We study models of credit with limited commitment, which implies endogenous borrowing constraints. We show that there are multiple stationary equilibria, as well as nonstationary equilibria, including some that display deterministic cyclic and chaotic dynamics. There are also stochastic...

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...

The Received Theory of trade policy, based solely on terms-of-trade externalities between national governments, has become the conventional wisdom among international trade theorists. But it displays two puzzles that render that theory inconsistent with reality. Significant empirical work,...