and sponsored in part by the Jno E. Owens Foundation. We would like to thank a number of people w... more and sponsored in part by the Jno E. Owens Foundation. We would like to thank a number of people who helped make this conference possible, especially Richard W. Fisher, president of the Dallas Fed, and Harvey Rosenblum, the Bank's executive vice president and director of research. We also thank Phil Martin and Catalina Amuedo-Dorantes for filling in at the last minute and doing such an excellent job. Finally, we want to express our gratitude to the Jno E. Owens Foundation for its generous support. The foundation was established in 1953 by Jewell Montague Owens in memory of her husband, a prominent Texas banker. During his lifetime, Mr. Owens was intensely interested in international economics, and it was his wish to establish a foundation that would memorialize his lifelong interest in international relations and his commitment to free trade.
In this paper we consider a model of international migration due to Fujita and Weber, with two he... more In this paper we consider a model of international migration due to Fujita and Weber, with two heterogeneous countries, and show that in equilibrium the larger country attracts more immigrants, while choosing a lower quota. Moreover, a higher degree of labor complementarity and lower degree of cultural friction between natives and immigrants yield a higher immigration quota. We test the empirical validity of the model by using time-series country-level data. Even in the absence of direct evidence of strategic and non-cooperative choice of countries' immigration quotas, both cross-section and panel data approaches indicate that crosscountry immigration patterns are consistent with the majority of our theoretical findings.
In this paper we investigate the idea whether democracy can have a direct effect on economic grow... more In this paper we investigate the idea whether democracy can have a direct effect on economic growth. We use a system GMM framework that allows us to model the dynamic aspects of the growth process and control for the endogenous nature of many explanatory variables. In contrast to the growth effects of institutions, regime stability, openness and macro-economic policy variables, we find that measures of democracy matter little, if at all, for the economic growth process.
This paper provides a theoretical explanation for a regulation-driven win-win situation along the... more This paper provides a theoretical explanation for a regulation-driven win-win situation along the lines of Porter's hypothesis. Using a Cournot duopoly with polluting¯rms we show that in the absence of government intervention there exist parameter values such that in the resulting Nash equilibrium, both rms choose the old, high polluting technology even though adoption of a new, low polluting technology yields higher pro¯ts for both¯rms (prisoner's dilemma). We then show that government intervention in the form of direct emission controls can eliminate the prisoner's dilemma situation and induce both rms to adopt the modern, low polluting technology provided that the regulation is su±ciently strict. In this case, the reduction in market size for polluting¯rms is strong enough to reduce pro¯ts. By investing in a new, low polluting technology,¯rms avoid any quantity restrictions on output and enjoy higher pro¯ts despite the initial cost of investing in the new technology.
Link to publication Citation for published version (APA): Hoogstrate, A. J., & Osang, T. (1998). ... more Link to publication Citation for published version (APA): Hoogstrate, A. J., & Osang, T. (1998). Saving, openness, and growth. (CentER Discussion Paper; Vol. 1998-47). CentER. General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research • You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal Take down policy If you believe that this document breaches copyright, please contact us providing details, and we will remove access to the work immediately and investigate your claim. Download date: 05. mrt. ...
Version 1.0 In this paper we examine the empirical relevance of three prominent endogenous protec... more Version 1.0 In this paper we examine the empirical relevance of three prominent endogenous protection models. Is protection for sale, or do altruistic policy makers worry about political support? We find strong evidence that protection is indeed "for sale. " The important new result is, however, that not only the existence of lobbies matters, but also the relative size of the sectoral pro and anti protection contributions. All variables of both the Influence Driven (Grossman and Helpman, 1994) and the Tariff Function (Findlay and Wellisz, 1982) models are significant at the one percent level. Novel is our application of a single, unified theoretical framework to take strict interpretations of the three theoretical models to the data. We thus extend the previous tests of the Influence Driven approach by comparing its performance to well specified alternatives. Using J tests to compare the power of the models directly, we find significant misspecification in the Political Su...
This paper investigates the consequences of religion for economic development. In particular, we ... more This paper investigates the consequences of religion for economic development. In particular, we examine whether religious attitudes, beliefs and participation contribute to differences in per capita income across countries. Using a large scale international survey on values and religious behavior, we estimate both cross-section and panel data models, controlling for the so called deep determinants of development: Institutions, geography and trade. Our results indicate that religion plays an important role in economic development, but mostly in a non-linear manner. Countries with moderate religious values and behavior tend to have higher income levels than countries on either end of the religious spectrum.
