What We Cannot Learn from the Irish Experience: A fundamental Asymmetry of Asymmetric Shocks
AbstractA simple N-country specific-factor model with imperfectly mobile labour is developed. It is shown that effects of country-specific productivity shocks hitting a small country are fundamentally asymmetric. A positive shock will be accomodated by a moderate wage increase and sizable in-migration, whereas a negative shock will be accomodated by a significant decrease in wages and moderate out-migration. The effects of shocks in a monetary union are discussed, and it is argued that the results are consistent with the recent Irish experience. The welfare effects of small economics fluctuations are also discussed.
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Bibliographic InfoPaper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2000:10.
Length: 14 pages
Date of creation: 11 Aug 2000
Date of revision:
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Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
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migration; assymmetric shocks;
Other versions of this item:
- Andersson, Fredrik & Forslid, Rikard, 2000. "What We Cannot Learn from the Irish Experience: A Fundamental Asymmetry of Asymmetric Shocks," CEPR Discussion Papers 2531, C.E.P.R. Discussion Papers.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- F22 - International Economics - - International Factor Movements and International Business - - - International Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2000-10-23 (All new papers)
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- Barry, Frank, 2002. "FDI, Infrastructure and the Welfare Effects of Labour Migration," CEPR Discussion Papers 3380, C.E.P.R. Discussion Papers.
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