Structural new trade theory models have never been used to evaluate and quantify the role of preferential trade agreement (PTA) membership for trade in a way which is consistent with general equilibrium. Apart from filling this gap, the present paper aims at delivering an empirical model which...

How do changes in labor market institutions, like more generous unemployment benefits in one country, affect labor market outcomes in other countries? We set up a two-country Armingtonian trade model with frictions on the goods and labor markets. Contrary to the literature, higher labor market...