We examine how trade openness influences income inequality within countries. The sample includes 139 countries over the period 1970-2014. We employ predicted openness as instrument to deal with the endogeneity of trade openness. The effect of trade openness on income inequality differs across...

We study how the opportunity to trade in trash might influence the equilibrium outcome when the tax on the externality is determined by a political economy process. In our model, individuals have heterogeneous preferences for environmental quality, and there is a leakage when funds are...

This paper analyzes the dynamics of trade policy reform under democracy. In an overlapping generations model, heterogeneous agents may acquire skills when young, thereby determining the skill composition of their cohort. Current and anticipated trade policies influence education decisions, and...

In a three-country model of endogenous trade agreements, we study the implications of the Most Favored Nation Clause (MFN) when countries are free to form discriminatory preferential trade agreements (PTAs). While PTA members discriminate against non-member countries, MFN requires non-members to...

This paper provides a quantitative analysis of the new EU-Japan free trade agreement (FTA), the biggest bilateral deal that both the EU and Japan have concluded so far. It employs a generalized variant of the Eaton-Kortum (2002) model, featuring multiple sectors, input-output linkages, services...

Trade and innovation cause structural change. Productive factors must flow from declining to growing industries. Banks play a major role in cutting credit to non-viable firms in downsizing sectors and in providing new credit to finance investment in expanding, innovative sectors. Structural...

We investigate theoretically and empirically the role of wholesalers in mediating the productivity effects of trade liberalization. Intermediaries provide indirect access to foreign produced inputs. The productivity effects of input tariff cuts on firms that do not directly import therefore...

This paper revisits the relationship between international trade and economic growth. We measure trade openness indices separately with respect to intermediate inputs and final goods and find that it is the former which turns out to be significant in explaining growth gains from trade. Using...

This paper analyses the role played by vertical linkages on the effects of trade liberalization on technology adoption and their consequences on average productivity and welfare in a trade model with heterogeneous firms. We find that the strength of vertical linkages shapes the effects that...