In the past decade, pirates from Somalia have carried out thousands of attacks on cargo ships sai... more In the past decade, pirates from Somalia have carried out thousands of attacks on cargo ships sailing through the Gulf of Aden and the Indian Ocean, causing what others have identified as significant damage to maritime trade. In this paper, we use variations in the spread and intensity of Somali piracy to estimate its effect on the volume of international trade. By comparing trade volume changes along shipping routes located in pirate waters to those that are not, we estimate that Somali piracy reduced bilateral trade passing through the Gulf of Aden by 1.7-1.9 percent per year from 2000 to 2010. In addition, we find larger reductions for trade in bulk commodities, which are generally shipped by sea and are more likely to fall prey to piracy attacks. While our estimates suggest that the trade costs of piracy are much lower than what has been suggested in the existing literature, we find that they remain significant and unevenly distributed, with five countries and the European Union shouldering 70% of the total costs.
Journal of Environmental Economics and Management, 2012
Wildlife corridors connect areas of biological significance to mitigate the negative ecological i... more Wildlife corridors connect areas of biological significance to mitigate the negative ecological impacts of habitat fragmentation. In this article we formalize the optimal corridor design as a connected subgraph problem, which maximizes the amount of suitable habitat in a fully connected parcel network linking core habitat areas, subject to a constraint on the funds available for land acquisition. To solve this challenging computational problem, we propose a hybrid approach that combines graph algorithms with Mixed Integer Programming-based optimization. We apply this technique to the design of corridors for grizzly bears in the U.S. Northern Rockies, illustrating the underlying computational complexities by varying the granularity of the parcels available for acquisition. The approach that is introduced is general and can be applied to other species or other similar problems, such as those occurring in social networks.
Communication is a real barrier to organizing international production as it hinders knowledge tr... more Communication is a real barrier to organizing international production as it hinders knowledge transmission. This paper provides evidence to suggest that a way in which multinational firms economize on costly information transfers is by using skilled foreign workers, since local talent can substitute for knowledge inputs from the headquarters. Combining U.S. data on headquarter service exports with information on communication costs and skill endowments by country, I find that while communication costs decrease the export of headquarter services to foreign affiliates, the effect becomes weaker in the average educational attainment of foreign workers. The sensitivity of headquarter service exports to communication barriers at low levels of skill endowment has important implications for the geography of multinational production, as well as for policies aimed at improving communication infrastructure.
In the past decade, pirates from Somalia have carried out thousands of attacks on cargo ships sai... more In the past decade, pirates from Somalia have carried out thousands of attacks on cargo ships sailing through the Gulf of Aden and the Indian Ocean, causing what others have identified as significant damage to maritime trade. In this paper, we use variations in the spread and intensity of Somali piracy to estimate its effect on the volume of international trade. By comparing trade volume changes along shipping routes located in pirate waters to those that are not, we estimate that Somali piracy reduced bilateral trade passing through the Gulf of Aden by 1.9 percent per year from 2000 to 2010. In addition, we find larger reductions for trade in bulk commodities, which are generally shipped by sea and more likely to fall pray to piracy attacks. While our estimates suggest that the trade costs of piracy are much lower than what has been suggested in the existing literature, we find that they remain significant and unevenly distributed, with five countries and the European Union shouldering 70% of the total costs. JEL Codes: F1, F14
Using a firm-level panel dataset covering the universe of Danish exports between 1999 and 2006, w... more Using a firm-level panel dataset covering the universe of Danish exports between 1999 and 2006, we find robust evidence for profit shifting by multinational corporations (MNC) through transfer pricing. Our triple difference estimation method corrects for a downward bias in previous studies. The bias results from MNCs adjusting their arm's length prices to obscure the extent of their transfer price manipulations. Our identification strategy exploits the movement in export prices to a destination in response to: (1) the establishment of a foreign affiliate by an exporter to that destination, and (2) a change in the foreign corporate tax rates. Once owning an affiliate in a country with a corporate tax rate lower than in the home country, Danish multinationals reduce the unit values of their exports there between 5.7 to 9.1 percent, on average. This reduction corresponds to $141 million in underreported export revenues in year 2006, which translates into a loss in tax income equal to 3.24 percent of Danish MNCs' tax returns.