As Rodrik, Subramanian, and Trebbi (2004) point out, factors that affect economic development can... more As Rodrik, Subramanian, and Trebbi (2004) point out, factors that affect economic development can be classified using a two-tier approach. Based on a standard production function, inputs such as labor and physical and human capital directly affect per capita income. Much of the empirical cross-country growth literature has focused on these covariates. But the factors themselves are the product of deeper and more fundamental determinants and, thus, are at best proximate factors of economic development. The deeper determinants fall into two broad categories: internal and external. Among the former, institutions and geography have received the most attention, while international trade has been the focus of the latter. The main purpose of this paper is to add an external factor, namely measures of migration, to the existing geography-institutions-trade setup and to evaluate its contribution to the observed differences in per capita income across countries.
In this paper, we use a multi-sector specific factors model with international capital mobility to... more In this paper, we use a multi-sector specific factors model with international capital mobility to examine the effects of globalization on the skill premium in U.S. manufacturing industries. This model allows us to identify two channels through which globalization affects relative wages: effects of international capital flows transmitted through changes in interest rates, and effects of international trade in goods and services transmitted through changes in product prices. In addition, we identify two domestic forces which affect relative wages: variations in labor endowment and technological change. Our results reveal that changes in labor endowments had a negative effect on the skill premium, while the effect of technological progress was mixed. The main factors behind the rise in the skill premium were product price changes (for the full sample period) and international capital flows (during 1982-05). JEL Classification: F16, J31.
This paper examines the absolute and relative contribution by Brazil, Russia, India, and China (B... more This paper examines the absolute and relative contribution by Brazil, Russia, India, and China (BRIC) on world trade and foreign direct in vestment over the past three decades. In addition, we briefly discuss major achievements as well as remaining shortcomings of the international trade and foreign investment policy reforms implemented by the BRICs over the same period. Empirical estimates of the long-run equilibrium relationship in exports between the BRICs and the G3 (United States, Japan, and Germany) as well as the role of the BRICs' economic performance within a larger cross-section time-series data framework are also presented.
In this paper we examine the empirical relevance of three prominent endogenous protection models.... more In this paper we examine the empirical relevance of three prominent endogenous protection models. Is protection for sale, or do altruistic policy makers worry about political support? We find strong evidence that protection is indeed "for sale." The important new result is, however, that not only the existence of lobbies matters, but also the relative size of the sectoral pro and anti protection contributions. All variables of both the Influence Driven (Grossman and Helpman, 1994) and the Tariff Function (Findlay and Wellisz, 1982) models are significant at the one percent level. Novel is our application of a single, unified theoretical framework to take strict interpretations of the three theoretical models to the data. We thus extend the previous tests of the Influence Driven approach by comparing its performance to well specified alternatives. Using J tests to compare the power of the models directly, we find significant misspecification in the Political Support Functio...
A number of recent papers study the impact of institutions, trade and geography known as “deep de... more A number of recent papers study the impact of institutions, trade and geography known as “deep determinants” of economic development using cross-section data. This paper instead employs a panel data approach to examine the impact of these three determinants on per capita income. Our approach enables us to account for unobserved heterogeneity across countries, an issue that cannot be addressed in a cross-section framework. Moreover, employing the Hausman and Taylor (1981) approach allows us to obtain direct parameter estimates of the time invariant explanatory variables like geography or some institutional measures, making our results comparable to the existing cross-section iterature. Also, by using lagged explanatory variables whenever possible we can account for contemporaneous correlation between these variables and the idiosyncratic error term. We find that the quality of institutions and openness to trade both have positive and statistically significant coefficient estimates th...
This paper examines the sources for U.S. labor productivity growth over more than three decades. ... more This paper examines the sources for U.S. labor productivity growth over more than three decades. We find that access to lower priced capital good imports played a signifcant role for gains in labor productivity. In contrast, imported industrial materials did contribute very little to the overall increase in labor productivity although they have become slightly more important since the early ’80s. While private capital formation was the most important and consistent component of labor productivity growth, non-military government expenditures on capital goods did not contribute to the observed long-run increase in labor productivity.
This paper investigates the consequences of religion for economic development. In particular, we ... more This paper investigates the consequences of religion for economic development. In particular, we examine whether religious attitudes, beliefs and participation contribute to differences in per capita income across countries. Using a large scale international survey on values and religious behavior, we estimate both cross-section and panel data models, controlling for the so called deep determinants of development: Institutions, geography and trade. Our results indicate that religion plays an important role in economic development, but mostly in a non-linear manner. Countries with moderate religious values and behavior tend to have higher income levels than countries on either end of the religious spectrum.
