LOWER OIL PRICES AND STATE EMPLOYMENT

Even after two years of adjustment, it was apparent that the sharp drop in oil prices occurring during late 1985 and early 1986 would have a profound effect on the regional distribution of employment in the United States. In this paper, we develop and implement a procedure for quantifying the long-term consequences of lower oil prices on employment in each of the 50 states. We use the estimates developed to determine how much of the variation in state employment growth during 1986 can be attributed to the oil price decline. We also use the estimates to gauge the feasibility of political action, such as an oil import tariff, to reverse the oil price decline. Copyright 1988 Western Economic Association International.

U.S. DIRECT INVESTMENT TO MEXICO: POLITICS, ECONOMICS, AND NAFTA

The goal of this paper is to determine whether the recent opening of the Mexican economy caused a significant change in the investment behavior of U.S. multinational firms. The first finding is that a real investment function that explained the data well through 1989 shifted dramatically thereafter. Tests indicate that the probable causes of this shift were (i) the relaxation of Mexican restrictions on direct investment after 1989 and (ii) anticipatory investment behavior after the positive conclusion of the NAFTA negotiations. Copyright 1998 Western Economic Association International.