In this paper we analyse the market integration process of the relative price distribution, develop a model to analyze market integration, and present a formal test of increasing market integration. We distinguish between the economic concepts of price convergence in mean and in variance. When...

We measure the impact of the Farmers Income Diversification Program (FIDP), an EU funded program implemented in Malawi from late 2005 onwards, aiming at increasing agricultural productivity, diversification, value addition, commercialization and trade of subsistence farmers. The geographical...

Transaction costs play a key role in the behaviour of smallholders in developing countries. We exploit the introduction of an additional tobacco auction floor in Malawi to investigate the impact of a reduction in transaction costs and improved market access on production per hectare and the...

We show that in a fully integrated economy, in which there is free mobility of goods and factors, each member’s share of total output will equal its shares of total stocks of productive factors (i.e., physical and human capital). We label this result the equal-share relationship. This...

To study the effect of the euro on international goods trade one typically estimates a panel model for the level of trade. Trade levels increase over time, and we show that this is not fully explained by the included regressors. Because the euro is only present at the end of the sample, this may...

Ineffective institutions increase transaction costs and reduce trade. This paper shows that differences in the effectiveness of institutions offer an explanation for the tendency of OECD countries to trade disproportionately with each other, and with non-OECD countries.

The paper examines the effects of Russia joining the WTO taking into accountenergy sector reform and the impact of a future Free Trade Agreement (FTA) between theenlarged EU and Russia. The paper uses Computable General Equilibrium Modellingtechniques for quantifying the different possible...

We study the optimal trade policy against a foreign oligopoly withendogenous quality. We show that, under the Most Favoured Nation(MFN) clause, a uniform tariff policy is always welfare improvingover the free trade equilibrium. However, a nonuniform tariff policyis always desirable on welfare...

The gravity model is the workhorse model to describe and explain variation in bilateral trade patterns. Consistent with both Heckscher-Ohlin models and models of imperfect competition and trade, this versatile model has proven to be very successful, explaining a large part of the variance in...

We quantify the causal effect of foreign investment on total factor productivity (TFP) using a new global firm-level database. Our identification strategy relies on exploiting the difference in the amount of foreign investment by financial and industrial investors and simultaneously controlling...