This paper considers the second-best strategy of correcting a wide variety of trade distortions in a small open economy with perfect competition in all markets. Using the tools of duality, we obtain some general properties of the structure and the levels of the optimal tax/subsidy rates. The...

The paper studies the welfare implications of temporary foreign aid in the context of a simple two-country model of trade. In addition to its usual effects, a transfer of income in one period is assumed to influence the preferences of the recipient country in the following period. The implied...

The paper develops a two-period, two-country, multigood model with endogenous investment. Borrowing is subject to quantitative restrictions. The authors examine the effect of promoting exports in period 1 on the level of exports in period 2. They consider a number of scenarios depending on how...

This paper extends the Spencer and Brander (1983) model of strategic exports and R&D by introducing exchange rate volatility and R&D activities that require internationally mobile skilled labor. We find that an increased volatility reduces both the levels of optimal export subsidy and R&D tax....

This paper suggests a new approach to the determination of profit allocation between the partners in international joint ventures (IJVs). We also examine the issue of partnership choice. The foreign firm gives a large share of profits to its partner and in return receives a better tax treatment...

This paper develops a unified structure to examine the interrelationships between current account, foreign investment, and domestic capital accumulation. In particular, we develop a two-country, two-period model with international mobility of both physical and financial capital, and endogenous...