This paper studies the implications of household heterogeneity for trade. I develop a model where household heterogeneity is induced via incomplete markets and results in heterogeneous price elasticities. Conditional on exposure to trade, heterogeneous price elasticities imply that different...

This paper assesses the costs of internal trade barriers and proposes policies to improve internal trade. Estimates suggest that complete liberalization of internal trade in goods can increase GDP per capita by about 4 percent and reallocate employment towards provinces that experience large...

It is widely perceived that globalization squeezes public sector activities by making taxation more costly. This is attributed to increased factor mobility and to a more elastic labour demand due to improved scope for relocation of production and thus employment across countries.We argue that...

We study empirically and theoretically the dynamic effects of the unilateral reduction in import tariffs undertaken by Colombia from 1989-1993, with a particular emphasis on the transition and including any anticipation effects. We develop an asymmetric two-country, multi-sector heterogeneous...

Static and dynamic gains from trade are the reasons why countries embark on the path of free trade, expecting this to promote industrialization and development. There is nothing, however, in the conventional theory of international trade that guarantees that these gains will materialize and even...

Do WTO commitments reduce the risk of trade policy reversals? To address this question, we rely on the theoretical model of varying cooperative tariffs by Bagwell and Staiger (1990) to specify our empirical model for the probability of a tariff increase. We then study how WTO tariff commitments...

Do WTO commitments reduce the risk of trade policy reversals? To address this question, we rely on the theoretical model of varying cooperative tariffs by Bagwell and Staiger (1990) to specify our empirical model for the probability of a tariff increase. We then study how WTO tariff commitments...

Following Smith's advocacy of free trade and competition, David Ricardo attempts to strengthen his theory of absolute advantage, which excludes from international trade countries which have no advantages over others, by eliminating this weakness. To do so, Ricardo introduces to the economics...

Trade taxes are often used as (a) a first-best instrument to manipulate the terms-of-trade, or (b) a second-best instrument to correct pre-existing market distortions. We analyze the (in)effectiveness of trade taxes at achieving these two policy goals. To this end, we derive sufficient...

By reducing the costs of such trade services as transport, insurance, and finance, liberalizing trade in services can generate benefits in the markets for every kind of trade they facilitate. It can also stimulate the fragmentation of production of both goods and services, thus increasing...