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The extent and impact of outsourcing: evidence from Germany
The authors use data from several sources, including plant-level data from the manufacturing sector in Germany, to expand the literature on outsourcing. They find that, in Germany, the extent of outsourcing among manufacturing industries is higher than among service industries and that the outsourcing intensity of these industries did not change much between 1995 and 2005. They also find a statistically significantly positive impact of industry-level outsourcing intensity on German plant-level labor produc- tivity for both 2000 and 2005. The estimated economic impact of outsourcing on plant-level productivity is also fairly significant.
AUTHORS: Aubuchon, Craig P.; Bandyopadhyay, Subhayu; Bhaumik, Sumon
Biofuel subsidies: an open-economy analysis
We present a general equilibrium analysis of biofuel subsidies in an open-economy context. In the small-country case, when a Pigouvian tax on conventional fuels such as crude is in place, the optimal biofuel subsidy is zero. When the tax on crude is not available as a policy option, however, a second-best biofuel subsidy (or tax) is optimal. In the large-country case, the optimal tax on crude departs from its standard Pigouvian level and a biofuel subsidy is optimal. A biofuel subsidy spurs global demand for food and confers a terms-of-trade benefit to the food-exporting nation. This might encourage the food-exporting nation to use a subsidy even if it raises global crude use. The food importer has no such incentive for subsidization. Terms-of-trade effects wash out between trading nations; hence, any policy intervention by the two trading nations that raises crude use must be jointly suboptimal.
AUTHORS: Bandyopadhyay, Subhayu; Bhaumik, Sumon; Wall, Howard J.