Can tariff-jumping foreign investment be beneficial? It is well known that tariff-jumping foreign investment is costly. The tax paid by foreign firms may not be sufficient to offset that cost. We present a model that incorporates two additional benefits of foreign investment. Being more...

Comparative advantage is the most important foundation for world trade. Yet comparative advantage is usually explained by a series of unrelated models. We present a general model that incorporates all three distinct sources of comparative advantage: differences in technologies, differences in...

It is widely accepted that China needs to shift from its past mode of export-led growth and start to rely more on domestic demand. What role could the real appreciation of the Chinese yuan play in this regard? We attempt to quantify the impact on the structure of the Chinese economy of the real...