Trade costs are crucial in new economic geography (NEG) models. The unavailability of actual trade costs data requires the approximation of trade costs. Most NEG studies do not deal with the ramifications of the particular trade costs specification used. This paper shows that the specification...

We study the effect of spatial inequality on economic activity. Given that the relationship is highly simultaneous in nature, we use exogenous variation in geographic features to construct an instrument for spatial inequality, which is independent from any man-made factors. Inequality measures...

This paper considers how sanctions affected the Iranian economy using a novel measure of sanctions intensity based on daily newspaper coverage. It finds sanctions to have significant effects on exchange rates, inflation, and output growth, with the Iranian rial over-reacting to sanctions,...

This paper considers how sanctions affected the Iranian economy using a novel measure of sanctions intensity based on daily newspaper coverage. It finds sanctions to have significant effects on exchange rates, inflation, and output growth, with the Iranian rial over-reacting to sanctions,...

We introduce the revised version of the KOF Globalisation Index, a composite index measuring globalization for every country in the world along the economic, social and political dimension. The original index was introduced by Dreher (2006) and updated in Dreher et al. (2008). This second...

We introduce the revised version of the KOF Globalisation Index, a composite index measuring globalization for every country in the world along the economic, social and political dimension. The original index was introduced by Dreher (2006) and updated in Dreher et al. (2008). This second...

Increasing-returns-to-scale imperfect competition trade models predict a more than proportionate relationship between the larger country's share in world endowments and its share in producing firms: the so called home market effect (HME). While this result plays a key role in empirical testing,...

Does international financial integration boost economic growth? The question has been discussed controversially for a long time. As of yet, robust evidence for a positive impact is lacking (Edison et al., 2002). However, there is substantial narrative evidence from economic history that...

Larger Indian firms selling inputs to other firms tend to have more customers, tend to be used more intensively by their customers, and tend to have larger customers. Motivated by these regularities, I propose a novel empirical model of trade featuring endogenous formation of input-output...