Tibor Besedes
Professor
- School of Economics
Overview
Dr. Besedes joined the School of Economics in 2007 after spending four years as an Assistant Professor of Economics at Louisiana State University. He obtained his Ph.D. from Rutgers University in 2003. His research interests include international trade and experimental/behavioral economics. His research in international trade focuses on the dynamics and stability of trading relationships between countries and factors determining duration of trade. His research in experimental and behavioral economics has focused on understanding how individuals make decisions in multi-attribute environments similar to decisions involving health insurance or drug coverage plans. Much of his experimental/behavioral economics research has been funded by the National Institutes of Health and the National Science Foundation. His articles have been published by the Review of Economics and Statistics, Journal of International Economics, European Economic Review, and Journal of Economic Behavior and Organization among others. Dr. Besedes serves as the director of the Forum for Research in Empirical International Trade and is currently a co-editor of the Journal of International Trade and Economic Development and associate editor of the Southern Economic Journal.
- Ph.D., Rutgers University
- M.A., Rutgers University
- B.S., Texas Christian University
Interests
- Behavioral Economics
- Experimental Economics
- International Trade
Courses
- ECON-2106: Prin of Microeconomics
- ECON-3110: Adv Microeconomic Analys
- ECON-4350: International Economics
- ECON-4351: Int'l Financial Econ
- ECON-4352: Intl Trade Theory & Pol
- ECON-6650: International Economics
- ECON-7121: International Econ I
- ECON-7122: International Econ II
- PHIL-6000: Responsible Conduct-Res
Publications
Selected Publications
Journal Articles
- Phase Out Tariffs, Phase In Trade?
In: Journal of International Economics [Peer Reviewed]
Date: November 2020
An important stylized fact in the empirical Free Trade Agreement (FTA) literature is that member trade flows gradually increase over time following an FTA. Baier & Bergstrand (2007) suggest two explanations: tariff phase-out and delayed pass-through of tariffs into import prices. We examine these hypotheses using 1989–2016 U.S. import growth and product-level data on the tariff phase-out negotiated under NAFTA and the earlier Canada-U.S. FTA. We do not find evidence supporting either hypothesis. While products receiving tariff cuts do show delayed import growth relative to products with unchanged tariffs, the delay in import growth does not correspond to delays in the timing of tariff cuts. We also show that tariff cuts are fully and immediately passed through to U.S. importers as there are virtually no changes in the prices received by exporters either in the short run or the long run. Rather, we find evidence for an important role played by NAFTA tariff cuts reducing the impact of frictions that, in turn, allow for a spatial expansion of imports across the U.S.
- Trade Liberalization and Gender Gaps in Local Labor Markets Outcomes: Dimensions of Adjustment in the United States
In: Journal of Economic Behavior & Organization [Peer Reviewed]
Date: 2021
We provide empirical results that trade liberalization with China reduced gender gaps in local U.S. labor markets. In MSAs with higher exposure to trade liberalization, the simple wage gender gap decreased, while the residual wage gap increased, indicating important selection effects in labor force participation decisions. The reduction in the gender labor force participation gap was driven by higher entry of women, in particular more educated women, and exit of the less educated men. This results in intrahousehold adjustments in work dynamics, with women entering the labor force to offset the lost income of male partners who left the labor force. We show that trade liberalization increased female workers’ unemployment rate and reliance on part-time jobs.
- Cheap talk? Financial sanctions and non-financial firms
In: European Economic Review [Peer Reviewed]
Date: March 2021
Sanctions restrict cross-border interactions and, therefore, not only put political and economic pressure on the target country, but they also adversely affect the sender country. This paper examines the effect of financial sanctions on the country imposing them. In particular, we analyze the business responses of German non-financial entities to the imposition of sanctions on 23 countries over the period from 1999 through 2014. Examining highly disaggregated, monthly data from the German balance of payments statistics, we find four main results. First, German financial activities with sanctioned countries are sizably reduced after the imposition of sanctions. Second, firms doing business with sanctioned countries tend to be disproportionately large, often having alternative business opportunities. Third, firms affected by sanctions expand their activities with non-sanctioned countries, some of which display close trade ties to the sanctioned country. Fourth, we find no effect of sanctions on broader measures of firm performance such as employment or total sales. Overall, we conclude that the economic costs of financial sanctions to the sender country are limited.
