trade and direct investment in producer services and the domestic market for expertise foreign producer services can provide substantial benefits for domestic firms we build on earlier monopolistic competition models of intermediate producer services in this paper results show that 1 while foreign services are partial equilibrium substitutes for domestic skilled labour they may be general equilibrium complements 2 service trade can provide crucial missing inputs that reverse comparative advantage in final goods 3 the optimal tax on imported services may be a subsidy and 4 in our dynamic formulation there may be earnings losses for immobile workers along a transition path that suggest potentially important equity consequences of reform jel classification f12 f16 f23 commerce international et investissement direct dans les services de production et le marche interieur de l expertise les services de production en provenance de l etranger peuvent engendrer des avantages substantiels pour les entreprises domestiques dans ce memoire les auteurs construisent sur la base de certains modeles anterieurs de concurrence monopolistique de services de production intermediaires les resultats montrent que 1 alors que les services de l etranger sont des substituts pour le travail domestique specialise en equilibre partiel en equilibre general ils peuvent etre des complements 2 le commerce de services peut fournir des intrants cruciaux qui manquent et ce faisant renverser les avantages comparatifs dans les produits finaux 3 la fiscalite optimale imposee sur les services importes peut etre une subvention et 4 dans la formulation dynamique du modele il peut y avoir perte de revenus pour les travailleurs immobiles le long du sentier de transition ce qui suggere qu il peut y avoir des consequences importantes au plan de l equite associees a certaines reformes

adapting the knowledge capital model of the multinational enterprise to trade and investment in business services at some conceptual level trade in goods and services are not that much different however the speed at which trade and foreign investment in services is growing along with the fact that the barriers to these activities are quite different from those for trade in goods prompts us to take a more careful look the paper begins with a general discussion about the various policies and technological constraints that impact foreign trade and the establishment of foreign commercial presence in intermediate business services we then discuss which characteristics an accurate modelling approach must capture following that we develop a model that allows for different regimes of trade and or foreign affiliate production in services using markusen s knowledge capital model simulations show that the pattern of service firm headquarters and office locations can differ considerably depending on whether it is trade investment or both that are either liberalised or become technologically feasible our results find that the welfare and factor price consequences are quite similar across the different scenarios

foreign know how firm control and the income of developing countries nber working paper seriesforeign know how firm control and the income of developingcountriesariel bursteinalexander monge naranjoworking paper 13073http www nber org papers w13073national bureau of economic research1050 massachusetts avenuecambridge ma 02138may 2007we thank manuel amador pol antras andy atkeson wilbur john coleman pete klenow eva nagypal giorgio primiceri andres rodriguez clare esteban rossi hansberg martin schneider aleh tsyvinski and seminar participants in various places for useful comments and suggestions gilberto arce providedsuperb research assistance the views expressed herein are those of the author s and do not necessarilyreflect the views of the national bureau of economic research 2007 by ariel burstein and alexander monge naranjo all rights reserved short sections of text not to exceed two paragraphs may be quoted without explicit permission provided that full credit including notice is given to the source

economic effects of the syrian war and the spread of the islamic state on the levant this paper uses a global computable general equilibrium framework with new detail on six levant countries the arab republic of egypt iraq jordan lebanon the syrian arab republic and turkey to quantify the direct and indirect economic effects of the syrian war and the advance of the islamic state on the levant syria and iraq bear the brunt of the direct economic costs while the other levant countries lose in per capita but not in aggregate terms the fact that the islamic state s spread has undermined regional trade adds to varying degrees to the direct costs in all levant economies and in the case of syria and iraq doubles the welfare losses all these countries are foregoing opportunities to expand intra levant trade and the associated gains in economic efficiency and diversification the average welfare effects are not indicative of within country incidence which varies among workers landowners and capitalists

services linkages and the value added content of trade services trade constitute roughly one third of trade on a value added basis and much of this is concentrated in margin services transport logistics linked to trade in goods however producer services are also part of the value added contained in traded goods this is especially true in high income countries where services account for roughly 70 percent of value added working with data a set of global social accounting matrices spanning intermittent years from 1992 to 2007 this paper examines the services embodied in trade on a value added basis this includes not only the direct and indirect contribution of services to value added contained in a given country s exports but also the extent to which third country value added in services through intermediate linkages of imported goods and services are also embodied in production and trade this exercise serves to highlight not only the importance of non tradables in trade but also by extension the importance that productivity foreign affiliates sales and trade and investment in services may hold for interdependence and cross border linkages

