The workhorse model of the New Trade Theory fails to explain four strong and central patterns of postwar trade data. These patterns are, first, the massive increase in trade volumes, second, the small fraction of traded varieties the average country imports, third the correlation between per...

This paper examines the impact of monetary policy on UK firms' access to bank and market finance when allowance is made for differences in firm-specific characteristics. A theoretical model determines the cut-off values for project profitability that would allow firms to access bank or market...

This paper investigates the role of trade credit in the transmission of monetary policy. Most models of the transmission mechanism allow the firm to access only financial markets or bank lending according to some net worth criterion. In our model we introduce trade credit as an additional source...

Models of stabilization in open economy traditionally emphasize the role of exchange rates as a substitute for nominal price flexibility in fostering relative price adjustment. This view has been recently criticized on the ground that, to the extent that prices are sticky in local currency, the...

This paper models a sequential merger formation game with endogenous efficiency gains in which every merger has to be submitted for approval to the Antitrust Authority (AA). Two different types of AA are studied: first a myopic AA, which judges a given merger without considering that subsequent...

Benhabib and Farmer [3] showed that a single sector growth model in the presence of increasing returns-to-scale may display an indeterminate equilibrium if the demand and supply curves cross with the "wrong slopes". We generalize their result to a model with preferences that are non-separable in...