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Robots in a Small Open Economy

Author

Listed:
  • Stéphane Auray

    (CREST; ENSAI; Université du Littoral Côte d’Opale)

  • Aurélien Eyquem

    (Université Lumière Lyon 2 ; GATE-LSE ; Institut universitaire de France)

Abstract
In this paper, we build a small open-economy model la Ghironi & Melitz (2005) with endogenously produced and traded varieties and automation to analyze the effects of a slow-moving, permanent automation shock. Our results are threefold: (i) in the long run a permanent automation shock effectively produces a displacement effect that increases wage inequality between routine and non-routine workers, as well as a fall (increase) in the demand of firms for routine (non-routine) labor, (ii) the relative impact on routine and non-routine labor eventually depends on the relative size of labor supply elasticities, (iii) the external effects of an automation shock remain limited at best.

Suggested Citation

  • Stéphane Auray & Aurélien Eyquem, 2018. "Robots in a Small Open Economy," Working Papers 2018-17, Center for Research in Economics and Statistics.
    • Handle: RePEc:crs:wpaper:2018-17
    as

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    File URL: http://crest.science/RePEc/wpstorage/2018-17.pdf
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    References listed on IDEAS

    as
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    2. Schmitt-Grohe, Stephanie & Uribe, Martin, 2003. "Closing small open economy models," Journal of International Economics, Elsevier, vol. 61(1), pages 163-185, October.
    3. Nicolas Berman & Philippe Martin & Thierry Mayer, 2012. "How do Different Exporters React to Exchange Rate Changes?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(1), pages 437-492.
    4. Maarten Goos & Alan Manning & Anna Salomons, 2009. "Job Polarization in Europe," American Economic Review, American Economic Association, vol. 99(2), pages 58-63, May.
    5. Fabio Ghironi & Marc J. Melitz, 2005. "International Trade and Macroeconomic Dynamics with Heterogeneous Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(3), pages 865-915.
    6. Alisdair McKay & Ricardo Reis, 2021. "Optimal Automatic Stabilizers [Consumption versus Expenditure]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(5), pages 2375-2406.
    7. Florin O. Bilbiie & Fabio Ghironi & Marc J. Melitz, 2012. "Endogenous Entry, Product Variety, and Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 120(2), pages 304-345.
    8. Florin O. Bilbiie & Fabio Ghironi & Marc J. Melitz, 2008. "Monetary Policy and Business Cycles with Endogenous Entry and Product Variety," NBER Chapters, in: NBER Macroeconomics Annual 2007, Volume 22, pages 299-353, National Bureau of Economic Research, Inc.
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    12. Joao Guerreiro & Sergio Rebelo & Pedro Teles, 2022. "Should Robots Be Taxed?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 89(1), pages 279-311.
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    More about this item

    Keywords

    Robots; Automation; Employment; Open-economy;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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