Three Essays On Macroeconomics And Economics Of Transition PDF Download

(Cont.) Countries that tend to be close to international supply of skilled labor have lower levels of advanced education, while the reverse is true for countries that are close to labor abundant nations. A one standard deviation difference in geographic proximity to skilled labor is associated with a difference' of about 2/3 of a year of average higher education. Chapter 2 examines why movements of relative costs brought about by exchange rate fluctuations are passed on to customers only slowly, and never to a full extent. We first develop a perfectly competitive economy featuring heterogeneity of both good qualities and of consumer valuations. In equilibrium, high valuation consumers and high quality firms are matched. The relative scarcity of different qualities leads to pricing-to-market and markups that are determined by the local toughness of competition. Our production setup features trade in intermediate goods, local assembly that is subject to decreasing returns and fixed costs of market entry. In every export market, firm entry and size decisions are determined by how local prices compare to the cost of production at home. We next analyze how changes in the real exchange rate are transmitted internationally.