and Slovakia (the EU11). Since the EU11 began the transformation process, this group of emerging ... more and Slovakia (the EU11). Since the EU11 began the transformation process, this group of emerging countries has made impressive strides as developing market economies and is anchoring development in European Union institutions. There are reasons to believe that the convergence of EU11 income per capita to Western European levels will continue, but will proceed more slowly. The paper concludes that trade and financial integration have sped along at a spectacular pace in the EU11 in the recent past, although trade in modern services and the integration of government bond and
This paper investigates the relationship between the unemployment gap between the United States a... more This paper investigates the relationship between the unemployment gap between the United States and Europe that widened dramatically in the mid-1980's and the opening of international capital markets. This time period was also characterized by substantial increases in international capital flows -a significant share of which were flows from Europe to the US. We consider the implications of capital mobility for unemployment levels and current accounts in a multi-country dynamic general equilibrium model with incomplete international capital markets and national labor markets characterized by search and matching. The economy also features unemployment insurance consisting of a benefit equal to a replacement rate times the market wage and financed by distorting taxes. It is shown that given differences in the generosity of unemployment benefits lead to a substantially differences in unemployment rates across countries when there is international capital mobility than in autarky. Moreover, when capital markets are opened, high benefit countries experience both an increase in the unemployment rate and an outflow of capital, and low benefit countries experience both a reduction in the unemployment rate and an inflow of capital.
This paper investigates the relationship between the unemployment gap between the United States a... more This paper investigates the relationship between the unemployment gap between the United States and Europe that widened dramatically in the mid-1980's and the opening of international capital markets. This time period was also characterized by substantial increases in international capital flows -a significant share of which were flows from Europe to the US. We consider the implications of capital mobility for unemployment levels and current accounts in a multi-country dynamic general equilibrium model with incomplete international capital markets and national labor markets characterized by search and matching. The economy also features unemployment insurance consisting of a benefit equal to a replacement rate times the market wage and financed by distorting taxes. It is shown that given differences in the generosity of unemployment benefits lead to a substantially differences in unemployment rates across countries when there is international capital mobility than in autarky. Moreover, when capital markets are opened, high benefit countries experience both an increase in the unemployment rate and an outflow of capital, and low benefit countries experience both a reduction in the unemployment rate and an inflow of capital.
Latvia. We also thank Mrs. Sari Soderstrom in ECSRE for her continuous support and for securing t... more Latvia. We also thank Mrs. Sari Soderstrom in ECSRE for her continuous support and for securing the funding necessary to conduct this analysis. We would also like to thank our colleagues in DECRG-IE, especially Ms. Susmita Dasgupta for her continuous availability to answer our numerous questions. The research assistance of Mr. Craig Meisner is gratefully acknowledged. Usual disclaimers apply.
and Slovakia (the EU11). Since the EU11 began the transformation process, this group of emerging ... more and Slovakia (the EU11). Since the EU11 began the transformation process, this group of emerging countries has made impressive strides as developing market economies and is anchoring development in European Union institutions. There are reasons to believe that the convergence of EU11 income per capita to Western European levels will continue, but will proceed more slowly. The paper concludes that trade and financial integration have sped along at a spectacular pace in the EU11 in the recent past, although trade in modern services and the integration of government bond and
and Slovakia (the EU11). Since the EU11 began the transformation process, this group of emerging ... more and Slovakia (the EU11). Since the EU11 began the transformation process, this group of emerging countries has made impressive strides as developing market economies and is anchoring development in European Union institutions. There are reasons to believe that the convergence of EU11 income per capita to Western European levels will continue, but will proceed more slowly. The paper concludes that trade and financial integration have sped along at a spectacular pace in the EU11 in the recent past, although trade in modern services and the integration of government bond and
This paper investigates the relationship between the unemployment gap between the United States a... more This paper investigates the relationship between the unemployment gap between the United States and Europe that widened dramatically in the mid-1980's and the opening of international capital markets. This time period was also characterized by substantial increases in international capital flows -a significant share of which were flows from Europe to the US. We consider the implications of capital mobility for unemployment levels and current accounts in a multi-country dynamic general equilibrium model with incomplete international capital markets and national labor markets characterized by search and matching. The economy also features unemployment insurance consisting of a benefit equal to a replacement rate times the market wage and financed by distorting taxes. It is shown that given differences in the generosity of unemployment benefits lead to a substantially differences in unemployment rates across countries when there is international capital mobility than in autarky. Moreover, when capital markets are opened, high benefit countries experience both an increase in the unemployment rate and an outflow of capital, and low benefit countries experience both a reduction in the unemployment rate and an inflow of capital.
This paper investigates the relationship between the unemployment gap between the United States a... more This paper investigates the relationship between the unemployment gap between the United States and Europe that widened dramatically in the mid-1980's and the opening of international capital markets. This time period was also characterized by substantial increases in international capital flows -a significant share of which were flows from Europe to the US. We consider the implications of capital mobility for unemployment levels and current accounts in a multi-country dynamic general equilibrium model with incomplete international capital markets and national labor markets characterized by search and matching. The economy also features unemployment insurance consisting of a benefit equal to a replacement rate times the market wage and financed by distorting taxes. It is shown that given differences in the generosity of unemployment benefits lead to a substantially differences in unemployment rates across countries when there is international capital mobility than in autarky. Moreover, when capital markets are opened, high benefit countries experience both an increase in the unemployment rate and an outflow of capital, and low benefit countries experience both a reduction in the unemployment rate and an inflow of capital.
Latvia. We also thank Mrs. Sari Soderstrom in ECSRE for her continuous support and for securing t... more Latvia. We also thank Mrs. Sari Soderstrom in ECSRE for her continuous support and for securing the funding necessary to conduct this analysis. We would also like to thank our colleagues in DECRG-IE, especially Ms. Susmita Dasgupta for her continuous availability to answer our numerous questions. The research assistance of Mr. Craig Meisner is gratefully acknowledged. Usual disclaimers apply.
and Slovakia (the EU11). Since the EU11 began the transformation process, this group of emerging ... more and Slovakia (the EU11). Since the EU11 began the transformation process, this group of emerging countries has made impressive strides as developing market economies and is anchoring development in European Union institutions. There are reasons to believe that the convergence of EU11 income per capita to Western European levels will continue, but will proceed more slowly. The paper concludes that trade and financial integration have sped along at a spectacular pace in the EU11 in the recent past, although trade in modern services and the integration of government bond and
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