In this paper, the welfare results in trade liberalisation scenarios in global CGE models (like GTAP)are analysed. The default modeling strategy in trade is the Armington assumption with bilateral tradeflows in industries. The negative terms of trade effects that often dominate the negative...

Direct and indirect effects of exchange rates on foreign and home prices may induce a change in terms of trade and volume of trade. In particular, the price effect in substitutability between foreign and home products and endogeneity of the foreign price provide evidence for the indirect impact...

Despite the voluminous literature on North-South macroeconomic interactions and the key role of terms of trade variations in growth transmission from one region to another, a significant research gap persists for two reasons. First, there has been very little empirical work on testing of the...

This paper derives the balance of payments-constrained growth (BPCG) model as a special case of a three good framework that incorporates ex- portables, importables, and non-tradables. The conditions under which the canonical form of the BPCG rate can be derived are made explicit and the...

Many developing countries have adopted investor-friendly policies in recent years in order to attract export-oriented foreign direct investment (FDI). The effects of these policies on the external accounts have been largely ignored. This paper endogenizes FDI inflows in a structuralist general...

The paper examines the impact of terms of trade shocks on private savings in the transition economies after accounting for the effect of other determinants. Economic agents in the transition economies are subject to tight credit constraints which are more pronounced during bad state of nature....

One of the fundamental normative questions within international trade theory is whether free trade is better than autarky and, if so, in what sense and to what extent. Surprisingly, the literature contains just a few formal models constructed under discrete time and investigating the...

One of the most striking features of the world economy is that wealthy countries are clustered together. This paper theoretically and empirically explains a mechanism for this clustering by extending the Acemoglu and Ventura model so that it takes real geography into account. Countries close to...