Rod Falvey

• PhD University of Rochester
• Professor at Bond University

We use Australian Thoroughbred racing data, including situational variables, to examine when a sequence of winning rides for a jockey initiates psychological momentum (PM) that makes a win on the next ride more or less likely, other things equal. Of the 42% of jockeys that exhibit PM, we find positive PM is much more common (80%) than negative PM;...

The paper uses recently available data on the core economic provisions of PTAs to identify which (types of) provisions seem to promote bilateral exports and the intensive and extensive margins of exports. Our evidence suggests that measures applied at the border on a preferential basis tend to expand existing trade relationships rather than generat...

Countries differ in the extent to which their financial systems rely on banks or on financial markets. We offer a model featuring a complex relationship between countries’ financial system architecture and their comparative advantage. Countries with capital markets that are relatively more efficient than their banking systems gain comparative advan...

We extend the empirical analysis of hot hands in sports to horse racing, using the winning streaks of a sample of jockeys riding in Australia. Grouping jockeys by strike rate (win percentage), we find evidence of hot hands across almost all strike rates. But considering jockeys individually, only a minority exhibit hot hands. A wagering strategy ba...

Our empirical analysis utilises panel data on bilateral FDI stocks from 34 OECD countries into 45 ACP countries over the period 2000–2017 to consider the role of PTAs in attracting FDI. We control for policies relating to trade, taxes and investment, along with other explanatory variables identified in the literature. We conclude the prevalence of...

We use the frequency of streaks of winning rides to test whether jockeys have 'hot hands'.

We propose and experimentally test a mechanism for a class of principal-agent problems in which agents can observe each others' efforts. In this mechanism each player costlessly assigns a share of the pie to each of the other players, after observing their contributions, and the final distribution is determined by these assignments. We show that ef...

We extend the empirical analysis of hot hands in sports to horse racing, by looking at the occurrences of winning streaks in the racing records of a sample of jockeys riding in Australia. When we consider jockeys collectively, grouped by strike rate, the evidence indicates the presence of hot hands across almost all strike rates. But when we consid...

Study at a foreign university can be an important way of developing international human capital. We investigate factors affecting international student flows for higher education and their consequences for bilateral market integration in Australia. Estimation results demonstrate that income, cost competitiveness, migration network effects and other...

Does increased import competition lead to higher returns to skill within an industry and, therefore, to greater incentives for skill acquisition? Does it also induce skill upgrading by the industry's existing workforce? To answer these questions, we follow individual workers across skills/occupations, firms and industries using a longitudinal match...

This paper uses matching econometrics to extend the literature investigating the impact of preferential trading arrangements (PTAs) on goods trade flows. Heterogeneity in PTAs is accounted for through a “provision count index” derived from data provided in a recent World Bank study. PTA formation now involves two separate, sequential decisions—firs...

We investigate the effects of trade on national minimum quality standards for a product whose quality is unobservable to consumers prior to purchase. Two standard-setting regimes are considered: (1) where the regulatory authority takes the trade share as given; and (2) where the regulatory authority takes full account of its ability to influence th...

The standard competitive trade model, extended to include many goods and factors, is used to analyze the effect of goods and factor market integration on average international disparities in the real returns of internationally immobile factors. It is shown that goods market integration decreases international real return differentials for all facto...

This chapter analyzes the effects of tariff reforms on welfare and market access in a competitive small open economy that is characterized by involuntary unemployment due to non-market clearing wages that are fixed either in terms of the numeraire or in real terms. We show that recent tariff-reform results can be extended to integrated reforms of t...

Bilateral investment treaties (BITs) have become increasingly popular as a means of encouraging foreign direct investment (FDI) from developed to developing countries. We adopt a difference-in-difference analysis to deal with the problem of self-selection when estimating the effects of BITs on FDI flows from a sample of OECD countries to a broader...

Bilateral investment treaties (BITs) are an increasingly used policy instrument to encourage FDI inflows, particularly inflows into developing countries. In this paper we estimate a gravity model of FDI flows from a sample of OECD countries to a broader sample of developing economies, examining the impact of BITs on these flows. BITs are signed bet...

A growing number of developed countries are offering entrepreneurial visas as a means of attracting entrepreneurial talent and capital. In this paper we use a simple two sector model of international trade with heterogeneous agents and financial frictions to show that entrepreneurial migration can contribute to the international efficiency of produ...

