The long list of product in sensitive list maintained by the member countries is one of the major weaknesses of South Asia Free Trade agreement for its effectiveness. Present study analyzes the impact of sensitive list (Phase II) under the SAFTA at disaggregate level (HS6 digit) by using partial...

A banking union limits international bank default contagion, eliminating inefficient liquidations. For particularly low short-term returns, it also stimulates interbank flows. Both effects improve welfare. An undesirable effect arises for moderate moral hazard, since the banking union encourages...

I study the implications of top income inequality for the gains from trade in a dynamic model. I argue that higher top income inequality among entrepreneurs can increase the gains from trade for workers. In the model, entrepreneurs face uninsurable idiosyncratic productivity risk, and thus save....

We construct a stochastic dynamic dual model to investigate the structural adjustment of two aggregate output and three aggregate input categories in U.S. agriculture under climatic change uncertainty. A century of national annual data (1910-2011) is used in the empirical analysis. No...

Beginning in the 2007-08 school year, California's Quality Education Investment Act required schools selected via lottery to institute reforms including class size reduction, increased average teacher experience, and extra professional training. The act provided additional per-pupil funding for...

This paper investigates the properties of distortions that manifest themselves as wedges in the equilibrium conditions of the neoclassical growth model across a sample of OECD countries for the 1970-2011 period. The quantitative relevance of each wedge and its robustness in generating...

This paper examines the stability of the basic regression underpinning the forward-discount anomaly for 20 developed and 32 developing countries. It finds that the correlation between the change of the spot exchange rate and forward discount is piece-wise linear in every country, involving...

In this paper I compare the performance of three approaches to modeling temporal instability of the relationship between the euro-dollar exchange rate and macroeconomic fundamentals. Each of the three approaches considered -- adaptive learning, Markov-switching and Imperfect Knowledge Economics...

In the financial accelerator literature pioneered by Bernanke, Gertler and Gilchrist (1999) entrepreneurs are myopic and lenders suboptimally choose a safe rate of return on their loans. We derive the optimal lending contract for forward looking entrepreneurs and provide three main results....

We study cooperative and non-cooperative fiscal policy in an open economy model where cross-country risk sharing is imperfect and countries face terms of trade externalities. We show that the optimal form of fiscal cooperation, or fiscal union, is defined by one parameter: the Armington...