Relationship Between Exports and Trade

Relationship Between Exports and Trade Methodology Empirical Strategy The primary objective of this paper is to determine whether there is a main difference in the causal relationship between exports and trade finance among two groups of countries classified based on their financial systems; bank-based and market-based. As outlined in the literature review section, there are contradicting empirical and theoretical evidence on the impact of trade finance on exports and thus, the secondary objectives are first to determine the significance of this impact using my own proxy for trade finance and then, to capture the effect of the financial crisis on this causal link between exports and trade finance. Data Sources and Measurement Technique Annual data for 19 countries ranging in the period 2001 to 2011 have been used for the empirical analysis of this paper. All data used for the 10 annual observations for these countries were obtained from the World Bank’s World Development Indicators. The estimation technique in this paper generally follows the model used by Liston and McNeil (2013) but contains several modifications and extensions due to unavailability of data and different objective. They constructed both an export volume equation and an import volume equation to analyze international trade. The common variables included in both equations are real exports (exportst,j), real imports (importst,j), real gross domestic product which is equivalent to real gross national income (GNIt,j) , export demand (EXDEMt,j), real effective exchange rates (REERt,j), trade finance (FINt.j) and a dummy variable (Dcrisis) that takes a value of 0 from the period starting 2000 to 2007 and zero otherwise. Additionally, there are other dummy variables which classified countries based on their financial systems and they are structure size dummy (DUMMY1t,j) and structure activity dummy (DUMMY2t,j). Structure size dummy takes a value of 1 for countries with higher means ratio of market cap to bank credit as compared to structure activity variable which takes a value of 1 for countries with higher means ratio of value of shares traded to bank credit and 0 otherwise. Real exports and real imports are measured in constant 2005 U.S dollars and as for export demand, it represents market share. In this paper, the proxy for export demand differs from that of Liston and McNeil (2013) due to model modification and instead, the ratio of individual country’s export to world exports is used to represent market share as opposed to the ratio of the sum of imports to the sum of exports. Similarly, the proxy for trade finance is different in this paper due to data unavailability. Nevertheless, short-term net flows on external debt are instead used as the proxy for trade finance. Short-term net flows on external debt represent net lending received by the borrower during the year where the maturity of the debt is one year or less. The rationale behind using this proxy for trade finance is that trade finance is basically a short term debt used to carry on trade and hence, an increase in trade finance should be reflected in an increase in the proxy used. Mo reover, due to unavailability of data for real domestic product, it is substituted by gross national income and in theory, they should be equivalent. The last discrepancy from the paper of Liston and McNeill (2013) is that as a substitute for real exchange rate, real effective exchange rate index is used in this paper where 2005=100 for the index and REERi,j is included to account for relative prices between countries. Empirical Model To investigate whether financial system and trade finance affect trade flows, panel data models are estimated. The models consist of 16 countries which most of them are developing or under-developed countries. Interestingly, empirical studies such as Liston and McNeil (2013) demonstrated that countries with lower level of financial development give a higher importance to trade finance compared to developed countries and hence, the relationship between trade finance and exports should be high in this paper. The export volume specification is described as: Log(exportst,j),= ÃŽ ±0 + ÃŽ ±1log(EXDEMt,j) + ÃŽ ±2 REERt,j + ÃŽ ±3 FINt.j + ÃŽ ±4FINt.j* DUMMY1t,j + ÃŽ ±5FINt.j* DUMMY2t,j + ÃŽ ±6FINt.j* DUMMY3t,J + Â µt,j (1) Where exportst,j are real exports for the jth country at time t, EXDEMt,j represents export demand, REERt,j is the real effective exchange rate index, FINt,j is the trade finance proxy, DUMMYt captures effects of the financial crisis as it is 1 for the years 2008 and onwards and 0 otherwise and DUMMY1t,j, DUMMY2t,j and DUMMY3t,j represent the classification of countries into 2 groups by financial system upon structure size, structure activity and financial structure respectively. As for import volume specification, it is arranged as: Log(importst,j)= ÃŽ ±0 + ÃŽ ±1log(GDIt,j) + ÃŽ ±2 REERt,j + ÃŽ ±3 FINt.j + ÃŽ ±4FINt.j* DUMMY1t,j + ÃŽ ±5FINt.j* DUMMY2t,j + ÃŽ ±6FINt.j* DUMMY3t,J + vt,j (2) Where importst,j are real imports for the jth country at time t and GNIt,j is the real gross domestic income for the jth country. All other variables are the same as that in the export volume specification. Expected Signs of Variables All the variables included are expected to have some impact on international trade and the expected effect of these variables on exports and imports are given in table 1. Table 1. Overview of expected effects of variables used on exports and imports Variables Expected effects on Exports Expected effects on Imports Export demand positive Real Effective Exchange Rate negative positive Trade Finance positive positive Gross Domestic Income positive As export demand in this paper represents exports market share, an increase in export demand should also generate an increase in exports. Real effective exchange should have a negative impact on exports and a positive impact on imports respectively because when a country’s currency strengthen, its exports become less competitive whereas its price of imports become cheaper and imports tend to increase. Moreover, an increase in trade finance should have a positive effect on both exports and imports. Trade finance is used to fund firms for them to be able to continue exports and imports also should increase due to the imports of raw materials used for exports. Also, as gross domestic income increases, demand for foreign goods increases and thus, imports are also expected to increase. Estimation Technique Both equations (1) and (2) are estimated first by their base models to analyze the common explanatory variables for export and import volumes. In the export volume equation, the base model includes export demand (EXDEM) and real effective exchange rate (REER) whereas in the import volume equation, instead of including export demand (EXDEM), real gross domestic income (GNI) is included. Then the base models are extended by including the proxy for trade finance (FIN). Log(exportst,j),= ÃŽ ±0 + ÃŽ ±1log(EXDEMt,j) + ÃŽ ±2 REERt,j + ÃŽ ±3 FINt.j + Â µt,j (3) Log(importst,j)= ÃŽ ±0 + ÃŽ ±1log(GDIt,j) + ÃŽ ±2 REERt,j + ÃŽ ±3 FINt.j + vt,j (4) Equations 5 and 6 are then extended by adding dummy variables which represent financial system of a country. The dummy variable takes the value of 1 when a country is classified as market based and 0 otherwise. Separately, they are interacted with proxy for trade finance which will enable the analysis of whether between market and bank based economies are more dependent on trade finance or there is no difference at all. Log(exportst,j),= ÃŽ ±0 + ÃŽ ±1log(EXDEMt,j) + ÃŽ ±2 REERt,j + ÃŽ ±3 FINt.j + ÃŽ ±4FINt.j* DUMMY1t,j + ÃŽ ±5FINt.j* DUMMY2t,j+ Â µt,j (5) Log(importst,j)= ÃŽ ±0 + ÃŽ ±1log(GDIt,j) + ÃŽ ±2 REERt,j + ÃŽ ±3 FINt.j + ÃŽ ±4FINt.j* DUMMY1t,j + ÃŽ ±5FINt.j* DUMMY2t,j + vt,j (6) Finally, equations 5-8 are enhanced to include a dummy variable Dcrisis which captures the effect of the financial crisis and which takes the value of 1 for the period 2008 to 2011 and 0 for the period of 2000 to 2007. By adding this structural break, during the crisis, it is expected that exports will be more reliant on trade finance in general due to turmoil in financial markets and the presence of a liquidity crunch. Additionally, whether how this affected the analysis made from the interactions of the dummy variables in equation 5 and 6 needs to be tested and analyzed. The results of the panel data regression and its analysis are provided in the next section. Log(exportst,j),= ÃŽ ±0 + ÃŽ ±1log(EXDEMt,j) + ÃŽ ±2 REERt,j + ÃŽ ±3 FINt.j + Dcrisis + Â µt,j (7) Log(importst,j)= ÃŽ ±0 + ÃŽ ±1log(GDIt,j) + ÃŽ ±2 REERt,j + ÃŽ ±3 FINt.j + Dcrisis + vt,j (8) Log(exportst,j),= ÃŽ ±0 + ÃŽ ±1log(EXDEMt,j) + ÃŽ ±2 REERt,j + ÃŽ ±3 FINt.j + ÃŽ ±4FINt.j* DUMMY1t,j + ÃŽ ±5FINt.j* DUMMY2t,j + Dcrisis + Â µt,j (9) Log(importst,j)= ÃŽ ±0 + ÃŽ ±1log(GDIt,j) + ÃŽ ±2 REERt,j + ÃŽ ±3 FINt.j + ÃŽ ±4FINt.j* DUMMY1t,j + ÃŽ ±5FINt.j* DUMMY2t,j + Dcrisis + vt,j (10)

