We analyse the effects of transboundary pollution on trade patterns and welfare in a general equilibrium trade model. Production in a dirty industry generates pollution that negatively effects productivity, both at home and abroad, in a clean industry. Trade may lead to the spatial separation of production but the existence of transboundary pollution can offset the benefits from specialization....

We present a theory of why some countries negotiate trade agreements during economic downturns. We argue that political leaders can gain from such agreements because of the signals they send to their publics. Publics are less likely to blame leaders for bad economic conditions when they have implemented sound economic policies, such as signing and implementing agreements designed to liberalize ...

I incorporate heterogeneous trade costs into the model of Foellmi, Hepenstrick, and Zweimüller (2013) to analyze another reason for export zeros, additional to arbitrage constraints resulting from per capita income differences. In my model, high trade costs may be responsible for export zeros. The level of tariffs and transportation costs are crucial for patterns of international trade. I find ...

——————————————————————————————————— We study optimal portfolio choice in a two-country model where assets represent claims on future consumption and facilitate trade in markets with imperfect credit. Assuming that foreign assets trade at a cost, agents hold relatively more domestic assets. Consequently, agents have larger claims to domestic over foreign consumption. Moreover, foreign assets tur...

In the literature of new trade theory, most studies have dealt with industrial location by imposing an assumption of free transportation in the agricultural sector. We explicitly incorporate arbitrary transport costs in both the manufacturing and agricultural sectors into the Helpman-Krugman-Davis model of two countries and one production factor. The following results are obtained. First, we fi...

This article presents a model of international trade under monopolistic competition. In the increasing returns sector firms face fixed, in addition to variable, trade costs, and both exporters and non-exporters may coexist. Exporters benefit from access to large foreign markets, thus a small country has a higher share of exporting firms than a large one. In contrast to standard models, the incr...

Using Vector Autoregressions on U.S. time series, the present paper documents the effects of fiscal policy on foreign trade: an increase in government spending significantly depreciates the nominal exchange rate, appreciates the terms of trade and increases net exports. Exposed to the same spending shock, a New Keynesian general equilibrium model is shown to match qualitatively the response of ...

One of the main causes behind the trade collapse of 2008-09 was a significant fall in the demand for durable goods. This paper develops a small country, overlapping generations model of international trade in which goods durability gives rise to a more than proportional fall in trade volumes, as observed in 2008-09. The model has three goods two durable, traded goods and one non-durable, non-tr...

This paper investigates the implications of matching and searching in inter rm trade. From a schematic model, whereby rms nd long-term trading partners by successive matches, we derive some important propositions. Trade between matched rms generates an expected economic pro t, depending on match quality, while trade between searching rms may be conducted at a short-term loss, being a form of ca...

Over the past years, the relationship between foreign trade and economic growth has been the debate of economic research in academe. On this issue, economists at home and abroad used the relative data of china and got different conclusions by different methods. At first, this thesis reviews the theories of the relationship between foreign trade and economic growth, and then sum up the main argu...