How do foreign interests influence the setting of policies by particular countries? What are the implications of such foreign influence? In this paper we develop a theory of foreign influence and apply it to the study of optimal tariffs. We develop a two-country probabilistic voting model of...

This paper begins by unveiling a series of systematic patterns in the intensive and extensive margins of U.S. imports that suggests that selection into importing is potentially as important in explaining aggregate imports as selection into exporting is in explaining aggregate exports. Our...

How are foreign direct investment (FDI) flows and patterns of multinational firm (MNC) activity determined in a world with frictions in financial contracting and variations in institutional environments? As developers of technologies, MNCs have long been characterized as having comparative...

Why do firms decide to offshore certain parts of their production process? What qualifies certain countries as particularly attractive locations to offshore? In this paper we address these questions with a theory of international production hierarchies in which teams arise endogenously to make...

The incomplete nature of contracts governing international transactions limits the extent to which the production process can be fragmented across borders. In a dynamic, general-equilibrium Ricardian model of North-South trade, the incompleteness of international contracts is shown to lead to...

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While neoclassical theory emphasizes the impact of trade on wage inequality between occupations and industries, more recent theories of firm heterogeneity point to the impact of trade on wage dispersion within occupations and industries. Using linked employer-employee data for Brazil, we show...

Trade effects the size of firms in the economy differentially. Exporting firms tend to become larger relative to non-exporting firms. This affects different workers in the economy differentially. We develop a two-sided matching model with heterogeneous firms and heterogeneous workers and firm...

We study patterns of FDI in a multi-country world economy. First, we present evidence for a broad sample of countries that firms direct FDI disproportionately to markets with income levels similar to their home market. Then we develop a model featuring non-homothetic preferences for quality and...