Motivated by increasing trade and fragmentation of production across countries since World War II, we build a dynamic two-country model featuring sequential, multistage production and capital accumulation. As trade costs decline over time, globalvalue-chain (GVC) trade expands across countries,...

This document summarizes the thrust of my monograph book Disasters and the Networked Economy (2003, NY: Routledge. 228 pp. ISBN: 978-0-415-66629-9). It is no substitution for the book, but it attempts to make salient the main concepts, explanations and conclusions of it. It does so by first...

This paper discusses some of the inter-temporal issues that arise in the pursuit of real undervaluation to achieve rapid development. Policy makers face a trade-off between achieving a capital stock target in a given amount of time on the one hand and boosting real wages and output in the short...

Standard open economy macro models with unemployment predict a contractionary short-run effect of international capital inflows. Empirical evidence, on the other hand, often associates such inflows with short-term booms, and developing country policy makers frequently go out of their way to...

This paper surveys the theoretical and empirical literature on the effects of the real exchange rate (RER) on international trade, economic development and growth. We summarize the main conceptual issues, discuss the relevance of the RER as an instrument of development policy, provide an...

This paper analyzes the structural change implications of consumer credit expansions in a dual-sector open economy growth model. Policy-induced increases in banks' willingness and ability to lend result in new consumer lending, boosting consumption demand and average wages in the nontradable...

We add to recent evidence on deindustrialization and document a new pattern: increasing industry polarization over time. We assess whether these new features of structural change can be explained by a dynamic open economy model with two primary driving forces, sector-biased productivity growth...

A recent body of empirical research has documented a strong association between the level and volatility of the RER and economic growth. This research has relied on a variety of econometric techniques applied to large cross-country data sets. Although the documented positive effects of both RER...

Growth in low-income developing economies with large sectors charac- terized by underemployment is unlikely to be wage-led in the traditional neo-Kaleckian sense of the term. Output and employment in the sectors of the economy producing non-tradable output could be demand-led, how- ever, and...

Evidence regarding the relationship between distribution, demand, and growth in the short run has been mixed. Open economy models that create the possibility of "beggar-thy-neighbor" growth offer one theoretical explanation for why this may be expected. Several authors have argued recently,...