Listing 1 - 4 of 4 |
Sort by
|
Choose an application
Choose an application
We build a small open economy, real business cycle model with labor market frictions to evaluate the role of employment protection in shaping business cycles in emerging economies. The model features matching frictions and an endogenous selection effect by which inefficient jobs are destroyed in recessions. In a quantitative version of the model calibrated to the Mexican economy we find that reducing separation costs to a level consistent with developed economies would reduce output volatility by 15 percent. We also use the model to analyze the Mexican crisis episode of 2008 and conclude that an economy with lower separation costs would have experienced a smaller drop in output and in measured total factor productivity with no significant change in aggregate employment.
Job security --- Labor market --- Business cycles --- Economic cycles --- Economic fluctuations --- Cycles --- Employees --- Market, Labor --- Supply and demand for labor --- Markets --- Employment protection --- Employment security --- Job insecurity --- Security, Job --- Economic security --- Personnel management --- Layoff systems --- Econometric models. --- Supply and demand --- Labor --- Macroeconomics --- Production and Operations Management --- Employment --- Unemployment --- Wages --- Intergenerational Income Distribution --- Aggregate Human Capital --- Aggregate Labor Productivity --- Business Fluctuations --- International Business Cycles --- Unemployment Insurance --- Severance Pay --- Plant Closings --- Labor Economics: General --- Production --- Cost --- Capital and Total Factor Productivity --- Capacity --- Macroeconomics: Production --- Prices, Business Fluctuations, and Cycles: General (includes Measurement and Data) --- Labour --- income economics --- Economic growth --- Total factor productivity --- Productivity --- Industrial productivity --- Labor economics --- Economic theory --- Mexico
Choose an application
We account for the appreciation of the real exchange rate in Mexico between 1988 and 2002 using a two sector dynamic general equilibrium model of a small open economy with two driving forces: (i) differential productivity growth across sectors and (ii) a decline in the cost of borrowing in foreign markets. These two mechanisms account for 60 percent of the decline in the relative price of tradable goods and explain a large fraction of the reallocation of labor across sectors. We do not find a significant role for migration remittances, foreign reserves accumulation, government spending, terms of trade, or import tariffs.
Financial crises --- Structural adjustment (Economic policy) --- International finance. --- Mexico --- Economic conditions --- Economic policy --- International monetary system --- International money --- Finance --- International economic relations --- Exports and Imports --- Foreign Exchange --- Labor --- Macroeconomics --- Production and Operations Management --- Labor Economics: General --- Production --- Cost --- Capital and Total Factor Productivity --- Capacity --- Empirical Studies of Trade --- Wages, Compensation, and Labor Costs: General --- Labour --- income economics --- International economics --- Currency --- Foreign exchange --- Total factor productivity --- Terms of trade --- Real exchange rates --- Wages --- Labor economics --- Industrial productivity --- nternational cooperation
Choose an application
We build a partial equilibrium model of firm dynamics under exchange rate uncertainty. Firms face idiosyncratic productivity shocks and observe the current level of the real exchange rate each period. Given their current level of capital stock, firms make their export decisions and choose how much to invest. Investment is financed through one period loans from foreign lenders. The interest rate charged by each lender is set to satisfy an expected zero-profit condition. The model delivers a distribution of firms over productivity, capital stocks and debt portfolios, as well as an exit rule. We calibrate the model using data from a panel of Mexican firms, from 1989 to 2000, and analyze the effect of the 1994 crisis on these variables. As a result of the real exchange rate depreciation, the model predicts: (i) an increase in the debt burden, (ii) an increase in exports, and (iii) a large decline in investment. These real effects are consistent with the evidence for the Mexican crisis.
Listing 1 - 4 of 4 |
Sort by
|