We propose a model to study the role of industry-level external economies scale in open economies. If elasticity governing strength is below inverse trade each industry, then specialization under frictionless consistent with comparative advantage, tractable even frictions, and all countries gain from trade. External lower gains except if country specializes industries high economies, they ampli...

When capacity utilization is allowed to vary, standard equilibrium theory predicts that demand shocks can generate not only closed-economy business cycles that are previously thought explainable only by technology shocks, but also international business cycles that are more consistent with the data than what can be generated by technology shocks. JEL classi ̄cation: E13, E32, F11, F41.

Using a three-sector general equilibrium model with non-traded goods, we investigate the impact of foreign direct investment on the real wages of skilled and unskilled workers. We show that foreign direct investment increases the real wages of skilled and unskilled workers, but widens the gap between the two under plausible conditions. JEL: F10, F11, F21

This short note examines some time series evidence relating prices of exports and imports to the aggregate US wage over 34 years of falling tariffs starting in the mid 1960s. The cointegrated unit root series lead to error correction and vector autoregression models. The lost protection and changing traded prices lowered the US wage very slightly, by less than 1%. © 2007 Elsevier Inc. All right...

I study how trade affects urbanization and real income. To this end, exploit large-scale exogenous changes in stemming from the redrawing of Hungary’s borders after First World War. show that counties near new border decreased significantly relative to farther away. rationalize reduced-form finding a spatial model which benefits trading drive agglomeration around locations where activity takes ...