Asymmetric Competition among Nation States: A Differential Game Approach

E-print/Working paper (2012)

This paper analyzes the impact of foreign investments on a small country's economy in the context of international competition. To that end, we model tax and infrastructure competition within a ... [more ▼]

This paper analyzes the impact of foreign investments on a small country's economy in the context of international competition. To that end, we model tax and infrastructure competition within a differential game framework between two unequally sized countries. The model accounts for the widely recognized characteristic that small states are more flexible in their political decision making than larger countries. However, we also acknowledge that small size is associated with limited institutional capacity in the provision of public goods. The model shows that the long-term outcome of international competition crucially depends on the degree of capital mobility. In particular, we show that flexibility mitigates against - but does not eliminate - the likelihood of collapse in a small economy. Finally, we note that the beneficial effect of flexibility in a small state increases with its inefficiency in providing public infrastructure and with the degree of international openness. [less ▲]

On tax competition, public goods provision and jurisdictions' size

in Journal of International Economics (2011), 84(1), 124-130

The Migration of Medical Workers in Sub-Saharan Africa and Substitution Policy

in Revue Economique (2010), 61(6), 1011-1022

Substitution policies are strategies sometimes chosen in Sub-Saharan Africa for curtailing the shortage of health professionals especially caused by the outflow of medical personnel. The aim of our ... [more ▼]

Substitution policies are strategies sometimes chosen in Sub-Saharan Africa for curtailing the shortage of health professionals especially caused by the outflow of medical personnel. The aim of our contribution is to propose a way to assess the merits and drawbacks of substitution policies by developing a simple growth model of healthcare productivity with medical brain drain. Within this framework, we use a medical care production function of the ces type which aggregates low and high specialized health workers. We then run simulations which compare scenarios with and without substitution strategies by using data from the Ghana’s medical sector. [less ▲]

Migration and human capital in an endogenous fertility model

in Annales d'Economies et Statistiques (2010), 97/98

What is the impact of high-skilled migration on fertility and human capital in migrant's origin countries? This question is analyzed within an overlapping generations model where parents choose to finance ... [more ▼]

What is the impact of high-skilled migration on fertility and human capital in migrant's origin countries? This question is analyzed within an overlapping generations model where parents choose to finance higher education for a certain number of their children. It follows that families are composed of high-and low-skilled children who may both emigrate with a certain probability when they reach adulthood. It is found that a brain drain leads to a change in children's skill composition, with parents choosing to provide higher education to a larger number of their children. A calibration of the model suggests that, following a brain drain, the additional children benefiting from higher education might in the long run compensate for the loss of high-educated workers and lead to a brain gain. [less ▲]

Brain Drain and Factor Complementarity

in Economic Modelling (2009), 26(2), 285-548

In this paper we develop an extended Solow growth model with emigration which aggregates different types of labor skills from strict complementarity to perfect substitution. The derivation of balanced ... [more ▼]

In this paper we develop an extended Solow growth model with emigration which aggregates different types of labor skills from strict complementarity to perfect substitution. The derivation of balanced growth paths shows that the most relevant cases for studying the impact of emigration are those where these paths can only be attained asymptotically. This requires and justifies the need for using transitional dynamics. We therefore derive a complete characterization of the transitional dynamics of output and wages in the sending country for all possible values taken by the elasticity of substitution between skilled and unskilled workers. The model then serves to qualitatively study the effect of brain drain on per capita income and wages of the sending country. [less ▲]

Brain Drain, Remittances, and Fertility

in Economie Internationale (2008)

This paper analyzes the effects of skilled migration and remittances on fertility decisions at origin. We develop an overlapping generations model which accounts for endogenous fertility and education ... [more ▼]

This paper analyzes the effects of skilled migration and remittances on fertility decisions at origin. We develop an overlapping generations model which accounts for endogenous fertility and education. Parents choose the number of children they want to raise and decide upon how many children obtain higher education. Only high skilled individuals migrate with a certain probability and remit to their parents. We find that an increase in the probability to emigrate leads both high and low skilled parents to send more children to obtain higher education. However the effect on the number of children is ambiguous. In a further analysis, we calibrate the model to match different characteristics of a developing economy. When the destination country relaxes the immigration restrictions, more high skilled individuals leave the origin country. The result is that, at origin, increased high skilled emigration reduces fertility and fosters human capital accumulation. [less ▲]

Discipliner les centres financiers offshore : Incitation par la pression internationale

in Région et développement = Region and development = Region y desarollo (2007), 26

Since Offshore Financial Centers (OFCs) generally provide bank secrecy to foreign investors they are likely to attract criminal money. Recently however, academic writings have pointed to the fact that ... [more ▼]

Since Offshore Financial Centers (OFCs) generally provide bank secrecy to foreign investors they are likely to attract criminal money. Recently however, academic writings have pointed to the fact that OFCs might have beneficial economic effects. In this context, we address the question whether pressure exerted by international organizations on offshore financial centers may be effective enough to enforce compliance with anti-money laundering regulations. Supposing that onshore and offshore banking centers compete with each other, we show that if costs of being lax (in particular, reputation costs) in customer identification are high enough, offshore banks have an incentive to comply credibly and that in spite of the existence of bank secrecy. Furthermore, the likelihood that an offshore bank credibly opts for monitoring foreign deposits increases with the degree of international financial integration and with the tax difference between onshore and offshore centers. [less ▲]

Place financière au Luxembourg: Analyse des sources de ses avantages compétitifs et de sa dynamique

Book published by Editions De Boeck & Larcier (2007)

Cet ouvrage développe trois thèmes : 1) identification des spécialisations et avantages potentiels de la Place luxembourgeoise. Ce 1er chapitre présente selon trois approches (investisseurs individuels ... [more ▼]

Cet ouvrage développe trois thèmes : 1) identification des spécialisations et avantages potentiels de la Place luxembourgeoise. Ce 1er chapitre présente selon trois approches (investisseurs individuels, clientèle "firme" et institutions financières) les grands avantages à la source des spécialisations de la Place financière luxembourgeoise; 2) attractivité des places bancaires et financières : les enjeux du cadre institutionnel et juridique. Ce 2e chapitre est consacré à une analyse théorique de la concurrence entre les places bancaires et financières pour l'attrait des capitaux; 3) La dynamique d'agglomération du pôle financier luxembourgeois. Ce 3e chapitre traite des forces centripètes et des forces centrifuges qui s'exercent au sein d'une place financière. [less ▲]

Pôle financier et croissance régionale, les effets externes des activités bancaires sur l'économie luxembourgeoise

in Gallouj, Camal; Leloup, Fabienne; Mérenne-Schoumaker, Bernadette (Eds.) et al Services aux entreprises et développement régional (2006)

This article intends to evaluate and to precise the transmission channels from financial development to non financial activities in the Luxembourg economy. Especially, we isolate the role played by the ... [more ▼]

This article intends to evaluate and to precise the transmission channels from financial development to non financial activities in the Luxembourg economy. Especially, we isolate the role played by the external effects of the financial sector on the productiviy of the other sectors. Based on the modified Feder’s production functions (1983), we propose a measure of technological spill-overs generated by the proximity of the banking sector. The analysis of spatial externalities allows a better understanding of these effects on the internal growth process. [less ▲]

Compétitivité de l'économie luxembourgeoise

Report (2005)