The Evolution of Comparative Advantage: Measurement and Welfare Implications

Using an industry-level dataset of production and trade spanning 75 countries and 5 decades, and a fully speciÞed multi-sector Ricardian model, we estimate productivities at sector level and examine how they evolve over time in both developed and developing countries. We find that in both country groups, comparative advantage has become weaker: productivity grew systematically faster in sectors that were initially at the greater comparative disadvantage. The global welfare implications of this phenomenon are significant. Relative to the counterfactual scenario in which an individual countryÕs comparative advantage remained the same as in the 1960s, and technology in all sectors grew at the same country-specific average rate, welfare today is 1.9% lower at the median. The welfare impact varies greatly across countries, ranging from -0.5% to 6% among OECD countries, and from -9% to 27% among non-OECD countries. Remarkably, for the OECD countries, nearly all of the welfare impact is driven by changes in technology in OECD countries, and for the non-OECD countries, nearly all of the welfare impact is driven by changes in technology in non-OECD countries.evolution of comparative advantage, welfare, Ricardian models of trade

If You Can't Change What You Believe, You Don't Believe It

I develop and defend the view that subjects are necessarily psychologically able to revise their beliefs in response to relevant counter-evidence. Specifically, subjects can revise their beliefs in response to relevant counter-evidence, given their current psychological mechanisms and skills. If a subject lacks this ability, then the mental state in question is not a belief, though it may be some other kind of cognitive attitude, such as a supposi-tion, an entertained thought, or a pretense. The result is a moderately revisionary view of belief: while most mental states we thought were beliefs are beliefs, some mental states which we thought were beliefs are not beliefs. The argument for this view draws on two key claims: First, subjects are rationally obligated to revise their beliefs in response to relevant counter-evidence. Second, if some subject is rationally obligated to revise one of her mental states, then that subject can revise that mental state, given her current psychological mechanisms and skills. Along the way to defending these claims, I argue that rational obligations can govern activities which reflect on one’s rational character, whether or not those activities are under one’s voluntary control. I also show how the relevant version of epistemic ‘ought’ implies ‘can’ survives an objection which plagues other variants of the principle

Counteridenticals

A counteridentical is a counterfactual with an identity statement in the antecedent. While counteridenticals generally seem non-trivial, most semantic theories for counterfactuals, when combined with the necessity of identity and distinctness, attribute vacuous truth conditions to such counterfactuals. In light of this, one could try to save the orthodox theories either by appealing to pragmatics or by denying that the antecedents of alleged counteridenticals really contain identity claims. Or one could reject the orthodox theory of counterfactuals in favor of a hyperintensional semantics that accommodates non-trivial counterpossibles. In this paper, I argue that none of these approaches can account for all the peculiar features of counteridenticals. Instead, I propose a modified version of Lewis’s counterpart theory, which rejects the necessity of identity, and show that it can explain all the peculiar features of counteridenticals in a satisfactory way. I conclude by defending the plausibility of contingent identity from objections

Beyond the crisis: prospects for emerging Europe

This paper assesses the impact of the 2008-09 global financial and economic crisis on the medium-term growth prospects of the countries of central and eastern Europe, the Caucasus and Central Asia, which began an economic transition about two decades ago. We use crosscountry growth regressions, putting special emphasis on a proper consideration of the crisis and robustness. We find that the crisis has had a major impact on the within-sample fit of the models used and that the positive impact of EU enlargement on growth is smaller than previous research has shown. The crisis has also altered the future growth prospects of the countries studied, even in the optimistic but unrealistic case of a return to pre-crisis capital inflows and credit booms

Regulation and the Macroeconomy

We introduce a new measure of the extent of federal regulation in the U.S. and use it to investigate the relationship between federal regulation and macroeconomic performance. We find that regulation has statistically and economically significant effects on aggregate output and the factors that produce it–total factor productivity (TFP), physical capital, and labor. Regulation has caused substantial reductions in the growth rates of both output and TFP and has had effects on the trends in capital and labor that vary over time in both sign and magnitude. Regulation also affects deviations about the trends in output and its factors of production, and the effects differ across dependent variables. Regulation changes the way output is produced by changing the mix of inputs. Changes in regulation and marginal tax rates also offer a straightforward explanation for the productivity slowdown of the 1970s.

Federal Regulation and Aggregate Economic Growth

We introduce a new measure of the extent of federal regulation in the U.S. and use it to investigate the relationship between federal regulation and macroeconomic performance. We find that regulation has statistically and economically significant effects on aggregate output and the factors that produce it–total factor productivity (TFP), physical capital, and labor. Regulation has caused substantial reductions in the growth rates of both output and TFP and has had effects on the trends in capital and labor that vary over time in both sign and magnitude. Regulation also affects deviations about the trends in output and its factors of production, and the effects differ across dependent variables. Regulation changes the way output is produced by changing the mix of inputs. Changes in regulation and marginal tax rates offer a straightforward explanation for the productivity slowdown of the 1970s. Key Words: Regulation; macroeconomic performance; economic growth; productivity slowdown

Macroeconomic consequences of migration diversion : a CGE simulation for Germany and the UK

"This paper examines the macroeconomic consequences of the diversion of migration flows away from Germany towards the UK in the course of the EU Eastern Enlargement. The EU has agreed with the new member states from Central and Eastern Europe transitional periods for the free movement of workers. The selective application of migration restrictions during the transitional periods has resulted in a reversal of the pre-enlargement allocation of migration flows from the new member states across the EU: Germany as the main destination before enlargement attracts only modest immigration flows since 2004, while the UK and Ireland which have been only marginally affected by immigration prior to enlargement absorb about 60% of the inflows in the post-enlargement period. The macroeconomic effects of this diversion process is analysed in this paper on the basis of a CGE model which considers wage rigidities. We find that higher migration is associated with larger GDP and employment gains, but also with a smaller wage increase and a smaller decline of the unemployment rate. The diversion of migration flows away from Germany towards the UK yields thus a higher GDP and employment growth in the UK. The joint GDP of Germany and the UK declines by 0.1 per cent as a consequence of the migration restrictions." (Author's abstract, IAB-Doku) ((en))EU-Osterweiterung - Auswirkungen, internationale Wanderung, Ost-West-Wanderung, Arbeitskräftemobilität, Mobilitätsbarriere, Wirtschaftsentwicklung - internationaler Vergleich, Bruttoinlandsprodukt, Beschäftigungseffekte, Arbeitsmarktentwicklung, Arbeitslosigkeit, Lohnentwicklung, Beschäftigungsentwicklung, Einwanderung, Bundesrepublik Deutschland, Großbritannien, Irland, Europäische Union, Osteuropa