We first review the literature relating to the protection of the modern sector in developing countries (DCs). We then discuss the connections between protection, economic dualism, and optimal environmental policy in DCs. Next, we construct an intertemporal model of the environmental policy...

Thomas Grennes's letter criticizing my article, "The Unsustainability of the US Trade Deficit," fails to distinguish between the trade deficit and the current account deficit, and therefore does not respond to my argument.

When does trade become a one-way relationship? We study bilateral trade balances for a sample of 18 European countries over the period from 1948 through 2008. We find that, with the introduction of the euro, trade imbalances among euro area members widened considerably, even after allowing for...

If sectoral trade flows obey structural gravity, countries' bilateral trade imbalances are the result of macro trade imbalances, "triangular trade", or pairwise asymmetric trade barriers. Using data for 40 major economies and the Rest of the World, we show that large and pervasive asymmetries in...

This paper uses a Ricardian framework to clarify the role of microeconomic and macroeconomic factors governing the time series and cross-section behavior of sectoral trade balances. Unit labor costs and trade balances are calculated for several sectors for the seven major industrial countries....