We present a model of optimal government policy when policy choices may exacerbate socio-political instability (SPI). We show that optimal policy that takes into account SPI transforms a standard concave growth model into a model with both a poverty trap and endogenous growth. The resulting...

Die Opfer von Konflikten sind in ihrem Überleben nicht nur durch den Mangel an materiellen Ressourcen bedroht, sondern auch durch die Konfliktparteien selbst, für die sie direktes Ziel sind. Deshalb bedürfen sie des Schutzes. Diese Art von Konflikten, sogenannte complex emergencies, hat dazu...

We examine a foreign firm's choice between exporting and foreign direct investment (FDI) under country-specific cost uncertainty. Unlike exporting, FDI exposes foreign and home firms to common shocks. This results in a correlation of strategies, harming the firms. However, the exposure to common...

We examine the role of cost uncertainty in a firm's choice between exporting and foreign investment in oligopolistic industry. We consider both foreign direct investment and an international joint venture, and allow country-specific and firm-specific cost uncertainty. Unlike exporting, either...