We consider growth and welfare effects of lifetime-uncertainty in an economy with human capital-l... more We consider growth and welfare effects of lifetime-uncertainty in an economy with human capital-led endogenous growth. We argue that lifetime uncertainty reduces private incentives to invest in both physical and human capital. Using an overlapping generations framework with finite-lived households we analyze the relevance of government expenditure on health and education to counter such growth-reducing forces. We focus on three different models that differ with respect to the mode of financing of education: (i) both private and public spending, (ii) only public spending, and (iii) only private spending. Results show that models (i) and (iii) outperform model (ii) with respect to long-term growth rates of per capita income, welfare levels and other important macroeconomic indicators. Theoretical predictions of model rankings for these macroeconomic indicators are also supported by observed stylized facts.
This paper searches for empirical evidence for convergence in real GDP per capita between the U.S... more This paper searches for empirical evidence for convergence in real GDP per capita between the U.S., Canada, and Mexico. The results of the paper are based on two different concepts of convergence. First, some simple descriptive statistics are calculated that characterize convergence from a static crosscountry perspective. Second, based on the concepts of cointegration and common trends, the paper estimates the dynamic (long run) relationships in per capita income between the three countries and then tests for convergence. Different subgroups of countries as well as the entire sample are considered. Both the static as well as the dynamic statistics indicate that there is little evidence for convergence in per capita income.
International Journal of Behavioral Medicine, 2005
Using a country-level panel data set, we investigate the relationship between GDP growth, savings... more Using a country-level panel data set, we investigate the relationship between GDP growth, savings, and openness to trade in general and the link between openness and growth conditional on a country's savings rate in particular. We find that the current openness has a significant positive effect on GDP growth in all VAR models, even though the impact is small compared to the strong positive effect of current savings on growth. Based on the estimation of a threshold VAR model and the corresponding impulse response functions we find that for countries in the high savings regime, a shock to openness has a positive effect on GDP growth that is about three times the size of the growth effect for countries in the low saving regime, at least in the very short run.
This paper provides a theoretical explanation for a regulation-driven win-win situation along the... more This paper provides a theoretical explanation for a regulation-driven win-win situation along the lines of Porter's hypothesis. Using a Cournot duopoly with polluting firms we show that in the absence of government intervention there exist parameter values such that, in the resulting Nash equilibrium, both firms choose the old, high polluting technology even though the adoption of a new, low polluting technology yields higher profits for both firms (prisoner's dilemma). We then show that gobernment intervention in the form of direct emission controls can eliminate the prisoner's dilemma situation and induce both firms to adopt the modern, low polluting technology provided that the regulation is sufficiently strict. In this case, the reduction in market size for polluting firms is storng enough to reduce profits. By investing in a new, low polluting technology, firms avoid any quantity restrictions on output and enjoy higher profits despite the initial cost of investing i...
We suggest a new perspective on firms’ ability to organize collective action. We argue that indus... more We suggest a new perspective on firms’ ability to organize collective action. We argue that industries that face a greater number of regulations have an easier time forming a lobby group and sustaining joint lobbying efforts. In particular, firms in industries that are pollution intensive, and therefore incur abatement costs, face an extra policy issue compared to other industries. The prediction that emerges from the theory is that more polluting industries should have greater levels of lobbying contributions. Using U.S. manufacturing sector data, we find empirical support for this hypothesis. JEL Codes: D70, Q28.
Abstract: This paper examines the impact of NAFTA on trade as well as migration flows between Mex... more Abstract: This paper examines the impact of NAFTA on trade as well as migration flows between Mexico, Canada, and the United States. Several questions are being investigated: Can the increase in trade volume among NAFTA countries be attributed to the reduction in trade barriers since 1994? Is there evidence for a significant shift in the pattern of migration within North American since 1994? Is there evidence that observed changes in trade flows on the one hand and migration flows on the other are linked, and to what extent did NAFTA affect this potential link? Our findings point to a positive impact of NAFTA on aggregate trade flows between all three countries, and in particular between Mexico and the United States. However, at a more disaggregate level, NAFTA appears to have a positive trade impact on no more than half of the industries analyzed. With regard to legal migration, we do not find a noticeable NAFTA impact on long-term trends, while the short-run impact is more difficu...
