Unemployment and Debt Dynamics in a Highly Indebted Small Open Economy

The paper analyzes the dynamic effects of a total factor productivity shock and an interest rate risk premium shock in a highly indebted open economy. In contrast to the standard open economy framework, search unemployment and wage bargaining are introduced. We find that a negative total factor productivity shock primarily has effects on the economy’s production side and on welfare, but not on its stock of foreign debt and the country specific risk premium, and large part of the adjustment happens in the short run. In contrast, a pure increase in the country specific risk premium causes substantial dynamics and a considerable reduction in foreign debt, allowing higher consumption in the long run and creating an intertemporal welfare gain, even though unemployment increases strongly in the short run. A 50% haircut of foreign debt significantly reduces the initial response of the unemployment rate. In case of a temporary productivity shock, sticky wages imply smaller employment, but generate higher welfare than flexible wages.unemployment, debt, interest rate premium, haircut, sticky wages

THE ECONOMIC EFFECTS OF ADVERTISING ON TOURISM DEMAND

In this paper we introduce a dynamic model to study the macroeconomic effects of advertising activities in tourism. The agents of the model are a representative consumer which optimize their intertemporal welfare, a representative firm that produces tourism services, an authority which organizes tourism advertising abroad and foreigner tourists. We show that in the short run, an increase in marketing expenditures raises foreigner's tourism demand, leads to an increase in the relative price of tourism services, makes tourism production more attractive and stimulates capital investment. As time passes, the capital stock increases and tourism production expands, leading to a falling price of tourism. In the long run, the increase in marketing activities results in a higher rate of tourism production, a higher capital stock, a lower relative price of tourism services and a reduction of net foreign assets.

The Dynamic Effects of Subsidizing the Tourism Sector

The paper studies the short run and long run effects of a production subsidy to the tourism sector of a small open economy, which can also be thought as a region within a country. We introduce a two-sector dynamic general equilibrium model where the tourism sector is considered to be labor-intensive and produces traded services. The other sector is capital-intensive and produces a nontraded good, which is also used for capital accumulation. Labor and capital can freely move between sectors. Economic decisions are made by forward-looking representative agents, which optimize their intertemporal welfare by choosing consumption of both the nontraded good and tourism services, the sectoral allocation of labor, and the rate of wealth accumulation. We discuss the short run, dynamic and long run effects of a production subsidy to the tourism sector. In the short run, the introduction of a subsidy to tourism production leads to a boom in that sector. As time passes, the economy-wide capital stock is decumulated, and production of tourism is falling. In the long run, compared to the situation before the subsidy was implemented, tourism production remains on a higher level, whereas output of the nontraded good drops.dynamic open economy two-sector model; tourism; subsidies; deindustrialization

Introduction: Popularizing Instability (Chapter 1), Introducing Narrative Instability (Chapter 2)

The following text is an excerpt from the book Narrative Instability: Destabilizing Identities, Realities, and Textualities in Contemporary American Popular Culture, which was originally published in 2019 with Universitätsverlag Winter as part of the series American Studies – A Monograph Series. The book introduces the concept of ‘narrative instability’ in order to make visible a new trend in contemporary US popular culture, to analyze this trend’s poetics, and to scrutinize its textual politics. It identifies those texts as narratively unstable that consciously frustrate and obfuscate the process of narrative understanding and comprehension, challenging their audiences to reconstruct what happened in a text’s plot, who its characters are, which of its diegetic worlds are real, or how narrative information is communicated in the first place. Despite—or rather, exactly because of—their confusing and destabilizing tendencies, such texts have attained mainstream commercial popularity in recent years across a variety of media, most prominently in films, video games, and television series. Focusing on three clusters of instability that form around identities, realities, and textualities, the book argues that narratively unstable texts encourage their audiences to engage with the narrative constructedness of their universes, that narrative instability embodies a new facet of popular culture, that it takes place and can only be understood transmedially, and that its textual politics particularly speak to white male middle-class Americans

“This Whole World Is a Story”: Popularizing Narrative Instability in Contemporary Film and Television

