Despite the predictions of standard trade theory, countries in the North are not indifferent between free migration and free trade. Explanations include the redistributive policies of the welfare state (Wellisch and Walz, 1998, this Review). This paper offers an explanation using the concept of social capital and extends the analysis to the South. The movement of people differs from the movemen...

This paper presents a new empirical strategy for estimating the effects of trade policy on domestic factor prices when policy endogeneity is suspected. Absent income effects on factor supplies or domestic prices, the coefficient on the terms of trade can provide an unbiased estimator of the effect of trade barriers on the factor distribution of income for a small economy. In the more general ca...

In economic theory, various determinants are considered to explore their effects on trade patterns. Accordingly, business cycles indicate turbulences in economic activities. Business cycles and their fluctuations cause a change in demand for goods and services from the other country then it can affect trade flows. In this study, by using a gravity model, we study the effects of business cycles ...

This paper offers new insights on a central question in trade and development economics: does increased exposure to foreign competition generate gains in plant productivity? We find that it does. We examine Colombian trade policy from 1977 to 1991, a period during which trade liberalization alternates with increased trade protection in varied ways across industries, to investigate the link betw...

Using a bilateral trade equation derived from a monopolistic competition model, we investigated market access reciprocity in food trade among the US, Canada, the EU and Japan. We explore country and industry–specific market access asymmetry through the border effect approach, re-challenging the underlying main explanations. Our findings reveal marked asymmetry in reciprocal trade openness; inde...

This paper develops a dynamic theory that accounts for the evolution of trade policy, underlying internal class con‡icts, and output growth performance over the last few centuries. By analyzing political responses to the distributional e¤ects of international trade, it …nds a prominent interaction between trade policy and the pattern of economic development, and also a signi…cant role for trade...

Recent research has underlined the efficiency of the GATT/WTO rules from the standpoint of politically motivated governments, emphasizing that the current multilateral rules are capable of delivering a politically efficient equilibrium. Such an equilibrium is, however, economically inefficient. Global free trade, in particular, is generally unattainable even in a fully cooperative world, provid...

This paper studies empirically the relationship between trade policy and individual income risk faced by workers. The analysis proceeds in three steps. First, longitudinal data on workers are used to estimate time-varying individual income risk parameters in various manufacturing sectors. The estimated income risk parameters and data on trade barriers are then used to analyze the relationship b...

This paper the presents pattern and determinants of intra-industry trade (IIT) in Australian manufacturing since the late 1970s. The results point to a sharp rise in IIT from the mid 1980s which appears to be linked with an outward-oriented policy. Industry level analysis indicates that industries which experienced a sharp fall in protection are the industries with the higher levels of IIT. The...

There has been great focus in the recent trade theory literature on the introduction of firm heterogeneity into trade models. This introduction has highlighted the importance of the entry/exit decision of firms in response to changes in trade barriers. However, it is typical in many of these models to use iceberg transport costs as a general form of trade barriers that can be interchangeable wi...