What We Cannot Learn from the Irish Experience: A fundamental Asymmetry of Asymmetric Shocks

Fredrik Andersson () and Rikard Forslid

No 2000:10, Research Papers in Economics from Stockholm University, Department of Economics

Abstract: A simple N-country specific-factor model with imperfectly mobile labour is developed. It is shown that effects of country-specific productivity shocks hitting a small country are fundamentally asymmetric. A positive shock will be accomodated by a moderate wage increase and sizable in-migration, whereas a negative shock will be accomodated by a significant decrease in wages and moderate out-migration. The effects of shocks in a monetary union are discussed, and it is argued that the results are consistent with the recent Irish experience. The welfare effects of small economics fluctuations are also discussed.

Keywords: migration; assymmetric shocks (search for similar items in EconPapers)
JEL-codes: E24 F22 (search for similar items in EconPapers)
Pages: 14 pages
Date: 2000-08-11
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Citations: View citations in EconPapers (1)

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Working Paper: What We Cannot Learn from the Irish Experience: A Fundamental Asymmetry of Asymmetric Shocks (2000)
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