modeling aggregate manufactured exports for some asian newly industrialized economies a central question in studies of the asian newly industrialised economies has been whether the extremely rapid export growth of these countries can be viewed as primarily a phenomenon of income elastic export demand or of fast expanding export supply in the face of highly price elastic demand this paper provides evidence to show that while high income elasticities of export demand are detected using a conventional simultaneous model this may conceal the presence of important product differentiation and product innovation effects on export demand these are then captured using a measure of the total resource base copyright 1995 by mit press

the income and terms of trade effects a permanent versus transitory decomposition in us trade abstract this paper develops an empirical analysis of the us trade balance with particular attention to the distinction between permanent and transitory disturbances to income and the terms of trade arising from real monetary and demand supply shocks the results indicate that the income effects on the trade balance differ remarkably depending on whether a given change is permanent or transitory for instance a permanent increase in income deteriorates the trade balance whereas a transitory increase improves it the results are contrasted to the predictions of the mundell fleming dornbusch model and intertemporal models jel f32

flexible exchange rates and the j curve an alternative approach abstract estimates of the j curve that do not explicitly account for feedback effects may give misleading results in the absence of a structural model a var approach is recommended to solve this problem

oligopolistic markets with sequential search and production cost uncertainty this article analyzes a sequential search model where firms face identical but stochastic production costs the realizations of which are unknown to consumers we characterize a perfect bayesian equilibrium satisfying a reservation price property and provide a sufficient condition for such an equilibrium to exist we show that i firms set on average higher prices and make larger profits compared to the scenario where consumers observe production costs ii expected prices and consumer welfare can be non monotonic in the number of firms and iii the impact of production cost uncertainty vanishes as the number of firms becomes very large

distribution capital and the short and long run import demand elasticity the elasticity of substitution between home and foreign goods is one of the most important parameters in international economics the international macro literature which is primarily concerned with short run business cycle fluctuations assigns a low value to this parameter the international trade literature which is more concerned with long run changes in trade flows following a change in relative prices assigns a high value to this parameter this paper constructs a model where this discrepancy between the short and long run elasticities is due to frictions in distribution goods need to be combined with a local non traded input distribution capital which is good specific home and foreign goods may be close substitutes but if distribution capital is slow to adjust then agents cannot shift their consumption in the short run following a change in relative prices and home and foreign goods appear as poor substitutes in the short run in the long run this distribution capital can be reallocated and agents can shift their purchases following a change in relative prices thus the observed substitutability gets larger as time passes

optimal search learning and implementation we characterize the incentive compatible constrained efficient policy second best in a dynamic matching environment where impatient privately informed agents arrive over time and where the designer gradually learns about the distribution of agents values we also derive conditions on the learning process ensuring that the complete information dynamically efficient allocation of resources first best is incentive compatible our analysis reveals and exploits close formal relations between the problem of ensuring implementable allocation rules in our dynamic allocation problems with incomplete information and learning and between the classical problem posed by rothschild 1974 20 of finding optimal stopping policies for search that are characterized by a reservation price property

an empirical evaluation of the macroeconomic effects of tarrifs abstract the macroeconomic effects of unilateral tariff changes are reviewed in a variety of theoretical models it is shown that there is no theoretical presumption about the effects of tariffs on output or the trade balance five different data sets are found to be consistent with the hypothesis that tariff changs have no significant effects on the real exchange rate the real trade balance and real output both foreign and domestic tariff rates do appear to have a negative effect on the gross volume of international trade jel f13 f40

managerial turnover in a changing world we develop a dynamic theory of managerial turnover in a world in which the quality of the match between a firm and its managers changes stochastically over time shocks to managerial productivity are anticipated at the time of contracting but privately observed by the managers our key positive result shows that the firm s optimal retention decisions become more permissive with time our key normative result shows that compared to what is efficient the firm s contract induces either excessive retention at all tenure levels or excessive firing at the early stages of the relationship followed by excessive retention after sufficiently long tenure

import content of exports and j curve effect this article investigates how the response to devaluation of trade balance is affected compared to j curve hypothesis by the presence of imported inputs in the production of exports using first the almon lag technique and then the cointegration and the generalized impulse response function analysis the j curve effect is examined in two sectors of turkish economy manufacturing and mining which use imported inputs at different rates based on the data covering the period from the first quarter of 1986 to the third quarter of 1998 our results indicate that in neither sector j curve exists and that the violation of the j curve effect is more severe in the sector with higher import content