Leonardo Fibonacci Biography

Leonardo Fibonacci was born around 1170 A. D. , and died around 1250 A. D. He was born in Pisa, Italy and died there too. Leonardo’s mom was Alessandra, and she died when he was nine. His father was Guglielmo Bonacci, who directed a trading post Bugia, Barbary. As a young boy, Leonardo traveled there to help him, and that’s where he learned about the Hindu-Arabic numeral system. He recognized that arithmetic with Hindu-Arabic numerals is simpler and more efficient that with Roman numerals and so he traveled throughout the Mediterranean world to study under the leading Arab mathematicians of the time. Leonardo returned from his travels around 1200 and in 1202, age 32, he published Liber Abaci. Through the Liber Abaci he introduced Hindu-Arabic numerals to Europe. Liber Abaci is a book that Leonardo Fibonacci wrote in 1202. In it Fibonacci introduces the so-called modus Indorum (method of the Indians), today known as the Arabic numerals. It shows the practical importance of the new numeral system, using lattice multiplication and Egyptian fractions, by applying it to commercial bookkeeping, conversion of weights and measures, the calculation of interest, money-changing, and other applications. Liber Abaci also posed, and solved, a problem involving the growth of a hypothetical population of rabbits based on idealized assumptions. The solution, generation by generation, was a sequence of numbers later known as the Fibonacci numbers. In the Fibonacci sequence of numbers, each number after the first two, is the sum of the previous two numbers. The sequence is 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, etc. The higher the sequence, the closer two consecutive numbers of the sequence divided by each other will approach the golden ratio ( approximately 1 : 1. 618 or 0. 618 : 1). Leonardo became a guest of the Emperor Frederick II, who enjoyed mathematicians and science. In 1240 the Republic of Pisa honored Leonardo by granting him a salary. In the 19th century, a statue of Fibonacci was constructed and erected in Pisa. Today it is located in the western gallery of the Camposanto, which is a cemetery on the Piazza dei Miracoli.

