Recent literature has highlighted the importance of new activities in development and growth. It was shown that trade distortions such as tariffs are associated with first-order costs stemming from the induced drop in the formation of new activities. This paper demonstrates that uncertainty may...

This paper analyzes the impact of foreign direct investment (FDI) on the patterns of cyclical dumping (exporting at a price below marginal cost). We consider a global economy where manufacturing is monopolistic-competitive, and productivity is subject to country- specific shocks. Labor is risk...

This paper investigates the behavior of public debt in countries forming a union (as outlined, e.g., by the Maastricht treaty). We consider a federal union of states where the center has limited control over the spending patterns of the union members, and where the union members' behavior has...

The purpose of this paper is to evaluate the degree to which the threat of managed trade leads to foreign direct investment (FDI) in a time-consistent manner. We study the role of capital mobility in a two-countries world economy characterized by monopolistic competition. Investment decisions...

The goal of this paper is to investigate the factors determining the impact of exchange rate regimes on the behavior of domestic investment and foreign direct investment (FDI), and the correlation between exchange rate volatility and investment. We assume that producers may diversify...

The purpose of this paper is to examine the implications of foreign direct investment and endogenous capacity choice on the welfare ranking of exchange rate regimes, and to analyze the linkages between volatility of shocks, the volume of trade and investment. We construct an intertemporal...

This paper analyzes the role of investment policies in regimes undergoing trade liberalization with policy makers of uncertain credibility. We consider an economy producing exportable and importable goods. The economy is liberalized, and tariffs are eliminated. The public views the reform...

This paper considers an economy where the macroeconomic equilibrium is the outcome of the conduct of an administration, consisting of a large number of decision makers whose horizon is uncertain, being endogenously determined by their behavior. Limited monitoring enables each decision maker to...

The purpose of this paper is to study the role of an endogenous switch from a competitive to a bargaining international equilibrium. We consider two trading blocks, which can engage in a free-market determined trade, or a bargaining dictated trade. Bargaining can be called for by either pany,...

The purpose of this study is to analyze the behavior of the inflation tax in an economy where, due to coordination failure, the inflation rate is not determined by a unique policy maker but by several competing decision makers. Each decision maker can effectively print more paper money via the...