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A Quantitative Analysis of Subsidy Competition in the U.S.
November 20, 2014Macro, Trade, and Finance Seminar Series

Ralph Ossa (Chicago Booth School of Business) will share the results of his most recent research.

Ralph Ossa’s research focuses on international trade. At the London School of Economics, he earned a diploma in economics with distinction in 2002, a master's degree in economics with distinction in 2003, and a PhD in economics with a dissertation entitled "International Trade and Economic Development" in 2007. Ossa joined Chicago Booth in 2008.  More >>

Abstract
U.S. state governments spend vast resources on business incentives trying to attract firms. In this paper, I ask what motivates such business incentives and explore how they interact nationally if they are set competitively or cooperatively. To this end, I explore a quantitative economic geography model which I calibrate to U.S. states. I find that state governments have strong incentives to subsidize firm relocations in an attempt to benefit at the expense of other states. However, states tend to lose from rampant subsidy competition so that there is scope for mutually beneficial cooperation.

Presentation


Last Updated: Nov 14, 2014

The Macro, Trade, and Finance Seminar Series is a weekly series hosted by the World Bank's research department. The series invites leading researchers from the fields of macroeconomics, growth, trade, international integration, and finance to present the results of their most recent research in a seminar format. The full list of seminars can be viewed here.

Event Details