Trade, Trade Finance, and Global Liquidity in Asia; Markov-Switching FAVAR Approach

Markov Switching Terms of Trade

The paper studies the effect of terms of trade fluctuations on equilibrium debt position of a small open economy. I develop a simple model of a small open economy producing exportable and nontradable goods to investigate the effects of terms of trade shock assuming that terms of trade follow two state Markov switching process. Under this process, permanent terms of trade shock means change of r...

R&D Spillovers, Trade Integration And Expansion Of Trade Flows In East- West Asia And Pacific

Liquidity and International Trade

This paper introduces a framework to study the links between the supply of liquid assets for the financial market and the international allocation of economic activity. Private assets’ liquidity properties—their usefulness as collateral or media of exchange in financial transactions— affect assets’ values and interest rates, with consequences on firm entry, production, aggregate productivity, a...

Trade Arrangements and Evolving East Asian and Asia Pacific

The paper begins by noting that proposals involving significant developments in the regional tradearchitecture are being developed within regional processes that in some cases are simultaneouslypursuing other dimensions of regional economic integration: monetary and financial cooperation inthe case of ASEAN + 3, and the establishment of a common market in the case of ASEAN. At leastthree of the...

Capital, Finance, and Trade Collapse

This paper proposes a model of international trade with capital accumulation and …nancial intermediation. This is achieved by embedding the Melitz (2003) model into an incomplete-markets neoclassical framework with an endogenous credit market. The model preserves the analytical tractability of the original Melitz model despite nontrivial distribution of …rms’net worth and capital stocks. We use...