The theoretical literature on trade and foreign direct investment (FDI) indicates that they could be either substitutes or complements. The empirical evidence on U.S.-Japan and APEC countries suggests that trade and FDI exhibit a complementary relationship. In this paper, we employ a six-region...

China's accelerated global emergence has changed trade patterns in the Asia-Pacific region and exerted important influence on its trilateral relationship with Japan and the United States. In this paper, we evaluate the effects of multilateral and regional trade policy scenarios that are...

We highlight an example of considerable bias in officially published input-output data (factor-income shares) by an LDC (Turkey), which many researchers use without question. We make use of an intertemporal general equilibrium model of trade and production to evaluate the dynamic gains for...

This paper analyzes key aspects of the changing economic relationship between the European Union (EU) and Asia, and explores the potential economic ramifications of deeper EU-Asian economic cooperation. The author investigates the possible costs to the EU of remaining “disengaged” from the...

We know that euro-area member countries have absorbed asymmetric shocks in ways that are inconsistent with a common nominal anchor. Based on a reformulation of the gravity model that allows for such bilateral misalignment, we disentangle the conventional trade cost channel and trade effects...

There has been great focus in the recent trade theory literature on the introduction of firm heterogeneity into trade models. However, these models tend to rely heavily on symmetry assumptions and assume melting iceberg transport costs as the only form of trade restrictions. Moreover, a standard...

The main conclusion to emerge is that in moving from a certain to an uncertain world, the optimal size of the import-competing sector does not fall. For the case of CU it will rise. For PU, whether it increases or not depends on the decision rule used and the ranking of probabilities. Similarly...

It is well known that or a small open economy which is subject to no domestic distortions the optimal tariff is zero. Using this as their base model Jabara and Thompson [1982] now assume that the terms of trade facing this country are uncertain. They claim that if the terms of trade are...

This paper investigates the effect of regional borders on trade in Asia. The regional borders define the three regions of Asia: South, Southeast, and East Asia. Regional trade indicates the flows of trade within a region, whereas regional border trade means trade across regions. A gravity model...

This paper explains why free trade agreements (FTAs) are more popular than customs unions (CUs), and it identifies the optimal rule in FTAs and CUs to achieve global tariff-free trade. Employing an equilibrium theory of trade agreements with tariff coordination, I demonstrate that two FTA...