On Thursday, May 27 ICEF organized a joint research seminar in economics by Peter Skott (University of Massachusetts Amherst, USA) and Stephane Auray (Universites Lille Nord de France (ULCO)).
The seminar worked at 16:30-18:30, with the presentation by Peter Skott followed by Stephane Auray, with approximately 1 hour per presentation.
Peter Skott's presentation: "The Real Exchange Rate as an Instrument of Development Policy" (co-autored with Arslan Razmi and Martin Rapetti)
Abstract: Growth is endogenous in small open economies with substantial hidden or open unemployment, even under constant returns to scale. Growth promoting policies, however, have implications for the balance of trade, and two instruments are needed in order to achieve targets for both the growth rate and the balance of trade. The real exchange rate can serve as one of those instruments. Distributional conflict imposes constraints on real exchange rate policies, but in LDCs the main exchange-rate related distributional conflict may be over the sectoral distribution of pro…ts, rather than the real wage. This paper develops a model along these lines and presents empirical support for the hypothesis that real exchange rate undervaluations are a useful instrument for the pursuit of accumulation and growth in low income countries.
Stephane Auray's presentation: "Bargaining Frictions, Labor Income Taxation and Economic Performance" (co-autored with Samuel Danthinez)
Abstract: A matching model with labor/leisure choice and bargaining frictions is used to explain differences in GDP per hour and GDP per capita, differences in employment and hours worked (per capita and per worker), differences in the proportion of part-time work across countries. The model predicts that the higher the level of rigidity in wages and hours the lower are GDP per capita, employment, part-time work and hours worked, but the higher is GDP per hour. In addition, it predicts that a country with a high level of rigidity in wages and hours and a high level of income taxation has higher GDP per hour and lower GDP per capita, employment and part-time work than a country with less rigidity and a lower level of taxation. This is due mostly to a lower level of employment. In contrast, a country with low levels of rigidity in hours and in wage setting but with a higher level of income taxation has a lower GDP per capita and a higher GDP per hour than the economy with low rigidity and low taxation. In this conguration, the level of employment is similar in both economies but the share of part-time work is larger. The model accounts well qualitatively for the facts, and a plausible calibration accounts well qualitatively for the differences between the US, French and Dutch economies.
Venue: Pokrovski Bulvar, 11, Room Zh-822
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