Recent statistical techniques, including nonlinear programming, have been added to a basic survey of equilibrium systems, comparative statistics, consumer behavior theory, and cost and production theory.

Foundations of Economic Analysis

Econometric policy evaluation: A critique

Recursive methods offer a powerful approach in dynamic macroeconomics. This book contains both an introduction to recursive tools, including standard applications such as asset pricing, and advanced material, including analyses of reputational mechanisms and contract design. The tools are presented with enough technical sophistication to get the reader started working on practical problems. When numerical simulations are called for, the book provides suggestions for how to proceed, as well as references for further reading. The applications cover many substantive issues in macroeconomics, such as equilibrium asset prices, market incompleteness, wealth distribution, fiscal-monetary theories of inflation, government debt, optimal labour and capital taxation, time consistency and credible government policies, optimal social insurance, economic growth and labour market dynamics.

Recursive Macroeconomic Theory

In his presidential address to the American Economic Association (AEA), Milton Friedman (1968) warned not to expect too much from monetary policy. In particular, Friedman argued that monetary policy could not permanently influence the levels of real output, unemployment, or real rates of return on securities. However, Friedman did assert that a monetary authority could exert substantial control over the inflation rate, especially in the long run. The purpose of this paper is to argue that, even in an economy that satisfies monetarist assumptions, if monetary policy is interpreted as open market operations, then Friedman’s list of the things that monetary policy cannot permanently control may have to be expanded to include inflation.

/pdf/some-unpleasant-monetarist-arithmetic-14tdtedo1q.pdf

Some Unpleasant Monetarist Arithmetic

We study a rich class of noncooperative games that includes models of oligopoly competition, macroeconomic coordination failures, arms races, bank runs, technology adoption and diffusion, R&D competition, pretrial bargaining, coordination in teams, and many others. For all these games, the sets of pure strategy Nash equilibria, correlated equilibria, and rationalizable strategies have identical bounds. Also, for a class of models of dynamic adaptive choice behavior that encompasses both best-response dynamics and Bayesian learning, the players' choices lie eventually within the same bounds. These bounds are shown to vary monotonically with certain exogenous parameters. WE STUDY THE CLASS of (noncooperative) supermodular games introduced by Topkis (1979) and further analyzed by Vives (1985, 1989), who also pointed out the importance of these games in industrial economics. Supermodular games are games in which each player's strategy set is partially ordered, the marginal returns to increasing one's strategy rise with increases in the competitors' strategies (so that the game exhibits "strategic complementarity"2) and, if a player's strategies are multidimensional, marginal returns to any one com- ponent of the player's strategy rise with increases in the other components. This class turns out to encompass many of the most important economic applications of noncooperative game theory. In macroeconomics, Diamond's (1982) search model and Bryant's (1983, 1984) rational expectations models can be represented as supermodular games. In each of these models, more activity by some members of the economy raises the returns to increased levels of activity by others. In oligopoly theory, some models of Bertrand oligopoly with differentiated products qualify as supermodu- lar games. In these games, when a firm's competitors raise their prices, the marginal profitability of the firm's own price increase rises. A similar structure is present in games of new technology adoption such as those of Dybvig and Spatt (1983), Farrell and Saloner (1986), and Katz and Shapiro (1986). When more users hook into a communication system or more manufacturers adopt an interface standard, the marginal return to others of doing the same often rises. Similarly, in some specifications of the bank runs model introduced by Diamond and Dybvig (1983), when more depositors withdraw their funds from a bank, it is more worthwhile for other depositors to do the same. In the warrant exercise

http://www.parisschoolofeconomics.eu/docs/guesnerie-roger/milgromroberts90.pdf

Rationalizability, Learning, and Equilibrium in Games with Strategic Complementarities

