This Paper describes a procedure for constructing theory restricted prior distributions for BVAR models. The Bayes Factor, which is obtained without any additional computational effort, can be used to assess the plausibility of the restrictions imposed on the VAR parameter vector by competing DSGE models. In other words, it is possible to rank the amount of abstraction implied by each DSGE mode...

This Paper examines the causality and long-run relationships between economic growth and Tourism development in developing countries using P-VAR approach during 1995-2009. The findings reveal that there is a bilateral causality and positive long-run relationship between economic growth and Tourism development. In the other words, the tourism-led growth hypothesis is confirmed, as well as, outpu...

We examine the relation between trading volume and skewness in 11 international stock markets using daily and monthly data from January 1980 to August 2004. We construct single equation and VAR models of the relation between the first three moments of market returns and trading volumes. Our results show hitherto unrecognised channels of influence, and support the investor heterogeneity approach...

We explore the consequences of international trade in an economy that encompasses technology choice and an endogenous distribution of mark-ups due to credit market frictions. We show that in such an environment a gradual opening of trade may —but not necessarily must —have a negative impact on productivity and overall output. The reason is that the pro-competitive effects of trade reduce mark-u...

This paper takes the neoclassical infant industry model, allows agents to respond to future expectations, and reveals previously unexplained relationships between protection and outcome. Policy, which projects to protect the industry until international competitiveness, may not necessarily succeed, consistent to the mixed empirical evaluations. To guarantee success, protection has to last longe...

This paper examines interbrand competition between a domestic and a foreign manufacturer who market their products through intermediaries. The contracts manufacturers offer these intermediaries are endogenous. In equilibrium contracts may specify exclusive territories (ET), depending on the degree of substitutability between products and the level and degree of transparency of trade barriers. T...

We examine the effects of mergers and internal groups (lobbies) in shaping national policies towards foreign direct investment. Lobbying is modeled following the political contributions approach. In this work we develop a partial equilibrium model of an oligopolistic industry in which a number of domestic and foreign firms compete in the market for a homogeneous good in a host country. It is as...

This paper examines the role of the burden of proof (BoP) in National Treatment (NT) disputes under trade agreements. In the situation under study, imports may cause environmental damage, in which case less favorable treatment of imported products may be globally desirable from an international efficiency point of view. But adjudicators do not with full certainty know the motives for policies t...

We explore how integrating into the world economy affects the incomes of manufacturers in less developed countries (LDCs). We show that cutting back trade barriers has asymmetric effects on the incomes of the two typical groups of entrepreneurs. Whereas access to foreign markets benefits those entrepreneurs who are able to run large-scale factories, credit-rationed entrepreneurs running a micro...

This paper studies the impact of trade liberalization in terms of tariff cuts within the Eastern European enlargement on German and Austrian firm productivity. Unique matching of data from 1994 to 2003 suggests that tariff reductions raise parent firm productivity significantly. A ten percentage point decrease in tariff rates can lead to total factor productivity gains of up to 2 percent. The d...