Standard theory of small open economies predicts a smooth path for consumption and investment over time, and procyclical current account balances and employment. This contrasts with the data for emerging countries, where consumption, investment and employment are highly procyclical and volatile,...

This paper studies an international tax policy design problem by employing a two-country dynamic general equilibrium model with incomplete asset markets. We investigate the possibility of welfare-improving active tax policies, in particular capital and labor income tax, under the non-cooperative...

The relevance of transport costs has increased as liberalization continues to reduce artificial barriers to trade. Countries need to adopt policies to “get closer†to global markets. Can improvements in infrastructure and regulation reduce transport costs? Is it worthwhile to implement...

The paper presents a three period model that studies the eects of IMF loans on borrowers’ and lenders’ welfare highlighting the fact that the IMF has both de jure and de facto seniority rights over private creditors. It is shown that an IMF intervention affects borrowers and...

This study sets out to develop a simplified risk premium model to explain output volatility within the economies of Asia in the immediate aftermath of the Asian financial crisis. Firms are allowed to borrow from both domestic and foreign banks, with the firms� debts being loosely...

Today?s level of financial integration and development of international capital markets is often compared to the pre-World War I Gold Standard. However, the propensity to currency crises seems higher today than in the past. Furthermore, the dynamics of crises has changed: In the most recent...

Using firm level data, Bernard and Jensen (1995, 1999, 2001) find that exporters are bigger and more productive than non-exporters. These studies also find that the identity of exporting firms changes over time and that fixed entry and participation costs influence firm's decision to enter and...

The organization of production within the multinational corporation (MNC) depends on the relative factor abundance of the home country and the destination country. This proposition is at the heart of the theory of the multinational corporation (MNCs) that Helpman (1984, 1985) and Helpman and...

Trade and growth theories predict a mutual causation of innovation and exports. We test empirically whether innovation causes exports using a uniquely rich German micro dataset. To overcome the potential endogeneity, we need to identify variations in innovations that are exogenous to export...

This paper studies empirically the relationship between trade policy and individual income risk and uses the empirical estimates of this relationship to asses the welfare costs of changes in trade policy. The empirical analysis proceeds in two steps. First, longitudinal data on income of Mexican...