The volatility of economic activity in most G7 economies has moderated over the past 40 years. Also, despite large increases in trade and openness, G7 business cycles have not become more synchronized. After documenting these facts, we interpret G7 output data using a structural VAR that separately identifies common international shocks, the domestic effects of spillovers from foreign idiosyncratic shocks, and the effects of domestic idiosyncratic shocks. This analysis suggests that, with the exception of Japan, a significant portion of the widespread reduction in volatility is associated with a reduction in the magnitude of the common international shocks. Had the common international shocks in the 1980s and 1990s been as large as they were in the 1960s and 1970s, G7 business cycles would have been substantially more volatile and more (JEL: C3, E5)

/pdf/understanding-changes-in-international-business-cycle-268cpqfmkx.pdf

Understanding Changes in International Business Cycle Dynamics

This Paper considers the spatial distribution of economic activities in the European Union It has three main aims: (i) to describe the data that is available in the EU and give some idea of the rich spatial data sets that are fast becoming available at the national level; (ii) to present descriptive evidence on the location of aggregate activity and particular industries and to consider how these location patterns are changing over time; (iii) to consider the nature of the agglomeration and dispersion forces that determine these patterns and to contrast them to forces acting elsewhere, in particular the US Our survey suggests that much has been achieved in the wave of empirical work that has occurred in the past decade, but that much work remains to be done

The Spatial Distribution of Economic Activities in the EU

Specialization Patterns in Europe. — This paper analyzes whether specialization has increased in European Union countries, and discusses whether specialization patterns are consistent with predictions of trade theory. There is evidence of increasing specialization in some EU countries between 1968 and 1990, and some industries have become more concentrated geographically. The observed pattern of specialization broadly follows trade theory. In particular, those industries that have become more concentrated geographically are characterized by high scale economies and high intermediate-goods intensity, providing some support for new trade theories.

Specialization patterns in Europe

The monetary transmission mechanism: Evidence from the industries of five OECD countries

Outsourcing Economics has a double meaning. First, it is a book about the economics of outsourcing. Second, it examines the way that economists have understood globalization as a pure market phenomenon, and as a result have 'outsourced' the explanation of world economic forces to other disciplines. Markets are embedded in a set of institutions - labor, government, corporate, civil society, and household - that mold the power asymmetries that influence the distribution of the gains from globalization. In this book, William Milberg and Deborah Winkler propose an institutional theory of trade and development starting with the growth of global value chains - international networks of production that have restructured the global economy and its governance over the past twenty-five years. They find that offshoring leads to greater economic insecurity in industrialized countries that lack institutions supporting workers. They also find that offshoring allows firms to reduce domestic investment and focus on finance and short-run stock movements.

Outsourcing Economics: Global Value Chains in Capitalist Development

http://www.biblio.liuc.it/liucpap/pdf/167.pdf

Patterns of international fragmentation of production and the relative demand for labor

In this paper we analyse the dynamics of trade patterns in the six largest industrialised countries and in eight fast growing Asian economies. For each of these countries we study the shape of the sectoral distribution of an index of trade specialisation and its evolution over time. Our analysis shows a marked difference between the advanced and the emerging countries as far as the degree of persistence is concerned: the former have in fact a highly persistent trade pattern, whereas the latter show a rapidly changing trade specialisation. However, the two groups of countries are more similar as far as the evolution of the degree of specialisation is concerned: although emerging countries are still more specialised than the industrialised countries, both groups show a tendency toward a reduced polarisation and a more symmetric distribution of the specialisation index. This evidence is in line with the traditional trade theory, in which changing comparative advantage is the determinant of a changing trade pattern. On the contrary, this evidence does not support the idea that self-reinforcing mechanisms are prominent in international trade specialisation.

On the Dynamics of Trade Patterns

How much (a)symmetry in Europe? Evidence from industrial sectors

There are various paths through which globalization is channelled to the labour market. One of these is the eff ect on labour demand elasticity. Trade might induce an increase in this elasticity via a scale effect due to the increased competition on the output market and/or via a substitution effect generated by expanding the firm production possibility set to include additional inputs. The focus of this paper is centered on the latter channel of transmission. A labour demand equation is obtained from the solution of a firm’s cost minimization problem. The impact of globalization on domestic employment is not restricted to a wage elasticity effect, but also allows for a direct effect with globalization acting as a domestic labour demand shifter. A theoretically consistent labour demand is estimated using a industry-year panel from a number of industrialised countries, including major European countries, Japan and the US over the period 1970-96. Overall we do not find any significant substitution effect of trade on labour demand elasticity. The only exception is France.

/pdf/measuring-the-effect-of-globalization-on-labour-demand-4g3av993lk.pdf

Measuring the effect of globalization on labour demand elasticity: an empirical application to OECD countries

In this paper we analyse the dynamics of trade patterns in the six largest industrialised countries and in eight fast growing Asian economies. For each of these countries we study the shape of the sectoral distribution of an index of trade specialisation and its evolution over time. Our analysis shows a marked difference between the advanced and the emerging countries as far as the degree of persistence is concerned: the former have in fact a highly persistent trade pattern, whereas the latter show a rapidly changing trade specialisation. However, the two groups of countries are more similar as far as the evolution of the degree of specialisation is concerned. Although emerging countries are still more specialised than the industrialised countries, both groups show a tendency toward a reduced polarisation and a more symmetric distribution of the specialisation index. This evidence is in line with the traditional trade theory, in which changing comparative advantage is the determinant of a changing trade pattern. Contrarily, this evidence does not support the idea that self-reinforcing mechanisms are prominent in international trade specialisation.

Rodolfo Helg

Papers

Patterns of international fragmentation of production and the relative demand for labor

On the Dynamics of Trade Patterns

How much (a)symmetry in Europe? Evidence from industrial sectors

Measuring the effect of globalization on labour demand elasticity: an empirical application to OECD countries

On the Dynamics of Trade Patterns