and sponsored in part by the Jno E. Owens Foundation. We would like to thank a number of people w... more and sponsored in part by the Jno E. Owens Foundation. We would like to thank a number of people who helped make this conference possible, especially Richard W. Fisher, president of the Dallas Fed, and Harvey Rosenblum, the Bank's executive vice president and director of research. We also thank Phil Martin and Catalina Amuedo-Dorantes for filling in at the last minute and doing such an excellent job. Finally, we want to express our gratitude to the Jno E. Owens Foundation for its generous support. The foundation was established in 1953 by Jewell Montague Owens in memory of her husband, a prominent Texas banker. During his lifetime, Mr. Owens was intensely interested in international economics, and it was his wish to establish a foundation that would memorialize his lifelong interest in international relations and his commitment to free trade.
In this paper we consider a model of international migration due to Fujita and Weber, with two he... more In this paper we consider a model of international migration due to Fujita and Weber, with two heterogeneous countries, and show that in equilibrium the larger country attracts more immigrants, while choosing a lower quota. Moreover, a higher degree of labor complementarity and lower degree of cultural friction between natives and immigrants yield a higher immigration quota. We test the empirical validity of the model by using time-series country-level data. Even in the absence of direct evidence of strategic and non-cooperative choice of countries' immigration quotas, both cross-section and panel data approaches indicate that crosscountry immigration patterns are consistent with the majority of our theoretical findings.
In this paper we investigate the idea whether democracy can have a direct effect on economic grow... more In this paper we investigate the idea whether democracy can have a direct effect on economic growth. We use a system GMM framework that allows us to model the dynamic aspects of the growth process and control for the endogenous nature of many explanatory variables. In contrast to the growth effects of institutions, regime stability, openness and macro-economic policy variables, we find that measures of democracy matter little, if at all, for the economic growth process.
This paper provides a theoretical explanation for a regulation-driven win-win situation along the... more This paper provides a theoretical explanation for a regulation-driven win-win situation along the lines of Porter's hypothesis. Using a Cournot duopoly with polluting¯rms we show that in the absence of government intervention there exist parameter values such that in the resulting Nash equilibrium, both rms choose the old, high polluting technology even though adoption of a new, low polluting technology yields higher pro¯ts for both¯rms (prisoner's dilemma). We then show that government intervention in the form of direct emission controls can eliminate the prisoner's dilemma situation and induce both rms to adopt the modern, low polluting technology provided that the regulation is su±ciently strict. In this case, the reduction in market size for polluting¯rms is strong enough to reduce pro¯ts. By investing in a new, low polluting technology,¯rms avoid any quantity restrictions on output and enjoy higher pro¯ts despite the initial cost of investing in the new technology.
Link to publication Citation for published version (APA): Hoogstrate, A. J., & Osang, T. (1998). ... more Link to publication Citation for published version (APA): Hoogstrate, A. J., & Osang, T. (1998). Saving, openness, and growth. (CentER Discussion Paper; Vol. 1998-47). CentER. General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research • You may not further distribute the material or use it for any profit-making activity or commercial gain • You may freely distribute the URL identifying the publication in the public portal Take down policy If you believe that this document breaches copyright, please contact us providing details, and we will remove access to the work immediately and investigate your claim. Download date: 05. mrt. ...
Version 1.0 In this paper we examine the empirical relevance of three prominent endogenous protec... more Version 1.0 In this paper we examine the empirical relevance of three prominent endogenous protection models. Is protection for sale, or do altruistic policy makers worry about political support? We find strong evidence that protection is indeed "for sale. " The important new result is, however, that not only the existence of lobbies matters, but also the relative size of the sectoral pro and anti protection contributions. All variables of both the Influence Driven (Grossman and Helpman, 1994) and the Tariff Function (Findlay and Wellisz, 1982) models are significant at the one percent level. Novel is our application of a single, unified theoretical framework to take strict interpretations of the three theoretical models to the data. We thus extend the previous tests of the Influence Driven approach by comparing its performance to well specified alternatives. Using J tests to compare the power of the models directly, we find significant misspecification in the Political Su...
This paper investigates the consequences of religion for economic development. In particular, we ... more This paper investigates the consequences of religion for economic development. In particular, we examine whether religious attitudes, beliefs and participation contribute to differences in per capita income across countries. Using a large scale international survey on values and religious behavior, we estimate both cross-section and panel data models, controlling for the so called deep determinants of development: Institutions, geography and trade. Our results indicate that religion plays an important role in economic development, but mostly in a non-linear manner. Countries with moderate religious values and behavior tend to have higher income levels than countries on either end of the religious spectrum.
