Canadian Journal of Economics-Revue Canadienne D Economique最新文献

Our analysis begins with an empirical investigation of how employment concentration in industries and occupations across regions of the United States has changed over time and how regional specialization has changed. Results show that industry concentration and specialization indices have fallen, while occupation concentration and specialization indices have risen. Using this background as motivation, we develop a model in which the comparative advantage of regions lies in their productivity of supplying functions such as law, finance, advertising and engineering, to multiple sectors. Productivity differences specific to region functions shape the location decisions of industries that use multiple functions and hence determine patterns of regional specialization both in functions and in sectors. A key parameter is the cost of sourcing functions from a different region (fragmentation costs), and we show that a fall in this cost mimics the data: sector concentration and regional specialization fall and function concentration and specialization rise. At high fragmentation costs, regional comparative advantage in sectors determines general equilibrium analogous to a Heckscher–Ohlin model (HO). At low fragmentation costs, comparative advantage in functions drives an equilibrium that has little resemblance to a HO world.

Productivity growth in many countries has remained low for several years. Whether new technologies can reverse the trend depends on the scope of their impact and scale of their adoption—two dimensions of technical change that are historically difficult to measure. Here, we elaborate on the materials and methods presented in Alexopoulos's presidential address at the 2024 Canadian Economics Association meeting. Specifically, we discuss how applying natural language processing and text mining to library collections and cataloguing materials can help: (i) identify new technologies as they come to market and (ii) track their uses and spread over time. We further describe how our insights can be used to uncover general purpose technologies and macro-innovations in both the past and the present. An application to current data suggests that AI and robotics are responsible for an increasing share of recent technical change. Moreover, they resemble past early-stage general purpose technologies and thus do promise a reversal in productivity trends as their adoption increases. Going forward, our new methods should be especially useful to economists and policy-makers who need to track future development and adoption of key technologies—especially during periods of rapid innovation.

External reference pricing imposes a price cap for drugs based on prices in other countries. I study the choice of reference countries and pricing rules in a three-country framework. If the manufacturer sells to all three countries, the minimum price rule yields the lowest drug price. If the referencing country is sufficiently large, the manufacturer may not export to reference countries under the minimum price rule. External reference pricing creates the incentive for the reference countries also to adopt external reference pricing. Thus, external reference pricing results in price convergence.

We develop a new series of Canadian monetary policy shocks for the time period 1986 to 2023. Our shocks are constructed as the daily change in the Nelson–Siegel yield curve factors on days of monetary policy events such as announcements of the short-run policy rate and speeches by Bank of Canada officials. This allows us to look at both conventional and unconventional monetary policy. We find that tighter monetary policy lowers inflation and GDP. Monetary policy shocks, however, often twist the yield curve, potentially offsetting changes in the short-run policy rate. Finally, speeches also tend to move the yield curve with similar effects on inflation and GDP as formal policy announcements.

If rule of law encourages relationship-specific investments, then industries that use intermediates which require relationship-specific investments should have a disproportionately low share of output or labour in countries where rule of law is weak. We find robust support for this prediction using data on industry composition for 189 countries. Using a standard preference framework to construct model-implied income values from the estimated coefficients, we find that the interaction between relationship specificity and rule of law may be an economically significant determinant of aggregate outcomes through its influence on productivity and economic structure.

This study examines the effects of external trade policy shock from the US–China trade war on firm value. Using a merged data set of Chinese-listed companies, our empirical results reveal that Chinese firms conducting outward direct investment in the US have significantly higher stock returns around the date of the outbreak of the trade war as compared with the lower returns of exporting firms. This indicates a sheltering effect of pre-existing outward direct investment activities. Moreover, we find that the sheltering effect is more pronounced for production-oriented projects, high tech industries and tariff-targeted sectors, while it is weaker for state-owned companies.

Although politicians and the popular press often express the desire to link retaliation in trade agreements to non-trade issues, the WTO discourages and usually disallows cross-retaliation even among its own agreements. In this paper, we analyze the welfare implications of cross-retaliation. We compare two different mechanisms in a two-country two-sector tariff-setting political-economy model with incomplete information. A country may temporarily raise trade barriers in response to political pressure and the extent of this pressure is private information. In a same-sector retaliation mechanism a safeguard action, or other limited violation of the international trade agreement, is punished by an equivalent suspension of concessions in the sector where the initial deviation takes place. In a linked, or cross-sector, retaliation mechanism retaliatory actions may be taken in another sector or agreement. We next consider less-than-equivalent suspensions of concessions whereby the probability of retaliation is less than unity. We then endogenize this probability and derive its optimal level separately for same- and cross-sector retaliation. We also consider the long-run viability of these self-enforcing trade agreements. We show that whether retaliation is certain or probabilistic a cross-sector retaliation mechanism can generate greater welfare and self-enforcement capability than a same-sector mechanism unless export-oriented political pressure in the cross-sector targeted for retaliation is high. Although cross-sector retaliation is usually welfare improving, there may be little additional benefit to extending retaliation to a different agreement.

Canada plans to phase out internal combustion engine vehicle (ICEV) sales in favour of electric vehicles (EVs) by 2035 as part of its climate policy. Herein I examine the economic implications of a phased-in electric vehicle mandate. I show using partial equilibrium analysis that when both types of cars are available, auto companies will overproduce electric vehicles and earn scarcity rents on internal combustion engine vehicles that partially offset the revenue loss on electric vehicles. I then present a numerical general equilibrium model of the Canadian economy to assess the overall macroeconomic consequences of the policy. The results depend critically on the assumed pace at which electric vehicles achieve cost parity with internal combustion engine vehicles on a quality-adjusted basis. An electric vehicle mandate will have manageable economic consequences if technology improves so rapidly that the mandate is unnecessary. If the mandate outpaces achievement of cost parity the economic consequences can be severe and would likely cause the auto manufacturing sector to shut down. The cost per tonne of emission reductions are at least 10 times the Canadian carbon tax rate while the mandate is binding. The analysis provides insight into why automakers have been willing hitherto to develop and sell electric vehicles even though they currently lose money on them.

This paper investigates whether evaluation outcomes are influenced by private information and subjective biases when appraisers and appraisees are socially connected. In the Korean Basketball League, school ties between referees and players are commonplace because a large proportion of referees were previously basketball players. Using data from six basketball seasons, we analyze the degree to which referees' decisions are affected when players and referees attended the same school. Our results suggest that players who play under referees with school ties are called for fewer fouls. We also find that the results are driven mainly by high school ties.