Globalization, aggregate productivity, and inflation
This paper investigates the effects of globalization on aggregate productivity, output growth, and inflation. I present a simple two-country, two-good, flexible exchange rate model using Fisher Ideal aggregators to examine changes in the mapping from microeconomic to macroeconomic productivity growth as nations globalize. Advances in industry-specific labor productivity are shown to have potentially a much greater pass-through to aggregate productivity, output, and prices the more open nations are to trade. Globalization raises both the level and growth rate of aggregate productivity by ...
Variety, globalization, and social efficiency
This paper puts recent work on the benefits of variety into the context of an exact quantitative analysis of the Dixit-Stiglitz-Krugman model of monopolistic competition. We show that the gains from international trade are almost completely determined by the increase in variety and not economies of scale, and that the social efficiency question is quantitatively insignificant. These results follow from allowing the number of varieties to affect the elasticity of demand facing each firm. Most applications of the DSK model abstract from variety?s effect by assuming that the elasticity of demand ...
Insulating policies for large and small countries
In this paper we investigate policies for the large and small country that provide complete insulation from foreign real and monetary disturbances. We find that when there exists two channels of transmission, the integrated commodity and capital markets, using only exchange rate policies does not provide complete insulation. However, floating the exchange rate and pursuing a specific interest rate target does. In terms of output variability however, insulating policies may be undesirable.
Tax indexation and inflationary finance
An economic interpretation of suicide cycles in Japan
Suicide rates in Japan have increased dramatically in recent years, making. Japan?s male rate the highest among developed economies. This study revises the standard economic model of suicide to accommodate Japan?s experience, focusing on the change in human capital for the unemployed. We then use the new model and de-trended data to empirically investigate the relationship between the suicide cycle and the unemployment cycle. Unlike previous aggregate time series studies, we find that the relationship between the suicide rate and the unemployment rate is significantly and robustly positive ...