Strategic Exports and R&D with Internationally Mobile Skilled Labor and Exchange Rate Volatility * | Zendy

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Strategic Exports and R&D with Internationally Mobile Skilled Labor and Exchange Rate Volatility *

Author(s) -

Lahiri Sajal,

Mesa Fernando

Publication year - 2006

Publication title -

review of international economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.513

H-Index - 58

eISSN - 1467-9396

pISSN - 0965-7576

DOI - 10.1111/j.1467-9396.2006.00575.x

Subject(s) - economics , subsidy , endogeneity , volatility (finance) , exchange rate , wage , strategic complements , labour economics , monetary economics , microeconomics , market economy , econometrics

This paper extends the Spencer and Brander (1983) model of strategic exports and R&D by introducing exchange rate volatility and R&D activities that require internationally mobile skilled labor. We find that an increased volatility reduces both the levels of optimal export subsidy and R&D tax. We also find that the endogeneity of skilled wage increases the level of export subsidy and reduces the level of R&D tax if the country is an exporter of skilled labor.

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