As Rodrik, Subramanian, and Trebbi (2004) point out, factors that affect economic development can... more As Rodrik, Subramanian, and Trebbi (2004) point out, factors that affect economic development can be classified using a two-tier approach. Based on a standard production function, inputs such as labor and physical and human capital directly affect per capita income. Much of the empirical cross-country growth literature has focused on these covariates. But the factors themselves are the product of deeper and more fundamental determinants and, thus, are at best proximate factors of economic development. The deeper determinants fall into two broad categories: internal and external. Among the former, institutions and geography have received the most attention, while international trade has been the focus of the latter. The main purpose of this paper is to add an external factor, namely measures of migration, to the existing geography-institutions-trade setup and to evaluate its contribution to the observed differences in per capita income across countries.
In this paper, we use a multi-sector specific factors model with international capital mobility to... more In this paper, we use a multi-sector specific factors model with international capital mobility to examine the effects of globalization on the skill premium in U.S. manufacturing industries. This model allows us to identify two channels through which globalization affects relative wages: effects of international capital flows transmitted through changes in interest rates, and effects of international trade in goods and services transmitted through changes in product prices. In addition, we identify two domestic forces which affect relative wages: variations in labor endowment and technological change. Our results reveal that changes in labor endowments had a negative effect on the skill premium, while the effect of technological progress was mixed. The main factors behind the rise in the skill premium were product price changes (for the full sample period) and international capital flows (during 1982-05). JEL Classification: F16, J31.
This paper examines the absolute and relative contribution by Brazil, Russia, India, and China (B... more This paper examines the absolute and relative contribution by Brazil, Russia, India, and China (BRIC) on world trade and foreign direct in vestment over the past three decades. In addition, we briefly discuss major achievements as well as remaining shortcomings of the international trade and foreign investment policy reforms implemented by the BRICs over the same period. Empirical estimates of the long-run equilibrium relationship in exports between the BRICs and the G3 (United States, Japan, and Germany) as well as the role of the BRICs' economic performance within a larger cross-section time-series data framework are also presented.
In this paper we examine the empirical relevance of three prominent endogenous protection models.... more In this paper we examine the empirical relevance of three prominent endogenous protection models. Is protection for sale, or do altruistic policy makers worry about political support? We find strong evidence that protection is indeed "for sale." The important new result is, however, that not only the existence of lobbies matters, but also the relative size of the sectoral pro and anti protection contributions. All variables of both the Influence Driven (Grossman and Helpman, 1994) and the Tariff Function (Findlay and Wellisz, 1982) models are significant at the one percent level. Novel is our application of a single, unified theoretical framework to take strict interpretations of the three theoretical models to the data. We thus extend the previous tests of the Influence Driven approach by comparing its performance to well specified alternatives. Using J tests to compare the power of the models directly, we find significant misspecification in the Political Support Functio...
A number of recent papers study the impact of institutions, trade and geography known as “deep de... more A number of recent papers study the impact of institutions, trade and geography known as “deep determinants” of economic development using cross-section data. This paper instead employs a panel data approach to examine the impact of these three determinants on per capita income. Our approach enables us to account for unobserved heterogeneity across countries, an issue that cannot be addressed in a cross-section framework. Moreover, employing the Hausman and Taylor (1981) approach allows us to obtain direct parameter estimates of the time invariant explanatory variables like geography or some institutional measures, making our results comparable to the existing cross-section iterature. Also, by using lagged explanatory variables whenever possible we can account for contemporaneous correlation between these variables and the idiosyncratic error term. We find that the quality of institutions and openness to trade both have positive and statistically significant coefficient estimates th...
This paper examines the sources for U.S. labor productivity growth over more than three decades. ... more This paper examines the sources for U.S. labor productivity growth over more than three decades. We find that access to lower priced capital good imports played a signifcant role for gains in labor productivity. In contrast, imported industrial materials did contribute very little to the overall increase in labor productivity although they have become slightly more important since the early ’80s. While private capital formation was the most important and consistent component of labor productivity growth, non-military government expenditures on capital goods did not contribute to the observed long-run increase in labor productivity.
This paper investigates the consequences of religion for economic development. In particular, we ... more This paper investigates the consequences of religion for economic development. In particular, we examine whether religious attitudes, beliefs and participation contribute to differences in per capita income across countries. Using a large scale international survey on values and religious behavior, we estimate both cross-section and panel data models, controlling for the so called deep determinants of development: Institutions, geography and trade. Our results indicate that religion plays an important role in economic development, but mostly in a non-linear manner. Countries with moderate religious values and behavior tend to have higher income levels than countries on either end of the religious spectrum.