the quality of employment and decent work definitions methodologies and ongoing debates this article explores the development of concepts related to the quality of employment in the academic literature in terms of their definition methodological progress and ongoing policy debates over time these concepts have evolved from simple studies of job satisfaction towards more comprehensive measures of job and employment quality including the international labour organization s concept of decent work launched in 1999 this article compares the parallel development of quality of employment measures in the european union with the ilo s decent work agenda and concludes that the former has advanced much further due to more consistent efforts to generate internationally comparable data on labour markets which permit detailed measurements and international comparisons in contrast decent work remains a very broadly defined concept which is impossible to measure across countries we conclude by proposing three important differences between these two scenarios that have lead to such diverging paths the lack of availability of internationally comparable data the control over the research agenda by partisan social actors and a prematurely mandated definition of decent work that is extremely vague and all encompassing

the quality of employment in the early labour market experience of young europeans this paper presents a new approach to evaluating individuals employment quality considering the evolution of individuals employment conditions over a period of time instead of the quality of jobs held at a point in time in particular we present a new definition of employment quality based on four dimensions employment security income security income success and occupational success using eu silc data we analyse the early labour market experience of young adults and the extent to which the achievement of employment quality around five years after leaving education varies according to gender education and labour market institutions our findings suggest that there is still a pressing need to enhance women s chances of remaining continuously in employment and to move up in the labour income distribution stricter rules on the use of temporary contracts appear to improve youth employment prospects in general whereas a more stringent regulation of individual dismissals seems to generate some difficulties for high school and university graduates

cheap labor meets costly capital the impact of devaluations on commodity firms abstract this paper examines how devaluations affect the relative costs of labor and capital and therefore influence production profitability investment and stock returns for firms in the crisis country as well as competitors in the rest of the world after developing these ideas in a small open economy model the paper performs a series of empirical tests using information for about 1100 firms in 10 commodity industries between 1996 and 2000 the empirical tests support the model s main predictions 1 immediately after devaluations commodity firms in the crisis country have output growth rates about 10 20 higher than competitors in other countries 2 immediately after devaluations commodity firms in the crisis country have operating profit growth rates about 15 25 higher than competitors in other countries 3 the effect of devaluations on fixed capital investment and stock returns and therefore expected long run output and profits is determined by capital labor ratios and changes in the cost of capital for example crisis country firms have higher rates of capital growth and better stock performance after devaluations if they had lower capital labor ratios and there was no substantial increase in their interest rates

brazil us commodity trade and the j curve currency devaluation or depreciation is said to temporarily worsen a country s trade balance and improve it later an effect that is called the j curve previous research that tested the j curve for brazil used the country s aggregate trade flows with the rest of the world and did not find support for the phenomenon in this article we consider the trade flows between brazil and a major trading partner the united states disaggregating their trade flows by commodity we then test the empirical validity of the j curve for each of the 92 industries that trade between the two countries we find support for the phenomenon in 31 industries therefore disaggregation by industry seems to yield some support for the phenomenon

on low frequency estimates of long run relationships in macroeconomics abstract a number of recent studies have attempted to test propositions concerning long run economic relationships by means of frequency domain time series techniques that concentrate attention on low frequency comovements of variables the present paper emphasizes that many of these propositions involve expectational relationships that are not inherently related to specific frequencies or periodicities thus the association of low frequency time series test statistics with long run economic propositions is not generally warranted that such an association can be misleading is demonstrated by analysis of examples taken from notable papers by geweke lucas and summers

optimal selling strategies when to haggle when to hold firm a seller encountering risk neutral buyers one at a time should if commitments are feasible quote a single take it or leave it price to each this strategy is superior to any other for finite or infinite buyer populations whether there is learning or the distribution of buyer prices is known at the outset with one object for sale or many although haggling may offer advantages in terms of price discrimination these gains are more than offset by the losses it generates by encouraging buyers to refuse purchases at high prices

the exchange rate and the balance of trade the turkish experience in this article we examine the responsiveness of turkey s trade balance to devaluation accompanied by trade liberalisation our results show that the trade balance was responsive to changes in the exchange rate that were brought about by the economic reforms introduced in the 1980s suggesting that exchange rate policy was able to create and maintain a satisfactory balance of trade position in the 1980s and early 1990s

exchange rate depreciation and exports the case of singapore revisited this article revisits the weak relationship between exchange rate depreciation and exports for singapore using a bivariate generalized autoregressive conditional heteroscedasticity in mean model that simultaneously estimates time varying risk the evidence shows that depreciation does not significantly improve exports but that exchange rate risk significantly impedes exports in sum singaporean policy makers can better promote export growth by stabilizing the exchange rate rather than generating its depreciation

