Koushik Ghosh

Trade and wage inequality: Are they related?

The objective of this paper is to investigate the relationship between net exports and wage inequality in the U.S. The short- and long-run analyses of the U.S. trade and wage data are undertaken. Cointegration test results indicate that net exports and wage inequality are related in the long run. The main contribution of this paper lies in its focus on the short-run investigation of the relationship between net exports and wage inequality. This investigation was conducted using the vector error correction (VEC) testing framework. Contrary to the prevailing view, the VEC test results indicate that trade has no statistically significant impact on wage inequality in the U.S. Instead, the empirical evidence shows a negative causal impact of wage inequality on net exports.

United-Continental Merger

This case study discusses the nature and likely effects of the proposed merger between United and Continental. It is intended as a lecture for instructors teaching undergraduate courses in Industrial Organization or Antitrust Economics

Economic Sanctions and North Korea

The United States has enacted economic sanctions against North Korea since the early 1950s when North Korea attacked South Korea. Can North Korea be pressured into giving up its nuclear weapons? This article discusses the role of economic sanctions as a tool of international diplomacy with North Korea. Using concepts and tools taught in undergraduate economics classes, the article discusses the operation of sanctions and then it applies this analysis to the case of North Korea. The article examines the success that sanctions have achieved in bringing Kim Jong Un to the bargaining table and the difficulties that sanctions encounter in promoting a lasting resolution of the conflict between North Korea and the United States. The article is written for a broad audience of economics students. JEL Classifications: F0, F1

Offshoring Quotas and Strategic Export Subsidies

ABSTRACT We present an analysis of strategic export subsidization in the presence of exogenous limits on the extent of offshoring that is permissible for a domestic firm. Rather than offsetting a quota’s cost-raising effect, the government reduces its optimal strategic subsidy compounding the negative effects on the domestic firm’s market share. This double jeopardy of lower subsidies and greater offshoring restrictions must reduce domestic profits as well as domestic welfare. Finally, we show that there is no guarantee that such an offshoring quota will raise domestic employment in the oligopolistic sector, calling into question the efficacy of such a barrier.

Reforming the U.S. Tax System

The suddenly enormous budget deficit has unleashed discussion of tax reform in the United States. The intricate web of deductions, credits, and various loopholes distorts incentives. But reforming the tax system could also enable the country to raise more tax revenue in economically efficient and socially just ways. The authors provide a primer about the available choices.

Rushing to Copenhagen

To listen to the public discourse about how to control emissions, one might think there is near-unanimity that cap-and-trade is the answer. Set limits on carbon emissions, provide business with the ability to trade rights to pollute, and the market will efficiently spread the costs of pollution control. These economists beg to differ. Read why.