Empirical evidence suggests that past levels of protection are significant determinants of current levels of protection. We investigate dynamic interactions among interest groups and resulting endogenous links between current and future trade policies. We explore these intertemporal links in a...

Country size, measured by either population or gross domestic product (GDP), is shown to be negatively related to the variances of aggregate output, consumption and investment and positively related to the contemporaneous correlations of consumption and investment with output in a sample of...

Many international macroeconomic models link the real exchange rate to a ratio of marginal utilities. We examine this link empirically, allowing the marginal utility of consumption to depend on government expenditure, real money balances, or external habit. We also consider two environments with...

Since the early 1980s, a large body of research has thrown doubt on the relevance of macroeconomic models for understanding exchange rates. The authors argue that a balanced reading of recent literature in exchange rate economics gives a more optimistic assessment. Many studies have established...

This paper examines the effects of taxation in a two-sector model of endogenous growth, based on the joint accumulation of physical and human capital. Both transitional dynamics and balanced growth paths are computed, and the response to wage taxes, capital taxes, and consumption taxes is...

This paper documents some previously neglected features of sectoral shares at business cycle frequencies in OECD economies. We find that the non-traded output share is as volatile as aggregate GDP and for most countries is countercyclical. While the standard international real business cycle...

This paper explores the relationship between government budget deficits and the real exchange rate. While the conventional view is that a deficit generates real exchange rate appreciation, the experience of many small economies appears to contradict this belief. In this model, the impact of an...

This paper looks at the effect of nontraded goods on the international transmission of fiscal policy. Interte mporal movements in the price of nontraded goods affect real interest rates differentially between countries. The real interest-rate effec ts of a fiscal expansion depend crucially upon...

This paper examines the effect of introducing profit-sharing arrangements into union-firm contracts. It is shown that if bargaining is efficient (using the generalized Nash bargain), profit-sharing has no effect on the bargaining outcome. This is true both when the profit-sharing restriction is...