- Students’ Preferences for Returning to Colleges and Universities During the COVID-19 Pandemic: A Discrete Choice Experiment
In: Socio-Economic Planning Sciences [Peer Reviewed]
Date: August 2022
- Smart or Smash? The Effect of Financial Sanctions on Trade in Goods and Services
In: Review of International Economics [Peer Reviewed]
Date: February 2024
We examine the extent to which financial sanctions imposed by Germany through its European Union and United Nations commitments cause collateral damage on Germany's trade in goods and services. Financial sanctions reduce Germany's inflows and outflows of financial assets, as well as imports and exports of goods and services. The relative effects on trade in goods and services are weaker than on financial assets, about half as large in the case of goods and two-thirds as large in the case of services. The effect on trade in goods is entirely due to episodes where financial sanctions are accompanied by export restrictions of specific goods. In the case of services trade, only exports are affected by financial sanctions once export restrictions are considered. The primary channel through which sanctions affect the three types of cross-border flows is the extensive margin. Anticipation effects are quite strong for financial assets and weak for services and goods.
- Fly the Unfriendly Skies: The role of transport costs in gravity models of trade
In: Journal of International Economics [Peer Reviewed]
Date: November 2024
We exploit exogenous shocks to flight distances over time to estimate the distance effect in airborne trade within panel regressions. We find a negative distance effect, which we interpret as evidence of a link between transportation costs and airborne trade. Notably, this relationship is driven almost entirely by changes at the extensive margin. Specifically, trade in HS 6 product categories with intermittent trading histories becomes dormant when flight distances increase. Conversely, the intensive margin of trade remains largely unaffected.
All Publications
Book - Editors
- Disrupted Economic Relationships
Date: May 2019
Journal Articles
- Fly the Unfriendly Skies: The role of transport costs in gravity models of trade
In: Journal of International Economics [Peer Reviewed]
Date: November 2024
We exploit exogenous shocks to flight distances over time to estimate the distance effect in airborne trade within panel regressions. We find a negative distance effect, which we interpret as evidence of a link between transportation costs and airborne trade. Notably, this relationship is driven almost entirely by changes at the extensive margin. Specifically, trade in HS 6 product categories with intermittent trading histories becomes dormant when flight distances increase. Conversely, the intensive margin of trade remains largely unaffected.
- Smart or Smash? The Effect of Financial Sanctions on Trade in Goods and Services
In: Review of International Economics [Peer Reviewed]
Date: February 2024
We examine the extent to which financial sanctions imposed by Germany through its European Union and United Nations commitments cause collateral damage on Germany's trade in goods and services. Financial sanctions reduce Germany's inflows and outflows of financial assets, as well as imports and exports of goods and services. The relative effects on trade in goods and services are weaker than on financial assets, about half as large in the case of goods and two-thirds as large in the case of services. The effect on trade in goods is entirely due to episodes where financial sanctions are accompanied by export restrictions of specific goods. In the case of services trade, only exports are affected by financial sanctions once export restrictions are considered. The primary channel through which sanctions affect the three types of cross-border flows is the extensive margin. Anticipation effects are quite strong for financial assets and weak for services and goods.
- Students’ Preferences for Returning to Colleges and Universities During the COVID-19 Pandemic: A Discrete Choice Experiment
In: Socio-Economic Planning Sciences [Peer Reviewed]
Date: August 2022
- Cheap talk? Financial sanctions and non-financial firms
In: European Economic Review [Peer Reviewed]
Date: March 2021
Sanctions restrict cross-border interactions and, therefore, not only put political and economic pressure on the target country, but they also adversely affect the sender country. This paper examines the effect of financial sanctions on the country imposing them. In particular, we analyze the business responses of German non-financial entities to the imposition of sanctions on 23 countries over the period from 1999 through 2014. Examining highly disaggregated, monthly data from the German balance of payments statistics, we find four main results. First, German financial activities with sanctioned countries are sizably reduced after the imposition of sanctions. Second, firms doing business with sanctioned countries tend to be disproportionately large, often having alternative business opportunities. Third, firms affected by sanctions expand their activities with non-sanctioned countries, some of which display close trade ties to the sanctioned country. Fourth, we find no effect of sanctions on broader measures of firm performance such as employment or total sales. Overall, we conclude that the economic costs of financial sanctions to the sender country are limited.
- Trade Liberalization and Gender Gaps in Local Labor Markets Outcomes: Dimensions of Adjustment in the United States
In: Journal of Economic Behavior & Organization [Peer Reviewed]
Date: 2021
We provide empirical results that trade liberalization with China reduced gender gaps in local U.S. labor markets. In MSAs with higher exposure to trade liberalization, the simple wage gender gap decreased, while the residual wage gap increased, indicating important selection effects in labor force participation decisions. The reduction in the gender labor force participation gap was driven by higher entry of women, in particular more educated women, and exit of the less educated men. This results in intrahousehold adjustments in work dynamics, with women entering the labor force to offset the lost income of male partners who left the labor force. We show that trade liberalization increased female workers’ unemployment rate and reliance on part-time jobs.
