42 research outputs found
Firm Heterogeneity and the Two Sources of Gains from Trade
Recent empirical work identi.es two main channels through which consumers benefit from trade. Trade liberalization lowers prices, while it raises product variety. This paper develops the first model that connects both channels and interprets their interaction. It shows that heterogeneity in firm productivity is the source behind both. Upon liberalization efficient exporters enter, pushing out the least efficient domestic firms. Two countervailing forces emerge, both stylized facts. Liberalization leaves a moreconcentrated market. But exporters o¤er more variety than the .rms that they replace. Remarkably, total variety unambiguously increases. Exploration of comparative statics leads to an intuitive explanation.Trade, Firm selection, Product Variety, Heterogeneous firms
The US Trade Deficit, the Decline of the WTO and the Rise of Regionalism
This paper argues that the growing US trade de.cit has caused the decline of the WTO and the rise of regional trade agreements. A country in de.cit prefers to retain market power against countries with a large surplus. Multilateral cooperation restricts its choice. This notion is formalized in a three-country game in which countries negotiate multilaterally and, if that fails, bilaterally. The multilateral agreement only holds for sufficiently even trade balances. When one country's deficit grows too large, a regionalist equilibrium emerges. A VAR analysis shows that the US trade balance explains over 50% of the variation in regional trade agreements.Regionalism, RTA, Multilateralism, WTO, Trade balance, US trade deficit
Behind the Scenes of Globalization: Strategic Trade Policy, Firm Decisions and Worker Expectations.
Foreign trade and employment; Investments, Foreign, and employment;
Will macroprudential policy counteract monetary policy’s effects on financial stability? Bruegel Working Paper Issue 01 / 2018
HHow does monetary policy impact upon macroprudential regulation?
This paper models monetary policy’s transmission to bank risk
taking, and its interaction with a regulator’s optimization problem.
The regulator uses its macroprudential tool, a leverage ratio, to
maintain financial stability, while taking account of the impact
on credit provision. A change in the monetary policy rate tilts
the regulator’s entire trade-off. We show that the regulator allows
interest rate changes to partly “pass through” to bank soundness by
not neutralizing the risk-taking channel of monetary policy. Thus,
monetary policy affects financial stability, even in the presence of
macroprudential regulatio
Managing External Volatility: Policy Frameworks in Non-Reserve-Issuing Economies
Since the Global Financial Crisis, non-reserve-issuing economies (NREs) have been highly sensitive to episodes of external pressures. With monetary policy independence constrained by this sensitivity, many NREs have utilized other policy instruments. This paper confirms the vulnerability of NREs to external shocks and finds that, in some circumstances, managing such shocks with multiple instruments can both lessen the policy response required from any one policy tool to financial and external shocks and increase the effectiveness of policies in stabilizing macrofinancial conditions. Effectiveness, however, does not always imply appropriateness, which rests on an evaluation of potential trade-offs and unintended consequences
Behind the Scenes of Globalization: Strategic Trade Policy, Firm Decisions and Worker Expectations
Defence date: 15 December 2008Examining board: Pascal Courty, European University Institute ; Gianmarco Ottaviano, UniversitĂ degli Studi di Bologna ; Diego Puga, Universidad Carlos III de Madrid ; Karl Schlag, Supervisor, Universitat Pompeu Fabr
The US Trade Deficit, the Decline of the WTO and the Rise of Regionalism
This paper argues that the growing US trade deficit has caused the decline of the
WTO and the rise of regional trade agreements. A country in de.cit prefers to retain
market power against countries with a large surplus. Multilateral cooperation restricts
its choice. This notion is formalized in a three-country game in which countries negotiate
multilaterally and, if that fails, bilaterally. The multilateral agreement only holds for
su¢ ciently even trade balances. When one country's deficit grows too large, a regionalist
equilibrium emerges. A VAR analysis shows that the US trade balance explains over 50%
of the variation in regional trade agreements
Firm Heterogeneity and the Two Sources of Gains from Trade
Recent empirical work identies two main channels through which consumers benefit
from trade. Trade liberalization lowers prices, while it raises product variety. This paper
develops the first model that connects both channels and interprets their interaction.
It shows that heterogeneity in firm productivity is the source behind both. Upon
liberalization efficient exporters enter, pushing out the least efficient domestic firms.
Two countervailing forces emerge, both stylized facts. Liberalization leaves a more
concentrated market. But exporters offer more variety than the firms that they replace.
Remarkably, total variety unambiguously increases. Exploration of comparative statics
leads to an intuitive explanation
On the Possibility of Credit Rationing in the Stiglitz-Weiss Model: A Comment
The model of Stiglitz and Weiss ( American Economic Review , 1981, 71(3)) is the seminal analytical work on credit rationing. However, in a recent paper, Arnold and Riley ( American Economic Review , 2009, 99(5)) claim that the distributional assumption on which that model.s main result depends cannot hold. This paper shows that Arnold and Riley.s result is an outcome of their implicit assumption of a one-period Bertrand game between banks. In more realistic modes of bank competition, in which banks have some degree of monopoly power, Stiglitz and Weiss.s result can hold.Credit rationing; Stiglitz-Weiss; Bank competition; Market Structure