We examine R&D policies when a national firm forms an R&D alliance with a foreign competitor. Firms differ in R&D capabilities, select among three forms of R&D alliance and adopt a profit-sharing rule if they coordinate their R&D decisions. When firms coordinate their R&D decisions and governments choose R&D policies independently, R&D taxes are ch...

The World Bank‟s International Comparison Program (ICP) data on national price levels for tradables and non-tradables (and goods compared to services) reveals that New Zealand has relatively high prices of both tradables and non-tradables when compared to a sample of over 40 OECD-Eurostat countries (Gemmell, 2013). The present paper seeks to explai...

For the purposes of this study, we will construct a static monopolistically‐competitive computable general equilibrium model to quantify the endogenous productivity spillovers from foreign and domestic firms, using the Chinese economy as a case study. Our simulation results indicate: (i) that the net spillover effects are positive in terms of natio...

This study compares the results of skill content tests for types of trade flows under alternative assumptions about the technologies used to produce imports and exports. For trade between high- and middle-income countries, we show that the match between the actual skill content of trade and that predicted by endowments in a Heckscher-Ohlin-Vanek fr...

We consider a simple oligopoly model where firms engage in cost-reducing R&D and compare two R&D regimes: R&D competition and R&D cooperation in the form of a research joint venture (RJV). We introduce coordination costs for the RJV and examine how these affect the equilibrium outcomes. We find that the performance of the RJV in comparison to R&D c...

Openness and trade liberalisation variables are consistently estimated to have significant positive coefficients in panel growth regressions. Many arguments have been advanced as to why and how more open or liberalised economies might grow faster, but the specific channels this process uses have begun to be investigated only recently. We continue t...

Historically, trade taxes have been an important source of government revenue in subsistence-oriented economies with large informal sectors. As countries developed and economic activity became more market-oriented, governments sourced revenue from broader, more efficient tax bases. But trade taxes remained, with protection of domestic import-compet...

When Palgrave approached us with the proposal of editing the Handbook of International Trade targeted at the beginning postgraduate student, their rationale was the existence of a market niche supporting the teaching of the economics of international trade at either the masters or beginning doctoral level. Existing handbooks and surveys in internat...

Many economic reforms are undertaken during an economic crisis, but is a crisis a good time to undertake trade reform? We investigate whether an economic crisis at the time of trade liberalization affects a country’s subsequent growth performance. We employ threshold regression techniques on five crisis indicators to identify the “crisis values” an...

Tax incentives have been adopted worldwide to attract foreign direct investment (FDI) and its superior technology. However whether tax incentives can promote FDI productivity spillovers remains unknown. We develop a static computable general equilibrium (CGE) model of China to explore it. The results suggest that abolishing differential tax system...

We examine research and development (R&D) policies when a national firm forms an R&D alliance with a foreign competitor. Firms differ in their R&D capabilities, and adopt a profit-sharing rule when R&D decisions are coordinated. National R&D tax/subsidy policies are set independently or harmonized. When firms coordinate their R&D decisions and gove...

In this paper we investigate the effects of trade on the national minimum quality standards applied by two trading partners. We employ a simple partial equilibrium model in which national regulators set a minimum quality standard for a product whose quality is unobservable to consumers prior to purchase. Both producers and consumers can benefit fro...

We develop a simple theoretical model to examine the impact of the distribution of wealth on the patterns of trade when capital markets are imperfect. Our model predicts that the dispersion of wealth can be a determinant of comparative advantage for low income countries with poor financial institutions. We find support for these prediction using ex...

In this paper we develop a heterogeneous firm, intra-industry trade model in which countries are asymmetric in both technology and size. In the trading equilibrium, the industry productivity levels countries are jointly determined by the technology gap and trade barriers. We find that the (exogenous) technological gap is a key determinant of the si...

We introduce financial frictions in a two sector model of international trade with heterogeneous agents. The level of specialization in the economy (economic development) depends on the quality of financial institutions. Underdeveloped financial markets prohibit an economy to specialize in sectors where finance is important. Capital flows and inter...

This paper highlights the way in which workers of different ages and abilities are affected by anticipated and unanticipated trade liberalisations. A two-factor (skilled and unskilled labour), two-sector Heckscher-Ohlin trade model is supplemented with an education sector which uses skilled labour and time to convert unskilled workers into skilled...

