This paper proposes a simple multi-industry trade model with search frictions in the labor market. Unimpeded access to global financial markets enables capital owners to invest abroad, thereby fostering unemployment at the extensive industry margin. Whether a country benefits from FDI in terms...

Growth empirics with institutional measures is performed for 25 transition countries overthe period 1990-95. Estimation results suggest that (particularly state) institutions aresignificant for growth and, especially, foreign direct investment (FDI), the latter in turnbeing important for the...

This paper proposes a multi-industry trade model with integrated capital markets and Mortensen and Pissarides search frictions in the labor market. Institutional changes in the model trigger adjustments at the intensive and extensive margin of labor demand. At the extensive margin a shift of the...