The Welfare Effects of Globalization with Labor Market Regulation I examine how globalization affects wages and welfare in a general equilibrium model of international trade with partly oligopolistic markets. Globalization is modeled as reducing trade costs or opening up shielded sectors to trade. There is a national or international common agency that determines minimum wages for the oligopoli...

We consider the effects a public revelation of information (e.g. rating, grade) has on trading in a dynamic signaling model. Competing buyers offer prices to a privately informed seller who can reject them and delay trade. Delay is costly and the seller has no commitment to its duration. The external public information allows for signaling in equilibrium. More interestingly, we characterize the...

We study price formation in securities markets, using the sequential trade framework of Glosten and Milgrom (1985). This paper makes one basic methodological advance over previous research on sequential securities trading: we allow traders to choose from n trade sizes in a multi-period market, where n can be arbitrarily large. We examine how trade size multiplicity affects the intertemporal dyn...

Rapid trade liberalisation can exert profound effects on labour markets. Domestic firms, to sustain competitiveness for survival, could react through cutting labour benefits to achieve cost reductions. Alternatively, trade liberalisation may alter the industry composition of firms changing the aggregate formality rates. This paper studies the relationship between trade liberalisation and inform...

How Outsourcing Affects Bilateral Political Relations One issue the literature neglects is how outsourcing stimulates trade (imports, exports and foreign direct investment), thereby affecting political relations. However, at least as far back as 1750, economic philosophers such as Baron de Montesquieu in his L’Esprit des Lois, argued, “peace is the natural effect of trade.” This paper first rev...

In this paper we consider whether a movement towards freer international trade generates incentives for firms to merge and if so what forms of merger are most profitable. In a linear Cournot framework we show that a reduction in trade costs may, but will not necessarily, encourage mergers. Both market structure and the level to which trade costs fall are shown to play a decisive role. Domestic ...

I use bilateral import data to test for the role of trade costs and asset market frictions in impeding international consumption risk sharing. Trade costs play a significant role. I do not reject the null of optimal risk sharing within OECD countries, though I do reject for the world as a whole. I calculate the impact on ex-post welfare of moving from historical asset market frictions to optima...

According to the “smooth adjustment hypothesis”, the labour-market adjustment costs entailed by trade liberalisation are lower if trade expansion is intra-industry rather than interindustry in nature. In this paper, we study the link between trade and labour market changes in UK manufacturing industries during the 1980s. We use industry-level measures of unemployment duration and wage variabili...

We consider the estimation of the usual Gravity model of trade, which involves flows of trade, say exports, from country i to country j in time period t. We suggest an easy-to-impliment generalised method of moments estimator that avoids the issues associated with the usual fixed effects treatment of the unobserved heterogeneity in this type of models and at the same time provides consistent pa...

We argue that compensating losers is more difficult for immigration than for trade and capital movements. While a tax-cum-subsidy mechanism allows the government to turn the gains from trade into a Pareto improvement, the same is not true for the so-called immigration surplus, if the redistributive mechanism is not allowed to discriminate against migrants. We discuss policy conclusions to be dr...