The authors develop and test the orthogonality conditions implied by a dynamic model of the inflation tax. A distinguishing feature of the analysis is that the welfare loss from inflation, the money-demand function, and the time path of inflation are jointly derived from first principles of...

Recent attempts to resolve the international debt crisis have lead some countries to engage in debt-equity swaps. This paper explores conditions under which such transactions are beneficial to the debtor, as well as the creditors. It identifies a market failure that may prevent the emergence of...

The authors construct a dynamic, two country model of trade and growth in which endogenous technological progress results from the profit-maximizing behavior of entrepreneurs. They study the role that the external trading environment and that trade and industrial policies play in the...

Suppose that an opportunity arises for two countries to negotiate a free-trade agreement. Will a free-trade agreement between these countries be politically viable and, if so, what form will it take? The authors address these questions using a political-economy framework that emphasizes the...

Recent theories of firm heterogeneity emphasize between-firm wage differences as a new mechanism through which trade can affect wage inequality. Using linked employer-employee data for Sweden, we show that many of the stylized facts about wage inequality found in Helpman et al. (2012) for Brazil...

The authors develop a model in which special-interest groups make political contributions in order to influence an incumbent government's choice of trade policy. The interest groups bid for protection with their campaign support. Politicians maximize their own welfare, which depends on total...

Endorsements are a simple language for communication between interest group leaders and group members. The members, who share policy concerns, may not perfectly understand where their interests lie on certain issues. If their leaders cannot fully explain the issues, they can convey some...