Working on another project, I found this interesting correlation between the IMF’s “Measure of Aggregate Trade Restrictions” (MATR) (Estafania-Flores, Furceri, Hannan, Ostry and Rose (2022)) and the Chinn-Ito (JDE 2006) measure of financial openness (KAOPEN).
Figure 1: Chinn-Ito KAOPEN vs MATR (inverted) for Emerging Market/Developing Economies (EMDEs). Higher values of each variable indicate more openness. Source: Chinn-Ito, and MATR.
Each one unit change in KAOPEN is associated with a 2.5 unit change in MATR (inverted). This estimate is relatively unchanged (2.4, t-stat = 98) with the inclusion of time fixed effects (adj-R2 = 0.69). With this degree of correlation, it’s sometimes hard to distinguish which variable is important in multiple regression when both are included on the right hand side (i.e., multicollinearity).
The time series pattern of the two variables average (cross-country) value is also of interest.
Figure 2: Y – average of Chinn-Ito KAOPEN, X10 – average MATR (inverted, divided by 10) for Emerging Market/Developing Economies (EMDEs). Higher values of each variable indicate more openness. Source: Chinn-Ito, and MATR.
I’m wondering how much the recent issues with global supply chains are going to change these numbers over a 5-10 year horizon?? Or will people’s short memories of the deaths, empty grocery shelves, dwindled car dealership inventories, etc lead back to “normalcy” very quickly?? I suspect it will be a blip (relatively speaking, “blip” here in the big picture meaning something like 5 years). Then in the 15–20 years we have another pandemic (from China?? Africa?? Pick your own candidates on probable culprits), all the know it alls will come out of the woodworks and say “Why didn’t we concentrate our supply chains of crucial products to a more domestic emphasis??” And we’ll go down tired public dialogue deja vu all over again.
Similar to war. As you get older, what fun, to re-live the same damned dumb-a$$ human caused events over and over.
A very useful graph. We might expect trade and capital openness to be correlated, but this is the first time I have seen it convincingly demonstrated. It remains to be seen, though, if the inverted MATR will become the standard measure of trade openness in the same way that the Chinn-Ito index is the standard for capital openness. There are a large number of similarly weighted variable inputs, many of which are somewhat opaque. This leads to some unexpected results. For example, it would appear the US is more open to trade since 2014 than at any time since the nineties, with no impact from recent tariff increases (at least up to 2020). Moreover, the US is near the top (MATR 4), beaten only by Israel and Finland (MATR 3). In general, it would seem tariffs carry less weight than expected, given the non-tariff index (MATR-nt) is so highly correlated with standard MATR.
The fundamental question is globalization: does a more open economy tend to provide a better life for its people? The most telling measures might be something like caloric intake, infant / natal mortality, longevity, girls’ education, and similar non-monetary measures.
I never liked purchasing power parity for the simple reason that the New York Times is not the same as People’s Daily, and hundreds of other incompatibles. So, I prefer non-monetary measures.
The results can be amazing.
Globalization as you call it is the only thing keeping the U.S. over consumption system a float. A system built on technology expansion via debt has been the name of the game since the Columbian Exchange. As has globalization. It changes formulation time to time, but is basically the same.
I did not stay up to see MSNBC late night When Truth Isn’t Truth Part I and if anyone knows if cable TV has any way to watch this now. I did learn about the 1992 City Hall Riots which involved a bunch of racist cops going after Mayor Dinkins simply because the mayor wanted proper oversight:
https://nymag.com/intelligencer/2021/10/the-forgotten-city-hall-riot.html
The day of the protest, Rudy Giuliani was also outside the building with a microphone. Giuliani, a former U.S. Attorney and failed mayoral candidate in 1989, declared, “The reason the morale of the police department of the City of New York is so low is one reason and one reason alone: David Dinkins!” The crowd roared. “The mayor doesn’t know why the morale of the police department is so low,” Giuliani said. “He blames it on me. He blames it on you. Bullshit!” Giuliani then attacked an anti-corruption commission impaneled by Dinkins, which he said was created “to protect David Dinkins’s political ass.” More cheers rose from the crowd. The demonstration began to spiral out of control, amplified by officers drinking at the pubs on Murray Street. Thousands more had shown up than were expected. Deputy Mayor Fritz Alexander called the police on the police. Acting Police Commissioner Ray Kelly dispatched a phalanx of officers to City Hall for crowd control.
