We develop a heterogeneous-firms model with trade in goods, labor mobility and credit constraints due to moral hazard. Mitigating financial frictions reduces the incentive of mobile workers to migrate to one region such that an unequal distribution of industrial activity becomes less likely....

The European Union (EU) provides grants to disadvantaged regions of member states from two pools, the Structural Funds and the Cohesion Fund. The main goal of the associated transfers is to facilitate convergence of poor regions (in terms of per-capita income) to the EU average. We use data at...

We examine the impacts of both domestic and international financial market development on R&D intensities in 22 manufacturing industries in 18 OECD countries for the period 1990–2003. We take account of such industry characteristics as the need for external financing and the amount of tangible...

We argue in this paper that differences in corporate taxes between economies stimulate vertical integration of final goods producers and suppliers of intermediate goods causing more intra-firm trade. This is due to the fact that vertically integrated firms can shift profits from a high-tax...