We present a gravity model that accounts for multilateral resistance, firm heterogeneity and country-selection into trade, while accommodating asymmetries in trade flows. A new equation for the proportion of exporting firms takes a gravity form, such that the extensive margin is also affected by...

In the cross section of countries, there is a strong positive correlation between trade andincome, and a negative relationship between trade and inequality. Does this reflect a causalrelationship? We adopt the Frankel and Romer (1999) identification strategy, and exploitcountries' exogenous...

The U.S. labor share of income has been on a secular downward trajectory since thebeginning of the new millennium. Using data that are disaggregated across both state andindustry, we show the decline in the labor share is broad-based but the extent of the fallvaries greatly. Exploiting a new...

The growth of Italian exports has lagged that of euro area peers. Against the backdrop ofunit labor costs that have risen faster than those in euro area peers, this paper examines whether there is a competitiveness challenge in Italy and evaluates the framework of wage bargaining. Wages are set...

In recent years, unemployment rates in some ECCU countries have been among the highest globally. This paper evaluates several factors that could explain them, finding that high unit labor costs, in a context of strong unionization, are significantly associated with high structural unemployment,...

The paper surveys unemployment policies for advanced market economies and evaluates them by examining the predictions of the underlying macroeconomic theories. The basic idea is that, for the most part, different unemployment policy prescriptions rest on different macroeconomic theories, and our...

This study estimates the size of the informal economy, and the relative contribution of each underlying factor, for the Caucasus and Central Asia countries in 2008. Using a Multiple Indicator-Multiple Cause model, we find that a burdensome tax system, rigid labor market, low institutional...

This paper reviews a broad set of indicators of competitiveness in the Macedonian economy and estimates the equilibrium real effective exchange rate (REER) using different methodologies. Although the REER is broadly in equilibrium at present, structural factors are found to hamper...

Public-Private Partnerships (PPPs) are increasingly an important vehicle for several Western Balkan countries to increase investment to reduce their infrastructure gaps. While there are benefits to well-designed and implemented PPPs, they also carry a potential for large fiscal risks and...

After trailing Euro Area inflation closely in the recent past, inflation in the Western Balkans has accelerated faster since early 2022 on the back of the shocks to global commodity prices, strong recovery from the pandemic, and lingering supply bottlenecks. This paper employs two complementary...