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Understanding the Gains from Wage Flexibility : The Exchange Rate Connection
Galí, Jordi; Monacelli, Tommaso - 2021
We study the gains from increased wage flexibility using a small open economy model with staggered price and wage setting. Two results stand out: (i) the effectiveness of labor cost reductions as a means to stimulate employment is much smaller in a currency union, (ii) an increase in wage...
Persistent link: https://www.econbiz.de/10013311616
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Evaluating Labor Market Reforms : A General Equilibrium Approach
Alonso-Borrego, Cesar; Fernández-Villaverde, Jesús; … - 2021
Job security provisions are commonly invoked to explain the high and persistent European unemployment rates. This belief has led several countries to reform their labor markets and liberalize the use of fixed-term contracts. Despite how common such contracts have become after deregulation, there...
Persistent link: https://www.econbiz.de/10013222310
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Trade Policy Making in a Model of Legislative Bargaining
Celik, Levent - 2011
In democracies, trade policy is the result of interactions among many agents with different agendas. In accordance with this observation, we construct a dynamic model of legislative trade policy-making in the realm of distributive politics. An economy consists of different sectors, each of which...
Persistent link: https://www.econbiz.de/10013121949
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Foreign Influence and Welfare
Antras, Pol; Padró i Miquel, Gerard - 2021
How do foreign interests influence the policy determination process? What are the welfare implications of such foreign influence? In this paper we develop a model of foreign influence and apply it to the study of optimal tariffs. We develop a two-country voting model of electoral competition,...
Persistent link: https://www.econbiz.de/10013248149
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Consumption and Cash-Flow Taxes in an International Setting
Auerbach, Alan J. - 2013
We model the effects of consumption-type taxes which differ according to the base and location of the tax. Our model incorporates a multinational producing and selling in two countries with three sources of rent, each in a different location: a fixed basic production factor (located with initial...
Persistent link: https://www.econbiz.de/10013073945
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Trade, Diffusion and the Gains from Openness
Rodríguez-Clare, Andrés - 2012
Building on Eaton and Kortum's (2002) model of Ricardian trade, Alvarez and Lucas (2005) calculate that a small country representing 1% of the world's GDP experiences a gain of 41% as it goes from autarky to frictionless trade with the rest of the world. But the gains from openness, which...
Persistent link: https://www.econbiz.de/10012755278
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How Big are the Gains from International Financial Integration?
Hoxha, Indrit - 2010
The literature has shown that the implied welfare gains from international financial integration are very small. We revisit the existing findings and document that welfare gains can be substantial if capital goods are not perfect substitutes. We use a model of optimal savings that includes a...
Persistent link: https://www.econbiz.de/10012758019
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Transition to FDI Openness : Reconciling Theory and Evidence
McGrattan, Ellen R. - 2011
conclusive evidence that they are positive, as theory predicts. This paper shows that the lack of empirical evidence is … consistent with theory if countries are in transition to FDI openness. Anticipated welfare gains lead to temporary declines in … reconciliation of theory and evidence is accomplished with a multicountry dynamic general equilibrium model parameterized with data …
Persistent link: https://www.econbiz.de/10013130264
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An Information-Based Model of Foreign Direct Investment : the Gains from Trade Revisited
Razin, Assaf; Sadka, Efraim; Yuen, Chi-Wa - 2021
Foreign direct investment (FDI) is observed to be a predominant form of capital flows to emerging economies, especially when they are liquidity-constrained internationally during a global financial crisis. The financial aspects of FDI are the focus of the paper. We analyze the problem of...
Persistent link: https://www.econbiz.de/10013231578
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Y2k and Offshoring : The Role of External Economies and Firm Heterogeneity
Mitra, Devashish; Ranjan, Priya - 2021
We construct a model of offshoring with externalities and firm heterogeneity. Due to the presence of externalities, temporary shocks like the Y2K problem can have permanent effects, i.e., they can permanently raise the extent of offshoring in an industry. Also, the initial advantage of a country...
Persistent link: https://www.econbiz.de/10013233896