Barthélémy Bonadio

We study the roles of globalization and structural change in the evolution of international GDP comovement among industrialized countries over the period 1978-2007. In recent decades, trade integration between advanced economies increased rapidly while average GDP correlations remained stable. We show that structural change – trend reallocation of economic activity towards services – plays an important part in resolving this apparent puzzle. Business cycle shocks in the service sector are less internationally correlated than in manufacturing, and thus structural change lowers GDP comovement by increasing the share of less correlated sectors in GDP. Globalization – trend reductions in trade costs – exerts two opposing effects on cross-border GDP comovement. On the one hand, greater trade linkages increase international transmission of shocks and therefore comovement. On the other, globalization induces structural change towards services because it reduces the relative price of traded goods, and services and goods are complements. We use a multi-country, multi-sector model of international production and trade to quantify these effects. The two opposing effects of globalization on comovement largely cancel each other out, limiting the net contribution of globalization to increasing international comovement over this period.

Does international trade help or hinder the economic development of border regions? Theory tends to suggest that trade helps, but it can also predict the reverse. We estimate how changes in bilateral trade volumes affect economic activity along roads running inland from international borders, using satellite night-light measurements for 2,061 border-crossing roads in 146 countries. We observe a significant ‘border shadow’: on average, lights are 18 percent dimmer within 30 kilometers of the border than further inland. We find this difference to be reduced by trade expansion as measured by exports and instrumented with tariffs on the opposite side of the border. In our baseline estimate, a doubling of exports to a particular neighbor country increases night lights by 18.5 percent at the border but only by 12.9 percent 200 kilometers inland. We provide evidence that local export-oriented production is a significant mechanism behind the observed ef- fects. Through the lens of theory, our empirical results can also shed light on equilibrium properties in a variety of spatial models.

Ports are at the center of international trade’s infrastructure network. I provide a framework to estimate the quality of different ports and to estimate trade costs on normal roads and expressways. I apply my framework to India and find that quality varies significantly across Indian ports. I then build a general equilibrium model of international and internal trade with port and road infrastructure to assess the relative importance of ports versus roads in shaping international market access. Improving all ports to the level of the best port increases average wages by 1% across Indian districts. Reducing international costs as if all roads to ports became expressways increases wages by 0.1%, an order of magnitude less. Converting all roads to expressways to reduce internal trade cost as well as international costs increases wages by 0.6%. Improvements in ports and roads have different distributional implications. Port improvements increase international market access more and benefit export-oriented regions, while improving roads benefits domestically oriented regions. The differential distributional impact might make both types of infrastructure improvement attractive despite the larger aggregate gains from ports improvement.

Migrants shape market access: first, they reduce international trade frictions and second, they change the geographical location of domestic demand. This paper shows that both effects are quantitatively relevant. It estimates the sensitivity of exports and imports to immigrant population and quantifies these effects in a model of inter- and intra-national trade and migration calibrated to US states and foreign countries. Reducing US migrant population shares back to 1980s levels increases import (export) trade costs by 7% (2.5%) on average and decreases US natives’ real wages by more than 2%. States with higher exposure to immigrant consumer demand (both from within the state and from other states) than to migrant labor supply competition suffer more from the removal of migrants. States with higher export and import exposure suffer more from the increased trade costs.

We study the role of global supply chains in the impact of the Covid-19 pandemic on GDP growth using a multi-sector quantitative framework implemented on 64 countries. We discipline the labor supply shock across sectors and countries using the fraction of work in the sector that can be done from home, interacted with the stringency with which countries imposed lockdown measures. One quarter of the total model-implied real GDP decline is due to transmission through global supply chains. However, “renationalization” of global supply chains does not in general make countries more resilient to pandemic-induced contractions in labor supply. This is because eliminating reliance on foreign inputs increases reliance on the domestic inputs, which are also disrupted due to nationwide lockdowns. In fact, trade can insulate a country imposing a stringent lockdown from the pandemic-shock, as its foreign inputs are less disrupted than its domestic ones. Finally, unilateral lifting of the lockdowns in the largest economies can contribute as much as 2.5% to GDP growth in some of their smaller trade partners.

On January 15, 2015, the Swiss National Bank discontinued its minimum exchange rate policy of 1 euro against 1.2 Swiss francs. This policy change resulted in a sharp, unanticipated, and permanent appreciation of the Swiss franc by more than 11% against the euro. We analyze the pass-through of this unusually clean exchange rate shock into import unit values at the daily frequency using Swiss transaction-level trade data. Our key findings are twofold. First, for goods invoiced in euros, the pass-through is immediate and complete. Second, for goods invoiced in Swiss francs, the pass-through is partial and exceptionally fast: beginning on the second working day after the exchange rate shock, the medium-run pass-through is reached after 12 working days.

We provide a quantitative assessment of both the aggregate and the distributional effects of revoking NAFTA using a multi-country, multi-sector, multi-factor model of world production and trade with global input-output linkages. Revoking NAFTA would reduce US welfare by about 0.2%, and Canadian and Mexican welfare by about 2%. The distributional impacts of revoking NAFTA across workers in different sectors are an order of magnitude larger in all three countries, ranging from -2.7 to 2.23% in the United States. We combine the quantitative results with information on the geographic distribution of sectoral employment, and compute average real wage changes in each US congressional district, Mexican state, and Canadian province. We then examine the political correlates of the economic effects. Congressional district-level real wage changes are negatively correlated with the Trump vote share in 2016: districts that voted more for Trump would on average experience greater real wage reductions if NAFTA is revoked.