- Phase Out Tariffs, Phase In Trade?
In: Journal of International Economics [Peer Reviewed]
Date: November 2020
An important stylized fact in the empirical Free Trade Agreement (FTA) literature is that member trade flows gradually increase over time following an FTA. Baier & Bergstrand (2007) suggest two explanations: tariff phase-out and delayed pass-through of tariffs into import prices. We examine these hypotheses using 1989–2016 U.S. import growth and product-level data on the tariff phase-out negotiated under NAFTA and the earlier Canada-U.S. FTA. We do not find evidence supporting either hypothesis. While products receiving tariff cuts do show delayed import growth relative to products with unchanged tariffs, the delay in import growth does not correspond to delays in the timing of tariff cuts. We also show that tariff cuts are fully and immediately passed through to U.S. importers as there are virtually no changes in the prices received by exporters either in the short run or the long run. Rather, we find evidence for an important role played by NAFTA tariff cuts reducing the impact of frictions that, in turn, allow for a spatial expansion of imports across the U.S.
- Economic Determinant of Multilateral Environmental Agreements
In: International Tax and Public Finance [Peer Reviewed]
Date: January 2020
We examine the economic factors that lead to the formation of multilateral environmental agreements, focusing on the likelihood a pair of countries enters into an agreement as well as the number of agreements they share using a near universe of agreements. Two countries are more likely to have an agreement and have more of them if they are economically larger and of similar economic size, closer in distance, have a preferential trade agreement, and trade more. Results are strongest for agreements involving a small number of countries, consistent with a hypothesis that agreements are formed to manage common pool resources.
- Optimizing Choice Architectures
In: Decision Analysis [Peer Reviewed]
Date: January 2019
This paper investigates decision quality in large choice sets across several choice architectures in three studies. In the first controlled experiment, we manipulate two features of a choice architecture—the response mode (for ranking alternatives) and presentation mode (for presenting alternatives). Our design objectively ranks all 16 choice options in each choice set and makes it possible to observe decision quality directly, independent of attitudes toward risk. We find joint presentation outperforms separate presentation and that choice response modes outperform “happiness ratings,” which outperform hypothetical monetary valuations. We also apply classic welfare criteria to assess the performance of the architectures. Our key finding is that low cognitive reflection subjects (as measured by the cognitive reflection test) perform better given a large choice set than given smaller sets collectively containing the same alternatives. This illustrates a basic tradeoff confronting choice architectures: for a fixed choice set, fewer options improve decision quality within that set but require architectures to elicit multiple responses, increasing opportunities for errors. One follow-up study demonstrates the robustness of the response mode result in a comparison using the tournament presentation mode. A second follow-up study reveals that the impact of incentivizing monetary valuations depends on cognitive reflection.
- You're Banned! The Effect of Sanctions on German Cross-Border Financial Flows
In: Economic Policy [Peer Reviewed]
Date: April 2017
This paper examines the effect of financial sanctions on cross-border capital flows. While sanctions can be expected to hinder international transactions, thereby putting political and economic pressure on a target country, we study the patterns of adjustment in bilateral financial relationships after the imposition of sanctions along various dimensions. Our analysis is based on highly disaggregated, monthly data from the German balance of payments statistics for the period from 2005 through 2014. During this time, Germany imposed financial sanctions on 20 countries; two of these sanctions have been lifted. Applying a differences-in-differences approach, we find two key results. First, financial sanctions have a strong and immediate negative effect on direct financial flows with the sanctioned country, with cross-border flows reduced in either direction. Second, sanctions imposed by the European Union alone, and therefore only enforced by their member countries instead of the United Nations, are evaded as flows with major trading partners of sanctioned countries increase. We conclude that financial sanctions do matter for capital flows.
- Distorted Trade Barriers: A Dissection of Trade Costs in a "Distorted Gravity" Model
In: Review of International Economics [Peer Reviewed]
Date: February 2017
It is common in the trade literature to use iceberg transport costs to represent both tariffs and shipping costs alike. However, in models with monopolistic competition these are not identical trade restrictions. This difference is driven by how the two costs affect the extensive margin. We illustrate these differences in a gravity model. We show theoretically that trade flows are more elastic with respect to tariffs than transport costs and find a linear relationship between the elasticities with respect to tariffs, iceberg transport costs, and fixed market costs. We empirically validate these results using data on US product‐level imports.
