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on Open MacroEconomics |
| By: | Daron Acemoglu; Gino Gancia; Fabrizio Zilibotti |
| Abstract: | We study a dynamic general equilibrium model where innovation takes the form of the introduction new goods, whose production requires skilled workers. Innovation is followed by a costly process of standardization, whereby these new goods are adapted to be produced using unskilled labor. Our framework highlights a number of novel results. First, standardization is both an engine of growth and a potential barrier to it. As a result, growth in an inverse U-shaped function of the standardization rate (and of competition). Second, we characterize the growth and welfare maximizing speed of standardization. We show how optimal IPR policies affecting the cost of standardization vary with the skill-endowment, the elasticity of substitution between goods and other parameters. Third, we show that the interplay between innovation and standardization may lead to multiple equilibria. Finally, we study the implications of our model for the skill-premium and we illustrate novel reasons for linking North-South trade to intellectual property rights protection. |
| JEL: | F43 O31 O33 O34 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15958&r=opm |
| By: | Matthias Busse; Peter Nunnenkamp; Mariana Spatareanu |
| Abstract: | The paper analyses the impact of fundamental labor rights on bilateral FDI flows to 82 developing countries. The results indicate that investments by multinationals are significantly higher in countries that adhere to labor rights, thereby refuting the hypothesis that repression of these rights fosters FDI. |
| Keywords: | FDI, Labor Rights, Developing Countries |
| JEL: | F21 F23 J50 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:run:wpaper:2010-002&r=opm |
| By: | Nikolaos Antonakakis; Johann Scharler |
| Abstract: | Using the dynamic conditional correlation (DCC) model due to Engle (2002), we estimate time varying correlations of quarterly real GDP growth among the G7 countries. In general, we find that rathe heterogeneous patterns of international synchronization exist during U.S. recessions. During the 2007 - 2009 recession, however, international co-movement increased substantially. |
| Keywords: | Dynamic conditional correlation, Business cycle synchronization, Recession |
| JEL: | E3 E32 F4 F41 |
| Date: | 2010–04 |
| URL: | http://d.repec.org/n?u=RePEc:jku:econwp:2010_05&r=opm |
| By: | Balli, Faruk; Basher, Syed Abul; Ozer-Balli, Hatice |
| Abstract: | Following the launch of the Euro in 1999, integration among Euro area financial markets increased considerably. As a result, portfolio home bias declined across the European financial markets. However, greater market integration has generated a new bias: portfolio Euro bias, a situation where Euro investors tend to hold large proportion of assets issued within the Euro region. The first part of this paper presents an empirical analysis of the economic factors at play behind the switch from home bias to Euro bias. We find that decline in default risk and transaction cost are two key determinants of the rise in portfolio Euro bias. The second part of the paper goes deeper into the effects of Euro bias on Euro area bond and equity markets. We observe that both government and corporate bond markets revealed clear signs of strain during the recent financial turmoil. Our results also reveal that the risk-reduction potential from geographic diversification within the Euro equity market is lower than that of the Euro sector diversification. |
| Keywords: | Financial integration; home bias; Euro bias; transaction costs. |
| JEL: | G11 G12 F21 F36 |
| Date: | 2010–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:22430&r=opm |
| By: | Julia Lendvai; Werner Roeger |
| Abstract: | This paper studies external deficits in the Baltics between 1995 and 2007.It uses a calibrated small-open-economy dynamic general equilibrium model incorporating a financial accelerator to assess to what extent deficits can be explained by productivity growth, fall in spreads and increasing access to credit.Results suggest that the external deficit and other key macroeconomic aggregates can be well fitted by the equilibrium response of the model economy. Real convergence is found to have been dominant in the first half of the sample. More reversible financial factors became increasingly important towards the end of the period pointing to growing vulnerability. Positive growth outlook is also likely to have played a significant role in the build up of the foreign debt. Reversal scenarios confirm the need for a sizable readjustment. |
| Keywords: | Baltic States financial accelerator dynamic general equilibrium Roeger Lendvai External Deficits in the Baltics 1995 to 2007 Catching Up or Imbalances |
| JEL: | F41 C68 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:euf:ecopap:0398&r=opm |
| By: | Carlos Garcimartín (Universidad Rey Juan Carlos); Luis Rivas (IE University); Pilar García Martínez (Universidad de Salamanca) |
| Abstract: | Broadly speaking, the balance-of-payments constraint hypothesis as developed by Thirlwall has been empirically supported. Yet, it shows some shortcomings highlighted in the literature. In our opinion, two of them must be analysed. First, temporary disequilibria and capital flows must be incorporated into the balance-of-payments constrained growth models. Second, the role of relative prices must be made explicit, since it can be relevant even in an external constraint framework. This study is aimed at developing a model that incorporates both possibilities: temporary external disequilibria and a the impact of relative prices. This model is subsequently used to analyse the evolution of the Spanish and Portuguese economies in last decades, and, in particular, the different path shown by both countries since their accession to the Eurozone. |
| Keywords: | Growth, Balance of payments constraint, Exchange rate. |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:ucm:wpaper:05-10&r=opm |