Publications by Author: Caselli, Francesco

Caselli, Francesco, Alberto Giovannini, and Timothy Lane. 2004. “Fiscal Discipline and the Cost of Public Debt Service: Some Estimates for OECD Countries”. Abstract

Is there any systematic explanation of variations in the cost of debt servicing over time and across countries? This paper examines the influence of fiscal variables on borrowing costs in a panel of OECD countries, showing that these variables have a significant role. In particular, an improvement of the primary fiscal balance and a reduction in the stock of outstanding debt are associated with significant reductions in debt servicing costs, amplifying the effects of primary adjustment on the fiscal position. These effects appear to be non–linear: more pronounced for highly–indebted countries. A significant country–specific component remains, however; several explanations for this component are discussed, including debt management and market infrastructure.

We use data on imports of computer equipment for a large sample of countries between 1970 and 1990 to investigate the determinants of computer-technology adoption. We find strong evidence that computer adoption is associated with higher levels of human capital and with manufacturing trade openness vis-a-vis the OECD. We also find evidence that computer adoption is enhanced by high investment rates, good property rights protection, and a small share of agriculture in GDP. Finally, there is some evidence that adoption is reduced by a large share of government in GDP, and increased by a large share of manufacturing. After controlling for the above-mentioned variables, we do not find an independent role for the English- (or European-) language skills of the population.
This paper introduces various sources of consumer heterogeneity in one-sector representative-consumer growth models and develops tools to study the evolution of the distribution of consumptions, assets and incomes. These tools are applied to the Ramsey-Cass-Koopmans model of optimal savings and the Arrow-Romer model of productive spillovers. The RC property per se places very few restrictions on the nature of observed distributions, and a wide range of distributive dynamics and income mobility patterns can arise as the equilibrium outcome. An example illustates how to use these tools to generate quantitative predictions and compare them to the data.
Caselli, Francesco, and John Coleman. 2000. “The World Technology Frontier”. Abstract

We define a country's technology as a triple of eficiencies: one for unskilled labor, one for skilled labor, and one for capital. We find a negative cross–country correlation between the eficiency of unskilled labor and the eficiencies of skilled labor and capital. We interpret this finding as evidence of the existence of a World Technology Frontier. On this frontier, increases in the eficiency of unskilled labor are obtained at the cost of declines in the eficiency of skilled labor and capital. We estimate a model in which firms in each country optimally choose from a menu of technologies, i.e. they choose their technology subject to a Technology Frontier. The optimal choice of technology depends on the country's endowment of skilled and unskilled labor, so that the model is one of appropriate technology. The estimation allows for country–specific technology frontiers, due to barriers to technology adoption. We find that poor countries tend disproportionately to be inside the World Technology Frontier.

Caselli, Francesco, and Massimo Morelli. 1999. “Bad Politicians”. Abstract

We present a simple theory of the quality of elected officials. Quality has (at least) two dimensions: competence and honesty. Voters prefer competent and honest policymakers, so high–quality citizens have a greater chance of being elected to oce. But low–quality citizens have a iacomparative advantageli in pursuing elective oce, because their market wages are lower than the market wages of high–quality citizens (competence), and/or because they reap higher returns from holding oce (honesty). In the political equilibrium, the average quality of the elected body depends on the structure of rewards from holding public oce. Under the assumption that the rewards from once are increasing in the average quality of once holders there can be multiple equilibria in quality. Under the assumption that incumbent policymakers set the rewards for future policymakers there can be path dependence in quality.

Discussion Paper 134, Institute for Empirical Macroeconomics, Federal Reserve Bank of Minneapolis, 2000.

Caselli, Francesco, and John Coleman. 1999. “How Regions Converge (Forthcoming in Journal of Political Economy )”. Abstract
We present a joint study of the US structural transformation (the decline of agriculture as the dominating sector) and regional convergence (of Southern to Northern average wages). We find that empircally most of the regional convergence is attributable to the structural transformation: the nation-wide convergence of agricultural wages to non-agricultural wages, and the faster rate of transition of the Southern labor force from agricultural to non-agricultural jobs.
Caselli, Francesco. 1999. “Technological Revolutions.” American Economic Review. American Economic Review. Publisher's Version Abstract

I present a simple model of technological revolutions. A technological revolution is the introduction of a new generation of machines that can only be operated by workers who have learned a set of machine-specific skills. If learning the new skills is more (less) costly than learning the skills associated with pre-existing technologies, the revolution is skill biased (deskilling). On impact, skill-biased (deskilling) revolutions trigger a reallocation of capital from high (low) learning cost to low(high) learning cost workers, thereby reducing the relative and absolute wage of the former. Thus, the model of skill-biased revolutions replicatesthe observed recent changes in the wage structure, and constitutes a possible interpretation of the Information Technology Revolution.

It also provides insight into the future possible behavior of the wage structure, as the diffusion of information technology continues. The model of deskilling revolutions constitutes a possible interpretation of the introduction ofthe assembly line in the early 1910s. I also present some new facts from the Annual Survey of Manufacturing. The inter-industry dispersion of capital-labor ratios has increased substantially and abruptly after 1975. Increases in capital-labor ratios between 1975 and 1990 are positively correlated across industries with changes in pay per worker, changes in the proportion of non-production workers in total employment, high average-wage levels in 1975, and high non-production worker shares in 1975. I argue that my theory constitutes one possible explanation for these facts.

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