International trade has become increasingly dependent on the transmission of complex information,... more International trade has become increasingly dependent on the transmission of complex information, often realized via face-to-face communication. This paper provides novel evidence for the importance of in-person business meetings in international trade. Interactions among trade partners entail a fixed cost of trade, but at the same time they generate relationship capital, which adds bilateral specific value to the traded products. Differences in the face-to-face communication intensity of traded goods, bilateral travel costs and foreign market size determine the optimal amount of interaction between trade partners. Using U.S. state level data on international business-class air travel as a measure of in-person business meetings, I find robust evidence that the demand for business-class air travel is directly related to volume and composition of exports in differentiated products. I also find that trade flows in R&D intensive manufactures and goods facing contractual frictions are most dependent on face-to-face meetings. The econometric identification exploits the cross-state variation in bilateral exports and business-class air travelers by foreign country and time period, circumventing any spurious correlation induced by cross-country differences driving aggregate travel and trade patterns.
There is significant debate over the effect of the Interstate Commerce Act (ICA) on the cost of r... more There is significant debate over the effect of the Interstate Commerce Act (ICA) on the cost of rail transport to shippers. Taking price differences across locations as proxy for transport costs, we use data on wheat prices before and after the implementation of the ICA to see if the Act led to smaller differences in wheat prices across American cities relative to a control group of European cities. We find that the ICA had no effect on U.S. transport costs; however, it reduced their volatility substantially. This evidence supports the view that the ICA helped stabilize cartel prices after a period of significant price wars.
Journal of Environmental Economics and Management, 2013
We collect extensive data on worldwide trade by transportation mode and use this to provide detai... more We collect extensive data on worldwide trade by transportation mode and use this to provide detailed comparisons of the greenhouse gas emissions associated with output versus international transportation of traded goods. International transport is responsible for 33 percent of world-wide trade-related emissions, and over 75 percent of emissions for major manufacturing categories like machinery, electronics and transport equipment. US exports intensively make use of air cargo; as a result two-thirds of its export-related emissions are due to international transport, and US exports by themselves generate a third of transport emissions worldwide. Inclusion of transport dramatically changes the ranking of countries by emission intensity. US production emissions per dollar of exports are 16 percent below the world average, but once we include transport US emissions per dollar exported are 59 percent above the world average. We use our data to systematically investigate whether trade inclusive of transport can lower emissions. In one-quarter of cases, the difference in output emissions is more than enough to compensate for the emissions cost of transport. Finally, we examine how likely patterns of trade growth will affect modal use and emissions. Full liberalization of tariffs and GDP growth concentrated in China and India lead to transport emissions growing much faster than the value of trade, due to trade shifting toward distant trading partners. Emissions growth from growing GDP dwarfs any growth from tariff liberalization.
Wildlife corridors connect areas of biological significance to mitigate the negative ecological i... more Wildlife corridors connect areas of biological significance to mitigate the negative ecological impacts of habitat fragmentation. In this article we formalize the optimal corridor design as a connected subgraph problem, which maximizes the amount of suitable habitat in a fully connected parcel network linking core habitat areas, subject to a constraint on the funds available for land acquisition. To solve this challenging computational problem, we propose a hybrid approach that combines graph algorithms with Mixed Integer Programming-based optimization. We apply this technique to the design of corridors for grizzly bears in the U.S. Northern Rockies, illustrating the underlying computational complexities by varying the granularity of the parcels available for acquisition. The approach that is introduced is general and can be applied to other species or other similar problems, such as those occurring in social networks.
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Papers by Anca Cristea