Strategic trade policy, competition, and welfare: the case of voluntary export restraints between Britain and Japan (1971–2002)

I evaluate the voluntary export restraint placed on Japanese automobile exports from 1977 to 1999 by the UK. I show that the policy failed to assist the British domestic car industry. Instead, UK-based US multi-nationals and Japanese manufacturers were the primary beneficiaries, at a substantial cost to UK consumers. Whilst there are a number of caveats, the policy was on balance damaging to the UK economy in welfare terms.

Firms in international trade: importers’ and exporters’ heterogeneity in Italian manufacturing industry

Combining data on structural characteristics and economic performance for a large sample of Italian firms with data on exporting and importing activity, we uncover evidence supporting recent theories on firm heterogeneity and international trade, together with some new facts. In particular, we find that importing is associated with substantial firm heterogeneity. First, we document that trade is more concentrated than employment and sales, and show that importing is even more concentrated than exporting both within sectors and along the sector- and country-extensive margins. Second, while supporting the fact that firms involved in both are the best performers, we also find that firms involved only in importing activities perform better than those involved only in exporting. Our evidence suggests there is a strong self-selection effect in the case of importers and the performance premia of internationalised firms correlate relatively more with the degree of geographical and sectoral diversification of imports.

Balkanisation of banking damages international trade and UK GDP

Balkanisation is a way to describe the breakdown of cross-border banking, as nervous lenders retreat in particular from the more troubled parts of the Eurozone or at least try to isolate operations within national boundaries. It is increasing at the Bank level, however the senior policy makers consider this a negative trend – Mario Draghi, president of the European Central Bank, has talked of the need to “repair this financial fragmentation” and Mark Carney, head of global regulatory body the Financial Stability Board, [and now Governor of the Bank of England] has warned that deglobalising finance will hurt growth and jobs by “reducing financial capacity and systemic resilience”. In this article I would like to examine the impact of banking balkanisation on international trade and provide some initial thoughts about remedies for excessive risk in a banking non-balkanising world.

Transatlantic flight times and climate change

Aircraft do not fly through a vacuum, but through an atmosphere whose meteorological characteristics are changing because of global warming. The impacts of aviation on climate change have long been recognised, but the impacts of climate change on aviation have only recently begun to emerge. These impacts include intensified turbulence and increased take-off weight restrictions. Here we investigate the influence of climate change on flight routes and journey times. We feed synthetic atmospheric wind fields generated from climate model simulations into a routing algorithm of the type used operationally by flight planners. We focus on transatlantic flights between London and New York, and how they change when the atmospheric concentration of carbon dioxide is doubled. We find that a strengthening of the prevailing jet-stream winds causes eastbound flights to significantly shorten and westbound flights to significantly lengthen in all seasons. Eastbound and westbound crossings in winter become approximately twice as likely to take under 5 h 20 min and over 7 h 00 min, respectively. For reasons that are explained using a conceptual model, the eastbound shortening and westbound lengthening do not cancel out, causing round-trip journey times to increase. Even assuming no future growth in aviation, the extrapolation of our results to all transatlantic traffic suggests that aircraft will collectively be airborne for an extra 2000 h each year, burning an extra 7.2 million gallons of jet fuel at a cost of US$ 22 million, and emitting an extra 70 million kg of carbon dioxide, which is equivalent to the annual emissions of 7100 average British homes. Our results provide further evidence of the two-way interaction between aviation and climate change.

Impact of the North Atlantic Oscillation on transatlantic flight routes and clear-air turbulence

The variation of wind-optimal transatlantic flight routes and their turbulence potential is investigated to understand how upper-level winds and large-scale flow patterns can affect the efficiency and safety of long-haul flights. In this study, the wind-optimal routes (WORs) that minimize the total flight time by considering wind variations are modeled for flights between John F. Kennedy International Airport (JFK) in New York, New York, and Heathrow Airport (LHR) in London, United Kingdom, during two distinct winter periods of abnormally high and low phases of North Atlantic Oscillation (NAO) teleconnection patterns. Eastbound WORs approximate the JFK–LHR great circle (GC) route following northerly shifted jets in the +NAO period. Those WORs deviate southward following southerly shifted jets during the −NAO period, because eastbound WORs fly closely to the prevailing westerly jets to maximize tailwinds. Westbound WORs, however, spread meridionally to avoid the jets near the GC in the +NAO period to minimize headwinds. In the −NAO period, westbound WORs are north of the GC because of the southerly shifted jets. Consequently, eastbound WORs are faster but have higher probabilities of encountering clear-air turbulence than westbound ones, because eastbound WORs are close to the jet streams, especially near the cyclonic shear side of the jets in the northern (southern) part of the GC in the +NAO (−NAO) period. This study suggests how predicted teleconnection weather patterns can be used for long-haul strategic flight planning, ultimately contributing to minimizing aviation’s impact on the environment