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Wedges: Distribution, Distortions, and Market Integration

Author

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  • Giuseppe Bertola
Abstract
This paper proposes a stylized model of policy determination and imperfect international integration. A country-specific policy wedge corrects labor market imperfections and/or redistributes welfare across differently wealthy agents. Capital market integration with the rest of the world, indexed by another wedge, shapes the politico-economic equilibrium policy through race-to-the-bottom and beggar-thy-neighbor channels. The policy and welfare implications of tighter international integration depend in sharp and empirically realistic ways on country-specific political and structural features.

Suggested Citation

  • Giuseppe Bertola, 2017. "Wedges: Distribution, Distortions, and Market Integration," CESifo Working Paper Series 6627, CESifo.
    • Handle: RePEc:ces:ceswps:_6627
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    References listed on IDEAS

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    1. Bertola, Giuseppe, 2017. "European unemployment revisited: Shocks, institutions, integration," Research in Economics, Elsevier, vol. 71(3), pages 588-612.

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    More about this item

    Keywords

    policy competition; capital mobility;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies

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