trade unions investment and employment the implications of long term wage contracts and investment in capital on non cooperative wage bargaining between a firm and a union are analysed the union maximises a utilitarian utility function and the firm faces a neoclassical investment problem with internal adjustment costs the monopoly union outcomes with binding contracts is time inconsistent because the union has an incentive to renege on announced low wage strategies once the capital stock has been accumulated the monopoly union outcome without binding contracts leads to credible strategies which correspond to higher wages and lower levels of employment investment and the capital stock efficient contracts give rise to higher employment than monopoly union outcomes whether with or without long term wage contracts the results are illustrated with a numerical example finally when the game between the union and firm is repeated reputational equilibira provide a solution to the problem of time inconsistency

market structure and market access the authors examine an issue at the nexus of domestic competition policy and international trade the interaction between goods trade and market power in domestic trade and distribution sectors theory suggests a set of linkages between service sector competition and goods trade supported by econometrics involving imports of 22 oecd countries compared with 69 exporters competition in services affects the volume of goods trade additionally because of interaction between tariffs and competition the market structure of the domestic service sector becomes increasingly important as tariffs are reduced empirically service competition apparently matters most for exporters in smaller poorer countries the results also suggest that while negotiated agreements leading to cross border services liberalization may boost goods trade as well they may also lead to a fall in goods trade when such liberalization involves foreign direct investment leading to increased service sector concentration

unemployment a survey this paper presents a survey of the economics of unemployment it covers competitive and imperfect competition models the role of different methods of wage determination and explanation of postwar unemployment patterns in the oecd countries copyright 1990 by royal economic society

life cycle individual thrift and the wealth of nations this paper provides a review of the theory of the determinants of individual and national thrift that has come to be known as the life cycle hypothesis lch of saving applications to some current policy issues are also discussed part i deals with the state of the art on the eve of the formulation of the lch some 30 years ago part ii sets forth the theoretical foundations of the model in its original formulation and later amendment calling attention to various implications distinctive to it and sometimes counter intuitive it also includes a review of a number of crucial empirical tests both at the individual and the aggregate level part iii reviews some applications of lch to current policy issues though only in sketchy fashion as space constraints prevent fuller discussion this abstract was borrowed from another version of this item

derationalizing tariffs with specialized intermediate inputs and differentiated final goods abstract existing analyses of differentiated products suggest that a small tariff must be welfare improving as a positive terms of trade effect and an increase in the number of domestic varieties outweighs the loss of foreign varieties this result appears to be due to an arbitrary assumption that the intra sectoral elasticity of substitution in consumption exceeds the inter sectoral elasticity this paper demonstrates that complementarity among specialized inputs or differentiated final goods implies that a small tariff can derationalize production sufficiently such that the number of domestic inputs goods falls and welfare is reduced

complementarity and increasing returns in intermediate inputs abstract conventional analysis in the trade industrial organization literature suggests that when a country has some market power over an imported good some small level of protection must be welfare improving this is essentially a terms of trade argument that is reinforced if the imported goods are substitutes for domestic goods produced with increasing returns to scale goods that are initially underproduced in free trade equilibrium this paper notes that this result may not hold when 1 the imports are intermediates used in a domestic increasing returns industry and or 2 the intermediates are complements for domestic inputs produced with increasing returns we then demonstrate such an outcome with respect to mexican protection against imported auto parts using an applied general equilibrium model of the north american auto industry

