Three essays in international economics

The chapters in this dissertation deal broadly with issues related to outsourcing and financial crises. All three chapters are empirical in nature and utilize plant and/or firm level datasets. The second and third chapters are in the field of trade and labor economics; they focus on the main determinants and the labor market implications of outsourcing in the U.S. manufacturing sector. The fourth chapter is in the field of international finance and examines the impact of large devaluations on investment levels of Turkish firms.; In the second chapter, I focus on the effects of outsourcing on conditional labor demand elasticities. I develop a theoretical model of outsourcing that formalizes this relationship and an empirical strategy that addresses the endogeneity of wages in the labor demand equation. Consistent with the predictions of the model, I find U.S. manufacturing plants operating in industries that heavily outsource experienced an increase in their labor demand elasticities during the 1980-1992 period. In 1992, this trend reversed. The model suggests that this finding can be attributed to a decline in the share of unskilled labor in total cost.; The main purpose of the next chapter is to identify the determinants of a plant's decision to outsource. I focus primarily on the importance of labor costs as a determinant of outsourcing and examine whether its importance changes over time, as suggested by the model introduced in this chapter. I find that although the responsiveness of the demand for contract work to changes in labor costs decreased over time, labor costs continue to be an important determinant of outsourcing.; The final chapter focuses on foreign currency denominated debt and its impact on the investment levels of credit-constrained firms, as one possible channel through which financial crises are transmitted to the real economy. I find that Turkish firms holding foreign currency denominated debt prior to devaluation had significant decreases in investment after the 1994 crisis, but not after the second crisis in 2001. For the 2001 crisis, results suggest that pre-crisis cash holdings were an important determinant of post-crisis investment levels, consistent with the major banking crisis that followed.