In this paper, we develop a new theoretical model that explains the forest transition not at a local, but at a worldwide level, in a trade liberalisation scenario. Our model has economic geography foundations: transport costs affect the distribution of firms between countries. We also introduce...

This paper represents a neoclassical model that explains the observed empirical relationship between government spending and world commodity supplies and the real exchange rate and real commodity prices. It is shown that fiscal expansion and increasing world commodity supplies simultaneously...