The diversification of production and trade is considered almost unanimously a fundamental policy goal, particularly for developing economies whose export baskets are heavily concentrated on a few products. In what direction trade diversification ought to take place is, however, subject to...

The paper embeds child labor in a standard two-sector general-equilibrium model of a small open economy facing perfectly competitive markets, efficiency wages, and free-trade. The modern sector produces a homogeneous good using skilled adult labor and capital, and offers effort-based efficiency...

This paper considers the role learning has on foreign direct investments (FDI) when there is both cost and demand uncertainty. FDI has an obvious benefit as it gains the firm information about local demand and costs. However, FDI has a second effect: it correlates the firm's cost with the local...

This paper proposes a novel strategy for identifying the effects of import competition on economic outcomes that avoids standard concerns related to the endogeneity of trade policy and provides a consistent measure of exposure to trade over time. Conditioning on the level of import tariffs, our...

The consideration of an averaging interval Δ of market trade time-series change the basic consumption-based asset pricing equation. The duration of Δ determines Taylor series of investor’s utility over current and future values of consumption. We present consumption at current and future...

This paper develops a model of multi-product firms in the presence of different types of labor. I show that an increase in the supply of skilled labor has non- uniform impact on the firm scope: a rise in the number of skilled labor allows the highly productive firms to add more varieties into...

In 1994, due to environmental concerns, Germany banned a chemical called 'Azo-dyes', a primary input for the leather and textiles firms in India (a key exporter). Exploiting this as a quasi-natural experiment, we examine the effects of this cross-border regulatory change on labor compensation,...

Trade liberalization has proceeded on the assumption that eventual aggregate welfare gains will exceed the losses. While compensatory mechanisms exist in most countries, they tend to be underfunded and ineffective. To begin to address this problem, the direct beneficiaries from trade...

We study the role of financial development on the aggregate effects and welfare implications of reducing international trade barriers on production inputs such as physical capital and intermediates. We document that financially underdeveloped economies feature a slower response of real GDP,...