2006 papers
| 2006-03 |
Raymond Hicks -- Globalization and Central Bank Independence: A partisan explanation" (added October 2006) |
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Abstract - While globalization has led some scholars to suggest that there has been or will be a convergence
in economic policy, especially by leftist governments, evidence in favor of the convergence
hypothesis is mixed. Studies have focused largely on the instruments of economic policy such as
taxation or spending while ignoring institutional mechanisms that leftist government could use to
tie their hands and demonstrate credibility to international investors. I argue that as countries
become more globalized, leftist governments will be more likely to reform the central bank while conservative governments will be less likely to reform the bank since granting greater independence to the central bank will remove one of their electoral advantages. The findings
using generalized estimating equations and logit analysis are consistent with the hypotheses: as a country becomes more exposed to the international
economy, leftist governments are more likely to reform the central bank. There is no
relationship between reform of the central bank and exposure to the international economy under
conservative governments. |
| 2006-02 |
Gene M. Grossman and Esteban Rossi-Hansberg -- The Rise of Offshoring: It's Not Wine for Cloth Anymore" (added September 2006) |
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Abstract - Much ink has been spilt on the subject of offshoring. But, so far, we lack a simple analytic
framework for investigating how improvements in communication and information technologies
that give rise to increased offshoring affect labor markets, production patterns, prices,
and welfare in the participating countries. In this paper, we will describe such a framework
that we have developed more formally in Grossman and Rossi-Hansberg (2006). Our simple
model of offshoring allows us to decompose the impact on wages of any improvements in the
technology for offshoring into three components: a labor-supply effect that is familiar from
the broadcasts and writings of Lou Dobbs and others; a relative-price effect that captures
the labor-market implications of any movements in relative prices effected by the improved
possibilities for offshoring; and a productivity effect that seems to have been largely overlooked
in earlier discussions. We show that the productivity effect can dominate the others
in a familiar trade environment, so that improved possibilities for offshoring low-skilled jobs
actually will raise the wages of domestic workers who perform these types of tasks. By the
same token, improved possibilities for offshoring some high-skilled tasks may boost the wage
of domestic white-collar workers. |
| 2006-01 |
Gene M. Grossman and Esteban Rossi-Hansberg -- "Trading Tasks: A Simple Theory of Offshoring" (added September 2006) |
| | Abstract - For centuries, most international trade involved an exchange of complete goods. But,
with recent improvements in transportation and communications technology, it increasingly
entails different countries adding value to global supply chains, or what might be
called "trade in tasks." We propose a new conceptualization of the global production
process that focuses on tradable tasks and use it to study how falling costs of offshoring
affect factor prices in the source country. We identify a productivity effect of task trade
that benefits the factor whose tasks are more easily moved offshore. In the light of this
effect, reductions in the cost of trading tasks can generate shared gains for all domestic
factors, in contrast to the distributional conflict that results from reductions in the cost
of trading goods in other neoclassical frameworks. |
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