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Strategic Exports and R&D with Internationally Mobile Skilled Labor and Exchange Rate Volatility

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  • Sajal Lahiri
  • Fernando Mesa

Abstract

This paper extends the Spencer and Brander (1983) model of strategic exports and R&D by introducing exchange rate volatility and R&D activities that require internationally mobile skilled labor. We find that an increased volatility reduces both the levels of optimal export subsidy and R&D tax. We also find that the endogeneity of skilled wage increases the level of export subsidy and reduces the level of R&D tax if the country is an exporter of skilled labor.

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  • Sajal Lahiri & Fernando Mesa, 2006. "Strategic Exports and R&D with Internationally Mobile Skilled Labor and Exchange Rate Volatility," Review of International Economics, Wiley Blackwell, vol. 14(2), pages 277-291, May.
    • Handle: RePEc:bla:reviec:v:14:y:2006:i:2:p:277-291
    DOI: 10.1111/j.1467-9396.2006.00575.x
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    1. Maurice Obstfeld & Kenneth S. Rogoff, 1996. "Foundations of International Macroeconomics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262150476, December.
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