Many economic reforms are undertaken at a time of economic crisis. But is this a good time for a country to undertake trade reform? In this paper we investigate whether an economic crisis at the time of trade liberalisation affects a country’s subsequent growth performance. We employ threshold regression techniques on five crisis indicators commonl...

We propose a two-country monopolistic competition model of business service offshoring that captures the advantage conferred by time zone differences. We emphasize the role of the entrepreneurs, who decide how to produce business services (i.e., domestic service provision or service offshoring). It is shown that the utilization of communication net...

We construct a static computable general equilibrium (CGE) model to quantify the endogenous productivity spillovers from foreign-invested firms to domestic firms, taking the Chinese economy as a case study. The coefficients of four spillover channels are estimated from econometric analysis. The simulations are conducted under two alternative market...

We use a firm-level dataset for Chinese manufacturing, to estimate productivity spillovers from foreign direct investment (FDI) to local firms. The spillover channels considered include inter-firm labour turnover/mobility; vertical input-output linkages; exporting externalities; and horizontal effects. The roles of these channels are dependent on v...

In this paper we examine the impact of membership in Preferential Trade Agreements (PTAs) on trade between PTA members. Rather than considering the impact of PTA membership on the volume of trade we consider the impact of membership on the structure of trade. For a large sample of countries over the period 1962-2000 we find that membership in a PTA...

Many economic reforms are undertaken at a time of economic crisis. But is this a good time to undertake trade reform? In this paper we investigate whether an economic crisis at the time of trade liberalisation affects a country’s subsequent growth performance. We employ threshold regression techniques on five crisis indicators commonly used in the...

In this paper we analyse the effects of joint multi-level decision-making in an economic union on regulatory outcomes produced under lobbying. We show that under certain conditions supranational decision-making leads to regulatory outcomes that raise national welfare.

This paper examines whether increased import competition induces domestic workers to skill upgrade and/or switch industries. The analysis makes use of a large unique longitudinal matched employer-employee dataset that covers virtually all workers and firms in Portugal over the 1986-2000 period. Our identification strategy uses two exogenous changes...

This chapter examines the role of patent policy in the open economy. It begins by considering how the presence of patents affects trade in patentable products. A brief review of the general argument for patent protection is followed by consideration of the elements that comprise a patent system, and which determine "patent strength." Attention is t...

We have constructed a computable general equilibrium (CGE) model to capture the endogenous productivity spillover from foreign-invested firms to domestic firms in China. This paper summarizes the main results we have found so far. There are four contributions we have made to the literature. Firstly, we have disaggregated 31 industries into 31*3=93...

The labour market consequences of globalisation are controversial. Fears that the process of increased integration into world markets implies increasing job losses and downward pressure on wages are widespread, often resulting in demands for import protection. Growing concerns about the importance of such adjustment costs are evident in the policy...

Measures to support Competition Policy and enhance the efficiency of Public Procurement can enhance the impact of regional integration agreements. The first part addresses Competition Policy - measures employed by government to ensure a fair competitive market environment. Competition policy aims to ensure that markets remain competitive (through a...

Panel data are used to investigate North–South trade-related knowledge spillovers. We find that absorptive capacity increases the benefits of knowledge spillovers, and that spillovers have least impact in countries closest to and farthest from the technological frontier.

The Byrd Amendment, which redistributed antidumping duty revenue to import competing firms, has been declared an unauthorized “action against dumping”. But does revenue redistribution dissuade dumping? Or is it a strategic trade policy? This paper uses a simple two-period duopoly model to evaluate these issues. An antidumping law provides an incent...

This paper highlights the way in which workers of different age and ability are affected by anticipated and unanticipated trade liberalisations. A two-factor (skilled and unskilled labour), two-sector Heckscher-Ohlin model is supplemented with an education sector which uses skilled labour and time to convert unskilled into skilled workers. A skille...

We develop a general equilibrium model with heterogeneous firms and foreign direct investment cost uncertainty and investigate the survival of foreign-owned firms. The survival probabilities of foreign-owned firms depend on firm-level characteristics, such as productivity, and host country characteristics, such as market size. We show that a foreig...