anticipated versus unanticipated terms of trade shocks and the j curve phenomenon abstract using a dynamic stochastic general equilibrium dsge model we examine the impact of anticipated and unanticipated terms of trade tot shocks on aggregate output inflation and the trade balance tb this allows us to offer an alternative explanation of the j curve phenomenon we find that an unanticipated tot shock increases real output as well as inflation but the j curve phenomenon may not exist under a certain condition however under the same condition an anticipated tot shock leads to the j curve effect we find that our main result concerning the j curve phenomenon continues to hold even if the assumption of rational expectations about the tot is relaxed further analysis reveals that the presence of a cost channel of monetary policy increases the intensity of the j curve effect assuming plausible parameter values while using a more general model calibration results support our theoretical predictions

cointegration aggregate consumption and the demand for imports a structural econometric this paper uses a two good version of hall s 1978 representative agent permanent income model to derive a structural import demand equation for nondurable consumer goods under the identification restriction that taste shocks are stationary the model is shown to imply that log imports log domestic goods and the log relative price of imports are co integrated the data decisively reject the null hypothesis that imports the relative price of imports and the consumption of home goods are not co integrated we employ the non linear least squares technique recently proposed by phillips and loretan 1990 to estimate the parameters of the import demand equation the long run price elasticity of import demand is estimated to be 0 95 the elasticity of import demand with respect to a permanent increase in real spending is estimated to be 2 20 these estimates fall within the range reported in studies by helkie and hooper 1986 cline 1989 and the many studies surveyed by goldstein and kahn 1985 the message of this paper is that at least for non durable consumer goods it is possible to interpret the traditional import demand equation as a co integrating regression and to interpret the price and expenditure elasticities estimated from such a trade equation as a co integrating vector estimates of the co integrating vector can be used to recover estimates of the utility parameters of the representative household the similarity between the ols and phillips loretan estimates of the parameters suggests that the simultaneous equation bias is not large this abstract was borrowed from another version of this item

optimal adaptive price search consider the problem of a consumer desiring to buy a good which is sold at a variety of prices such a buyer will be able to obtain a sequence of price quotations from various sellers when should the buyer stop searching for a lower price if he continues he may obtain a lower price but he incurs additional time effort and expense in searching the optimal price search decision is one of balancing the expectation of a possibly lower price obtained by continued search against cumulative costs from search when the prices arise from a known probability distribution the optimal search strategy has certain well defined and desirable properties in the more realistic case that the buyer has only partial information about the price distribution and must update his beliefs after observing prices in the marketplace the problem becomes more complex and search strategies become less well behaved the major purpose of this article is to determine new conditions under which optimal policies have these desirable characteristics in the case where the consumer possesses only incomplete information about the distribution of prices price quotations he receives in addition to providing him with price possibilities provide him with information about that distribution rothschild 151 in citing an unpublished paper of gastwirth has noted that small specification errors for an assumed distribution can lead to substantial changes in expected number of searches and expected cost consequently the assumption of a known distribution of prices can have a profound effect on total cost 1 0022 053 l 8 l 040001 20 02 00 o

time intensive r d and unbalanced trade abstract this paper highlights a novel mechanism that generates global imbalances it develops a general equilibrium trade model with one of two countries having a comparative advantage in a sector whose production is characterized by i rapid anticipated demand growth and ii large up front r d costs international funding of the accruing r d costs generates capital inflows in the r d stage which are balanced by subsequent outflows importantly sector level growth does not generate growth differentials between countries typically regarded as rationales of global imbalances additionally it is shown that a trade surplus can coincide with appreciations of the real exchange rate i argue that switzerland s trade surplus which was driven to record heights during 2010 2014 by pharmaceutical exports exemplifies this mechanism calibrating the model to swiss trade flows underpins this argument

asymmetric j curve evidence from industry trade between u s and u k previous research that assessed the impact of exchange rate changes on the trade balance between the u s and u k assumed the effects are symmetric in this paper we add to the literature on the

priority auctions and queue disciplines that depend on processing time we analyze the allocation of priority in queues via simple bidding mechanisms in our model the stochastically arriving customers are privately informed about their own processing time they make bids upon arrival at a queue whose length is unobservable we consider two bidding schemes that differ in the definition of bids these may reflect either total payments or payments per unit of time and in the timing of payments before or after service in both schemes a customer obtains priority over all customers waiting in the queue or arriving while he is waiting who make lower bids our main results show how the convexity concavity of the function expressing the costs of delay determines the queue discipline i e shortest processing time first spt longest processing time first lpt arising in a bidding equilibrium