inflation bankruptcy default premia and the stock market in this paper we explore some of the possibilities and argue that in the absence of index linked loans higher inflation implies higher liquidation rates and default premia this would also be one possible reason why higher inflation would depress share values our evidence also suggests that the modigliani and cohn 1979 valuation errors hypothesis is extremely important in order to see why higher inflation might lead to more bankruptcies consider the following example suppose that the real interest rate p is i and that a firm has borrowed iooo if there is no inflation the firm s interest payments are io now suppose that inflation p rises to io and that the nominal interest rate r is given by the formula i r i p i fi then r rises to i i i and total interest payments to i i i hence at a time when revenue has risen by only io interest payments rise elevenfold and this creates cashflow problems for the firm index linked debt would avoid this problem because the principal could be indexed and would rise to i ioo leaving the firm to only pay li i in interest

the exchange rate and company failure in a macro micro model of the uk company sector a macro micro model is presented which is used to predict company failure it bridges the gap between previous macroeconomic models and the microeconomic approach to company failure in the finance literature it can trace the probable effects of exogenous macroeconomic shocks upon the finances and the viability of individual members of the company sector a series of simulation exercises using this model quantifies the impact of variations in the exchange rate upon the failure rate among the top one hundred u k companies this impact is shown to be substantial asymmetric and at times nonlinear copyright 1991 by royal economic society

bankruptcies firm size and unemployment a big bang theory of economic cycles this paper analyses the impact of bankruptcies on unemployment in an economy characterised by no substitutability of labour a computer simulation model is used to analyse its properties spectral analysis reveals the existence of cycles in unemployment it is found that average unemployment tends to be lower the more flexible are wages and interest rates provided both move anticyclically and the more rapid is the speed with which existing firms expand an economy characterised by small firms is found to be more stable with a tendency to a longer cycle than one characterised by large firms however given the assumptions we have made it is also likely to be characterised by higher average unemployment

small firm entry in us manufacturing a cross section empirical analysis examining the entry behavior of small firms is provided in this paper while the authors find that certain traditional market structure characteristics and entry barriers have a strong impact on small firm entry behavior the reliance upon innovative strategy by small firms also explains a significant amount of the variation in the pattern of entry by small firms they conclude that small firm entry is at least partially determined by entry barriers industry specific characteristics facilitating retaliatory conduct by incumbent firms and the reliance upon innovative strategy by small firms copyright 1989 by the london school of economics and political science

the curse of uninformed voting an experimental study we study majority voting over two alternatives in small groups individuals have identical preferences but are uncertain about which alternative can better achieve their common interest before voting each individual can obtain information by buying a valuable but imperfect signal about the better alternative voting is either voluntary or compulsory in the compulsory mode each individual must vote between the two alternatives while in the voluntary mode they can also abstain an uninformed random vote generates a negative externality since it may override an informative group decision in pivotal events in our experiments participants in randomly re matched groups obtain information more often with compulsory than voluntary voting and the average number of signals is greater in larger than smaller groups surprisingly uninformed voting is common even in the voluntary mode finally group performance is poor in all treatments indicating the need to reconsider current practice of jury and committee voting

a cge analysis of the impact of foreign direct investment and tariff reform on female and male workers in tanzania summary this study analyzes the impact on female and male workers of tariff reform and the reduction of regulatory barriers faced by domestic and foreign firms operating in business services it develops a data set that distinguishes labor by gender for 52 sectors and four skill categories the model is the first to incorporate modern trade theory to assess its gender implications the dixit stiglitz framework results in productivity gains which increase remunerations across all worker categories however this is less beneficial for women because the less skilled workers and the ones that are less involved in business services gain less

trade in producer services and returns due to specialization under monopolistic competition this paper demonstrates that liberalizing trade in services while yielding efficiency gains associated with comparative advantage may yield additional gains for both importing and exporting countries because of an increased division of labor a model is developed in which producer services coordinate and control the specialized members of complex production processes the model is used to analyze trade in services and its effect on the division of labor and the realization of returns from specialization this differs from the recent literature on traded services and specialization because of the explicit role introduced for services in the specialization process

bad luck and fixed costs in personal bankruptcies this paper applies a model of industrial equilibrium to determine the effects of demand and cost variables on the bankruptcy rate of unincorporated businesses in four industries when there are stochastic cost and demand shocks the results suggest that different processes are relevant for firms whose fixed costs are associated with fixed capital assets and with working capital in contrast to earlier work on the corporate sector real and nominal interest rates have either small or unexpected effects copyright 1989 by royal economic society