There is clear evidence that during 1980-90 more exports are positively associated with higher growth rates across Chinese cities. In comparison, in the late 1980s, the contribution to growth comes mainly from foreign investment. The contribution of foreign investment comes in the form of...

Using the gravity model, we find evidence of three continental trading blocs: the Americas, Europe and Pacific Asia. Intra-regional trade exceeds what can be explained by the proximity of a pair of countries, their sizes and GNP/capitas, and whether they share a common border or language. We...

Using the gravity model to examine bilateral trade patterns throughout the world. we find clear evidence of trading blocs in Europe. the Western Hemisphere, East Asia and the Pacific. In Europe, it is the EC that operates as a bloc, not including EFTA. Two EC members trade an extra 55 per cent...

Market participants' forecasts of future exchange rate volatility can be recovered from option contracts on foreign currencies. Such implicit volatility forecasts for four currencies are used to test rational expectations jointly with the applicability of the standard Black-Scholes formula....

This paper seeks to draw lessons for developing countries based on a survey of the recent literature on financial globalization. First, while capital account openness holds promises (by potentially lowering cost of capital, promoting risk sharing, and providing disciplines on policies), it does...

This paper starts by documenting a new fact that consumer price index (CPI) and producer price index (PPI) used to move in tandem within a given country around the world, but start to diverge after 2000. Understanding the source of divergence is important as it potentially affects optimal...

This paper examines the role of public governance quality in determining the composition of a country's external liabilities and the capital structure of firms. In our theory, better institutional quality tends to promote a higher share of foreign direct investment and equity investment in total...

Quality of public institutions has been recognized as a crucial determinant of macroeconomic outcomes. We propose that a country's intrinsic level of openness (due to population size, geography, or exogenous trade opportunities) affects its incentives in investing in better institutions. We...

We argue that existence of public good does not necessarily imply market failure, and illustrate this point in the context of international trade. An influential hypothesis states that export pioneers are too few relative to social optimum because the first exporter's action creates an...

This paper empirically investigates the various effects that source and destination countries' financial development (SFD and DFD respectively) have on foreign direct investment (FDI).We establish causality by exploiting variations in both country-specific financial development and...