was it real the exchange rate interest differential relation over the modern floating rate period in this paper we explore the relationship between real exchange rates and real interest rate differentials in the united states germany japan and the united kingdom contrary to theories based on the joint hypothesis that domestic prices are sticky and monetary disturbances are predominant we find little evidence of a stable relationship between real interest rates and real exchange rates we consider both in sample and out of sample tests one hypothesis that is consistent with our findings is that real disturbances such as productivity shocks may be a major source of exchange rate volatility this paper investigates the empirical relationship between major currency real exchange rates and real interest rates over the modern post march 1973 flexible rate experience the exchange rates examined here include the dollar mark dollar yen and dollar pound rates our two major findings are as follows first the data do not indicate a strong correspondence between real interest rate differentials short term or long term and real exchange rates this finding appears to conflict with the predictions of most monetary and portfolio balance models of exchange rate determination though the conflict can be substantially reconciled if aggregate disturbances are primarily real in nature i e changes in productivity tastes etc it is true that in many cases the sign of the estimated exchange rate interest rate differential relationship is consistent with the possible predominance of financial market disturbances but the relationship is not stable enough to be statistically significant second although one does find some evidence of a unit root in both real exchange rates and long term but not shortterm real interest differentials these two series do not appear to be linearly cointegrated hence the nonstationarity or near nonstationarity in the two series cannot be attributed to the same factor in section i we briefly describe a class of small scale monetary models of exchange rate determination the importance of this class of models for empirical work derives from its strong predictions about how the exchange rate will move

is there a j curve abstract if the response of the value of the trade balance to movements in the real exchange rate is described by a j curve then a real depreciation initially worsens a balance of trade deficit only improving it over time this paper investigates whether a j curve can be detected in the last twenty five years of american data no statistically reliable evidence of a stable j curve is detected the model is checked extensively to support this finding

transitory and permanent disturbances and the current account an empirical analysis in the intertemporal framework the intertemporal models of current account determination demonstrate that in the analysis of the current account balance of a country it is important to distinguish between transitory and permanent disturbances in income and relative prices this paper attempts to decompose the observed data on income and real exchange rate into transitory and permanent components and then uses the decomposed series to test the empirical validity of the predictions of the intertemporal models evidence from the united states and japan provide very limited support for the intertemporal models in terms of the effects of transitory and permanent changes in income on current account balance for both us and japan the study finds that permanent changes in real exchange rate have significant effects on the current account balance statistical tests find no evidence of hysteresis in the trading relations of the two countries

auctions with online supply abstract online advertising auctions present settings in which there is uncertainty about the number of items for sale we study mechanisms for selling identical items when the total supply is unknown but is drawn from a known distribution items arrive dynamically and the seller must make immediate allocation and payment decisions with the goal of maximizing social welfare we devise a simple incentive compatible mechanism that guarantees some constant fraction of the first best solution a surprising feature of our mechanism is that it artificially limits supply and we show that limiting the supply is essential for obtaining high social welfare although common when maximizing revenue commitment to limit the supply is less intuitive when maximizing social welfare the performance guarantee of our mechanism is in expectation over the supply distribution we show that obtaining similar performance guarantee for every realization of supply is impossible

trade liberalisation the peso and mexico s commodity trade flows with the united states abstract we assess the effects of real peso devaluations as well as the effects of gatt and nafta on mexico s in payments and out payments with the united states for 102 industries we find that relatively few trade flows are sensitive to changes in the real exchange rate probably due to production sharing and intra industry trade but devaluations affect mexican imports more than exports trade liberalisation has had a larger impact particularly on imports of intermediate goods and exports of certain manufactures many affected export industries are ones that have previously been shown to have economies of scale

on errors in variable biases in estimates of export price elasticities abstract the literature has long suggested that estimates of export price elasticities are biased toward 1 this paper demonstrates that they are either unbiased or biased towards zero depending on estimation method

the j curve a literature review due to lag structure currency devaluation is said to worsen the trade balance first and improve it later resulting in a pattern that resemble the letter j hence the j curve phenomenon since its introduction by magee in 1973 brooking papers on economic activity 1 pp 303 25 a large number of studies have attempted to test the phenomenon using different techniques and different model specifications the results are at best ambiguous and deserve to be collected together for the future generation of researchers and graduate students this paper fills such a vacuum in the literature by reviewing the j curve related empirical papers

reservation prices in optimal stopping in an optimal stopping problem where bids on an asset are received conditions are given that ensure the so called reservation price property namely if a certain price is accepted then any higher price would also have been accepted at that point in time the approach followed in this paper is similar to that pursued by d b rosenfield and r d shapiro in 1981

an efficient dynamic mechanism this paper constructs an efficient budget balanced bayesian incentive compatible mechanism for a general dynamic environment with quasilinear payoffs in which agents observe private information and decisions are made over countably many periods first under the assumption of private values other agents private information does not directly affect an agent s payoffs we construct an efficient ex post incentive compatible mechanism which is not budget balanced second under the assumption of independent types the distribution of each agent s private information is not directly affected by other agents private information we show how the budget can be balanced without compromising agents incentives finally we show that the mechanism can be made self enforcing when agents are sufficiently patient and the induced stochastic process over types is an ergodic finite markov chain publication abstract

