the main purpose of this paper is theoretically to design the optimal intervention in the foreign exchange market in iran, which has not been investigated by previous studies. the economic fundamentals are strongly affected by the optimal foreign exchange intervention, the consistency of foreign exchange intervention with other policies and political authorities' beliefs about the interven...

In many globalized industries, the recent wave of vertical outsourcing seems to have co-evolved with increased horizontal consolidation in the component sector. To account for this phenomenon, I build an industry-equilibrium model in which the boundaries of the firm are endogenous in both the horizontal and vertical dimensions of production. This setup allows me to solve for the equilibrium con...

This paper analyses the role of product differentiation in firms’ choices between exporting and foreign direct investment as ways to supply overseas markets. When the degree of product differentiation is exogenously fixed, we show that the overseas firm favors exporting at low and high degrees of product differentiation while local production is favored at intermediate values: there can be a “d...

This paper analyses the consequences of trade liberalisation on firms’ internal organisation, with formal and informal arrangements. I extend the ’relational contract’ approach of Baker, Gibbons, and Murphy (2002) in an open economy set-up. I find that freer trade in final goods increases the quasi-rents from suppliers’ specific investments, leading to an increase in outsourcing. When trade lib...

This paper studies steady-state, Markov-Perfect strategic trade policy when (infinitely lived) governments are committed to trade policy during two periods. We compare the case in which both governments choose their export subsidies in the same periods (synchronization) versus the case in which they set them in alternate periods (staggering). We find that, under Cournot competition, welfare is ...

This paper documents and theoretically explains a nexus between globalization and residual wage inequality through internal labor market reorganization. Combining time-varying within-occupation task information from representative German labor force surveys with linked plant–worker data for Germany, we establish three interrelated facts: (1) Larger plants and exporters organize production into ...

Recent emerging market crises have emphasized the fluctuating character of trade’s reaction after financial crises, in contradiction with the apparently simple theoretical impact of such events on trade, which is essentially described by the well-known J-curve mechanism.. We use a gravity-like equation to assess the impact of these events on bilateral sectoral trade and reveal the elements whic...

 Up to now, the impact of real exchange rate on the non-oil exports of Iran has been mainly on focus. However, the more important aspect of the fluctuations in exchange rate is its degree of volatility which can have profound effect on the non-oil exports. Hence, the main objective of this paper is to investigate the linkage between non-oil exports and the real exchange rate volatility for Iran...

We analyze the relationship between international trade and the quality of economic institutions, such as contract enforcement, rule of law, or property rights. The literature on institutions has argued, both empirically and theoretically, that larger firms care less about good institutions and that higher inequality leads to worse institutions. Recent literature on international trade enables ...

Developing countries typically exhibit small firm size, high dispersion of firm-level productivity, and low trade-to-output ratios. They also tend to export particularly less to more distant and smaller markets. To rationalize these facts, this paper develops a flexible, multi-country general equilibrium model of production and trade in which heterogeneous producers face both domestic size-depe...