Heterogeneous information and trade policy

Protectionism enjoys surprising popular support, in spite of deadweight losses. At thesame time, trade barriers appear to decline with public information about protection.This paper develops an electoral model with heterogeneously informed voters whichexplains both facts and predicts the pattern of trade policy across industries. In themodel, each agent endogenously acquires more information about his sector of employment. As a result, voters support protectionism, because they learn more about thetrade barriers that help them as producers than those that hurt them as consumers.In equilibrium, asymmetric information induces a universal protectionist bias. Thestructure of protection is Pareto inefficient, in contrast to existing models. The modelpredicts a Dracula effect: trade policy for a sector is less protectionist when there ismore public information about it. Using a measure of newspaper coverage across industries, I find that cross-sector evidence from the United States bears out my theoreticalpredictions.

Learning ability and longevity: a symmetrical evolutionary trade-off in Drosophila.

Learning ability can be substantially improved by artificial selection in animals ranging from Drosophila to rats. Thus these species have not used their evolutionary potential with respect to learning ability, despite intuitively expected and experimentally demonstrated adaptive advantages of learning. This suggests that learning is costly, but this notion has rarely been tested. Here we report correlated responses of life-history traits to selection for improved learning in Drosophila melanogaster. Replicate populations selected for improved learning lived on average 15% shorter than the corresponding unselected control populations. They also showed a minor reduction in fecundity late in life and possibly a minor increase in dry adult mass. Selection for improved learning had no effect on egg-to-adult viability, development rate, or desiccation resistance. Because shortened longevity was the strongest correlated response to selection for improved learning, we also measured learning ability in another set of replicate populations that had been selected for extended longevity. In a classical olfactory conditioning assay, these long-lived flies showed an almost 40% reduction in learning ability early in life. This effect disappeared with age. Our results suggest a symmetrical evolutionary trade-off between learning ability and longevity in Drosophila.

On the role of retaliation in trade agreements

This paper analyzes the role of retaliation in trade agreements. It shows that, in the presenceof private information, retaliation can always be used to increase the welfare derived from suchagreements by the participating governments. In particular, it is shown that retaliation is anecessary feature of any efficient equilibrium.We argue that retaliation would not be necessary if governments could resort to internationaltransfers or export subsidies to compensate for terms-of-trade externalities. Within the currentworld trading system, though, in which transfers are seldom observed whereas export subsidiesare prohibited, the use of the remaining trade instruments in a retaliatory fashion might beoptimal. The model is used to interpret the retaliatory use of antidumping observed in the lastdecades, and the proliferation of these measures relative to other trade remedies.

Is the person trade-off a valid method for allocating health care resources? Some caveats

The Person Trade-Off (PTO) is a methodology aimed at measuring thesocial value of health states. The rest of methodologies would measure individualutility and would be less appropriate for taking resource allocation decisions.However few studies have been conducted to test the validity of the method.We present a pilot study with this objective. The study is based on theresult of interviews to 30 undergraduate students in Economics. We judgethe validity of PTO answers by their adequacy to three hypothesis of rationality.First, we show that, given certain rationality assumptions, PTO answersshould be predicted from answers to Standard Gamble questions. This firsthypothesis is not verified. The second hypothesis is that PTO answersshould not vary with different frames of equivalent PTO questions. Thissecond hypothesis is also not verified. Our third hypothesis is that PTOvalues should predict social preferences for allocating resources betweenpatients. This hypothesis is verified. The evidence on the validity of themethod is then conflicting.

The electric revolution in Latin America

Latin America participated in the electric revolution which profoundly transformed the most developed Western economies between 1880 and 1930. The electrification of Latin America began relatively soon after these economies, but it was incapable of keeping up with them. Public electric lighting was introduced early in the big Latin American cities, where electric trams started running at almost the same time as in Europe, and electricity spread rapidly in the mining sector. In the most advanced countries or areas in the region, the manufacturing industry substituted the steam engine with the electric motor, following the example of industry in the United States and Europe. Nevertheless, towards 1930 electricity consumption per inhabitant for Latin America was far below that of the more advanced economies, and only the Latin American countries which lead the process of electrification had reached levels of electric consumption that were similar to those of the late industrialised European countries. One of the most striking features of the electric revolution in Latin America is rooted precisely in the enormous national differences. These differences are indicative of the great economic inequalities existing in the heart of the region and these nations highly diverse capacity for economic modernisation.

