On the welfare costs of business-cycle fluctuations and economic-growth variation in the 20th century and beyond

The main objective of this paper is to propose a novel setup that allows estimating separately the welfare costs of the uncertainty stemming from business-cycle fluctuations and from economic-growth variation, when the two types of shocks associated with them (respectively, transitory and permanent shocks) hit consumption simultaneously. Separating these welfare costs requires dealing with degenerate bivariate distributions. Levi's Continuity Theorem and the Disintegration Theorem allow us to adequately define the one-dimensional limiting marginal distributions. Under Normality, we show that the parameters of the original marginal distributions are not affected, providing the means for calculating separately the welfare costs of business-cycle fluctuations and of economic-growth variation.Our empirical results show that, if we consider only transitory shocks, the welfare cost of business cycles is much smaller than previously thought. Indeed, we found it to be negative – −0.03% of per-capita consumption! On the other hand, we found that the welfare cost of economic-growth variation is relatively large. Our estimate for reasonable preference-parameter values shows that it is 0.71% of consumption – US$ 208.98 per person, per year.     

Positive welfare effects of trade barriers in a dynamic partial equilibrium model

We develop a simple two-region, cobweb-type dynamic partial equilibrium model to demonstrate the existence of optimal, possibly non-zero, trade barriers. A pure comparative statics analysis of our model suggests that a reduction of trade barriers, modeled as small but positive import tariffs, always enhances welfare. However, taking a dynamic perspective reveals that nonlinear trade interactions between two regions may generate endogenous price fluctuations which can hamper welfare. Finally, we allow special interest groups, such as consumers or producers from these two regions, to lobby for a particular level of trade barriers. Our model predicts that time-varying trade barriers may be another channel for market instability.     

On the distributional effects of exchange rate fluctuations

How do exchange rate movements affect different sectors of an economy? We address this question in a simple general equilibrium model, stressing the different exposures of various sectors to foreign competition, an aspect ignored in earlier contributions. The impact of exchange rate shifts is highly heterogenous across sectors. While a depreciation leads to a substantial competitiveness and welfare gain for agents with a high exposure to foreign competition, agents facing mostly domestic competition are adversely affected.     

Regulating prices for shifting between service providers

The price that a regulated access provider charges for shifting customers between service providers has significant welfare implications. Typical regulatory approaches to pricing, such as pricing based on fully allocated cost or incremental cost, ignore the characteristics of consumer demand. A theoretical alternative, Ramsey pricing, considers only the elasticity of demand for given products. This paper directs attention to the competitive process. Using US long-distance telephone services as an example, this paper shows how empirical evidence concerning customer acquisition costs, customer switching costs, and churn among service providers can help to inform price regulation.     

Migration Effects of Welfare Benefit Reform

This study tests for a migration response to the implementation of stricter rules for receiving welfare benefits (means-tested social assistance for individuals who lack sufficient work-related income), in the form of mandatory participation in activation programmes in Stockholm town districts. The results give no indications that activation programmes affect the moving choices of recipients of welfare benefits.     

Labour mobility and wage inequality in the presence of endogenous foreign investment

This paper examines the impact of labour mobility and increased competition on skilled–unskilled wage inequality and foreign investment. Unlike the existing literature this paper considers a model where foreign investment is endogenously determined. The paper shows that in the shortrun, inflow of either skilled or unskilled labour has no effect on wage inequality but increased competition increases wage inequality. Inflow of either type of labour increases foreign investment but the impact of increased competition on foreign investment cannot be unambiguously determined. Inflow of skilled labour increases wage inequality in the longrun and its effect on foreign investment is positive. Increased competition in the longrun increases wage inequality, foreign investment and welfare.     

The Welfare State, Budgetary Pressure and Labour Market Shifts

Public debate about the welfare state in OECD countries has emphasized the need for reform to meet a twofold set of shocks: budgetary pressure and a labour market shift against unskilled workers. The aim of the paper is to set out a framework for examining the implications of these shocks for the optimal scale of social transfers and, in particular, the impact on different societies, distinguishing a restricted welfare state, labelled "the United States" and a more extensive welfare state, labelled "Continental Europe".     

日本经验与东亚发展型国家

日本经济模式的显著特点就是政府主导,东亚其他国家和地区的发展模式又与日本发展模式极为相似,这就是通常所说的东亚"发展型国家"。那么,日本政府导向型经济的具体特征是什么?对其他东亚国家和地区有什么影响?发展型国家与比较优势是怎样结合的?日本主导的东亚经济格局正在发生那些变化?本文力图回答这些问题。     

New Labour at work: long-term unemployment and the geography of opportunity

New Labour has placed great faith in active labour market policiesto address problems of long-term unemployment and poverty. Thispaper considers the effectiveness of welfare-to-work programmesin light of persistent regional employment disparities withinthe UK. It is argued that the government has proceeded froma flawed analysis of the causes and magnitude of long-term unemployment,framing the issue in terms of ‘worklessness’ andneglecting demand-side concerns of job availability and jobquality.