We consider growth and welfare effects of lifetime-uncertainty in an economy with human capital-l... more We consider growth and welfare effects of lifetime-uncertainty in an economy with human capital-led endogenous growth. We argue that lifetime uncertainty reduces private incentives to invest in both physical and human capital. Using an overlapping generations framework with finite-lived households we analyze the relevance of government expenditure on health and education to counter such growth-reducing forces. We focus on three different models that differ with respect to the mode of financing of education: (i) both private and public spending, (ii) only public spending, and (iii) only private spending. Results show that models (i) and (iii) outperform model (ii) with respect to long-term growth rates of per capita income, welfare levels and other important macroeconomic indicators. Theoretical predictions of model rankings for these macroeconomic indicators are also supported by observed stylized facts.
This paper searches for empirical evidence for convergence in real GDP per capita between the U.S... more This paper searches for empirical evidence for convergence in real GDP per capita between the U.S., Canada, and Mexico. The results of the paper are based on two different concepts of convergence. First, some simple descriptive statistics are calculated that characterize convergence from a static crosscountry perspective. Second, based on the concepts of cointegration and common trends, the paper estimates the dynamic (long run) relationships in per capita income between the three countries and then tests for convergence. Different subgroups of countries as well as the entire sample are considered. Both the static as well as the dynamic statistics indicate that there is little evidence for convergence in per capita income.
International Journal of Behavioral Medicine, 2005
Using a country-level panel data set, we investigate the relationship between GDP growth, savings... more Using a country-level panel data set, we investigate the relationship between GDP growth, savings, and openness to trade in general and the link between openness and growth conditional on a country's savings rate in particular. We find that the current openness has a significant positive effect on GDP growth in all VAR models, even though the impact is small compared to the strong positive effect of current savings on growth. Based on the estimation of a threshold VAR model and the corresponding impulse response functions we find that for countries in the high savings regime, a shock to openness has a positive effect on GDP growth that is about three times the size of the growth effect for countries in the low saving regime, at least in the very short run.
This paper provides a theoretical explanation for a regulation-driven win-win situation along the... more This paper provides a theoretical explanation for a regulation-driven win-win situation along the lines of Porter's hypothesis. Using a Cournot duopoly with polluting firms we show that in the absence of government intervention there exist parameter values such that, in the resulting Nash equilibrium, both firms choose the old, high polluting technology even though the adoption of a new, low polluting technology yields higher profits for both firms (prisoner's dilemma). We then show that gobernment intervention in the form of direct emission controls can eliminate the prisoner's dilemma situation and induce both firms to adopt the modern, low polluting technology provided that the regulation is sufficiently strict. In this case, the reduction in market size for polluting firms is storng enough to reduce profits. By investing in a new, low polluting technology, firms avoid any quantity restrictions on output and enjoy higher profits despite the initial cost of investing i...
We suggest a new perspective on firms’ ability to organize collective action. We argue that indus... more We suggest a new perspective on firms’ ability to organize collective action. We argue that industries that face a greater number of regulations have an easier time forming a lobby group and sustaining joint lobbying efforts. In particular, firms in industries that are pollution intensive, and therefore incur abatement costs, face an extra policy issue compared to other industries. The prediction that emerges from the theory is that more polluting industries should have greater levels of lobbying contributions. Using U.S. manufacturing sector data, we find empirical support for this hypothesis. JEL Codes: D70, Q28.
Abstract: This paper examines the impact of NAFTA on trade as well as migration flows between Mex... more Abstract: This paper examines the impact of NAFTA on trade as well as migration flows between Mexico, Canada, and the United States. Several questions are being investigated: Can the increase in trade volume among NAFTA countries be attributed to the reduction in trade barriers since 1994? Is there evidence for a significant shift in the pattern of migration within North American since 1994? Is there evidence that observed changes in trade flows on the one hand and migration flows on the other are linked, and to what extent did NAFTA affect this potential link? Our findings point to a positive impact of NAFTA on aggregate trade flows between all three countries, and in particular between Mexico and the United States. However, at a more disaggregate level, NAFTA appears to have a positive trade impact on no more than half of the industries analyzed. With regard to legal migration, we do not find a noticeable NAFTA impact on long-term trends, while the short-run impact is more difficu...
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