the role of technology in market shares dynamics the paper presents the estimation of an empirical model of market share dynamics for five industrialized countries and 18 industries the emphasis is put on the importance of non price factors of competitiveness whereas most traditional explanations rest on the influence of relative prices among the former type of factor the role of variables reflecting technological advantage is privileged in particular the role of innovations has received considerable attention in the literature on international trade as well as the literature on endogenous growth in this spirit the paper introduces patent counts and investment as explanatory variables for the export market share the results show that non price variables have an important impact on the determinations of long run competitiveness

sorting through search and matching models in economics toward understanding assortative matching this is a self contained introduction to research on search and matching we first explore the nontransferable and perfectly transferable utility matching paradigms and then a unifying imperfectly transferable utility matching model motivated by some unrealistic predictions of frictionless matching we flesh out the foundational economics of search theory we then revisit the original matching paradigms with search frictions we finally allow informational frictions that often arise such as in college student sorting

the j curve and nafta evidence from commodity trade between the us and mexico the north american free trade agreement nafta was predicted to have a substantial impact on the us mexico trade especially on specific importing and exporting industries in this article we use annual industry level export and import data from 1962 to 2004 to discern both the short and long run effects of real exchange rate depreciation on the mexico us trade balance as well as the effects of nafta on this trade we find that peso depreciation has a positive long run effect on 24 of 102 mexican industries and a negative short run effect on 19 of 102 industries only a small fraction 7 of 102 industries show any support for the j curve hypothesis nafta has had a significant effect on a significant number of the industries however

measuring economic insecurity we provide a systematic treatment of the notion of economic insecurity assuming that an individual s sentiment of insecurity depends on the current wealth level and its variations experienced in the past we think of wealth as a comprehensive variable encompassing anything that may help in coping with adverse occurrences the current wealth level could also be interpreted as incorporating the individual s evaluation of future prospects variations in wealth experienced in the recent past are given higher weight than experiences that occurred in the more distant past two classes of measures are characterized with sets of plausible and intuitive axioms

can exchange rate variations or trade policy alter the equilibrium current account abstract paul krugman has pointed out that much work needs to be done before the intertemporal open economy model can replace the open economy is lm model as a guide to policy making the objective here is to take a step in this direction by examining if an exogenous increase in world demand for home goods as via trade policy can improve the equilibrium current account within an open economy intertemporal model in the process the paper explores the theoretical issue as to whether a variation in the real exchange rate can alter the difference between saving and investment the key idea is that uncovered interest parity plus some degree of mean reversion in the real exchange rate imply that a modern version of the laursen metzler harberger effect is operative the result is that a policy induced increase in the trade balance will alter the real exchange rate which in turn increases the difference between home saving and investment and thereby improves the equilibrium current account

climate instability urbanisation and international migration abstractthis paper focuses on climate induced migration we construct a simple theoretical model where in a first step climate shocks accelerate the transition from the traditional to the modern sector leading rural workers to move to urban centres within national borders while in a second step downward pressures on wages due to the greater labour supply in cities push people to engage in international migration to test this hypothesis we exploit a rich panel dataset displaying a representative picture of bilateral migration flows and climatic data across 222 countries for the period 1960 2000 findings suggest that in the next few years the climate induced growth rate of migrant stocks might be in a range between 8 6 per cent and 12 8 per cent especially from developing countries where the level of rural employment is more likely to be affected by climatic shocks

why is it so difficult to find an effect of exchange rate risk on trade abstract it is commonly argued that exchange rate risk hampers international trade however the large literature on this subject has not yet provided conclusive evidence this paper analyzes why it is so difficult to obtain a clear answer from time series analyses we use data on bilateral aggregate u s exports to the other g7 countries the results show that as far as the exchange rate is concerned export decisions are mostly affected by the probability distribution of the about one year ahead rate the riskiness of the exchange rate at such a long horizon appears fairly constant over time with only short term fluctuations this makes it difficult to discover the true effect of exchange rate risk on trade from the time series data that are typically available

