional National Accounts agenda.  We expect to organize four sessions, for which we are welcoming submissions of completed papers or detailed drafts.

Paper submission. Please submit your paper in pdf format by email to  by September 1st, 2017, indicating whether you will require funding, and whether you are a PhD student. Decisions are expected to be announced by September 11th, 2017.

Attending but not presenting a paper. Please send an email to  with your name and affiliation by September 17th, 2017. Note that it may not be possible to accept all requests if demand exceeds the space available.

For updates on this Call for Papers. Please see the call for papers published in

2017 InsTED / Sao Paulo School of Economics-FGV Workshop

4th InsTED Workshop on “Advances in Institutions, Trade and Economic Development”

joint with

9th Sao Paulo School of Economics Conference Series on “Trade & Labor and other Institutions”

The workshop will take place at Sao Paulo School of Economics-FGV, Brazil, May 17th-18th 2017.  Sponsorship by the Swiss Programme for Research on Global Issues for Development and the “Firms, Markets and Values” cluster, University of Exeter Business School, is gratefully acknowledged.

Keynote speakers:

Amit Khandelwal (Columbia Business School)

Gianmarco Ottaviano (London School of Economics)

Scott Taylor (University of Calgary)

Submissions are now closed.

A current version of the workshop program can be found here.
For travel information and logistics click here.

Organizers: Emanuel Ornelas (Sao Paulo School of Economics-FGV), Vladimir Ponczek (Sao Paulo School of Economics-FGV), Ben Zissimos (Exeter) and Isleide Zissimos (Exeter)

   Logo 3 Swiss Programme Image  Exeter Business School logoSPSE FGV logo

Giovanni Anania Scholarship 2017

The Italian Association of Agricultural and Applied Economics (AIEAA), the Manlio Rossi-Doria Centre for Economic and Social Research (Roma Tre University), the Department of Agricultural and Resource Economics of the University of California at Davis, and the Department of Economics, Statistics and Finance of the University of Calabria (Arcavacata di Rende, CS) are offering a scholarship in memory of Giovanni Anania. The scholarship will be awarded to a PhD candidate enrolled in the first or second year of an Italian doctoral program (i.e. 31th and 32nd doctoral cycles) whose research project focuses on one of the following fields: 
– international trade, 
– international negotiations and agreements on market liberalization, 
– sectoral and trade policies in the agri-food sector. 
The scholarship is worth € 5,000.00 as a contribution to cover the expenses for a stay study and research period, tuition-free, at the Department of Agricultural and Resource Economics of the University of California at Davis. The winner will be entitled to attend lectures and seminars organized by the Department. The time spent at UC Davis is a minimum of 4 months, preferably in the Fall term 2017-2018 and in any case not after Spring 2018. Thanks to the International Agricultural Trade Consortium (IATRC) the winner can also attend the IATRC’s Annual December Meeting free of charge.  
The selection will be made by a committee of three members designated by the institutions that sponsor the scholarship.  
The applications will be evaluated on the basis of a research project whose academic objectives and methodologies must be clearly specified. The description of the project, written in English, must not exceed 15,000 characters. In case of research projects receiving equal evaluations, preference shall go to candidates born in Calabria region. 
The deadline for the 2017 Call for Applications is April 30th. By this date, applications must have been transmitted to  along with: 
– research project description 
– copy of an identity document 
– certificate of registration at the doctoral cycle 
– letter of recommendation from the doctoral program supervisor or coordinator. 
The results of the evaluation procedure will be communicated to candidates by May 15th 2017. The winner shall commit to carrying out the program described in the Call – whose details will be agreed upon with the participating institutions – under penalty of revocation of the award and related benefits. 
At the end of the period, the beneficiary will write a summary (in English) on the activities carried out at UCD. Publications resulting from research activities carried on, entirely or partially, thanks to this Scholarship should acknowledge the grant received. 
The Italian Association of Agricultural and Applied Economics (AIEAA),
the Manlio Rossi-Doria Centre for Economic and Social Research (Roma Tre University), the Department of Agricultural and Resource Economics of the University of California at Davis, and the Department of Economics, Statistics and Finance of the University of Calabria (Arcavacata di Rende, CS)