CREI Lectures in Macroeconomics

Robert Shimer is the Alvin H. Baum Professor in Economics and the College at the University of Chicago. Labor Markets and Business Cycles integrates search and matching theory with the neoclassical growth model to better understand labor market outcomes. Robert Shimer shows analytically and quantitatively that rigid wages are important for explaining the volatile behavior of the unemployment rate in business cycles. The book focuses on the labor wedge that arises when the marginal rate of substitution between consumption and leisure does not equal the marginal product of labor. According to competitive models of the labor market, the labor wedge should be constant and equal to the labor income tax rate. But in U.S. data, the wedge is strongly countercyclical, making it seem as if recessions are periods when workers are dissuaded from working and firms are dissuaded from hiring because of an increase in the labor income tax rate. When job searches are time consuming and wages are flexible, search frictions--the cost of a job search--act like labor adjustment costs, further exacerbating inconsistencies between the competitive model and data. The book shows that wage rigidities can reconcile the search model with the data, providing a quantitatively more accurate depiction of labor markets, consumption, and investment dynamics. Developing detailed search and matching models, Labor Markets and Business Cycles will be the main reference for those interested in the intersection of labor market dynamics and business cycle research. "This essential book offers an insightful and often provocative analysis of labor market responses to business cycle shocks, and develops new ways of looking at this issue. The careful integration of theory and data, of earlier business cycle theory with search and matching, as well as the critique of wage setting, open up new areas that will inspire researchers for many years to come."-Christopher Pissarides, London School of Economics and Political Science "Shimer's definitive account of the modern theory of labor market volatility presents many new results and deserves a prominent place on the bookshelf of every macroeconomist and labor economist."-Robert E. Hall, author of Forward-Looking Decision Making "No other book on labor markets and business cycles treats search and matching models with the same detail. This will be a standard reference for advanced graduate students and researchers who are familiar with modern dynamic programming techniques."-Monika Merz, Bonn University

Pol Antràs is the Robert G. Ory Professor of Economics at Harvard University and a research associate at the National Bureau of Economic Research. Global Production is the first book to provide a fully comprehensive overview of the complicated issues facing multinational companies and their global sourcing strategies. Few international trade transactions today are based on the exchange of finished goods; rather, the majority of transactions are dominated by sales of individual components and intermediary services. Many firms organize global production around offshoring parts, components, and services to producers in distant countries, and contracts are drawn up specific to the parties and distinct legal systems involved. Pol Antràs examines the contractual frictions that arise in the international system of production and how these frictions influence the world economy. Antràs discusses the inevitable complications that develop in contract negotiation and execution. He provides a unified framework that sheds light on the factors helping global firms determine production locations and other organizational choices. Antràs also implements a series of systematic empirical tests, based on recent data from the U.S. Customs and Census Offices, which demonstrate the relevance of contractual factors in global production decisions. Using an integrated approach, Global Production is an excellent resource for researchers, graduate students, and advanced undergraduates interested in the inner workings of international economics and trade. "This book is an excellent addition for graduate courses and a great reference for researchers." "The field of international trade has been transformed in recent decades by a shift in attention to firm heterogeneity and organization. This outstanding volume by one of the foremost contributors to the field is essential reading for trade economists and a cornerstone for graduate and undergraduate courses in international trade."-Stephen J. Redding, Princeton University "International trade theories focus on what to produce and for whom, but have less to say about how to produce it or where. Those last questions take on great importance when contracts between firms are incomplete and in this valuable book, Pol Antràs provides accessible answers. Global Production is ideal for students and researchers who want to understand how the field of international trade has evolved."-Robert C. Feenstra, University of California, Davis "Pol Antràs is widely recognized as the world's leading expert on the theory and empirics of offshoring, outsourcing, and global value chains. In this lucid, comprehensive, and fascinating book, Antràs applies modern contract theory to help us understand the internationalization and location decisions of multinational firms. Graduate students and researchers will find themselves transported right to the research frontier."-Gene M. Grossman, coauthor of Interest Groups and Trade Policy "Antràs is the world's keenest observer of our age of global production and one of the smartest economists on the planet. With this book, his thinking about multinationals and offshoring is finally available to a wider audience. The volume is brimming with humor, lively anecdotes, philosophical musings, and other insights that could not possibly be outsourced to China."-Daniel Trefler, University of Toronto "Production is hugely globalized. Many goods we consume have components manufactured in several different countries. Anybody wishing to understand how and why this has come about, what challenges arise, and how economists approach these issues could do no better than to start with this readable book."-Daron Acemoglu, Massachusetts Institute of Technology "This impressive book provides an excellent, concise, and up-to-date summary of the existing literature on multinational firms and the outsourcing/offshoring of supply chains. Global Production will become an indispensable part of

Francesco Caselli is the Norman Sosnow Professor of Economics at the London School of Economics, and a fellow of the British Academy. Technology Differences over Space and Time looks at how countries use their productive resources-such as workers, skills, equipment and structures, and natural resources. Francesco Caselli develops methods to assess the efficiency with which productive inputs are used, and how these efficiencies vary across countries and over time. Caselli finds that richer countries use skilled workers relatively more efficiently than unskilled workers, and equipment and structures relatively more efficiently than natural resources. They also are relatively more efficient users of labor than of capital. Technological change tends to make countries particularly efficient at using skills and less efficient at using capital. Technical change also favors experienced workers. In order to interpret and understand these findings, Caselli presents a theory of technology choice. In this theory, firms pick technologies that make the most efficient use of the most abundant production factors when these factors are good substitutes for the less abundant factors. Firms pick technologies that make the most of less abundant factors when other suitable factors are not available for substitution. For example, rich countries, where skilled workers are abundant, use skilled workers efficiently, as these are good substitutes for unskilled workers. This flexible framework can be applied to other pairs of inputs, over time, and across countries. Technology Differences over Space and Time has significant implications not only for the theoretical understanding of development and technological innovation, but also for government formulation of industrial policy and multinationals making decisions about what to invest in and where to make those investments. "Caselli-in his compact, but rich and inspiring compendium-proposes a fascinating universal framework which takes into consideration differences existing (and changing in time) across countries in terms of capital (natural and physical) and labor (skilled and unskilled)."---Mariacristina Piva, Journal of Economics "Francesco Caselli is one of the world's leading experts on economic growth. In Technology Differences over Space and Time, he provides a unified treatment of factor-biased technical change, brilliantly synthesizing earlier research and pushing the frontier forward. Among many insights, he shows how a common framework can help us understand both why skilled workers do so well over time and how this is particularly true in rich countries. Highly recommended!"-Charles I. Jones, Stanford Graduate School of Business "Caselli shatters the view that technology can flow effortlessly across countries. He shows that the technology used in rich countries favors skilled workers, though not equipment and structures, whereas the technology used in developing countries surprisingly favors unskilled workers. Anybody who wants to understand how technology evolves with development-and how it shapes who gains the most from growth-will want to read this book."-Pete Klenow, Stanford University "This book is obligatory reading for those interested in the state of the art of research on biased technology across countries and over time."-Antonio Ciccone, University of Mannheim