We consider the incentives that the existence of an Antidumping Law provides for strategic behaviour on the part of duopolistic firms selling in each other's segmented markets. Firms have identical costs, but are located in countries with different market sizes (maximum willingness to pay). In free trade the firm from the larger market dumps in the...

Economic theory suggests some ambiguity concerning the effects of strengthening intellectual property rights (IPRs) on international trade. Here we extend the empirical literature that attempts to resolve this ambiguity. We use panel data to estimate a gravity equation for manufacturing exports, in aggregate and by industry, from five advanced coun...

Following the conclusion of the TRIPS Agreement, much has been written on the potential costs and benefits of stronger Intellectual Property Rights (IPRs) protection in terms of growth and technology transfer, particularly for developing countries. This paper reviews this literature and provides new evidence linking protection of IPRs to economic g...

In this paper we extend the Melitz (2003) heterogeneous firm trade model to include differences in country sizes and production technologies. We begin by characterising a "superior" technology, in terms of both survival cutoffs and representative firm productivity, and then examine a (costly) trading equilibrium between a leading and laggard countr...

We analyze a simple oligopoly model where firms can engage in cost-reducing R&D. We compare two R&D regimes, that is, R&D competition and R&D cooperation where firms can enter in a Research Joint Venture (RJV). We introduce coordination costs for the RJV and examine how these affect the equilibrium outcomes. Further, we examine the question of the...

This paper highlights the way in which workers of different age and ability are affected by trade liberalisation. A general-equilibrium model of trade and human-capital is constructed. Individuals differ not only in their endogenous education-level but also in their exogenous age. They can, at any point in their lives, skill-upgrade through (costly...

Following the conclusion of the TRIPS Agreement much has been written on the potential costs and benefits of stronger Intellectual Property Rights (IPRs) protection in terms of growth and technology transfer, particularly for developing countries. This paper reviews this literature and provides new evidence linking protection of IPRs to economic gr...

In this paper we investigate the relative importance of net exchanges of skills embodied in intra-industry and inter-industry trade for the UK’s trade with some middle income countries. We also separately measure the net exchanges of skills embodied in vertical and horizontal intra-industry trade (IIT). We find that there are substantial factor exc...

Interest in links between protection of intellectual property and growth has been revived by developments in new growth theory and by the WTO's TRIPS Agreement. The relationship between the strength of a country's intellectual property rights (IPRs) regime and rate of growth is ambiguous from a theoretical standpoint, reflecting the variety of chan...

The present study compares the results of factor (skill) content tests for different types of trade flows under alternative assumptions about the technologies used to produce imports and exports. Using data on trade, technologies (skill requirements) and national endowments for some high income countries, we show that the match between the actual f...

In this paper we investigate the relative importance of net exchanges of skills embodied in intra-industry and inter-industry trade for the UK's trade with some middle income countries. We also separately measure the net exchanges of skills embodied in vertical and horizontal intra-industry trade. We find that there are substantial factor exchanges...

The impact of firm level productivity heterogeneity on export market entry has been the subject of theoretical innovation and extensive empirical scrutiny in recent years. The latter has focused on falling trade costs and firm level productivity, notwithstanding the fact that theory also points up links between trade and industry level productivity...

In this paper we search for evidence of North-South trade-related knowledge spillovers from a sample of five major OECD countries to 45 developing countries using panel data. We then extend the analysis to examine whether the impact of domestic factors affects the extent of knowledge spillovers. In particular, we investigate whether knowledge spill...

The standard competitive trade model, extended to include many goods and factors, is used to establish two results. First, integration of goods markets decreases on average international disparities in the real returns of internationally immobile factors, irrespective of whether there is international factor mobility or not. Second, integration of...

Traditional treatments of the gains from trade were primarily concerned with the static gains realisable from realigning production in accordance with comparative advantage. In an open economy, resources would be (re)allocated more ‘productively’, taking advantage of the opportunities to import those products in whose production the country is rela...

We consider the incentives that the existence of an Antidumping Law provides for strategic behaviour on the part of duopolistic firms selling in each other's segmented markets. Firms have identical costs, but are located in countries with different market sizes (maximum willingness to pay). In free trade the firm from the larger market dumps in the...

Recently, evidence has emerged that knowledge produced through R&D in developed countries can spill over through trade to other countries. The literature has concentrated on imports as the transmission channel. We examine whether exports are also a channel on a panel of 21 countries for 1975–1990. We find that both are sources of knowledge spillove...

