David Kuenzel, associate professor of economics, is the co-author of a new paper published in the European Economic Review titled “Preferential Trade Agreements and MFN Tariffs: Global Evidence.” In the paper, Kuenzel and his co-author, Rishi Sharma from Colgate University, study theoretically and empirically the effects of countries’ import composition on multilateral liberalization using a global tariff database that covers the 2000–2011 period. Kuenzel and Sharma provide evidence that greater preferential trade agreement (PTA) import shares induce tariff cuts on non-member countries. The baseline estimates imply that a 10 percentage point increase in the share of imports from PTA partners lowers most-favored-nation (MFN) tariff rates by about 0.4 percentage points. This effect is driven by countries that negotiate deeper preferential trade deals as they are prone to lead to more inefficient trade diversion, which creates a stronger incentive to subsequently cut MFN tariffs.
Jorge Vásquez, assistant professor of economics, is the co-author of a new paper published in the November 2021 issue of the journal Games and Economic Behavior titled “Co-worker altruism and unemployment.” This theoretical paper, co-authored with Marek Weretka, demonstrates altruism among co-workers may generate downward wage rigidity that creates involuntary unemployment in economic downturns.