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This paper examines the welfare effects of protection in two sectors characterized by high wage premia, autos and steel, to determine if protection is justified to correct for the labor misallocation due to wage premia. If wage premia are exogenous, under most product market structures, labor...

When governments attempt stabilization why do they not undertake a programme certain to succeed? The paper discusses credibility when it is inconceivable that a programme will succeed with probability one. A cost-benefit analysis establishes an equilibrium programme that has some ex ante...

We explore the trade-off between a patent's length (its lifetime) and its width (its scope of coverage). A wider patent generally reduces the distortion of consumers' choices between the patented brand of the product and unpatented, lower-priced varieties sold by competitors, it also permits...

Government policies designed to give domestic exporters a strategic advantage in world markets are completely effective only if the government can commit to those policies for as long as they affect firms' decisions. Export subsidies or other output policies that affect firms only in the current...

Import protection is frequently advocated as a means of preserving jobs and avoiding labour adjustment costs. Defining adjustment costs in terms of output forgone during the process of adjustment and ignoring any general equilibrium repercussions, we estimate that quantitative restrictions on...

This paper considers arbitrage pricing of bonds and the determination of interest rates in the European Currency Unit (ecu) in situations of impending ecu basket adjustments. These adjustments disrupt the markets for private ecu assets with a lead of several months. The approach of the paper is...

The paper explores the role of innovation in the determination of both net exports and export prices. The analysis is conducted for 36 industry groups covering both manufacturers and services in the UK. The data are annual time series and these are analysed using the techniques of cointegration...

This paper provides a conceptual framework to analyze the main economic issues raised by Spain's integration into the EEC and by the vast economic reforms associated with the 1992 European Internal Market. The "EEC cum 1992" event can be described as a major anticipated permanent shock with both...

Small transaction costs and uncertainty imply that optimal cross-currency interest rate speculation is marked by a first-order hysteresis band. Consequently uncovered interest parity does not hold and market-efficiency tests based on it are mis-specified. Indeed, measured prediction errors are a...