I show that undervaluation of the currency (a high real exchange rate) stimulates economic growth. This is true particularly for developing countries. This finding is robust to using different measures of the real exchange rate and different estimation techniques. I also provide some evidence that the operative channel is the size of the tradable sector (especially industry). These results suggest that tradables suffer disproportionately from the government or market failures that keep poor countries from converging toward countries with higher incomes. I present two categories of explanations for why this may be so, the first focusing on institutional weaknesses, and the second on product-market failures. A formal model elucidates the linkages between the real exchange rate and the rate of economic growth.

/pdf/the-real-exchange-rate-and-economic-growth-52ml5nvocw.pdf

The Real Exchange Rate and Economic Growth

This paper develops an approach for quantifying the importance of different sources of comparative advantage for country welfare, based on the Eaton and Kortum (2002) model extended to predict industry trade flows. In this framework, comparative advantage is determined by the interaction of country and industry characteristics, with countries specializing in industries whose production needs they can best meet with their factor endowments and institutional strengths. I estimate the model parameters using a simulated method of moments procedure to account for the prevalence of zeroes in the bilateral trade data. I apply the model to explore various quantitative questions, such as how much distance, Ricardian productivity, factor endowments, and institutions each matter for country welfare in the global trade equilibrium.

https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=1289543

Unpacking Sources of Comparative Advantage: A Quantitative Approach

Domestic institutions can have profound effects on international trade. This chapter reviews the theoretical and empirical underpinnings of this insight. Particular attention is paid to contracting institutions and to comparative advantage, where the bulk of the research has been concentrated. We also consider the reverse causation running from comparative advantage to domestic institutions.

/pdf/domestic-institutions-as-a-source-of-comparative-advantage-1z5bxfvllx.pdf

Domestic Institutions as a Source of Comparative Advantage

http://www.mysmu.edu/faculty/davinchor/unpacking%20(Jul%2010).pdf

Unpacking sources of comparative advantage: A quantitative approach

Trade Facilitation and Manufactured Exports: Is Africa Different?

This paper derives estimating equations from a model where individuals consume two classes of goods, and the degree of contract enforcement affects the transaction cost of trade in the two classes of goods differentially. Empirically, using Rauch's classification, internationally traded goods are classified into differentiated goods and those possessing a reference price, with the presumption that contract enforcement issues are more important for the former. It is verified that the measures of contract enforcement affect the volume of trade in both types of goods, but the impact is larger for differentiated goods.

Contract enforcement and international trade

오늘날 게임 산업이 성장하면서 수많은 게임이 출시되고 있다. 이에 게임사들은 유저를 확보하기 위해 가격 프로모션을 적극적으로 활용하고 있지만, 그 효과가 반드시 장기적으로 이어지는 것은 아니다. 한편, 유저들의 게임플레이 행동은 온라인 게임 커뮤니티 및 게임 스트리밍 시청과 같은 게임 관련 제반 활동과 긴밀하게 연관되어 있기 때문에 가격 프로모션이 이러한 제반 활동에 영향을 미칠 가능성이 있다. 본 연구는 게임 플레이 및 게임 제반 활동에 가격 프로모션이 미치는 장기 효과를 살펴보고자 한다. 구체적으로, 토빗(Tobit) 모형이 패널 벡터자기회귀모형(Panel Vector Autoregressive)에 결합된 모형을 통해 가격 프로모션이 게임 플레이 및 게임 제반 활동에 미치는 장단기 효과를 분석하고자 한다. 이를 위해 게임 유통 플랫폼 스팀(Steam)에서 수집한 데이터를 분석한 결과, 가격 프로모션의 효과는 게임 플레이 및 제반 활동과 동태적 상호작용을 가진 것으로 드러났다. 이러한 결과를 바탕으로 본 연구는 게임 실무자들에게 효과적인 마케팅 전략 수립을 위한 시사점을 제안하고자 한다. 

The Long-Term Impact of Price Promotion on the Game Market: Focusing on Tobit-Augmented Panel VAR Model

Literature shows that social capital promotes diffusion in online user communities (OUCs). This research aims to show that social capital acts as a double-edged sword by promoting or suppressing in-group diffusion depending on the compatibility of the product with group identity (i.e., a topic or subject of common interest in the community). We analyze the diffusion of newly released music tracks across multiple communities on Last.fm, a world-leading music social network website. Across all three dimensions of social capital (cognitive, relational, and structural dimensions), we consistently find that the compatibility of the product with group identity moderates the relationship between social capital and in-group diffusion; social capital promotes in-group diffusion of songs that are compatible with group identity but suppresses in-group diffusion of songs that are incompatible with group identity. The findings contribute to the social capital and OUC literature and provide interesting implications for OUC managers. 

Jae Young Lee

Papers

Contract enforcement and international trade

The Long-Term Impact of Price Promotion on the Game Market: Focusing on Tobit-Augmented Panel VAR Model

Is social capital always “Capital”?: Measuring and leveraging social capital in online user communities for in-group diffusion