Aggregate fluctuations and the network structure of intersectoral trade

This paper analyzes the flow of intermediate inputs across sectors by adopting a network perspective on sectoral interactions. I apply these tools to show how fluctuationsin aggregate economic activity can be obtained from independent shocks to individualsectors. First, I characterize the network structure of input trade in the U.S. On thedemand side, a typical sector relies on a small number of key inputs and sectors arehomogeneous in this respect. However, in their role as input-suppliers sectors do differ:many specialized input suppliers coexist alongside general purpose sectors functioningas hubs to the economy. I then develop a model of intersectoral linkages that can reproduce these connectivity features. In a standard multisector setup, I use this modelto provide analytical expressions linking aggregate volatility to the network structureof input trade. I show that the presence of sectoral hubs - by coupling productiondecisions across sectors - leads to fluctuations in aggregates.

Geographical effects on the accuracy of textile trade data:an international approach for 1913

Foreign trade statistics are the main data source to the study of international trade.However its accuracy has been under suspicion since Morgernstern published hisfamous work in 1963. Federico and Tena (1991) have resumed the question arguing thatthey can be useful in an adequate level of aggregation. But the geographical assignmentproblem remains unsolved. This article focuses on the spatial variable through theanalysis of the reliability of textile international data for 1913. A geographical biasarises between export and import series, but because of its quantitative importance it canbe negligible in an international scale.

Globalization and wage inequality in South and East Asia, and Latin America: A gender approach

In this paper we analyse the reasons behind the evolution of the gender gap and wage inequality in South and East Asian and Latin American countries. Health human capital improvements, the exposure to free market openness and equal treatment enforcement laws seem to be the main exogenous variables affecting women s economic condition. During the second globalization era (in the years 1975-2000) different combinations of these variables in South East Asian and Latin American countries have had as a result the diminution of the gender gap. The main exception to this rule according to our data is China where economic reforms have been simultaneous to the increase of gender differences and inequality between men and women.This result has further normative consequences for the measure of economic inequality. Theimprovement of women s condition has as a result the diminution of the dispersion of wages.Therefore in most of the countries analysed the consequence of the diminution of the gender gapduring the second global era is the decrease of wage inequality both measured with Gini and Theil indexes.

On the throughput-WIP trade-off in queueing systems, diminishing returns and the threshold property: A linear programming approach

We present a new unifying framework for investigating throughput-WIP(Work-in-Process) optimal control problems in queueing systems,based on reformulating them as linear programming (LP) problems withspecial structure: We show that if a throughput-WIP performance pairin a stochastic system satisfies the Threshold Property we introducein this paper, then we can reformulate the problem of optimizing alinear objective of throughput-WIP performance as a (semi-infinite)LP problem over a polygon with special structure (a thresholdpolygon). The strong structural properties of such polygones explainthe optimality of threshold policies for optimizing linearperformance objectives: their vertices correspond to the performancepairs of threshold policies. We analyze in this framework theversatile input-output queueing intensity control model introduced byChen and Yao (1990), obtaining a variety of new results, including (a)an exact reformulation of the control problem as an LP problem over athreshold polygon; (b) an analytical characterization of the Min WIPfunction (giving the minimum WIP level required to attain a targetthroughput level); (c) an LP Value Decomposition Theorem that relatesthe objective value under an arbitrary policy with that of a giventhreshold policy (thus revealing the LP interpretation of Chen andYao's optimality conditions); (d) diminishing returns and invarianceproperties of throughput-WIP performance, which underlie thresholdoptimality; (e) a unified treatment of the time-discounted andtime-average cases.

Modern energy consumption and economic modernisation in Latin America and the Caribbean between 1890 and 1925

In the absence of comparable macroeconomic indicators for most of the Latin Americaneconomies before the 1930s, the apparent consumption of energy is used in this paper as a proxyof the degree of modernisation of Latin America and the Caribbean. This paper presents anestimate of the apparent consumption per head of modern energies (coal, petroleum andhydroelectricity) for 30 countries of Latin American and the Caribbean for 1890 to 1925,multiplying the number of countries for which energy consumption estimates were previouslyavailable. As a result, the paper provides the basis for a quantitative comparative analysis ofmodernisation performance beyond the few countries for which historical national accounts areavailable in Latin America.

Trade, migration and regional unemployment

We formulate a dynamic core-periphery model with frictions in the job matching process to study the interplay between trade costs, migration and regional unemploymentin the short- and long-run. We find that the spatial distribution of unemployment mirrors (inversely) the distribution of economic activities. Further, we highlight a contrast between the short-run and the long-run effects of trade-induced migration on regional unemployment. In particular, an inßow of immigrants from the periphery into the core reduces the unemployment gap in the short-run, but exacerbates unemployment disparities in the long-run.