export promotion through exchange rate policy exchange rate depreciation or stabilization exchange rate movements affect exports in two ways rate depreciation and rate variability risk a depreciation raises exports but the associated exchange rate risk could offset that positive effect the present paper investigates the net effect for eight asian countries using a dynamic conditional correlation bivariate garch m model that simultaneously estimates time varying correlation and exchange rate risk depreciation encourages exports as expected for most countries but its contribution to export growth is weak exchange rate risk contributes to export growth in malaysia and the philippines leading to positive net effects exchange rate risk generates a negative effect for six of the countries resulting in a negative net effect in indonesia japan singapore and taiwan and a zero net effect in korea and thailand exchange rate movements affect exports in two ways rate depreciation and rate volatility risk the two effects have received considerable attention since the collapse of fixed exchange rates in the early 1970s but no research considers the net total effect on exports of the two potentially offsetting effects this paper investigates the net effect for eight asian countries with engle s 2002 dynamic conditional correlation dcc bivariate garch m model that simultaneously estimates time varying correlation and exchange rate risk the net effect relates to the goal of a foreign exchange intervention depreciation lowers the foreign currency price of exports and probably increases the quantity of exports and export revenue in domestic currency conditions may exist however where export revenue falls highly inelastic foreign import demand leads to falling export revenue ambiguity also arises if export production incorporates high import content since the domestic cost or price of exports rises with depreciation during periods of appreciation exporters might price to market lowering their domestic currency price to maintain export market share theory and empirical evidence exhibits ambiguity as to the effect of the exchange rate on exports and export revenue junz and rhomberg 1973 and wilson and takacs 1979 find that devaluation

optimal pricing mechanisms with unknown demand the standard profit maximizing multi unit auction intersects the submitted demand curve with a preset reservation supply curve which is determined using the distribution from which the buyers valuations are drawn however when this distribution is unknown a preset supply curve cannot maximize monopoly profits the optimal pricing mechanism in this situation sets a price to each buyer on the basis of the demand distribution inferred statistically from other buyers bids the resulting profit converges to the optimal monopoly profit with known demand as the number of buyers goes to infinity and convergence can be substantially faster than with sequential price experimentation

new york city cab drivers labor supply revisited reference dependent preferences with rational expectations targets for hours and income this paper reconsiders whether cabdrivers labor supply decisions reflect reference dependent preferences following botond koszegi and matthew rabin 2006 we construct a model with targets for hours as well as income both determined by rational expectations estimating using henry s farber s 2005 2008 data we show that the reference dependent model can reconcile his 2005 finding that drivers stopping probabilities are significantly related to hours but not income with the negative wage elasticity of hours found by colin camerer et al 1997 and farber 2005 2008 the model yields sensible estimates that avoid farber s 2008 criticism that drivers income targets are too unstable to allow a useful reference dependent model of labor supply

differences in income elasticities and trends in real exchange rates abstract one might expect that differences in income elasticities in trade and or differences in growth rates among countries would give rise to strong secular trends in real exchange rates for example fast growing countries might need steady depreciation to get the world to accept their growing exports in fact however income elasticities are systematically related to growth rates by the 45 degree rule under which fast growing countries appear to face high income elasticities of demand for their exports while having low income elasticities of import demand the net effect of this relationship between elasticities and growth rates is that secular trends in real exchange rates are much smaller than one might otherwise have expected relative ppp holds fairly well this paper documents the existence of a 45 degree rule and suggests an explanation in terms of increasing returns and product differentiation

exchange rates and fiscal policy in a popular model of international trade this paper develops a reinterpretation of the devaluation analysis in a popular model of international trade developed by charles bickerdike joan robinson and lloyd metzler it has come to be known as the elasticity approach 1 that model developed in terms of independent markets for imports and exports has been criticized for its apparent lack of general equilibrium properties the assumptions underlying the model have remained by and large implicit and vary across users and the integration of this analysis with the absorption approach and macroeconomics has never been demonstrated all this is very much recognized and indeed application of the model is consistently accompanied by appropriate partial equilibrium impact effect or upper bound caveats these shortcomings notwithstanding the model continues to enjoy substantial popularity in policy discussions and interpretations of current events in empirical work and in recent textbooks in the field of international economics the brm model is likely to remain the preferred tool in the analysis of trade balance issues along with the foreign trade multiplier model it is therefore interesting and useful to enquire into its formal general equilibrium implications this paper is concerned with one such interpretation involving a nontraded goods sector and a well defined government policy that makes the analysis consistent with the absorption approach while it may well be possible to generate alternative interpretations the present analysis would seem to have the advantage of simplicity while at the same time pointing out the essential properties that would have to be satisfied by alternative treatments in section i a brief review of the brm approach is offered in section ii that approach is interpreted in terms of a simple model with nontraded goods and constant terms of trade the implicit assumptions of the brm model are brought to the f oreground by an explicit consideration of the market for home goods the equilibrium conditions and the role of the relative price of nontraded goods 3 following that analysis section iii considers the subsidiary issues that are raised by variable terms of trade the notion of total elasticities is given an interpretation in section iv where we return to the composite traded good model to explore alternative assumptions about absorption policies