That was when Steisel started to get scared.“I was getting concerned they’re gonna storm the building,” Steisel said. “I mean, these fucking guys are crazy.” That, for various reasons, has been all but scrubbed from New York’s historical memory. It not only involved Mayor Dinkins but was a formative experience for two future mayors and the city’s likely next mayor — who back then was a 32-year-old transit-police officer. “It’s almost equivalent to what we saw at the Capitol,” Eric Adams told me recently, referring to the Trump-inspired insurrection on January 6.
9/16/1992 was the forerunner of 1/6/2021 and RUDY was behind both.
I had hope Stacey Abrams would have been Georgia’s governor but the current Lt. Gov. is a decent dude:
https://www.msn.com/en-us/news/politics/it-could-take-a-decade-to-undo-damage-to-the-republican-party-caused-by-fox-news-promoting-election-fraud-claims-says-former-gop-official/ar-AA17HXXP?ocid=msedgdhp&pc=U531&cvid=76f121fe4ee249dcb66721d52c486c3f
Republican former Lt. gov. of Georgia Geoff Duncan said it would take a decade to undo the damage to the GOP caused by Fox News in allegedly promoting conspiracy theories about the 2020 election.
Trade Related Aspects of Intellectual Property Right (TRIPS) is an agreement on international IP rights. TRIPS came into force in 1995, as part of the agreement that established the World Trade Organization. Dani Rodrik has written on TRIPS before. I bring this up because of a recent ruling in Brazil:
https://www.reuters.com/markets/commodities/brazil-supreme-court-rules-bayer-must-return-252-mln-gmo-soy-royalties-2023-02-17/
Brazil Supreme Court rules Bayer must return $252 million in GMO soy royalties
SAO PAULO, Feb 17 (Reuters) – Germany’s Bayer (BAYGn.DE) has been ordered by Brazil’s Supreme Court to return to Brazilian soybean farmers the royalties they were charged for a GMO soybean seed, the Mato Grosso farmer lobby Aprosoja-MT said in a statement on Friday. The Feb. 13 ruling by Supreme Court Justice Nunes Marques relates to a GMO technology commercially known as Intacta RR2 Pro, created by Monsanto, which was later acquired by Germany’s Bayer. The ruling is the latest chapter of a protracted battle opposing the crop science firm and Brazilian farmers, who have launched multiple legal challenges against the firm. In 2017, Mato Grosso farmers sued Monsanto over that same genetically modified seed, seeking to cancel its patent protections by claiming it did not bring any technological innovation. Two years later soy producer associations in 10 Brazilian states joined that lawsuit. Aprosoja-MT said that according to the ruling, Bayer will now have to deposit 1.3 billion reais ($252 million) in an escrow account to return royalties paid by farmers going back to 2018. Bayer said it is analyzing the Marques ruling, which refers specifically to a lawsuit brought by farmers claiming the company was charging royalties on a patent that had expired.
Does anyone know if God is getting royalties for His work on soybean genetics?? I heard that some of His early work on soybeans was considered pioneering at the time. My understanding is He also fiddled with some other crops’ , uuuuhh, genesis.
The extreme EGO of man. Thank God in lesser portions on this blog recently. Mentally relieving actually. The dork eating tamales with cherry sod-ie pop said.
Now if God did collect royalties, I wonder if he would siphon this income off to a tax haven.
BTW in my attempts to figure out how high these royalty rates might be, I have come across a lot of defenses of GMO food which goes something like this. The world population growth over the next 50 years will require that we increase world food production by 70%. So the crop science business which includes companies like Bayer are going to generate a lot of sales and profits.
Let’s say this is all true. Then one would hope we would avoid the monopolization of this sector – right? And yet Baxter was allowed to merge with Monsanto? Yea – making profits off of food is more important than feeding the masses it seems. This crop science sector unfortunately a lot like Big Pharma.
Some pretty wise thoughts there. You know I hate to give you any credit (hahaha) but those are some pretty wise thoughts you set out there.
The true wise one is my incredibly left wing daughter who is on a campaign to combat the abuse of GMOs. Me? I would just settle for the appropriate enforcement of transfer pricing as boring as that sounds.
