The Baby Boom, Baby Busts, and Grandmothers

Studies in family economics and anthropology suggest that grandmothers are a highly valuable source of childcare assistance. As such, availability of grandmothers affects the cost of having children, and hence fertility decisions of young parents. In this paper, we develop a simple model to assess the fertility implications of the fluctuations in both output (as argued by demographers) and grandmother-availability induced child-care costs over the period 1920-1970. Model does a good job of mimicking the bust-boom-bust pattern during this period. When the child-care cost channel is shut down, the model’s performance weakens significantly; in particular, it fails to capture the bust in the 1960’s altogether.fertility, baby boom, baby bust, female labor-force participation, grandmother availability

Reputation and Learning: Japanese Car Exports to the United States

This paper incorporates learning and reputation building into a simple dynamic stochastic model of international trade with asymmetric information. We use the model to study a bilateral trade flow influenced significantly by learning and reputation, namely U.S. imports of Japanese cars over the period 1961-2005. Numerical simulations replicate the trade flow in a robust fashion. In addition to matching this event, we explore further implications of our framework for understanding international trade patterns. Since learning and reputation building require time, predicted short run trade patterns can be quite different than those predicted in the long run. Sectorial differences in the speed of learning and reputation building affect predicted trade patterns. The extent of asymmetric information existing between importers and exporters also changes under different trade policies

Costs of Low Productivity: Intensive and Extensive Margins

This paper discusses welfare costs of a decrease in productivity and argues that there are two important channels which cause a reduction in welfare: a decrease in output per firm (intensive margin) and a decrease in number of operating firms (extensive margin). Traditional Dixit-Stiglitz monopolistic competition framework with constant elasticity of substitution utility and common productivity across firms fail to capture the extensive margin. To address this problem, this paper introduces “continuum-quadratic” utility (i.e. linear demand system) while keeping the other assumptions unchanged and finds that lowering productivity affects not only the intensive but extensive margin as well

Reputation and Learning: Japanese Car Exports to the United States

This paper incorporates learning and reputation building into a simple dynamic stochastic model of international trade with asymmetric information. We use the model to study a bilateral trade flow influenced significantly by learning and reputation, namely U.S. imports of Japanese cars over the period 1961-2005. Numerical simulations replicate the trade flow in a robust fashion. In addition to matching this event, we explore further implications of our framework for understanding international trade patterns. Since learning and reputation building require time, predicted short run trade patterns can be quite different than those predicted in the long run. Sectorial differences in the speed of learning and reputation building affect predicted trade patterns. The extent of asymmetric information existing between importers and exporters also changes under different trade policies

Religion, Income Inequality, and the Size of the Government

Recent empirical research has demonstrated that countries with higher levels of religiosity are characterized by greater income inequality. We argue that this is due to the lower level of government services demanded in more religious countries. Religion requires that individuals make financial sacrifices and this leads the religious to prefer making their contributions voluntarily rather than through mandatory means. To the extent that citizen preferences are reflected in policy outcomes, religiosity results in lower taxes, which in turn implies lower levels of spending on both public goods and redistribution. Since measures of income typically do not fully take into account the part of income coming from donations received, this increases measured income inequality. We formalize these ideas in a general equilibrium political economy model and also show that the implications of our model are supported by cross-country data.religion, voluntary donations, taxation, redistribution, income inequality

The Comparison of the Recent Crises in Turkey in terms of Output Gap

The importance of output gap and its timely measure come from the fact that it can serve as a guide to macroeconomic policy design. The knowledge of the position of an economy in a cycle is invaluable information and it has an important role in formulation of monetary, fiscal, and income policies. In this paper, we measure potential GDP and output gap for the Turkish Economy for the period between 1998Q1 and 2011Q4, using production function approach. We analyze the crises and the boom periods in terms of output gap. We find that according to the length of downturn and recovery periods, the worst crisis is the 2001. However, when we compare the crises according to the magnitude, the biggest collapse occurs during 2008 crisis. After recovering from 2008 crisis, once again the actual real GDP remains higher than the potential GDP for 5 successive quarters. Moreover, in this period actual real GDP is back on its old trend suggesting that the recovery period is over for Turkey and the negative effects of 2008 global crisis are not permanent

The Baby Boom, Baby Busts, and Grandmothers

Studies in family economics and anthropology suggest that grandmothers are a highly valuable source of childcare assistance. As such, availability of grandmothers affects the cost of having children, and hence fertility decisions of young parents. In this paper, we develop a simple model to assess the fertility implications of the fluctuations in both output (as argued by demographers) and grandmother-availability induced child-care costs over the period 1920-1970. Model does a good job of mimicking the bust-boom-bust pattern during this period. When the child-care cost channel is shut down, the model’s performance weakens significantly; in particular, it fails to capture the bust in the 1960’s altogether

The Baby Boom, Baby Busts, and Grandmothers

Studies in family economics and anthropology suggest that grandmothers are a highly valuable source of childcare assistance. As such, availability of grandmothers affects the cost of having children, and hence fertility decisions of young parents. In this paper, we develop a simple model to assess the fertility implications of the fluctuations in both output (as argued by demographers) and grandmother-availability induced child-care costs over the period 1920-1970. Model does a good job of mimicking the bust-boom-bust pattern during this period. When the child-care cost channel is shut down, the model’s performance weakens significantly; in particular, it fails to capture the bust in the 1960’s altogether