The paper develops a model with lumpy setup costs of new investment, which govern the flows of FDI. Foreign investment decisions are two-fold: whether to export FDI and, if so, how much. The first decision is governed by total profitability considerations, whereas the second is governed by...

Moderating spillovers from the advanced economies during the Great Moderation, the global information technology revolution, the influx of skilled immigrants from the former Soviet Union, the gradual buildup of robust and well-regulated financial institutions over decades after the...

Motivated by the unique experience of Israel of a supply-side shock of skilled migration, and the concurrent rise in disposable income inequality, this paper develops a model which can explain the mechanism through which a supply-side shock of skilled migration can reshape the political-economy...

It is often argued that tax competition may lead to a "race to the bottom". Such a race may hold indeed in the case of the pure case of factor mobility (such as capital mobility). However, in this paper we emphasize the unique feature of labor migration, that may nullify the "race to the bottom"...

We develop a framework in which the host country productivity has a positive effect on the intensive margin (the size of FDI flows), but only an ambiguous effect on the extensive margin (the likelihood of FDI flows to occur). The source-country productivity has a negative effect on the extensive...

A positive productivity shock in the host country tends typically to increase the volume of the desired FDI flows to the host country, through the standard marginal profitability effect. But, at the same time, such a shock may lower the likelihood of making any new FDI flows by the source...

We develop a simple information-based model of FDI flows in which the abundance of intangible' capital in the source countries, which generates expertise in cream-skimming investment projects in the host countries and enhances FDI flows. Corporate transparency in the host countries, on the other...

This paper puts forward a notion of current account sustainability that explicitly takes into account willingness to pay and willingness to lend in addition to intertemporal solvency. It argues that this notion of sustainability provides a better framework for understanding the variety of...

The paper considers the interplay of the design and execution of stabilization policy and structural reform with the role of various agents and pressure groups in a democracy. The context is the political economy of Israel's transition from a successful stabilization to a renewed growth process...

This paper develops and estimates a dynamic optimizing model of the current account. The model focuses, on real factors that determine the evolution of saving and investment, and hence the external balance. Three types of shocks are at the center of the analysis: productivity shocks, shocks to...