This paper constructs a two-country intra-industry trade model with efficiency differences at both national and firm level, to focus on the impact of trade on asymmetric countries. We show that in both countries opening up to trade strengthens the self-selection effect, raises average industry revenue, profit and efficiency and generates welfare ga...

This paper examines the role of patent policy in the open economy. It begins by considering how the presence of patents affects trade in patentable products. A brief review of the general argument for patent protection is followed by consideration of the elements that comprise a patent system, and which determine "patent strength". Attention is the...

The endogenous growth literature has stimulated empirical research into links between trade and growth in general and international knowledge spillovers in particular. Results relating to the latter have been mixed and the issue of the appropriate construction of the spillover variable remains contentious. In this paper we develop measures taking a...

This article examines the role of rules of origin as a commercial policy instrument that targets the input composition of imports. Using a three-country, partial equilibrium structure, we demonstrate conditions under which the imposition of a binding rule will be welfare improving for an importer facing competitive export suppliers. We further show...

In models of endogenous growth, international trade can impact upon growth by allowing access to the innovative products of other countries. Since developing countries do little if any innovation, it is primarily through trade with developed countries that they profit from higher levels of technological development. In this paper we construct an em...

This paper considers the links between trade liberalization and technology choice in the nonliberalizing country. Trade-liberalization-induced changes in relative product prices have direct effects on equilibrium relative factor returns. The consequent changes in relative input costs may also lead producers to switch to alternative technologies, wh...

This paper examines the effects of trade liberalization on international disparities in factor real returns in a model with more factors than goods. Existing trade interventions are assumed to be “restricting” trade. We find that any bias for or against factor price convergence depends on the underlying source of comparative advantage. Where trade...

Since unification, the debate about Germany's poor economic performance has focused on supply-side weaknesses, and the associated reform agenda sought to make low-skill labour markets more flexible. We question this diagnosis using three lines of argument. First, effective restructuring of the supply side in the core advanced industries was carried...

Extraterritorial application of national laws are regarded as an infringement of national sovereignty and against the interests of the nations affected by these actions, who frequently oppose their enforcement as a consequence. This paper examines extraterritorial application of national competition laws, and identifies an additional issue. Extrate...

Since unification, the debate about Germany's poor economic performance has focused on supply-side weaknesses, and the associated reform agenda sought to make low-skill labour markets more flexible. We question this diagnosis using three lines of argument. First, effective restructuring of the supply side in the core advanced industries was carried...

Economic Effects of Rules of Origin. — Rules of origin exist because governments wish to discriminate amongst products on the basis of their “country of origin”. Since the components and activities that make up the total value added of many products are not created in a single location, rules to define a unique geographical source for products must...

Can undesirable (from a global perspective) outcomes be prevented by an international agreement establishing common rules for merger approval? Or must a global merger authority be established, and if so by what rules should it operate? Here we investigate the economic issues involved in answering these questions and illustrate them through a simple...

This paper employs a global general equilibrium framework and sensitivity analysis to examine why it is that shocks in one country apprear to transmit to comparatively small changes in real factor rewards in its trading partners.

The hypothesis that the demand for services is income-elastic tended to find support in early empirical work. Recent studies however, adopting improved methodologies and better international data (based on purchasing power parity exchange rates), have challenged this conventional wisdom. Using an updated, disaggregated dataset covering sixty countr...

This paper extends and integrates previous models of the determinants of international differences in the prices of services relative to tradable commodities. The authors provide a model capable of identifying the effects of differences in (total) factor productivity on service price differences separately from the effects of factor endowment diffe...

This paper examines the effects of trade liberalization on international disparities in factor real returns in a model with more factors than goods. Existing trade interventions are assumed to be ''restricting'' trade. We find that any bias for or against factor price convergence depends on the underlying source of comparative advantage. Where trad...

Recent empirical evidence suggests that the share of services in real expenditure not only varies considerably across countries, but is negatively correlated with real income per capita. This paper formulates and tests a framework aimed at explaining international differences in real service expenditure shares in terms of underlying differences in...

This paper contributes empirically to our understanding of informed traders. It analyzes traders' characteristics in a foreign exchange electronic limit order market via anonymous trader identities. We use six indicators of informed trading in a cross-sectional multivariate approach to identify traders with high price impact. More information is co...