In this article, I examine the intersection of two trends in contemporary US popular culture: a tendency of recent films to obfuscate the process of narrative understanding (called narrative instability) and a move towards combining elements of narrative with those of play (ludic textuality). I introduce both trends in more general terms and then look at the film Inception and the TV series Westworld to exemplify these trends’ narrative dynamics. This allows me to argue that narrative instability characterizes contemporary popular culture by an embrace of incoherence and by pleasures that build on an audience willing to actively engage with the text and its narration. While this has originally been a predominant trend in films, more recently, fusions of narrative and play have allowed television’s seriality to adopt instability as well, a convergence that I investigate by looking at the synergies between Inception and Westworld

A Dynamic Model of Economic Growth in a Small Tourism Driven Economy

The paper studies the dynamics of economic growth caused by an increase in the growth rate of tourism demand. We develop a simple dynamic model of a small open economy, which is completely specialized in the production of tourism services (island economy model), populated by a large number of intertemporally optimizing agents, deriving utility from consuming an imported good. Tourism services are produced by means of a simple AK technology by using imported capital, its accumulation associated with adjustment costs. Moreover, the economy can lend or borrow at the international financial markets at the given world interest rate. Adjustments in the relative price of tourism services ensure market clearance for tourism services. The long-run growth rate of the economy is tied to the growth rate in tourism demand. An increase in the latter increases thus the economy’s long-run balanced growth rate. In contrast to the standard one-good small open economy endogenous growth model, where the economy is always on its balanced growth path, we show that there are transitional dynamics after an increase in the growth rate of tourism demand. In particular, the short-run growth rate of output rises gradually towards its higher long-run level, and the market price of tourism increases during transition. Thus, an increase in the growth of tourism demand, say, caused by higher economic growth abroad, leads to a boom in the small open economy and increasing terms of trade. Adjustments of the relative price of tourism services (i. e. the real exchange rate) can therefore not protect the economy from demand disturbances.tourism demand; growth; economic dynamics

Objectivism, narrative agency, and the politics of choice in the video game BioShock

In this article, I investigate the video game BioShock for its political and cultural work and argue that it offers a popular platform to discuss the politically charged question of choice, both inside and outside the realm of video games. In a first section, I introduce the game’s basic plot and setting, propose a way to study how video games operate narratively, and briefly discuss the ‘political’ dimension of games in general. Afterwards, I look at how BioShock is influenced by Ayn Rand’s philosophy of objectivism, a philosophy that emphasizes the importance of individual choice and self-interest, and I trace this influence specifically in the game’s main antagonist, Andrew Ryan, and its setting, the underwater city of Rapture. With these elements as a basis, I analyze how BioShock engages with the politics of choice, focusing on a major twist scene in the game to demonstrate how BioShock deals with the question of choice on a metatextual level. Reading this scene in the context of the game’s overall narrative, specifically of moral choices in the game that lead to different endings, I argue that the game metatextually connects the political question of choice inherent in objectivism to the narrative and the playing of the game, pointing to the ambivalences inherent in questions of choice, agency, and free will

COVID-19: Consequências econômicas para uma pequena economia dependente do turismo

