Compared with its ASEAN neighbors, Vietnam appears to have weathered the Asian crisis quite well. Official statistics indicate a GDP growth rate of 6.6 per cent for the first half of 1998; export growth remains positive, and the dong has depreciated by only 20 per cent against the USD. But the relatively favorable picture has more to do with controls than with sound economic fundamentals. In th...

This paper analyzes the role of nonseparable utility and nontradables in business cycles and portfolio choice using a two-country, two-sector production economy model with a fairly general utility function. I find that nonseparability in utility can change the optimal portfolio choice significantly. Unlike the results of Stockman and Dellas (1989) or Baxter, Jermann and King (1998), the optimal...

This paper develops two very simple tests for the null hypothesis of no cointegration in panel data. The tests are general enough to allow for heteroskedastic and serially correlated errors, unit specific time trends, cross-sectional dependence and an unknown structural break in both the intercept and slope of the cointegrated regression, which may be located at different dates for different un...

How large are the welfare gains from trade when factors are misallocated due to domestic distortions? In this paper I provide a quantitative answer to this question by incorporating distortions to the allocation of labor across broad sectors into a model of structural change and Ricardian trade. Calibrating the model using 36 years of data for a diverse set of countries I find that (1) gains fr...

The accumulation of large amount of sovereign reserves has fuelled an intense debate on the associated costs. In a world with liquidity crises and strategic default, we model a contracting game between international lenders and a country, which delivers the country’s optimal portfolio choice and the cost of sovereign debt: at equilibrium, the sovereign chooses the amount of debt and decides on ...

This paper examines the e↵ects of liquidity on the demand for imports of non-durable consumers’ goods in Trinidad and Tobago. A parsimonious vector equilibrium correction model (VEqCM) is used to test the hypotheses that liquidity has both longand short-run e↵ects. The multivariate cointegration approach of Johansen and Juselius (1990) is used to determine long-run relations and general to spec...

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...

The observed excess price variability in cross-border city pairs compared to that in withincountry city pairs has been defined as the “border effect.” We used a unique data set from cities that were in the same country at one time and were in two separate countries later on to examine the effects of the presence of a national border on price variability. Interestingly a border-like effect was d...