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A fundamental asymmetry of asymmetric shocks

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Author

Summary, in English

A simple N-country specific-factor-type model with imperfectly mobile labour is developed. It is shown that the effects of country-specific productivity shocks hitting a small country have fundamentally asymmetric effects: A positive shock will be accommodated by a moderate wage increase and sizeable in-migration, whereas a negative shock will be accommodated by a significant decrease in wages and moderate out-migration. It is argued that the results of the model are consistent with the recent Irish experience. The welfare effects of small economic fluctuations are also discussed. (C) 2002 Elsevier B.V. All rights reserved.

Publishing year

2004

Language

English

Pages

337-351

Publication/Series

European Economic Review

Volume

48

Issue

2

Document type

Journal article

Publisher

Elsevier

Topic

  • Economics

Keywords

  • asymmetric shocks
  • migration

Status

Published

ISBN/ISSN/Other

  • ISSN: 1873-572X