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Who Is Internationally Diversified? Evidence from 296 401(k) Plans

February 16, 2015 Comments off

Who Is Internationally Diversified? Evidence from 296 401(k) Plans
Source: Center for Retirement Research at Boston College

We examine the international equity allocations of over 3 million individuals in 296 401(k) plans over the 2006-2011 period. These allocations show enormous cross-individual variation, ranging between zero and over 75 percent, as well as an upward trend that is only partially accounted for by the slight decrease in importance of the U.S. market relative to the world market. International equity allocations also display strong cohort effects, with younger cohorts investing more internationally than older ones, but also each cohort investing more internationally over time. This finding suggests that the home bias phenomenon may slowly disappear over time. Worker’s salary has a positive effect on international allocations, while account balance has a negative one, but these effects are not economically large. Education, financial literacy, and the fraction of the foreign-born population measured at the zip code level have strong positive effects on international diversification, consistent with familiarity and information stories. In addition, states with more exports have higher international allocations.

CRS — U.S. Trade Concepts, Performance, and Policy: Frequently Asked Questions (January 30, 2015)

February 11, 2015 Comments off

U.S. Trade Concepts, Performance, and Policy: Frequently Asked Questions (PDF)
Source: Congressional Research Service (via Federation of American Scientists)

Congress plays a major role in U.S. trade policy through its legislative and oversight authority. There are a number of major trade issues that are currently the focus of Congress. For example, bills were introduced in the 113th Congress to reauthorize Trade Promotion Authority (TPA), the U.S. Generalized System of Preferences (GSP), and the U.S. Export-Import Bank, and legislative action on these issues could be forthcoming in the 114th Congress. Additionally, Congress has been involved with proposed free trade agreements (FTAs), including the Trans-Pacific Partnership (TPP) involving the United States and 11 other countries and the Transatlantic Trade and Investment Partnership (TTIP) between the United States and the European Union (EU). Also of interest to Congress are current plurilateral negotiations for a Trade in Services Agreement (TISA) and a new multilateral Information Technology (ITA) agreement in the World Trade Organization (WTO). Trade and investment policies of major U.S. trading partners (such as China), especially when they are deemed harmful to U.S. economic interests, are also of continued concern to Congress. Recent improved U.S. relations with Cuba have resulted in the introduction of several bills to boost bilateral commercial ties. The costs and benefits of trade to the U.S. economy, firms, workers, and constituents, and the future direction of U.S. trade policy, are the subject of ongoing debates in Congress.

This report provides information and context for these and many other trade topics. It is intended to assist Members and staff who may be new to trade issues. The report is divided into four sections in a question-and-answer format: trade concepts; U.S. trade performance; formulation of U.S. trade policy; and trade and investment issues. Additional suggested readings are provided in an appendix.

Trade Adjustment Assistance: Let the Ineffective and Wasteful “Job-Training” Program Expire

February 8, 2015 Comments off

Trade Adjustment Assistance: Let the Ineffective and Wasteful “Job-Training” Program Expire
Source: Heritage Foundation

Members of Congress should be wary of reauthorizing the ineffective and wasteful Trade Adjustment Assistance (TAA) program. Trade Adjustment Assistance should be considered on its own merits and not linked to legislative proposals, such as Trade Promotion Authority (TPA). Similarly, TPA should be evaluated independently based on its merits and not tied to unrelated legislation like TAA.

Under TAA, workers who lose their jobs due to foreign trade are eligible for job training, relocation allowances, and income maintenance while they attempt to shift into new occupations. Absent congressional action, the entire TAA program will expire on December 31, 2014.

TAA provides very expensive benefits for a small fraction of laid-off workers. Furthermore, program evaluations have found that this spending does not actually help this small fraction of workers. A recent federal evaluation found that TAA hurts its beneficiaries’ job prospects. This finding should not be surprising: scientifically rigorous evaluations of federal job-training programs consistently find these programs to be highly ineffective.

Moreover, the Obama Administration has used very loose eligibility standards for TAA benefits. The Administration awarded TAA benefits to both Solyndra and Hostess employees—two companies whose failures had little to do with foreign trade. Congress should not waste $1 billion on a program that does not help—and may hurt—unemployed workers.

NAFTA at 20: North America’s Free-Trade Area and Its Impact on Agriculture

February 6, 2015 Comments off

NAFTA at 20: North America’s Free-Trade Area and Its Impact on Agriculture
Source: USDA Economic Research Service

This report examines the integration of North America’s agricultural and food markets as a result of the North American Free Trade Agreement (NAFTA), implemented in 1994. NAFTA has had a profound effect on many aspects of North American agriculture over the past two decades.

Tracing CO2 Emissions in Global Value Chains

February 2, 2015 Comments off

Tracing CO2 Emissions in Global Value Chains (PDF)
Source: U.S. International Trade Commission

This paper integrates two lines of research: trade in global value chains and embodied emissions into a unified conceptual framework. This allows both value-added and emissions to be systematically traced at the country, sector, and bilateral levels through various production network routes. By combining value-added and emissions accounting in a consistent way, the potential environmental cost (emission with per unit of value-added created) along Global Value Chains can be estimated. Based on this unified accounting method, we trace CO2 emission in global production and trade network among 41 economies in 35 sectors from 1995 to 2009 based on the World Input-Output Database (WIOD) database and show how they help us to better understand the impact of cross-country production sharing on the environment.

Prosperity Undermined: Fast-Tracked Trade Agreements’ 20-Year Record of Massive U.S. Trade Deficits, American Job Loss and Wage Suppression

January 22, 2015 Comments off

Prosperity Undermined: Fast-Tracked Trade Agreements’ 20-Year Record of Massive U.S. Trade Deficits, American Job Loss and Wage Suppression (PDF)
Source: Public Citizen
From press release:

Fast Tracked trade deals have exacerbated the income inequality crisis, pushed good American jobs overseas, driven down U.S. wages, exploded the trade deficit and diminished small businesses’ share of U.S. exports, a new report from Public Citizen’s Global Trade Watch shows. The report, “Prosperity Undermined,”compiles and analyzes 20 years of trade and economic data to show that the arguments again being made in favor of providing the Obama administration with Fast Track trade authority have repeatedly proved false.

Transatlantic Trade and Investment Partnership (TTIP) – Key Studies

January 21, 2015 Comments off

Transatlantic Trade and Investment Partnership (TTIP) – Key Studies
Source: European Parliament

This leaflet provides a compilation of papers prepared by the European Parliament’s Policy Departments in relation to the Transatlantic Trade and Investment Partnership. The magnitude of the transatlantic economic exchange and the chance to boost growth and create jobs provided the initial impetus for launching talks on the TTIP. The EP has supported the negotiations while expressing caution about several sensitive issues. Papers produced by the Policy Departments have addressed these and other issues, including the potential implications on EU Member States, the US Congress’s view of the Partnership, and its impact on areas such as employment and agriculture.

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