Rebecca Tomasik
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Doctoral Dissertation Announcement
Candidate: Rebecca Tomasik
Degree of:
Doctor of Philosophy
Department: Economics
Title: Time Zone Effects on Trade and Foreign Direct Investment
Committee:
Dr. Michael Ryan, Chair
Dr. Christine Moser
Dr. Stephen Woodbury
Date: Friday, December 14, 2012 1 p.m. to 3 p.m.
5302 Friedmann
Hall
Abstract:
This dissertation examines three questions regarding time zones’ impact on international trade and foreign direct investment (FDI) decisions. The existing theoretical and empirical literature suggests two main effects of time zones on trade and FDI, a positive continuity effect and a negative synchronization effect. My initial chapter tests for the presence of both effects and finds the first empirical evidence of the continuity effect. My empirical specification focuses on time zone differences between countries and the time zone difference interacted with a dummy variable for service trade. Here, the time zone variable picks up any effect that is common to both goods and services trade. The interaction term picks up any effect that is different between goods and services trade. The results are consistent with the theoretical expectations in that the coefficient on time zone differences is negative while the coefficient on the interaction term is positive. This provides empirical evidence of both the continuity and the synchronization effects. My second chapter focuses on the strong correlation between distance and time zones and how changing the model specifications for distance can affect the magnitude of the two time zone effects. This is done by relaxing the log-linearity assumption for distance’s effect on trade. The results suggest that the choice of a log-linear specification for distance caused an overestimation in the synchronization effect, which leads to misleading overall time zone effects for service exports. The third chapter examines whether time zone differences are found at the firm level in terms of their location choice and time between investments. By using survival analysis, this model is comparing whether increased time zone differences make it more likely that the previous investment was a service investment. The results suggest the presence of the continuity effect for Japanese firms. The greater the time zone difference, the more likely the investment observed is a service investment. This chapter provides the first empirical evidence of the continuity effect for FDI, as well as the first firm-level analysis of time zone effects.