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We revisit the relationship between international trade, economic growth and inequality with a focus on Latin America and the Caribbean. The paper combines two approaches: First, we employ a cross-country panel framework to analyze the macroeconomic effects of international trade on economic growth and inequality considering the strength of trade connections as well as characteristics of countries’ export markets and products. Second, we consider event studies of past episodes of trade liberalization to extract general lessons on the impact of trade liberalization on economic growth and its structure and inequality. Both approaches consistently point to two broad messages: First, trade openness and connectivity to the center of the trade network has substantial macroeconomic benefits. Second, we do not find a statistically significant or economically sizable direct impact of trade on overall income inequality.

Globalization --- Latin America --- Economic conditions. --- E-books --- Exports and Imports --- Macroeconomics --- Economic Growth of Open Economies --- Globalization: General --- Trade: General --- Aggregate Factor Income Distribution --- Trade Policy --- International Trade Organizations --- Financial Aspects of Economic Integration --- International economics --- Exports --- Income inequality --- Trade liberalization --- Trade integration --- Trade policy --- International trade --- National accounts --- Economic integration --- Income distribution --- Commercial policy --- International economic integration --- Mexico

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What determines the currency to which countries peg or "anchor" their exchange rate? Data for over 100 countries between 1980 and 1998 reveal that trade network externalities are a key determinant. This implies that anchor currency choice may well be suboptimal in that certain currencies, e.g., the U.S. dollar, could be oversubscribed. It also implies that changes in anchor choices by a small number of countries can have large and rapid effects on the international monetary system. Other factors found to be related to anchor choice include the symmetry of output shocks and the currency denomination of liabilities.

Foreign exchange rates. --- Foreign exchange administration. --- Coinage, International. --- International coinage --- International money --- Money, International --- Exchange rates --- Fixed exchange rates --- Flexible exchange rates --- Floating exchange rates --- Fluctuating exchange rates --- Foreign exchange --- Rates of exchange --- Rates --- Currency question --- Monetary unions --- Money --- Exports and Imports --- Foreign Exchange --- Money and Monetary Policy --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Financial Aspects of Economic Integration --- Monetary economics --- Currency --- International economics --- Reserve currencies --- Currencies --- Exchange rate arrangements --- United States

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We examine economic convergence among euro area countries on multiple dimensions. While there was nominal convergence of inflation and interest rates, real convergence of per capita income levels has not occurred among the original euro area members since the advent of the common currency. Income convergence stagnated in the early years of the common currency and has reversed in the wake of the global economic crisis. New euro area members, in contrast, have seen real income convergence. Business cycles became more synchronized, but the amplitude of those cycles diverged. Financial cycles showed a similar pattern: sychronizing more over time, but with divergent amplitudes. Income convergence requires reforms boosting productivity growth in lagging countries, while cyclical and financial convergence can be enhanced by measures to improve national and euro area fiscal policies, together with steps to deepen the single market.

Exports and Imports --- Inflation --- Macroeconomics --- Business Fluctuations --- Cycles --- Economic Integration --- Financial Aspects of Economic Integration --- Measurement of Economic Growth --- Aggregate Productivity --- Cross-Country Output Convergence --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- Personal Income, Wealth, and Their Distributions --- Price Level --- Deflation --- Economic growth --- International economics --- Business cycles --- Personal income --- Financial cycles --- Monetary unions --- National accounts --- Financial sector policy and analysis --- Prices --- Economic integration --- Income --- Germany

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This paper assesses the extent of regional financial integration in the Caribbean Community (CARICOM) by analyzing equity prices in the region and rigidity of external financing constraints. The results are presented in a cross-regional perspective. The Caribbean stock markets are not as well integrated as one would expect from the extent of cross-listing and importance of regional banking groups: price differentials of cross-listed stocks reach an average of 5 percent. Auto-Regressive models suggest that these price differentials are only slowly arbitraged away, with half-lives exceeding 7 worked days, even when looking only at large arbitrage opportunities (using a Threshold Auto-Regressive model). A speculative methodology using macroeconomic data seems to confirm these findings. A strong mean reversion of the current account (respectively regional trade imbalances) is interpreted, following Obstfeld and Taylor (2004), as a lack of ways to finance current account deficits, i.e. a lack of global (respectively regional) financial integration. The region appears to be much less integrated than the EU15 or the ASEAN+3 groups, although it fares well compared to other LDCs.

Finance --- Business & Economics --- Money --- Macroeconomics. --- Caribbean Area --- Economic policy. --- Funding --- Funds --- Economics --- Currency question --- Exports and Imports --- Finance: General --- Investments: Stocks --- Current Account Adjustment --- Short-term Capital Movements --- Financial Aspects of Economic Integration --- International Financial Markets --- General Financial Markets: General (includes Measurement and Data) --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- International economics --- Investment & securities --- Financial integration --- Stock markets --- Stocks --- Current account --- Regional integration --- Financial markets --- Financial institutions --- Balance of payments --- Economic integration --- International finance --- Stock exchanges --- International economic integration --- Trinidad and Tobago

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The introduction of the euro generated substantial interest in measuring the impact of currency unions (CUs) on trade flows. Rose's (2000) initial estimates suggested a tripling of trade and created a literature in search of "more reasonable" CU effects. A recent meta-analysis of this literature shows that subsequent papers quantify CU trade impacts at 30-90 percent. However, most recent studies use shorter time series and fewer countries than Rose in his original work. We revisit Rose's original benchmark, extend the dataset, and address Baldwin's (2006) critiques regarding the proper specification of gravity models in large panels by simultaneously accounting for multilateral resistance and unobserved bilateral heterogeneity. This produces a robust average CU trade effect of 45 percent. Yet, the trade impacts of individual CUs vary substantially and are generally lower than those of preferential trade agreements (PTAs). Our revised benchmark can be used as a yardstick for future studies to delineate how estimates differ due to new data or differences in econometric specifications.

Free trade. --- Monetary unions. --- Tariff. --- Finance --- Business & Economics --- International Finance --- Free trade and protection --- Trade, Free --- Trade liberalization --- Ad valorem tariff --- Border taxes --- Customs (Tariff) --- Customs duties --- Duties --- Fees, Import --- Import controls --- Import fees --- Tariff on raw materials --- Common currencies --- Currency areas --- Currency unions --- Optimum currency areas --- International trade --- Commercial policy --- Indirect taxation --- Revenue --- Customs administration --- Favored nation clause --- Non-tariff trade barriers --- Reciprocity (Commerce) --- Currency question --- Money --- Exports and Imports --- Foreign Exchange --- Trade Policy --- International Trade Organizations --- Financial Aspects of Economic Integration --- International economics --- Currency --- Foreign exchange --- Plurilateral trade --- Monetary unions --- Exchange rates --- Multilateral trade --- United States