Skilled Immigration and Wages in Australia*

This paper addresses the implications of the increasing skill intensity of cross-border migration flows for labour market outcomes in host countries. Specifically, we investigate the impact of the relative growth of skilled migrants on domestic wages in Australia over the last quarter century (1980-2006). We use instrumental variable (IV) estimation techniques to deal with the potential endogeneity of immigration. Unlike most of the previous literature, we use macro data to allow for the adjustment of wages and aggregate demand to immigration flows. However, the limited time span of such data raises problems of small sample bias. We address the small sample bias problem by using Jackknife IV estimation. Our basic finding challenges popular presumptions about the adverse wage implications of immigration. However, our examination of the skill composition of migration flows supports the many prevailing empirical findings that immigration need not cause labour market outcomes to deteriorate. Specifically, we do not find any robust evidence that a relative increase in arrivals of skilled immigrants exerts discernible adverse consequences on wages in Australia.Immigration, wage, endogeneity, instrumental variable.

FOREIGN DIRECT INVESTMENT AND SERVICES TRADE: EVIDENCE FROM MALAYSIA AND SINGAPORE

Services trade is an important source of growth in Malaysia and Singapore. Both economies are export-oriented and actively court foreign direct investment (FDI) to advance their economic objectives of industrialisation and economic development. This paper examines the causal linkages between inward FDI and the country’s engagement in services trade in bi-variate and tri-variate VAR frameworks. The empirical findings for Singapore show evidence of bidirectional causality between inward FDI and the total trade volume in services (i.e. the absolute sum of payments and receipts) as well as between FDI and services imports (in the tri-variate specification). This may reflect her relative open foreign investment policy and free trade regime in services. For Malaysia, the evidence of causality is weaker and unidirectional, from inward FDI to services imports. These findings are consistent with the different stages of economic development and openness attained by the two sample countries, and they provide useful background for trade and foreign investment policies and development strategies.Causality; services trade; foreign direct investment

EVOLUTION OF DOLLAR/EURO EXCHANGE RATE BEFORE AND AFTER THE BIRTH OF EURO AND POLICY IMPLICATIONS

One possible consequence of the establishment of the Euro is a challenge to the hegemony of the US dollar as the predominant international currency. No other currency has been able to rival the international role of the national currency of the US since World War II. The fact that the unipolar international monetary system can be unstable in the presence of large shocks opens a window of opportunity for the Euro to promote systemic stability. The present study pursues this conjecture by, first, exploring with cointegration and ECM techniques the interdependence between the dynamics of the Dollar/Euro exchange rate and economic fundamentals in the context of a monetary exchange rate model. Identification of the key determinants of the value of the Euro informs our analysis of the policy stance of the European Central Bank regarding the long-run global role of the Euro. Secondly, we explore whether the opportunity for a prominent systemic role of the Euro has been realized by examining the impact of the Euro on the global financial market.Euro, Exchange rate, Monetary model, Cointegration

Beyond the Analytics of the Monetary Approach to the Balance of Payments: Methodology, Innovation and Monetarism

In the present study an attempt is made to elucidate the meaning of the frequent attributions in the literature on the frequent attributions in the literature on the monetary approach to David Hume, and to the classical tradition of balance of payments analysis. Given the distinct analytical dissimilarities between the classical, specifically the Humean, and contemporary monetary approaches, it is contended that this meaning lies outside the sphere of the specific analytics of economic model-building. Instead, it is argued, the recurring references to orthodoxy are indicative of a non-extremist methodological approach to the history of economic thought, and further that they are consistent with the requirements of innovation in economics as well as with the express desire to dissociate the monetary approach from contemporary monetarism

The mobility of international capital: valuation changes and stock adjustment

SIGLEAvailable from Bibliothek des Instituts fuer Weltwirtschaft, ZBW, Duesternbrook Weg 120, D-24105 Kiel / FIZ - Fachinformationszzentrum Karlsruhe / TIB - Technische InformationsbibliothekDEGerman

Asymmetric Information and the Composition of Foreign Investment

This paper seeks to apply to the recent foreign investment experience of Mainland China some insights from the macro finance approach to foreign investment. Specifically, potential implications of information asymmetries for the choice of investment type, and hence for the composition of foreign investment inflows, are examined. The strong bias in favor of FDI in newly emerging market economies dissipates with the progressive development of the domestic financial sector. The association between host country financial development and the share of portfolio flows in foreign investment raises the question whether this relation can be systematically exploited by discriminatory policies for the purpose of promoting financial development