- The Hazardous Effects of Antidumping
In: Economic Inquiry [Peer Reviewed]
Date: January 2017
We investigate the extent to which antidumping actions eliminate trade altogether. Using quarterly 10-digit HS-level export data for products involved in U.S. antidumping cases we find that antidumping actions increase the hazard rate by more than 50%. We find strong evidence of investigation effects with the impact during the initiation and preliminary duty phases considerably larger than once final duties are imposed. There are also important differences with respect to the size of duties with cases with large duties experiencing very large investigation effects. We show the antidumping (AD)-affected countries are less likely to return to the market even after the AD order is removed.
- Reducing Choice Overload without Reducing Choices
In: Review of Economics and Statistics [Peer Reviewed]
Date: October 2015
Previous studies have demonstrated that a multitude of options can lead to choice overload, reducing decision quality. Through controlled experiments, we examine sequential choice architectures that enable the choice set to remain large while potentially reducing the effect of choice overload. A specific tournament-style architecture achieves this goal. An alternate architecture in which subjects compare each subset of options to the most preferred option encountered thus far fails to improve performance due to the status quo bias. Subject preferences over different choice architectures are negatively correlated with performance, suggesting that providing choice over architectures might reduce the quality of decisions.
- Export Growth and Credit Constraints
In: European Economic Review [Peer Reviewed]
Date: August 2014
We investigate the effect of credit constraints on the growth of exports at the micro level. We develop a stylized dynamic model showing credit constraints play a key role in early stages of exporting, but not in later stages. Our empirical results using product level data on exports to twelve European Union members and the U.S. support the model’s predictions: exports from more credit constrained and riskier exporters grow faster. Export growth rates decrease with duration and converge across countries. While an important force in early stages, credit constraints affect export growth much less as the duration of exports increases.
- Effort and Performance: What Distinguishes Interacting and Non-interacting Groups from Individuals?
In: Southern Economic Journal [Peer Reviewed]
Date: March 2014
We study how group membership affects behavior both when group members can and cannot interact with each other. Our goal is to isolate the contrasting forces that spring from group membership: a free-riding incentive leading to reduced effort and a sense of social responsibility that increases effort. In an environment with varying task difficulty and individual decision making as the benchmark, we show that the free-riding effect is stronger. Group members significantly reduce their effort in situations where they share the outcome but are unable to communicate. When group members share outcomes and can interact, they outperform groups without communication and individuals. We show that these groups do as well as the best constituent member would have done on her own.
- The Role of NAFTA and Returns to Scale in Export Duration
In: CESifo Economic Studies [Peer Reviewed]
Date: June 2013
While exports within NAFTA face a lower hazard of ceasing, its onset has increased the hazard for Mexican and U.S. intra NAFTA exports. Intra NAFTA exports still enjoy a lower hazard relative to exports to non–members. While NAFTA did affect the hazard for Canada’s exports in the short run, its effect on Mexican and U.S. exports is persistent. Exports of IRS manufacturing products face the highest hazard in the case of Canada and Mexico, while IRS natural resource products have the highest hazard for Mexico. The effect of NAFTA on the returns to scale product types is exporter specific.
- Age Effects and Heuristics in Decision Making
In: Review of Economics and Statistics [Peer Reviewed]
Date: May 2012
Using controlled experiments,weexamine howindividuals make choices when faced with multiple options. Choice tasks are designed to
mimic the selection of health insurance, prescription drug, or retirement savings plans. In our experiment, available options can be objectively ranked, allowing us to examine optimal decision making. First, the probability of a person selecting the optimal option declines as the number of options increases, with the decline being more pronounced for older subjects. Second, heuristics differ by age, with older subjects relying more on suboptimal decision rules. In a heuristics validation experiment, older subjects make worse decisions than younger subjects.
- Decision-making Strategies and Performance among Seniors
In: Journal of Economic Behavior and Organization [Peer Reviewed]
Date: February 2012
Using paper and pencil experiments administered in senior centers, we examine decision-making performance in multi-attribute decision problems. We differentiate the effects of declining cognitive performance and changing cognitive process on decision-making performance of seniors as they age. We find a significant decline in performance with age due to reduced reliance on common heuristics and increased decision-making randomness among our oldest subjects. However, we find that increasing the number of options in a decision problem increases the number of heuristics brought to the task. This challenges the choice overload view that people give up when confronted with too much choice.