Book talk

Artemisia fowl Is the heir to a multi-notational criminal empire. He Is witty, cunning and lust when you think your one step ahead of him you are ten steps behind. He has outsmarted many of the world's criminal elite In Just fourteen years and If given the opportunity he will do the same to you no matter who you are. The book Is about manufacturer stole from arteries. ]on would have already broken Into the computer If Artemisia hadn't built an eternity code into it. This eternity code is by name supposed o take eternity to break.The setting for most of the book is in the Spiro tower in New York, but there are many other places the book takes place too. The author doesn't really specify when the book takes place exactly but after reading it I would say that it takes place in modern day united states, sometime around 2009 up to now. The main character is Artemisia fowl; he is extremely outgoing and VERY witty. He reminds me very much of Courtney budged because in the book he shows many of the qualities that Courtney does in day to day life like being smart with people in general and Ewing two steps ahead of everyone.The main conflict is that Artemisia is having problems getting back the computer because the Spiro tower is heavily guarded and very secure and also the fact that he is locked in a vault like prison cell 80 floors down from where the computer is being held. The authors writing style is very easy to follow, he writes in a slow paced way that is never hard to understand so if you get confused with other books I would recommend this series to you'd would say I like this book mainly because of the authors writing style and also its very easy to get into swell,its very similar to the writing style of Suzanne Collins . Would say that the theme is that friendship trumps wealth because Artemisia almost looses every friend he has trying to get the computer back. ‘ think the book was absolutely hands down the best book have ever read for many reasons but mainly because of the moment when he burns the waitress at a restraint really bad. He went there to meet with Jon Spiro to discuss the new computer but when he got there Jon hadn't arrived yet and so the waitress came out to take his order,keep In mind that artless Is only 14, so she lad†oh hello there little boy, would you Like to see the children's menu?And artless said â€Å"no mademoiselle would not Like to see the â€Å"children's† menu as I have no doubt the the â€Å"children's† menu Itself tastes better than the food on It† â€Å"what I would Like If a saute ©deed swordfish over a rosemary rue with a mushroom risotto on the side. And Irish spring water please if you have It,no Ice either as I have no doubt that you Ice Is made from tap water and that would rather defeat the purpose of spring water. † And remember laughing in my head.

The Greatest Spy Of All Time - 1405 Words

Once upon a time there was a boy named Jack who did the impossible and saved his family and became the greatest spy of all time. Both of Jack’s parents, Heather and Vincent, were spies as well, so from a young age, he saw and learned many things that other kids his age would never learn. While many kids learned how to talk and tie the shoes by observing their parents by the time jack was thirteen he knew how to reload a gun, do stake outs, how to break into a house, as well as becoming a proficient fighter all through sitting back and witnessing his parents preform these skills while they worked *observational learning*. His parents sought to give him an ordinary life despite it being very clear from a young age that jack hand a knack†¦show more content†¦Vincent was very thrilled to know his son was interested in following in their footsteps and continue the family legacy. However once Heather became mindful of her sons wishes she banned him from doing anything spy a ssociated. Jack knew his dreams were crumpled because his mom forbade him and out of reverence for her he had no choice but to listen *obedience*. A number of years later at the age of twenty eight Jacks lives a fairly standard life he graduated top of his class in the New York City police academy and is now the lead detective in the local police department. Furthermore Jack married his high school sweetheart Katherine and has one daughter named Jennifer. While this isn’t his ideal career or life choice he still fairly satisfied because he still gets to save people and stop criminals all while still obeying his mother’s request of having a normal life *conformity*. Jack is known for putting the biggest criminals in New York City behind bars, however due to the fact that he is so good at his job he created many enemies for himself. Stanley one of the biggest mobsters in New York was fed up with Jack constantly putting his men behind bars so in retaliation, he had a grou p of his goons break into jacks home and kidnap is a wife and child *punishment*. Jack knew that because of the influence Stanley held there wasn’t nothing local law enforcements could do. Instead of letting the police get involved Jack