Optimal monetary rules and internationalized production

Cavallari, Lilia

doi:10.1002/ijfe.240

Cited by 8 publications

(7 citation statements)

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“…In a related monopolistic trade model, Corsetti et al (2007) hypothesize that each home and foreign household receives an equal share of the profits of all firms. In contrast, Devereux and Engel (2001), Cavallari (2004Cavallari ( , 2005, Ghironi and Melitz (2005), Lubik and Russ (2006) and Russ (2007) assume that each household only owns domestic firms. 13 Throughout the paper, we also use the index z ∈ [0, 1] to refer to the product of firm z.…”

Section: Household Decisionsmentioning

confidence: 99%

“…Aizenman (), Devereux and Engel (), Cavallari (2004, ,) and Chu () all consider (optimal) monetary policy in a representative firm framework with horizontal foreign direct investment, but do not allow for the endogenous relocation of firms.…”

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confidence: 99%

“…() hypothesize that each home and foreign household receives an equal share of the profits of all firms. In contrast, Devereux and Engel (), Cavallari (2004, ,), Ghironi and Melitz (), Lubik and Russ () and Russ () assume that each household only owns domestic firms.…”

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confidence: 99%

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Corporate Tax Reductions, Cross-Border Ownership and Welfare

Johdo

2013

Japanese Economic Review

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In this paper, a three‐country model incorporating the cross‐border ownership of stock and international firm relocation is constructed. Using this model, the effects of a reduction in the corporate tax on welfare in all three countries is examined. The findings indicate that if the country undertaking the reduction is moderately rich, and one of the two remaining countries is rich while the other country is poor, the tax reduction not only brings about a positive effect on its own welfare, but also increases the welfare of the rich foreign country and lowers that of the poor foreign country.

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Section: Household Decisionsmentioning

confidence: 99%

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confidence: 99%

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Corporate Tax Reductions, Cross-Border Ownership and Welfare

Johdo

2013

Japanese Economic Review

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“…One line of research investigates the determinants of firms' entry and exit decisions in an environment characterized by nominal rigidity and/or trade costs, with only a very limited number of papers in this area allowing for multinational activities 2 . A second approach stresses the macroeconomic implications of frictions in international goods markets arising from trade costs, as in Obstfeld and Rogoff (2000), and from multinational sales as in Devereux and Engel (2001) and Cavallari (2004). The present paper contributes to the latter line of research by providing a unified framework that conveniently nests earlier models with trade costs and models with internationalized production.…”

Section: Introductionmentioning

confidence: 99%

Macroeconomic Interdependence with Trade and Multinational Activities

Cavallari

2008

Rev International Economics

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This paper examines how differences in the integration strategies followed by firms active in foreign markets affect the way productivity and policy shocks spread their effects worldwide. The analysis incorporates costly trade and local sales by multinational firms in a general-equilibrium open economy macroeconomic model. The mode of foreign market access is found to play a major role in the international business cycle, affecting the dimension of consumption and output spillovers worldwide. We show that despite financial markets being effectively complete, consumption risks may not be fully insured in the world economy as long as multinational firms discriminate prices across markets. Furthermore, cross-country differences in firms' integration strategies can account for extensive asymmetries in the way country-specific and global shocks are transmitted in the world economy. We argue that this may have relevant consequences for the welfare implications of monetary and trade policies. Copyright � 2008 The Author. Journal compilation � 2008 Blackwell Publishing Ltd.

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“…Aizenman (), Devereux and Engel (), , Cavallari, ;, , Chu (), and Nishiyama () all consider optimal monetary policy in a representative firm framework with horizontal foreign direct investment, but do not allow for the endogenous determination of the number of firms. They focus instead on the production behavior of multinational firms which are already active in foreign markets.…”

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Monetary policy, foreign welfare, and international firm mobility

Johdo

2015

Int J of Economic Theory

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In this paper, we develop a new open economy macroeconomics model that incorporates international relocation of firms. A novel feature of our model is that the international distribution of firms responds to exchange rate movements caused by monetary shocks. This implies that our model generates an international transmission effect that operates through the international relocation of firms. We conclude that when the degree of flexibility in relocation between the two countries is sufficiently high, an expansionary monetary policy can be a "beggar-thy-neighbor" policy.

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Optimal monetary rules and internationalized production

Cited by 8 publications

References 29 publications

Corporate Tax Reductions, Cross-Border Ownership and Welfare

Corporate Tax Reductions, Cross-Border Ownership and Welfare

Macroeconomic Interdependence with Trade and Multinational Activities

Monetary policy, foreign welfare, and international firm mobility

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