The role of trade in adaptation to climate change

The role of trade in adaptation to climate change

Christophe Gouel, David Laborde

Given our collective failure to mitigate greenhouse gas emissions, the world will need to adapt to a particular degree of climate change. This might imply that as climate change affects crops’ yield potential, new patterns of comparative advantage, and therefore new trade flows, will emerge. This column examines the need for the marketplace adaptations in mediating welfare losses in the agricultural sector. The findings suggest a big role for international trade: when adjustments in trade flows are constrained, global welfare losses from climate change increase by 76%.

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The role of trade credit financing in international trade

The role of trade credit financing in international trade

Katharina Eck, Martina Engemann, Monika Schnitzer

Credits extended bilaterally between firms, so called trade credits, are particularly expensive yet many firms utilize it, specifically for international transactions. This column argues that such cash-in-advance financing serves as a credible signal of quality. Data from a distinctive survey of German firms show that it fosters export participation specifically for firms that generally have the best difficulties in entering foreign markets.

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