- The Role of Extensive and Intensive Margins and Export Growth
In: Journal of Development Economics [Peer Reviewed]
Date: November 2011
We investigate and compare countries' export growth based on their performance at the extensive and intensive export margins. Our empirical approach ismotivated by an extension to the Melitz (2003) model of heterogeneous firms in which exporters are subject to a one-time sunk cost and also a per-period fixed cost. With imperfect information a firm may enter export markets but shortly exit when it learns its per-period fixed costs. We apply this insight to disaggregated export data and confirm that indeed most export relationships are very short lived. We then show that the survival issue is a significant factor in explaining differences in long run export performance. We find that developing countries would experience significantly higher export growth if they were able to improve their performance with respect to the two key components of the intensive margin: survival and deepening.
- Export Differentiation in Transition Economies
In: Economic Systems [Peer Reviewed]
Date: March 2011
I investigate changes in the structure of trade of seventeen transition economies between 1996 and 2006, focusing on differences across three types of products – homogeneous goods, reference priced goods, and differentiated products. I examine shares of exports of each type of good, intensive and extensive margins, and the hazard of exporting. While there are cross-country differences in the distribution of export shares and in intensive and extensive margins, the largest differences exist in the hazard of exporting. There are significant differences in the hazard both across countries and time.
- A Search Cost Perspective on Formation and Duration of Trade
In: Review of International Economics [Peer Reviewed]
Date: October 2008
More than half of all US import relationships begin with less than $10,000 annually. The median relationship is observed to last just one year. The incidence and duration of import relationships are consistent with a search model of international trade. The preponderance of small starting relationships reveals uncertainty present in the formation of trade relationships. Initial size, reliability, and search costs play an important role. Larger initial purchase results in longer relationships. Higher reliability and lower search costs lead to larger initial purchases and longer relationships.
- Product Differentiation and Duration of US Import Trade
In: Journal of International Economics [Peer Reviewed]
Date: December 2006
We examine the extent to which product differentiation affects duration of US import trade relationships. The results are consistent with a matching model of trade formation. Using highly disaggregated product level data we estimate the hazard rate is at least 23% higher for homogeneous goods than for differentiated products. The results are not only highly robust but are often strengthened under alternative specifications. As the smallest relationships are dropped, differences across product types increase. Controlling for
potential measurement errors also results in larger differences across product types. - Ins, Outs, and the Duration of Trade
In: Canadian Journal of Economics [Peer Reviewed]
Date: January 2006
We employ survival analysis to study the duration of U.S. imports. Our findings indicate international trade is far more dynamic than previously thought. The median duration of exporting a product to the U.S. is very short, on the order of two to four years. There is negative duration dependence. If a country is able to survive in the exporting market for the first few years it will face a very small probability of failure and will likely export the product for a long period of time. The results hold across countries and industries and are robust to aggregation.
Chapters
- Blood Alcohol Regulation and EU Beer Exports
In: Geography of Beer: Policies, Perceptions, and Place [Peer Reviewed]
Date: 2023
We examine how blood alcohol content (BAC) regulations have affected EU beer exports over the 1995– 2019 period. We use BAC levels to group destination markets into five groups and examine how beer exports vary across BAC stringency. We distinguish between changes in the breadth of countries serviced (the extensive margin) and the trade deepening (the intensive margin). We find BAC rules affect the two margins differently. The breadth of EU exports is lower for destination markets with the least stringent BAC rules than markets with more stringent rules (i.e., lower BAC cutoff). By contrast, we find that the depth of EU exports increases as the BAC rules become less stringent. We offer possible explanations for the divergent effects of BAC rules on trade patterns but the results highlight the need for ongoing research on the topic.
- The Effects of European Integration on the Stability of International Trade: A Duration Perspective
In: Handbook of the Economics of European Integration
Date: 2015
I examine the effects European integration has had on intra‐EU trade relationships between 1962 and 2005. I find that the stability of intra‐EU trade relationships as reflected by their duration has been negatively affected by the persistent integration with duration decreasing and the hazard of trade ceasing increasing. The 1986 and 1995 expansions as well as the creation of the economic union in 1999 reduced the hazard, but not by a large enough magnitude to offset the increased hazard due to earlier integration actions. On the whole, intra‐EU relationships have become shorter. This is largely due to the reduction in trade costs brought about by integration, which has enabled a plethora of short and previously cost‐prohibitive relationships. This conclusion is supported by the tremendous growth of new relationships under the various incarnations of the European Union.
- The Duration of Trade Relationships
In: Adjustment Costs and Adjustment Impacts of Trade Policy
Date: 2010