This paper considers three groups of children affected by international migration: (i) children left behind by international labour migrants from the Philippines, Indonesia, and Thailand; (ii) children of Thai nationals in Japan; and (iii) children brought along by irregular migrants in Malaysia and Thailand. Based on the limited data available from published sources, the paper constructs preliminary estimates of numbers of children involved. It then synthesizes available evidence on problems and opportunities faced by the children, and on policies towards them. There are, however, important gaps in the available evidence. The paper identifies these gaps, and suggests ways in which they might be filled. The paper also makes policy recommendations. The growth of international migration in Southeast Asia has affected significant numbers of children. Some necessarily crude calculations suggest that 3-6 million children have been left behind by Filipino parents working overseas; the equivalent figure for Indonesia is something like one million, and for Thailand half a million. These numbers imply that roughly 10-20 per cent of Filipino children, and 2-3 per cent of Indonesian and Thai children, have a parent overseas. Based on good evidence from the Philippines, and scattered evidence from Indonesia and Thailand, it appears that (i) migration of parents improves the material conditions of the children left behind, which probably flows through to children’s health and schooling, and (ii) the social costs are strongly mitigated by the involvement of the extended family. In the Philippines, but less so in Indonesia and Thailand, governmental and non-governmental organizations already provide a range of services for children and migrants. Meanwhile, in Thailand, there are over 100,000 children of undocumented migrants from Myanmar, Cambodia, and Laos. There are tens or perhaps hundreds of thousands of children of Indonesian migrants in Malaysia. Scattered evidence suggests that these children face much greater difficulties than the children left at home by Filipino, Indonesia, and Thai workers. The children brought along to Thailand and Malaysia appear to be significantly poorer than other children in their host countries, and to have limited access to social services. In Thailand, however, current efforts to register foreign workers and their dependants may lead to improved access, at least in the short term. A number of practical, low-cost policies to address the problems of children left behind by labour migrants from Indonesia, Thailand, and the Philippines have been suggested or implemented. If further research were to show that particular subgroups, such as those with both parents overseas, suffered special disadvantages, then high-cost interventions for these subgroups might be justified. However, more general high-cost interventions covering all children left behind by labour migrants are not justified on current evidence, since this evidence suggests that children do not appear, on average, to face greater difficulties than other children in the same societies. Attention should instead be focused on children brought along by undocumented migrants. Thailand’s current registration campaigns represent a major policy experiment, and the effects on children need to be carefully monitored. Regulations governing the entry and exit of migrants strongly influence family migration strategies and the ability of parents to maintain contact with their children. These affects need to be taken into account when regulations are designed. For policy purposes, the most important gaps in current knowledge about children left behind by labour migrants probably concern differences among children. For instance, there is still no conclusive evidence on whether children with absent mothers suffer more problems than children with absent fathers. A sensible first stage in filling this gap would be to exploit existing household survey data. Most published research dealing with children of undocumented migrants in Thailand consists of small-scale studies of highly disadvantaged groups such as sex workers. There have been few studies looking at mainstream migrants, or comparing migrants with the surrounding population. The best way to begin such research would be to exploit existing data from the Kanchanaburi Field Station. In Malaysia, a promising source on children of Indonesian migrants is ethnographic work carried out by Malaysian students. More generally, there is a need for research on how immigration regulations affect family migration strategies and the well-being of the children.

/pdf/children-of-international-migrants-in-indonesia-thailand-and-5b2pyz59kg.pdf

Children of international migrants in indonesia, thailand, and the philippines: a review of evidence and policies

Monetary policy is analysed within a model that appeals to legal restrictions on private intermediation to explain the coexistence of currency and interest-bearing default-free bonds. The interaction between such legal restrictions and monetary policy is illustrated in a version of the overlapping generations model. The model shows that legal restrictions and the use of both currency and bonds permit the government to levy a nonlinear inflation tax and that such a tax may be better in terms of the Pareto criterion than a linear inflation tax.

/pdf/a-price-discrimination-analysis-of-monetary-policy-2kco404pcm.pdf

A Price Discrimination Analysis of Monetary Policy

This paper examines the hypotheses that a greater stock of migrants in New Zealand from a particular country leads to more trade between that country and New Zealand, and a greater stock of New Zealanders living overseas in a particular country leads to more trade between that country and New Zealand. It also examines the relationships between migration, diaspora and tourism exports. The literature suggests that migrants can stimulate trade by lowering transaction costs, and by bringing with them preferences for goods produced in their home country. Our approach is to apply panel data techniques, within the framework of a standard gravity model of trade, to a dataset consisting of information on 233 countries in each of the 26 years between 1981 and 2006. We estimate a random effects panel sample selection model using correlated random effects. Our results indicate that migration does indeed stimulate trade. In our benchmark specification, merchandise exports from and imports to New Zealand both have a statistically significant relationship with numbers of migrants in New Zealand; imports also have a statistically significant relationship with numbers of New Zealanders overseas. Our results also suggest that migration stimulates imports more than exports.

/pdf/trade-diaspora-and-migration-to-new-zealand-4kl6hviz7q.pdf

Trade, Diaspora and Migration to New Zealand

This paper examines the hypothesis that a greater stock of migrants in New Zealand from a particular country leads to more trade between that country and New Zealand. The literature suggests that migrants can stimulate trade by lowering transaction costs, and by bringing with them preferences for goods produced in their home country. We use panel data techniques within the framework of a standard gravity model of trade. Our sample includes an average of over 170 countries for the years 1981 to 2001. Previous studies of trade and migration have not dealt satisfactorily with problems of unobserved heterogeneity and selection bias. We address these problems using correlated random effects and selection models. Results suggest that larger migrant stocks are associated with higher trade flows.

Trade and Migration to New Zealand

Many New Zealand-born people migrate overseas, creating a diaspora, and many overseas-born people migrate to New Zealand Both the diaspora and the overseas-born population in New Zealand may facilitate the international exchange of goods and ideas Much discussion of international linkages has, however, been limited by a lack of data on numbers of people involved Based mainly on place-of-birth data from national censuses, this paper provides estimates of the size and structure of New Zealand’s diaspora and overseas-born population, as well as comparisons with selected OECD countries such as Australia A tentative conclusion is that the potential contribution of New Zealand’s diaspora may have been overestimated, and the contribution of the overseas-born population underestimated

https://www.econstor.eu/bitstream/10419/205553/1/twp2004-13.pdf

New Zealand's Diaspora and Overseas-born Population

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