This paper examines whether inward FDI incentives can soften the political constraints associated with trade liberalization. After introducing the role of capital inflows into the political economy of trade framework pioneered by Grossman and Helpman (1994, 1995 and 1996), the paper traces the...

We show that fiscal policies reflecting a primary balance response to higher debt in line with historic experience would significantly increase the likelihood of reaching the debt targets of the U.S. administration in the medium term. Deficits and debt are higher under current budgetary...