Trade and Tax Reforms in a Cash-in-Advance Economy

This paper investigates the determinants of longevity at a macroeconomic level, emphasizing the important role played by education. To analyze the determinants of longevity, we build a model where households intentionally invest in health and education, and where education exerts external effects on longevity. Performing an empirical analysis using data across 71 countries, we find that society’s tertiary education attainment rate is important for longevity, in addition to any role that basic education plays for life expectancy at the individual level. This finding uncovers a key externality of education, consistent with the theoretical hypothesis advanced in our macroeconomic model.Tariff reform, Tax reform, Cash-in-Advance Constraint

“Give me your Tired, your Poor,” so I can Prosper: Immigration in Search Equilibrium

We analyze the impact of immigration on the host country within a search and matching model that allows for skill heterogeneity, endogenous skill acquisition, differential search cost between immigrants and natives, capital-skill complementarity and different degree of substitutability between unskilled natives and immigrants. Within such a framework, we find that although immigration raises the overall welfare, it may have distributional effects. Specifically, skilled workers gain in terms of both employment and wages. Unskilled workers, on the other hand, gain in terms of employment but may lose in terms of wages. Nevertheless, in one version of the model, where unskilled workers and immigrants are imperfect substitutes, we find that even the unskilled wage may rise. These results accommodate conflicting empirical findings.Search, Unemployment, Immigration, Skill-heterogeneity

Pollution Abatement as a Source of Stabilisation and Long-Run Growth

In a two-period overlapping generations model with production, we consider the damaging impact of environmental degradation on health and, consequently, life expectancy. The government’s involvement on policies of environmental preservation proves crucial for both the economy’s short-term dynamics and its long-term prospects. Particularly, an active policy of pollution abatement emerges as an important engine of long-run economic growth. Furthermore, by eliminating the occurrence of limit cycles, pollution abatement is also a powerful source of stabilisation.Growth; Cycles; Environmental quality; Pollution abatement

Intergenerational Complementarities in Education and the Relationship between Growth and Volatility

We construct an overlapping generations model in which parents vote on the tax rate that determines publicly provided education and offspring choose their effort in learning activities. The technology governing the accumulation of human capital allows these decisions to be strategic complements. In the presence of coordination failure, indeterminacy and, possibly, growth cycles emerge. In the absence of coordination failure, the economy moves along a uniquely determined balanced growth path. We argue that such structural differences can account for the negative correlation between volatility and growth.Human Capital; Economic Growth; Volatility

Intergenerational complementarities in education, endogenous public policy, and the relation between growth and volatility

We construct an overlapping generations model in which parents vote on the tax rate that determines publicly provided education and offspring choose their effort in learning activities. The technology governing the accumulation of human capital allows these decisions to be strategic complements. In the presence of coordination failure, indeterminacy and, possibly, growth volatility emerge. This indeterminacy can be eliminated by an institutional mechanism that commits to a minimum level of public education provision. Given that, in the latter case, the economy moves along a uniquely determined balanced growth path, we argue that such structural differences can account for the negative correlation between volatility and growth.Human Capital, Intergenerational Complementarities, Economic Growth, Endogenous Taxation, Volatility

"Give me your Tired, your Poor," so I can Prosper: Immigration in Search Equilibrium

We analyze the impact of immigration on the host country within a search and matching model that allows for skill heterogeneity, endogenous skill acquisition, differential search cost between immigrants and natives, capital-skill complementarity and different degree of substitutability between unskilled natives and immigrants. Within such a framework, we find that although immigration raises the overall welfare,it may have distributional effects. Specifically, skilled workers gain in terms of both employment and wages. Unskilled workers, on the other hand, gain in terms of employment but may lose in terms of wages. Nevertheless, in one version of the model, where unskilled workers and immigrants are imperfect substitutes, we find that even the unskilled wage may rise. These results accommodate conflicting empirical findings.Search; Unemployment; Immigration; Skill-heterogeneity

Money, output, and income velocity

Income ; Input-output analysis ; Money

The Colonization of Hong Kong: Establishing the Pearl of Britain-China Trade

We construct a staged development framework with multi-period discrete choices to study the colonization of Hong Kong, which facilitated the trade of several agricultural and manufactured products, including opium, between Britain and China. The model is particularly designed based on historical data and documentation collected from various sources. We show theoretically how institutions changed in response to the underlying key primitives and lead to the transition from the pre-Opium War era, to the post-Opium War era and then to the post-opium trade era, which span the period 1773-1933. Finally, we support our theoretical findings with historical evidence.Colonial Economy, Opium Trade, Endogenous Policy and Institutions, Staged Development.

"Give me your Tired, your Poor," so I can Prosper: Immigration in Search Equilibrium

We analyze the impact of immigration on the host country within a search and matching model that allows for skill heterogeneity, endogenous skill acquisition, differential search cost between immigrants and natives, capital-skill complementarity and different degree of substitutability between unskilled natives and immigrants. Within such a framework, we find that although immigration raises the overall welfare,it may have distributional effects. Specifically, skilled workers gain in terms of both employment and wages. Unskilled workers, on the other hand, gain in terms of employment but may lose in terms of wages. Nevertheless, in one version of the model, where unskilled workers and immigrants are imperfect substitutes, we find that even the unskilled wage may rise. These results accommodate conflicting empirical findings

A Search-Equilibrium Approach to the Effects of Immigration on Labor Market Outcomes

We analyze the impact of the skill-biased immigration influx that took place during the years 2000-2009 in the United States, within a search and matching model that allows for skill heterogeneity, differential search cost between immigrants and natives, capital-skill complementarity and possibly endogenous skill acquisition. Within such a framework, we find that although the skill-biased immigration raised the overall net income to natives, it may have had distributional effects. Specifically, unskilled native workers gained in terms of both employment and wages. Skilled native workers, on the other hand, gained in terms of employment but may have lost in terms of wages. Nevertheless, in one extension of the model, where skilled workers and immigrants are imperfect substitutes, we find that even the skilled wage may have risen