This paper analyzes the economic impact of the COVID-19 pandemic on a small tourism dependent open economy. The lockdown affected both the demand side and the supply side of the economy, as production of goods and services dramatically dropped due to firms’ shutdowns, broken supply chains, or bankruptcies, and aggregate demand diminished due to lower consumer confidence and investment cutbacks, accompanied by a dramatic fall in international tourism demand, in particular due to travel restrictions. We look on these supply and demand changes through the lens of a macroeconomic model of a small open economy, comprising an industrial and a tourism sector. For this purpose, we modify Schubert’s (2013) model by introducing a multiple shock which reflects (i) reduced sectoral productivities due to, e.g., broken supply chains, (ii) a drop in employment due to firms’ lockdowns, and (iii) a sharp decline in international tourism demand. We find that the multiple shock leads to an immediate drop in GDP and a boost of the short-run unemployment rate, followed by a gradual transition back to steady state. The adverse effects on the tourism sector are the more severe the slower international tourism demand reverts to pre-crisis levels, but they do not strongly spill over to the industrial sector. Furthermore, even if international tourism demand recovers quickly, the effects on the industrial sector barely change. The length of the industrial sector’s recovery basically depends on the speed of restoring its sectoral productivity rather than on international tourism demand. The reason for this result can be found in the absorbing effect of the relative price of tourism services in terms of the industrial good.Este artículo analiza el impacto económico de la pandemia de COVID-19 en una economía pequeña, abierta y dependiente del turismo. El lockdown afectó tanto al lado de la demanda, como al de la oferta de la economía, ya que la producción de bienes y servicios cayó drásticamente debido al cierre de empresas, cadenas de suministro interrumpidas o quiebras. La demanda agregada ha disminuido debido a la menor confianza del consumidor y los recortes de la inversión, acompañada de una caída dramática en la demanda turística internacional, en particular debido a las restricciones de viaje. Vemos estos cambios en la oferta y la demanda a través de la lente de un modelo macroeconómico de una pequeña economía abierta que comprende un sector industrial y uno turístico. Para ello, modificamos el modelo de Schubert (2013), introduciendo un shock múltiple que refleja (i) la reducción de la productividad del sector debido, por ejemplo, a cadenas de suministro interrumpidas, (ii) una caída del empleo por cierre de empresas, y (iii) una fuerte caída de la demanda de turismo internacional. Descubrimos que el choque múltiple conduce a una caída inmediata del PIB y un aumento de la tasa de desempleo a corto plazo, seguido de una transición gradual de regreso al estado estacionario. Los efectos adversos sobre el sector turístico son tanto más graves cuanto más lento es el retorno de la demanda turística internacional a los niveles anteriores a la crisis. Sin embargo, los efectos sobre el turismo no afectan fuertemente al sector industrial. Además, incluso si la demanda turística internacional se recupera rápidamente, los efectos sobre el sector industrial cambian poco. La duración de la recuperación del sector industrial depende básicamente de la velocidad de recuperación de su productividad sectorial, y no de la demanda turística internacional. La razón de este resultado se puede encontrar en el poder de absorción del precio relativo de los servicios turísticos en términos de bienes industriales.Este artigo analisa o impacto econômico da pandemia de COVID-19 em uma pequena economia aberta e dependente do turismo. O lockdown afetou tanto o lado da demanda, quanto o lado da oferta da economia, uma vez que a produção de bens e serviços caiu drasticamente devido a fechamentos de empresas, cadeias de abastecimento interrompidas ou falências. A demanda agregada diminuiu devido à menor confiança do consumidor e cortes de investimentos, acompanhados por uma queda dramática na demanda de turismo internacional, em particular devido a restrições de viagens. Vemos essas mudanças na oferta e na demanda pelas lentes de um modelo macroeconômico de uma pequena economia aberta que compreende um setor industrial e um de turismo. Para este efeito, modificamos o modelo de Schubert (2013), introduzindo um choque múltiplo que reflete (i) produtividade setorial reduzida devido a, por exemplo, cadeias de abastecimento interrompidas, (ii) uma queda no emprego devido ao fechamento de empresas, e (iii) um declínio acentuado na demanda de turismo internacional. Descobrimos que o choque múltiplo leva a uma queda imediata do PIB e um aumento da taxa de desemprego de curto prazo, seguido por uma transição gradual de volta ao estado estacionário. Os efeitos adversos sobre o setor de turismo são tanto mais graves quanto mais lenta for o retorno da demanda turística internacional aos níveis anteriores à crise. Contudo, os efeitos sobre o turismo não afetam fortemente o setor industrial. Além disso, mesmo que a demanda turística internacional se recupere rapidamente, os efeitos sobre o setor industrial praticamente não mudam. A duração da recuperação do setor industrial depende basicamente da velocidade de restauração de sua produtividade setorial, e não da demanda turística internacional. A razão para esse resultado pode ser encontrada no poder de absorção do preço relativo dos serviços turísticos em termos do bem industrial

Analysing welfare reform in a microsimulation-AGE model: the value of disaggregation

We present a combined, consistent microsimulation-AGE model that uses the labour market model PACE-L, data from the German Socio-Economic Panel and a discrete choice labour supply estimation. The model is used to analyse a reform that cuts the social assistance minimum income and lowers the transfer withdrawal rate in order to encourage labour force participation at the lower end of the wage distribution. We compare a disaggregated and an aggregated version of the model as well as a partial and a general equilibrium variant. It turns out that both disaggregation and general equilibrium feedback tend to mitigate the labour supply response to the reform proposal. While some labour supply indicators react quite sensitively to the level of aggregation, most macroeconomic variables are considerably more robust. --applied general equilibrium,discrete working time choice,labour market,wage bargaining,labour market reform,logit model,microsimulation