engel s law and cointegration a time series counterpart of engel s law is that the expenditure share on food declines as the economy grows the main purpose of this paper is to test whether houthakker s addilog utility function can simultaneously explain this time series observation and cross sectional observations concerning engel s law ogaki and park s cointegration approach is used to estimate parameters of the utility function from time series data total expenditure elasticities implied by the estimated addilog utility function are compared with estimates of the elasticities from cross sectional data

learning about the future and dynamic efficiency we analyze the conditions under which an efficient allocation of resources is achievable in a dynamic private values setting where the designer gradually learns about the distribution of agents values as an application consider the sequential allocation of scarce spectrum to emerg ing technologies whenever a new technology appears a benevolent designer is faced with a problem should he allocate a valuable chunk of spectrum right now while forfeiting for a long period of time the option of allocating it to a possibly superior future technology it makes sense to assume here that current firms have a better knowledge of their technological prow ess than the designer and that the designer s assessment of future technological possibilities is improved by observing the current technology if technology owners are strategic we show below that the learning process about the future disturbs the ability to extract the information necessary for efficient decision making another good example is hiring by an organization that fills positions at different hierarchy levels over time while all candidates prefer higher level positions some aspect of their ability to perform the needed tasks at each level is privately known to the candidates if contracts with current employees are difficult to adjust the designer must carefully compare the quality of present candidates which can serve as a signal about the market to the expected quality of candidates that may become available in the future finally consider a firm allocating franchises in a country where it did not operate before and where contractual clauses or other impediments prevent reallocation during a significant period of time local potential franchisees may have some superior information regarding future prof itability in the respective market and hence the elicitation of private information is crucial for a franchisor that is supposed to get a share of the future profits

exchange rate shocks and trade a multivariate garch m approach abstract we build on the recent literature studying the effects of uncertainty on trade by introducing a model that combines a reduced form vector autoregression for the growth rates of exports foreign income and the real exchange rate rer with a multivariate garch model up to 12 lags of several conditional standard deviations are added to relevant mean equations and all parameters are estimated simultaneously using maximum likelihood thus allowing us to avoid two step procedures that are common in the literature using a large data set of both developed and emerging countries we find evidence that rer uncertainty negatively impacts trade for several less developed countries we also find that rer uncertainty tends to be associated with a real currency appreciation when we compute generalized impulse response functions to study the impacts of unexpected shocks to rer growth on export growth the results are typically asymmetric positive shocks generate substantial negative responses while unexpected depreciations produce relatively smaller positive responses especially in our developing country sample

vertical product differentiation and the import demand function theory and evidence in this paper we use a model of vertical product differentiation to cast doubt on the general validity of the import demand function as specified in macroeconomic models the empirical importance of our theoretical concerns is then established according to our first hypothesis the share of a good s imports in total imports is non increasing in domestic wages if the country has comparative advantage in high quality varieties of this good the second hypothesis states that the share of a good s imports is increasing in non wage domes tic income if the country has comparative advantage in high quality varieties of this good

inequality and the us import demand function in this paper we build a model of trade in vertically differentiated products and find that income inequality can affect the demand for imports even in the presence of homothetic preferences the empirical importance of changes in inequality on the demand for imports is then assessed by examining panel data for 36 developing and developed countries for the 1980 1997 period we find significant evidence supporting our prediction that inequality has a large influence on the demand for imports moreover we find that in line with the predictions of our theoretical model this influence is positive for high income countries countries that produce the high quality variety of the vertically differentiated product and negative for low income countries countries that produce the low quality variety of the vertically differentiated product

when does the stepping stone work fixed term contracts versus temporary agency work in changing economic conditions summary this paper emphasizes differences among short term contracts in terms of career prospects using french data over the 2002 2010 period we rely on a dynamic model with fixed effects to disentangle state dependence from unobserved heterogeneity although fixed term contracts may provide a stepping stone to permanent positions temporary agency work is hardly better than unemployment in this regard the great recession of 2008 has changed the dynamics on the labor market and amplified the difference between fixed term contracts and temporary agency work for both types of temporary workers providing overtime work does not significantly increase the transition to permanent employment copyright 2014 john wiley sons ltd

the role of exchange rates in a popular model of international trade abstract this paper examines the empirical relationship between the real effective exchange rate and the aggregate real trade balance for five major oecd countries in the post bretton woods era a variety of parametric and non parametric techniques are used there is little evidence that the exchange rate significantly affects the trade balance

saving investment and the current account in this review of recent work on the relationship between saving investment and the current account it is shown that focusing on national saving and investment behavior and modeling these in a modern intertemporal optimization framework will modify some conventional results regarding the relationship between the current account and the terms of trade the exchange rate and fiscal policy it is also shown that such a framework can explain the close empirical correlation between national saving and investment rates without relying on limited international capital mobility it is conjectured that a better empirical understanding of current account developments could be gained if modem theories of investment and saving behavior were used more systematically in applied studies

