Using a CGE Model to Identify the Policy Trade-Off between Unemployment and Inflation: The Efficient Phillips Curve

This paper provides a new reading of a classical economic relation: the short-run Phillips curve. Our point is that, when dealing with inflation and unemployment, policy-making can be understood as a multicriteria decisionmaking problem. Hence, we use so-called multiobjective programming in connection with a computable general equilibrium (CGE) model to determine the combinations of policy instruments that provide efficient combinations of inflation and unemployment. This approach results in an alternative version of the Phillips curve labelled as efficient Phillips curve. Our aim is to present an application of CGE models to a new area of research that can be especially useful when addressing policy exercises with real data. We apply our methodological proposal within a particular regional economy, Andalusia, in the south of Spain. This tool can give some keys for policy advice and policy implementation in the fight against unemployment and inflation.

Trade, Politics, and Democratization: The 1997 Global Agreement between the European Union and Mexico

Mexico and the European Union signed a new Political and Economic Association Agreement in December 1997 and ultimately a free-trade agreement in March 2000, aiming to establish a new model of relations with a more dynamic trade and investment component. This article analyzes the 1997 agreement as background to the final accord. Economic and political changes in the 1990s modified both parties' participation in the international political economy, helping to overcome some of the structural obstacles to the relationship. The policy toward Latin America adopted by the EU in 1994 was influential. The negotiation process revealed divergences over the scope of the liberalization process and the so-called democracy clause.

Determinants of International R&D Outsourcing: The Role of Trade

This paper investigates the determinants of international R&D outsourcing, in particular the role of trade. We construct a monopolistic competition model with heterogeneous firms where outsourcing increases a firm’s fixed transaction as well as its productivity. Financial constraints affect the decision to outsource R&D more to non-exporters than to exporters. In contrast, exporters are more sensitive to a lack of information because they have higher losses when there is technology leakage. We test these predictions using a panel database of Spanish companies. The results highlight the relevance of information in competitive markets, and the role of trade to induce companies to engage in other globalization strategies.

Defining efficient policies in a general equilibrium model: a multi-objective approach

Macroeconomic policy makers are typically concerned with several indicators of economic performance. We thus propose to tackle the design of macroeconomic policy using Multicriteria Decision Making (MCDM) techniques. More specifically, we employ Multiobjective Programming (MP) to seek so-called efficient policies. The MP approach is combined with a computable general equilibrium (CGE) model. We chose use of a CGE model since they have the dual advantage of being consistent with standard economic theory while allowing one to measure the effect(s) of a specific policy with real data. Applying the proposed methodology to Spain (via the 1995 Social Accounting Matrix) we first quantified the trade-offs between two specific policy objectives: growth and inflation, when designing fiscal policy. We then constructed a frontier of efficient policies involving real growth and inflation. In doing so, we found that policy in 1995 Spain displayed some degree of inefficiency with respect to these two policy objectives. We then offer two sets of policy recommendations that, ostensibly, could have helped Spain at the time. The first deals with efficiency independent of the importance given to both growth and inflation by policy makers (we label this set: general policy recommendations). A second set depends on which policy objective is seen as more important by policy makers: increasing growth or controlling inflation (we label this one: objective-specific recommendations).

Spatial and Functional Organization of Pig Trade in Different European Production Systems: Implications for Disease Prevention and Control

Understanding the complexity of live pig trade organization is a key factor to predict and control major infectious diseases, such as classical swine fever (CSF) or African swine fever (ASF). Whereas the organization of pig trade has been described in several European countries with indoor commercial production systems, little information is available on this organization in other systems, such as outdoor or small-scale systems. The objective of this study was to describe and compare the spatial and functional organization of live pig trade in different European countries and different production systems. Data on premise characteristics and pig movements between premises were collected during 2011 from Bulgaria, France, Italy, and Spain, which swine industry is representative of most of the production systems in Europe (i.e., commercial vs. small-scale and outdoor vs. indoor). Trade communities were identified in each country using the Walktrap algorithm. Several descriptive and network metrics were generated at country and community levels. Pig trade organization showed heterogeneous spatial and functional organization. Trade communities mostly composed of indoor commercial premises were identified in western France, northern Italy, northern Spain, and north-western Bulgaria. They covered large distances, overlapped in space, demonstrated both scale-free and small-world properties, with a role of trade operators and multipliers as key premises. Trade communities involving outdoor commercial premises were identified in western Spain, south-western and central France. They were more spatially clustered, demonstrated scale-free properties, with multipliers as key premises. Small-scale communities involved the majority of premises in Bulgaria and in central and Southern Italy. They were spatially clustered and had scale-free properties, with key premises usually being commercial production premises. These results indicate that a disease might spread very differently according to the production system and that key premises could be targeted to more cost-effectively control diseases. This study provides useful epidemiological information and parameters that could be used to design risk-based surveillance strategies or to more accurately model the risk of introduction or spread of devastating swine diseases, such as ASF, CSF, or foot-and-mouth disease.