: )
The “woke” reign of terror continues. Don’t you LOVE it, when the Guillotine operator accidentally beheads himself. Because I promise, 3/4ths of the “woke” folks waving the naughty finger have thoughts wandering their brain everyday that will get them sliced at the neck if those thoughts ever sauntered out of their mouths, the same as Mr. Lemon. And the best part of that fact is, many of them are women:
https://www.ibtimes.com/don-lemon-out-cnn-monday-future-network-being-discussed-reports-3669633
If you hire someone solely for the reason they “check a box”, this is what you get. Lemon is such a lightweight, he almost makes Nikki Haley look “deep and introspective”. And anyone with an ounce of sense that ever watched the man, knew that. Get somebody that knows their sh*t, who’s well-read. Don’t pick a news anchor because they LOOK like they could sell “Medicare Advantage” to functionally illiterate people as a fashion model in a target advertisement intended to exploit minorities. Women want to tune into the beefcake anchor, then can’t believe it when Braindead wanders off script. Quit watching anchors just for their appearance, or better yet, just don’t watch TV “news”, ‘cuz it barely even exists.
A Russian political analyst appearing on a state-run news program claimed that Russia allowed President Joe Biden to visit Ukraine because they are civilized. Now that’s so nice of Putin! Oh Gee – Marjorie Taylor Greene is calling for Biden to be impeached over this trip. OK – Marjorie is Putin’s spokesperson so hey!
DeSantis’s cowardice on supporting Ukraine makes him the JohnH choice for the next President:
https://www.msn.com/en-us/news/world/desantis-downplays-russian-military-power-hours-after-finland-s-pm-warns-putin-is-threat-to-all-of-europe/ar-AA17JfWQ?ocid=msedgdhp&pc=U531&cvid=0a2dc67a189f4b6ab44ae5655bad352a
DeSantis joined Fox & Friends early Monday morning and was asked by co-host Lisa Boothe about continued U.S. military aid for Ukraine and where he sees the war going. “I think a lot of Americans are asking, you know, how much more money, how much more time, how much more human suffering?” Boothe asked DeSantis, who joined the program as news of President Joe Biden’s surprise visit to Kyiv broke. “Well, they have effectively a blank check policy with no clear, strategic objective identified. And these things can escalate. And I don’t think it’s in our interests to be getting into a proxy war with China, getting involved over things like the borderlands or over Crimea,” DeSantis replied. “So, I think it would behoove them to identify what is the strategic objective that they’re trying to achieve. But just saying it’s an open-ended blank check, that is not acceptable,” the Republican concluded.
I get that Republicans like McConnell support Biden’s efforts but it is still Trump’s party and we know Trump is a Putin puppet.
Wouldn’t label this a “must read” but thought provoking and somewhat telling for 2024 politics.
https://newrepublic.com/article/170672/donald-trump-is-the-republican-party
Court filing by Dominion Voting Systems. Tons of quotes/ phone messages by Fox News hosts in which they contradict and really make polar opposite statements to their public postures.
https://newrepublic.com/article/170666/fox-news-carlson-hannity-dominion
https://int.nyt.com/data/documenttools/redacted-documents-in-dominion-fox-news-case/dca5e3880422426f/full.pdf
“This Dominion shit is going to give me a fucking aneurysm”
I never imagined the outline of a court filing would have such a sentence!
Aaaaah, hell, yes you did. Just not from that source.
They are kosher nationalism and it’s globalist agenda. They support Putin and would love to give him military aid.
And here we have a clean example of anti-antisemitism blending with anti-capitalism.
No, thanks.
curious to know what strategic objective Biden as c in c pursues by taking ordnance away from war reserves, and sending billions in $$.
guarantee of Stalin/kruschy borders and autarky in kiev are objects that link more to nuke war than the common defense and general welfare
splurging w/o strategic is the noise of failure
You need to update your Russian to English program – it’s literally Impossible to understand what you are talking about.
He does appear to have employed a designated driver. Next, he might consider a designated interpreter.
Considering the U.S. has actually given little in Aid in actual dollars, your point is irrelevant. Putin is a globalist. He cares none for Russia. He is the Alien in John Hurt’s belly. He wants a global dictatorship with his friends Murdoch Donald and Xi.
So East Ukraine are now “borderlands”.