- Raymond Riezman
329 Linda Rd
Santa Barbara, CA 93109
Raymond Riezman
The University of Iowa, Economics, Emeritus
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Aarhus University; School of Business and Social Sciences, Department of Economics and Business, Faculty MemberUniversity of California, Santa Barbara, Economics, Faculty Member add
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We construct a stochastic model of a legislature with an endogenously determined seniority system. We model the behavior of the legislators as well as their constituents as an infinitely repeated divide-the-dollar game. The game has a... more
We construct a stochastic model of a legislature with an endogenously determined seniority system. We model the behavior of the legislators as well as their constituents as an infinitely repeated divide-the-dollar game. The game has a stationary equilibrium with the property that the legislature imposes on itself a non-trivial seniority system, and that incumbent legislators are always reelected.
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This report demonstrates how the rational expectations methodology may be applied to oil exporter behavior. The authors derive intriguing results about the motivation of a dominant exporter in three specific cases: (1) when... more
This report demonstrates how the rational expectations methodology may be applied to oil exporter behavior. The authors derive intriguing results about the motivation of a dominant exporter in three specific cases: (1) when importer's demands are affected by supply uncertainty; (2) when disruptions occur among a competitive fringe of suppliers; and (3) when the dominant seller has capital invested in the importing country. While the authors abstract from many real world complexities to make their analysis tractable, they offer several thought-provoking insights and provide a solid foundation that should stimulate further research. 13 refs.
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Changes in trade policy affect a nation’s economic welfare through terms-of-trade and volume-of-trade effects. A move to global free trade would imply higher world economic welfare equal to the sum of all nations ’ volume-of-trade, or... more
Changes in trade policy affect a nation’s economic welfare through terms-of-trade and volume-of-trade effects. A move to global free trade would imply higher world economic welfare equal to the sum of all nations ’ volume-of-trade, or efficiency, effects. Since the sum of the terms-of-trade effectsacrossallnationsiszerotheseeffects are contentious. Konishi, Kowalczyk, and Sjöström (2003) have shown that if customs unions do not affect non-member countries, then immediate global free could be achieved if free trade were proposed together with international sidepayments equal to the terms of trade effects. How large would these terms of trade effects, and hence transfers, be? This paper presents some estimates from a simple computable general equilibrium model. In some cases transfers are not necessary for free trade, in other cases, terms-of-trade gains account for more than 50 % of a country’s gains from trade. (140 words) 2 1
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Economics, International Economics, Free Trade, General Equilibrium, Social Science Research Network, and 10 moreWelfare, Key words, Bystander Effect, HF, Free Trade Area, Customs Union, Preferential Trade Agreements, Preferential trade agreement, Tariffs, and Dynamic stochastic general equilibrium model
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We consider a dynamic model in which a domestic firm has a positive marginal cost of production and a foreign firm has zero marginal cost. With free trade the foreign firm would serve the entire domestic market and the domestic firm would... more
We consider a dynamic model in which a domestic firm has a positive marginal cost of production and a foreign firm has zero marginal cost. With free trade the foreign firm would serve the entire domestic market and the domestic firm would not produce. We assume that there is a social benefit for the domestic nation if the domestic firm produces. This could be, for example, because there is learning by doing at the firm level that spills over to other domestic firms. We also assume that the domestic firm can stochastically improve its technology and produce at zero cost. This probability is increasing in domestic production. However, whether the domestic firm has transitioned to zero cost or not is private information. We use a mechanism design approach to deliver optimal protection in the presence of such persistent private information. Our incentive-compatible protection policy induces the domestic firm to reveal its true cost. Our results are as follows. First, the import quota i....
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Purpose – We ask how far the Kemp–Wan Pareto-improving result can hold without inter-country transfers. Methodology/approach – Assuming that the standard revenue and expenditure functions exist, we consider tariff adjustments for some... more
Purpose – We ask how far the Kemp–Wan Pareto-improving result can hold without inter-country transfers. Methodology/approach – Assuming that the standard revenue and expenditure functions exist, we consider tariff adjustments for some group of countries such that they makes member countries better off without affecting non-member countries (a la Kemp–Wan). Findings – Any group of countries can engage in a Pareto-improving non-discriminatory tariff reform without income transfers, if (i) there are more than two tradable goods and (ii) the initial tariff vectors of the member countries satisfy the non-proportionality condition. We then show that if these two conditions hold then countries can form a Pareto-optimal customs union. Depending on initial conditions, transfers may be necessary for the customs union to be Pareto-improving. Originality/value of paper – The Pareto-improving result of this chapter is based on tariff reform only.
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Economic Theory and International Trade begins with an examination of classical trade theory and welfare economics. It goes on to discuss international trade policy, including international trading agreements, taxation, tariffs and... more
Economic Theory and International Trade begins with an examination of classical trade theory and welfare economics. It goes on to discuss international trade policy, including international trading agreements, taxation, tariffs and quotas. Attention then turns to the role of market structure in joint ventures, innovation, tariff policy and political economy. The final section is devoted to economic dynamics and international economics, with an emphasis on learning mechanisms, sustainable growth and immigration.
