In this paper, the authors show that the welfare effects of an export promotion zone can be divided into a factor terms-of-trade effect and a volume-of-trade effect. The first effect raises welfare, whereas the second is uncertain. To date, however, the literature has ignored the factor...

We examine the relationship between the relative price of nontradables and real exchange rate movements for fixed exchange rate regimes. Using BLS CPI data, we show that purchasing power parity holds strongly for tradables across U.S. regions. As a result, nontradables play a central role in...