We present a model, in which a small industrialised economy outsources part of its production into a small foreign country which is well endowed with low-skilled labour. We analyse under which conditions sinking trade costs stimulate outsourcing activities, thereby increasing the wage dispersion...

Having efficient and accurate samplers for simulating the posterior distribution is crucial for Bayesian analysis. We develop a generic posterior simulator called the "dynamic striated Metropolis-Hastings (DSMH)" sampler. Grounded in the Metropolis-Hastings algorithm, it draws its strengths from...

Consistent with predictions from the literature, we find that higher levels of in-migration dilute multiple dimensions of a community's level of social capital. The analysis employs a 2SLS methodology to account for potential endogeneity of migration.

In this paper, we consider a simultaneous equations model under a functional coefficient representation for the structural equation of interest and adopt the local-to-zero assumptions as in Staiger and Stock (1997) and Hahn and Kuersteiner (2002) on the coefficients of the instruments in the...

We study a new class of semiparametric instrumental variables models with the structural function represented by a partially varying coefficient functional form. Under this representation, the models are linear in the endogenous/exogenous components with unknown constant or functional...

In this paper, we study the effectiveness of carry trade strategies during and after the financial crisis using a flexible approach to modeling currency returns. We decompose the currency returns into multiplicative sign and absolute return components, which exhibit much greater predictability...