exchange rate volatility and intra asia trade evidence by type of goods this paper examines the impact of intra asia exchange rate volatility on intra asia trade in primary goods intermediate goods equipment goods and consumption goods from 1980 to 2009 for asia the evidence shows that as intraregional exchange rate volatility increases intraregional exports in these goods fall this adverse impact is even more pronounced in the subregion of association of southeast asian nations asean 5 comprising asean member countries plus the people s republic of china hong kong china japan the republic of korea and taipei china and especially among intermediate and equipment exports again the impact magnifies in an even smaller subgroup excluding the smaller asean economies these results underline the significant impact of exchange rate volatility on the region s production networks for south asia however exchange rate volatility appears to have a positive impact on exports still caution is warranted given that south asian economies trade relatively little with each other

drivers of export demand a focus on the giips countries this study investigates the drivers of export demand in the peripheral economies of the euro area namely greece ireland italy portugal and spain giips for the period between 1980 and 2012 recently several authors have pointed out that changes in trade export shares are not associated with major terms of trade disturbances rather they are the result of other underlying factors commonly defined as non price competitiveness starting from this premise the study extends the traditional imperfect substitute trade model to include a measure of non price competitiveness real capital stock the latter is a measure of a country s total resource base and captures the presence of product differentiation and product innovation the results show a significant link between export demand and cumulative investments in the short term giips exports are dominated by the movements of worldwide real income while changes in price and non competitiveness take longer to affect export performance in the long run all three variables play a significant role in pushing exports

labor supply of new york city cabdrivers one day at a time life cycle models of labor supply predict a positive relationship between hours supplied and transitory changes in wages because such changes have virtually no effect on life cycle wealth previous attempts to test this hypothesis empirically with time series data have not been supportive estimated elasticities are typically negative or nonsignificant such analyses however are vulnerable to measurement error and other estimation problems we use data on daily observations of wages and hours for new york city cab drivers to estimate the supply response to transitory fluctuations in wages cab drivers decide daily how many hours to supply and face wages that are positively correlated within days but largely uncorrelated between days using these data our central finding is that wage elasticities are persistently negative from 5 to 1 in three different samples even after correcting for measurement error using instrumental variables these negative wage elasticities challenge the notion that cab drivers trade off labor and leisure at different points in time and question the empirical adequacy of life cycle formulations of labor supply

optimal dynamic mechanism design with deadlines a seller maximizes revenue from selling an object in a dynamic environment with buyers that differ in their patience each buyer has a privately known deadline for buying and a privately known valuation first we derive the optimal mechanism neglecting the incentive constraint for the deadline the deadline of the winner determines the time of the allocation and therefore also the amount of information available to the seller when he decides whether to allocate to a buyer depending on the shape of the markup that the seller uses this can lead to a violation of the neglected incentive constraint we give sufficient conditions on the type distribution under which the neglected constraint is fulfilled or violated second for the case that the constraint cannot be neglected we consider a model with two periods and two buyers here the optimal mechanism is implemented by a fixed price in period one and an asymmetric auction in period two the asymmetry which is introduced to prevent the patient type of the first buyer from buying in period one leads to pooling of deadlines at the top of the type space

exchange rates and the trade balance abstract the impact of the exchange rate on the trade balance is examined for a number of developing countries non structural techniques indicate that a depreciation of the real exchange rate is not strongly associated with a significant improvement in the trade balance

intertemporal substitution in import demand and habit formation to study non durable import demand we extend previous work done by clarida 1994 and ceglowski 1991 by considering a two good version of the lifecycle model in which we introduce time non separability in the households preferences the model is estimated using quarterly data for the usa and france using the information contained in the observed stochastic and deterministic trends we derive a cointegration restriction used to estimate curvature parameters of the instantaneous utility function the remaining parameters are estimated in a second step by gmm the constancy of the different parameters is investigated in both the long and the short run habit formation turns out to be an important factor of import demand c 1998 john wiley sons ltd

exchange rate policy and trade balance a cointegration analysis of the argentine experience since 1962 using multivariate cointegration tests for nonstationary data and vector error correction models this article examines the determinants of trade balance tb for argentina over the last forty to fifty years taking into account that the short run impacts of currency depreciation on the tb behaviour may differ from the long run effects our investigation confirms the existence of long run relationships among tb real exchange rate rer and foreign and domestic incomes for argentina during different rer management policies based on the estimations the marshall lerner condition is checked and by means of impulse response functions we trace the effect of a one time shock to the rer on the tb not finding support for a j curve pattern in the short run