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Economics, International Economics, Econometrics, Climate Change, International Trade, and 15 moreNegotiation, Applied Economics, Global Warming, Numerical Simulation, global Climate change, Climate Change Mitigation, Developing Country, Incentive, Carbon Emissions, Greenhouse Gas, Interaction effect, Economic Modelling, Business as Usual, consumption sociology, and Externality
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We consider the e¤ect of globalisation on fertility, human capital and growth. We view globalisation as creating market opportunities for employment in less developed countries. We construct a speci
c model of household decision mak-ing,... more
We consider the e¤ect of globalisation on fertility, human capital and growth. We view globalisation as creating market opportunities for employment in less developed countries. We construct a speci
c model of household decision mak-ing, drawing on empirical observations in the development economics literature, and show that if the market opportunities produced by globalisation are for women then globalisation reduces fertility and increases human capital forma-tion. If the opportunities are for men then fertility increases and human capital formation falls. We then show that globalisation that produces job opportu-nities for women increases growth and produces a long run steady state with higher per capita consumption than would prevail either without globalisation, or with globalisation that creates jobs only for men. Acknowledgements: We wish to thank two anonymous referees and Stephan Klasen for helpful comments and suggestions on an earlier draft.
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Growth and Globalisation
Abstract: This paper examines various implications of Preferential Trade Agreements (PTAs), namely Customs Unions (CUs) and Free Trade Areas (FTAs), in the context of a multi-country general equilibrium model based on comparative... more
Abstract: This paper examines various implications of Preferential Trade Agreements (PTAs), namely Customs Unions (CUs) and Free Trade Areas (FTAs), in the context of a multi-country general equilibrium model based on comparative advantage considerations. We calibrate the model to represent countries with symmetric endowments, and compare the impact of those agreements with free trade and a non-cooperative Nash equilibria. Utilizing aggregate and dis ggregate welfare change measures, we quantify the welfare effects of trade arrangements. In particular, we develop a numerical approximation procedure to decompose the welfare changes into two components associated with the variations in terms of trade and volume of trade. The results of our analysis indicate that FTAs r bet er than CUs on welfare grounds for the world as a whole since both member and nonmember economies enjoy welfare benefits in an FTA. Further, we show that, for certain endowment distributions, upon formation of an FT...
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We develop a simple two country model of international trade that assumes that there is a fixed cost associated with transporting goods across national boundaries. We show that this leads to multiple equilibria that can be Pareto-ranked.... more
We develop a simple two country model of international trade that assumes that there is a fixed cost associated with transporting goods across national boundaries. We show that this leads to multiple equilibria that can be Pareto-ranked. One of these equilibria is autarky. We argue that the existence of fixed costs in transport can help explain the low volume of North-South trade. ∗GREQAM, University of Aix-Marseille II, email: laussel@univ-aix.fr †Department of Economics, University of Iowa, email: raymond-riezman@uiowa.edu
We develop a small, open economy, two-sector model with heterogeneous agents and endogenous participation in a labor matching market. There are two types of agents: workers and entrepreneurs. Both populations are heterogeneous. Workers... more
We develop a small, open economy, two-sector model with heterogeneous agents and endogenous participation in a labor matching market. There are two types of agents: workers and entrepreneurs. Both populations are heterogeneous. Workers are distinguished by their potential ability as skilled workers and entrepreneurs by their potential ability to manage a firm. To capture the notion of decentralized labor markets we assume random matching. Those agents on the long side of the market who are not matched find employment in the unskilled sector as do those agents who decided not to attempt to enter the matching market. The output of matched pairs is a function of the two partners’ abilities. We find that disparities in labor institutions become a source of comparative advantage. The exact patterns will depend not only on the costs of entering the skilled sector but also on the mechanism used for dividing the surplus. We analyze the implications of asymmetric market entry costs for the p...
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We utilize a three-country trade model to determine the effect of the formation of an FTA on equilibrium tariffs and welfare levels under the assumption that countries choose external tariffs independently to maximize national welfare. We... more
We utilize a three-country trade model to determine the effect of the formation of an FTA on equilibrium tariffs and welfare levels under the assumption that countries choose external tariffs independently to maximize national welfare. We show that the liberalization of internal trade by symmetric member countries causes their optimal external tariff (at constant nonmember tariffs) to fall below its Kemp-Wan (1976) level thereby raising the nonmember country's welfare. If the nonmember country also behaves strategically then, in the Nash equilibrium, this country adopts a more aggressive stance in its policy and induces FTA members to reduce their external tariff even more. For these reasons, the nonmember country benefits from integration; in contrast, member countries benefit only if the combined size of the FTA is sufficiently large. Keywords: Free trade areas, Kemp-Wan tariff adjustments, strategic interactions, welfare JEL Classification: F11, F13, F15, F42 Address for Corr...
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It is well known that large countries can manipulate the terms of trade to their advantage by using tariffs. It is widely believed, however, that this invites retali-ation, and that the post-retaliation equilibrium leaves all countries... more
It is well known that large countries can manipulate the terms of trade to their advantage by using tariffs. It is widely believed, however, that this invites retali-ation, and that the post-retaliation equilibrium leaves all countries worse off than they would be at free trade.2 We present a ...