Comparative Advantage and the Cross Section of Business Cycles PDF Download
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Author:
Publisher: World Bank Publications
ISBN:
Category :
Languages : en
Pages : 50
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Author:
Publisher: World Bank Publications
ISBN:
Category :
Languages : en
Pages : 50
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Book Description
Author: Aart Kraay
Publisher:
ISBN:
Category :
Languages : en
Pages : 45
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Book Description
Business cycles are different in rich and poor countries-because the industries in which each group of countries specialize respond differently to domestic and foreign shocks.Business cycles are less volatile in rich countries than in poor ones. They are also more synchronized with the world cycle. Kraay and Ventura develop two alternative but noncompeting explanations for those facts.Both explanations proceed from the observation that the law of comparative advantage causes rich and poor countries to specialize in the production of different commodities. In particular, rich countries specialize in high-tech products produced by skilled workers and poor countries specialize in low-tech products produced by unskilled workers.Cross-country differences in business cycles then arise as a result of asymmetries among the industries in which different countries specialize. Kraay and Ventura focus on two such asymmetries.The first, which they label the competition bias hypothesis, is based on the idea that cross-country differences in production costs are more prevalent in high-tech industries, sheltering producers from foreign competition and therefore making them large suppliers in the markets for their products.The second, which they label the cyclical bias hypothesis, is based on the idea that production costs in low-tech industries may be more sensitive to the shocks that drive business cycles.This paper-a product of Macroeconomics and Growth, Development Research Group-is part of a larger effort in the group to study open-economy macroeconomics.
Author: Assaf Razin
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 46
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Book Description
This paper links business cycle volatility to barriers on international mobility of goods and capital. Theory predicts that capital market integration should lower consumption volatility while raising investment volatility, if most shocks are country-specific and transitory. The removal of barriers to trade in goods should enhance specialization and hence output volatility. We test these ideas using a unique panel data set which includes indicators of barriers to trade in both goods and capital flows. However, our empirical results indicate that neither the degree of capital mobility, nor the degree of goods mobility is strongly correlated with the volatility of consumption, investment or output. This may reflect the fact that many business cycle shocks are both persistent and common to many countries.
Author: Jesse Marcus Noland
Publisher:
ISBN:
Category : Commerce
Languages : en
Pages : 222
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Book Description
Author: Aart Kraay
Publisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 62
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Book Description
Business cycles are both less volatile and more synchronized with the world cycle in rich countries than in poor ones. We develop two alternative explanations based on the idea that comparative advantage causes rich countries to specialize in industries that use new technologies operated by skilled workers, while poor countries specialize in industries that use traditional technologies operated by unskilled workers. Since new technologies are difficult to imitate, the industries of rich countries enjoy more market power and face more inelastic product demands than those of poor countries. Since skilled workers are less likely to exit employment as a result of changes in economic conditions, industries in rich countries face more inelastic labour supplies than those of poor countries. We show that either asymmetry in industry characteristics can generate cross-country differences in business cycles that resemble those we observe in the data.
Author: Jacob Marschak
Publisher:
ISBN:
Category :
Languages : en
Pages : 13
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Author: Esther Catherine Suss
Publisher:
ISBN:
Category :
Languages : en
Pages : 484
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Author: Andrew B. Bernard
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper examines how country, industry and firm characteristics interact in general equilibrium to determine nations' responses to trade liberalization. When firms possess heterogeneous productivity, countries differ in relative factor abundance and industries vary in factor intensity, falling trade costs induce reallocations of resources both within and across industries and countries. These reallocations generate substantial job turnover in all sectors, spur relatively more creative destruction in comparative advantage industries than comparative disadvantage industries, and magnify ex ante comparative advantage to create additional welfare gains from trade. The relative ascendance of high-productivity firms within industries boosts aggregate productivity and drives down consumer prices. In contrast with the neoclassical model, these price declines dampen and can even reverse the real wage losses of scarce factors as countries liberalize.
Author: Ms.Valerie Cerra
Publisher: International Monetary Fund
ISBN: 1513536990
Category : Business & Economics
Languages : en
Pages : 50
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Book Description
Traditionally, economic growth and business cycles have been treated independently. However, the dependence of GDP levels on its history of shocks, what economists refer to as “hysteresis,” argues for unifying the analysis of growth and cycles. In this paper, we review the recent empirical and theoretical literature that motivate this paradigm shift. The renewed interest in hysteresis has been sparked by the persistence of the Global Financial Crisis and fears of a slow recovery from the Covid-19 crisis. The findings of the recent literature have far-reaching conceptual and policy implications. In recessions, monetary and fiscal policies need to be more active to avoid the permanent scars of a downturn. And in good times, running a high-pressure economy could have permanent positive effects.
Author: Peter Lanjouw
Publisher: World Bank Publications
ISBN:
Category : Educacion primaria
Languages : en
Pages : 41
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Book Description
August 1998 Benefits from schooling and antipoverty programs in rural India were captured early by the nonpoor. The poor tend to benefit from program expansion, and lose from contraction. Conventional methods of assessing benefit incidence hide this fact. Survey-based estimates of average program participation conditional on income are often used in assessing the distributional impacts of public spending reforms. But program participation could well be nonhomogeneous, so that marginal impacts of program expansion or contraction differ greatly from average impacts. Using the geographic variation found in sample survey data for rural India for 1993-94, Lanjouw and Ravallion estimate the marginal odds of participating in schooling and antipoverty programs. Their results suggest early capture of these programs by the nonpoor. Thus, conventional methods of assessing benefit incidence underestimate the gains to India's rural poor from higher public outlays, and their loss from program cuts. This paper-a product of Poverty and Human Resources, Development Research Group-was prepared as a background paper for the Bank's 1998 Poverty Assessment for India. The authors may be contacted at
[email protected] or
[email protected].
